HomeMy WebLinkAbout2003-09-10 MinutesPolice Pension
September 10, 2003
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Police Pension Board of Trustees
Minutes of a Special Meeting
September 10, 2003
A special meeting of the Fayetteville Police Pension and Relief Fund Board was held on
September 10, 2003 at 9:00 a.m. in Room 326 of the City Administration Building located at 113
West Mountain Street, Fayetteville, Arkansas.
PRESENT: Mayor Coody, Jerry Friend, Tim Helder, Dr. Mashburn, Jerry Surles, Randy
Bradley, City Attorney Kit Williams, Steve Davis, Marsha Farthing and Amber Wood.
ABSENT: Sondra Smith, City Clerk.
Mayor Coody: Called the Meeting to order.
Steve Davis led a discussion about a letter from the Municipal League regarding the pension
compliance with GUST.
Jerry Friend: I will move that we have the attorney, Craig Westbrook look at this and give
us advice on what we should do or do it for us and authorize payment not to exceed $200.00
for our part of it.
Mayor Coody: Is there a second to the motion?
Tim Helder: Second.
Mayor Coody: We have a motion and second to hire Mr. Westbrook with a cost not to exceed
$200.00 to do this work. Shall the motion pass? All in favor say aye.
Mayor Coody: The motion passed unanimously.
Kit Williams: We need to discuss the resolution that was passed at the last special meeting. I
wasn't aware that you all we're going to make that resolution. I have researched the law about
what we have to do, and of course when we're doing pension stuff my advice is that you have to
be very strict to follow the law as it goes along. In my reading of the statute there's several
things that must be done prior to any benefit increase and one of them as it states here, "the
Board of Trustees of the Police Pension Relief Fund" I'm quoting the statute, "shall adopt a
resolution of not less than 3A of the membership of the Board of Trustees outlining the proposed
increase in benefits." After that then they have to send this resolution down to LOPFI and have
them look at it and agree and pass on it. It says that the Executive Director will then determine
the actuarial evaluation has been made in accordance of the provisions of the subject. It has to
be an actuarial evaluation and I think that they might be able to use the one that we've already
done, I'm not positive but I think they probably can, I hope they can. Then the Executive
Director can state the actuarial findings and writings of the Board of Trustees and certify the
appropriate action has been taken. The Board's trustees can go forward in compliance with her
findings and grant the benefit increase, but we have to follow it step by step. The first step is that
we have to pass a specific resolution requesting this be done and then we can move forward.
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Eldon Roberts: Kit I might add that I got that information right out of the mouth of one of the
actuaries that the study that was just performed that Steve had asked for, about when we were
looking at merging with LOPFI, is current up like July or August, somewhere right around in
there.
Kit Williams: That will be good enough.
Eldon Roberts: They're not going to charge again to do another study.
Kit Williams: Good.
Eldon Roberts: That one will work and I got that right out of the mouth from the actuary.
Kit Williams: So I think what this board needs to do to get the ball really rolling is to pass a
resolution outlining the proposed increase in benefits and then we'll pick up the ball from there
and start going through administrative hoops.
Tim Helder: Now will you draft the resolution? Is that how this works?
Kit Williams: Yes. And your resolution is to increase the benefits by 3% C.O.L.A., temporary
3% C.O.LA.
Tim Helder: Temporary compound.
Kit Williams: Temporary but compound C.O.L.A.
Tim Helder: Yes.
Jerry Surles: Did we not do that last time? What'd we do last week, last time?
Tim Helder: We didn't do a resolution to that effect we just passed it. Kit was then able to
research this so what he just said, you have to do this resolution to stay in strict compliance of
the law.
Kit Williams: I'm just concerned that if we don't jump through every hoop exactly as its stated
in the statute that they could say no we're not doing the right thing.
Dr. Mashburn: I'll agree with that.
Kit Williams: I will draft a resolution assuming that we need a recorded vote, we will need
three fourths of the membership so instead of just saying aye, I want everybody to vote by their
names so she can get your name down on the tape that you're voting in favor of this so that it's
clear that three fourths of the members of the Board of Directors have approved it.
Tim Helder: Before we do that though, we were going to implement this October 1, we don't
have any idea but obviously we can't do it by then.
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Kit. Williams: Let's just say as soon as possible.
Tim Helder: Can we leave it open-ended?
Kit Williams: I think we ought to leave it "as soon as it is approved" or something like that.
Randy Bradley: Before we do that we need to undo what we did?
Kit Williams: I don't know. I guess you could reconsider your previous motion, make a motion
to reconsider your previous motion and table it indefinitely.
Jerry Friend: Because we're going to do it again now.
Dr. Mashburn: I make a motion we rescind our last action
Mayor Coody: Make a motion to reconsider the last vote and that requires a second and a
vote, and then you can make a motion to rescind.
Kit Williams: So a motion to reconsider?
Randy Bradley: I second it.
Mayor Coody: We have a motion to reconsider the last vote. All in favor say aye.
Mayor Coody: So now we're going to reconsider the last vote. Now if you want to make a
motion on rescinding your action.
Randy Bradley: I make a motion that we rescind the last action, the 3% cost of living raise.
Tim Helder: Second.
Mayor Coody: We have a motion and second to rescind the 3% COLA. All in favor say
aye.
Mayor Coody: Does that take three fourths of the Board?
Kit Williams: No, the resolution that you're going to be proposing takes a three fourths vote.
Mayor Coody: The motion passed.
Kit Williams: They want to move to pass a resolution to request an increase of a temporary 3%
compounded COLA as soon as approved by the State Pension Board, the Executive Director of
Arkansas Fire and Pension Review Board.
Tim Helder: And then to take effect do we need that wording in there Kit on this voting?
Kit Williams: I will put it in there to take effect as soon as possible, to take effect as soon as
approved by the Pension Review Board.
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Eldon Roberts: It's up to you all. We discussed this at the first of the year. It seemed like a
better number then the first of November but that's up to the Board.
Kit Williams: It depends on how long
Tim Helder: Suppose it didn't happen. I mean if we put a date and they are not able to get this
resolved with Catherine.
Kit Williams: Yeah because she can't do anything.
Randy Bradley: We'd have to come back.
Eldon Roberts: I do expect that by the first of the year all these hoops can be gone through.
And then you have the first of the year every year as the exact time that, the COLA would be
implemented in the future but it's up to the Board.
Kit Williams: Well we could say the first of the year but that does leave a problem if they don't
get it approved.
Eldon Roberts: I would think so. We could always come back.
Tim Helder: I think I'd prefer to do it as soon as they can do it.
Randy Bradley: I think the first pay period and file an approval or something.
Jerry Friend: We could say effective the first of the year and if they don't do it until February
maybe we could come back.
Eldon Roberts: We could do that.
Jerry Friend: So as soon as they could get it done to be effective the first of the year.
Kit Williams: Let me ask one question of our accounting? Do you need any kind of lead time
when you're figuring this?
Marsha Farthing: Not too much.
Kit Williams: So as soon we hear that they've approved it you'd be able to probably get it in the
next pension payment? If it's not more than a week a way. You can still do that?
Steve Davis: We would need to know what it was based on.
Marsha Farthing: Yes that would be the big kicker is what you are basing it on for the 3%.
Eldon Roberts: What number are we taking the 3% of?
Kit Williams: Wouldn't it be the current one?
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Marsha Farthing: Are you going to include the money they receive for additional years, are
you going to base it on their salary, or 90% of their base salary? Or what options?
Kit Williams: My understanding was that they were going to do it on whatever the benefits
were at this time. There'd be a 3% on the current benefits whatever they were but I don't know
though. Let's be sure of what we're asking the board to approve.
Tim Helder: What is LOPFI's based upon? What is their COLA? Is it on the salary that they
retired at?
Steve Davis: I'm not sure.
Eldon Roberts: I'm really not sure. And no where in this material that I've got from the
actuary does it tell me or does it mention what number you pay the 3% on.
Tim Helder: Does it say to mirror all what LOPFI?
Kit Williams: Let's stay with the actuary they probably figured out where it's feasible.
Tim Helder: Okay.
Eldon Roberts: I can call them. I can find out.
Kit Williams: Whatever the actuaries, how they figured it out.
Tim Helder: Which would reflect what LOPFI does because they would be basing it on the
same method, I am sure and that's fine.
Kit Williams: So we're going to base the 3% on what the people that looked at this said, we
could legally do that, on there figures okay. And we'll find out.
Eldon Roberts: I can probably find out probably today.
Kit Williams: Why don't you let me know because I'll just put that in the resolution rather than
making it convoluted.
Steve Davis: There's a danger in that you could be a rabbit chasing your tail. You know the
actuaries calculated, based off a set perimeter. They may assume three or four scenarios and
averaged them I think you need to tell them what you want it calculated on, because it can make
a difference.
Kit Williams: What about just current benefits? Cost of living is generally on whatever you're
getting at this point in time.
Eldon Roberts: If we call and ask them how did you figure that? How did you compute this
3%, to be 3% of what, and they can specifically tell me without it being hostigeous, an average
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of four different numbers, if they could say we did it off this one number then we could deal with
that. Is that right Steve? If they did it off just one number?
Steve Davis: If they do it off just one number though.
Kit Williams: Let's say if they didn't do it off one number we still need to have our decision
made here. Would it be satisfactory to just have it 3% of the current benefits, so it would be
103% of what everybody is getting right now, the first year in this.
Jerry Friend: That's sounds like the highest scenario.
Tim Helder: I think that's right.
Tim Helder: Actually it would be the lowest.
Eldon Roberts: The highest would be 3% of the salary when they retired.
Tim Helder: It would be the salary that you were earning at the time you retired.
Eldon Roberts: That'd be 100% of salary.
Tim Helder: So the lowest scenario would be to go with 3% of your current pension.
Steve Davis: Of your benefits.
Jerry Friend: Okay.
Tim Helder: That would be the worst case scenario. The best case would be if they were
figuring it off your salary at the time of retirement.
Eldon Roberts: You're 100% of salary when you retire.
Steve Davis: The way that LOPFI works is that if somebody retires in August they get a COLA
the next July.
Kit Williams: And it is based off their salary though.
Steve Davis: It's based on their formula. It's a formula based on their salary. They don't get
any additional money based on longetivity or years above 20 or 28. That doesn't work.
Jerry Friend: To me that's kind of an important question and I don't know how, is there some
way we can make this motion and then settle that later. To me we need to talk to them or
somebody
Tim Helder: Eldon's going to make that call this afternoon but I would say and tell me if this
sounds bad to word it that the 3% would be based on no less than the current benefits of the
retired people.
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Tim Helder: It could be more but at no less than what the current is.
Kit Williams: The problem is as long as that's not above anything the actuarial will look at. I
mean I don't know how they look at it.
Jerry Friend: That's what my worry would be. It would be above what they figure it.
Tim Helder: What's your recommendation? I mean I don't know, as far as wording, as far as
today how do we leave it.
Kit Williams: I think that, that can hopefully be your ceiling, I mean your floor, and your
ceiling would be whatever if there's a good figure that we can use that the actuarial used. Is that
what you all would agree with me if the actuarial used a different figure like ending salary then
will put that in the resolution. If the actuarial use benefits or some sort of combination of stuff
it's going to be very difficult to figure out then, we're going to go back to the benefits.
Jerry Friend: If this is the floor, I mean I like cushion and they figured it on salary to me it
would be safer to use the floor, a lower amount, and it wouldn't hurt, I mean the difference isn't
that much except in the hole it would be quite a bit after all the benefits for each person.
Jerry Surles: I don't why they would figure it on your retirement salary. Why would they go
back to that point to figure the 3%?
Jerry Friend: I think LOPFI does.
Jerry Surles: I wouldn't think so.
Steve Davis: I think it's based on benefits.
Tim Helder: What were we thinking whenever we did this resolution to go to LOPFI? Because
all we put in here was adopt a 3% compounded cost of living to be applied annually.
Eldon Roberts: I was thinking about what we draw.
Tim Helder: I think we were all in our minds thinking it was based on what the retirement
package is now, and I think that's what got this study done.
Kit Williams: That's what I thought it was.
Eldon Roberts: So you think 3% of your current benefit.
Kit Williams: That's what I thought it was.
Tim Helder: So we could word it where, worst case scenario is based on that if they figure it on
more I guess that's fine to go up as long it doesn't go below what we all had intended. The other
thing there Kit, is it for full paid Fayetteville Police Pension Relief both current and future.
Eldon Roberts: Be sure to get that future.
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Tim Helder: Future would be people that retire later.
Kit Williams: You're still talking about the old plan though.
Tim Helder: Yes, there are still three people on it that could retire in the next year.
Kit Williams: No. We're not going let them.
Tim Helder: In the event that that happens, we need to make sure there is wording to include
them.
Kit Williams: Okay.
Tim Helder: So we don't have to meet again to make it for them.
Kit Williams: You don't what to let them sit and squirm.
Randy Bradley: Let's simplify it.
Kit Williams: Surely the actuarial has taken that into account.
Eldon Roberts: What the future retirees. But this Board has an option of probably voting one
way or the other.
Marsha Farthing: I have a question. If somebody retires say in December will they get the
COLA then in January or are you going make them be in the plan a year and a month before get
the COLA?
Tim Helder: How many more do we have?
Steve Davis: Three.
Randy Bradley: Three is what we're talking? It would be kind of a hardship on whoever was
doing the calculations to keep up with that one year and a month.
Tim Helder: Let's set a date.
Randy Bradley: Every January the COLA would come in, is that right?
Tim Helder: Instead of on the anniversary.
Randy Bradley: So if they would retire in February then they would get a raise the next
January.
Eldon Roberts: Well what about in December?
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Kit Williams: Do you have a lot of extra work at the end of the year or does it make any
difference to you. This January date is that going to be a problem for you to go back and figure
this?
Jerry Friend: Would you rather do it in March or some time like that.
Kit Williams: February or something like that?
Marsha Farthing: January through April is bad for us. It's not going to matter to me.
Kit Williams: So you'd just soon do it January 1.
Steve Davis: Actually, you know if you get the retired list, you do your retirement list for
December early in the month right?
Jerry Surles: Yeah.
Dr. Mashburn: When does LOPFI do theirs? I mean if you're going to set this and then LOPFI
takes it over then its going to be completely different.
Steve Davis: It will be a completely different thing.
Randy Bradley: It'll be different.
Eldon Roberts: They are July tat but that's the state's fiscal year and that's just when they opt
to do theirs is July 1st.
Kit Williams: But they do it on the date of retirement? They do the same for everyone.
Steve Davis: All COLAs are implemented July Is'.
Jerry Friend: So if we received a COLA in January then move to LOPFI we'd get another one.
Eldon Roberts: You'd be better off.
Tim Helder: Well I tend to agree with Jerry I think to simplify things I think January. If
somebody is fortunate enough to retire before then, then just kick it in. But to simplify things
January would be my suggestion.
Kit Williams: Okay I'm putting that down if that's your consensus, January 1.
Mayor Coody: Alright so what course other action do we need to take?
Tim Helder: Authorizing Kit to draft a resolution.
Kit Williams: Right and pass by 75% of everyone who votes by stating their name.
Mayor Coody: Is there a motion.
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Randy Bradley: Did you make a motion?
Tim Helder: Yes.
Jerry Surles: I second. A 3% compounded COLA based on current benefits.
Tim Helder: It's a five year temporary 3% compounded COLA to take affect January 1
and it will affect both current and future.
Mayor Coody: It that your motion.
Tim Helder: Yes it is sir.
Mayor Coody: Is there a second?
Jerry Surles: Second.
Mayor Coody: One by one, let's start over at this side. Do you want this motion to pass?
Jerry Friend: Yes.
Tim Helder: Yes.
Dr. Mashburn: Yes.
Jerry Surles: Yes.
Randy Bradley: Yes.
Mayor Coody: I guess that's 75%.
Kit Williams: You have to vote to Mayor.
Dan Coody: Yes.
Kit Williams: Okay and the total membership of the board, is there anybody not here besides
Sondra?
Tim Helder: Sondra.
Kit Williams: The motion passed unanimously.
OTHER BUSINESS:
Kit Williams: I have written to Jan Judy and I actually talked to her and she's passed the letter
on about the change in the law now authorizing widows to be paid more than 50%. They had
previously been restricted to 50% of the ending salary of the retiree. It looked to me like the
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language was crystal clear. I thought they were limited to that, and in fact that's what we always
did when the pensioner would die he might be getting 90% then the widow would only get 50%.
We had to face that couple of times last year, the year before and we talked about it and wrote a
memo to you that the law is clear. They changed the law, Act 274 of 2003 now allows the
surviving spouse to receive more than 50% of the police or firemen's pension ending salary.
Mayor Coody: Is there a ceiling?
Kit Williams: There's no ceiling except probably 90% which is same thing that most of the
people have. The thing that bothered me about it is that the Act is entitled to clarify the authority
and in state law when you look at supreme court cases dealing with interpreting acts, the title of
the act is looked at if there's any confusion, they can look at the title and see what the legislature
means. A clear meaning of the word clarified is not changing, not giving, it's just making clear
what's already there, I think that's a misnomer. I think that's what the act did, I think it actually
changed the law, an argument could be made by a widow that we have always had the authority,
we just didn't know we had the authority. This act clarified the fact you always had that
authority and in order to give the widow benefits you have to go through the same procedure we
just went through, pass a resolution, actuarial tables are checked out and sent down there and it's
authorized, of course every time we've done a benefit increase that's what we've done. We've
never tried to do one for widows so I think we're okay but I'm asking the attorney general to
clarify that himself and to say no that in fact it changed the law and that no widow can claim that
she should get 90%. Jan Judy and I talked this weekend and she said yes she has that on to the
attorney general so he can inundate this. This legislative session had a ton of questions, so it
might be a while before we hear back but I think he'll say that we're okay and we do not need to
make any back payments or any current payments to widows at this point in time until this board
decides to pass a resolution to ask for that.
Dr. Mashburn: Now clarify clarify.
Tim Helder: I think all they did is muddy it up a little bit.
Kit Williams: If they had just said an act of change I wouldn't have been concerned at all, but
they tried to make it sound better, I think that is only reason they put clarify in there.
Eldon Roberts: Kit, my take on that is if any police officer dies today on this benefit program,
they are drawing 90% of their salary.
Kit Williams: Right.
Eldon Roberts: Their widow would continue to draw at 90% salary, I think.
Kit Williams: Well I guess we'll find out.
Eldon Roberts: That first paragraph says "they shall draw the amount attached to the rank of
the salary of their spouse at the time of his death.
Kit Williams: Yeah that's right. It was contradictory.
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Dr. Mashburn: To do that you're going to change the actuarial figures tremendously.
Kit Williams: It will.
Eldon Roberts: It will make a lot of difference depending on how the actuary.
Jerry Friend: I think they figured that didn't they?
Kit Williams: No.
Mayor Coody: If the fund is unsound now with benefits going up, is it going to be bankrupt
next week instead of seven years out?
Kit Williams: Let me respond to what you said there because this is an issue we might have to
face, because somebody is going to die and there's going to be a widow out there. it says it did
not repeal § F1, it says the sum total of pension to be paid the surviving spouse of a deceased
police officer shall not exceed one half of the salary attached to the rank the police officer held at
time of his or her death, this is what they added, "however the limit on the sum total amount
under subdivision of F1 of this section may be exceeded through benefit increases authorized
under § 24-11-102." All the benefit increases have been authorized under that and that's where a
widow could come in and say well you know you exceeded benefits so I should get that, to me
that's not clear though. The better reading I think is that this board would have to say that they
want to raise the widow benefits, surviving spouse benefits to the same level as the pensioners
themselves and send that down to the board and get it approved. But your interruption is
arguable, and that's one reason I asked the attorney general to try to clarify this because to me,
usually when the legislature is going to clarify something they just muddy it up.
Eldon Roberts: But if this board sent that information down there that they wanted to raise the
widow's benefits to the amount that was being received by their spouse that would in fact do the
same thing we're talking about. You couldn't go back and raise those people that didn't get the
90% benefit increase, you couldn't raise those people because they never get it to start with, but
it could raise the current ones from the time we went 90% of salary because that's what their
husband was drawing at the time of his death. You see where I'm going there?
Kit Williams: Yeah. I just think it's not clear and I'll let the attorney general speak on it and
hopefully he will give us an opinion early enough because we're not the only pension plan
looking at this. Some other pension plans have 75% benefits and so they may very well come
forward and make some claims, and this very well might be decided actually in court despite
what the attorney general says.
Steve Davis: To answer the Mayor's question, under one calculation the plan's actuary is not
sound; under the cash flow calculation the plan is actuarially sound.
Mayor Coody: To date?
Steve Davis: With the compound 3% COLA
Eldon Roberts: Temporary compound.
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Kit Williams: That's based upon the turnback funds being increased? Is that what makes it a
cash flow thing.
Steve Davis: I assume that's my conclusion since they were so adamant that it would be in our
best interest to retain full control of the pension plan for another three to five years.
Kit Williams: Okay I will draft up the resolution as it was stated. Actually you decided 3% of
benefits didn't you. I'll just go ahead and draft it then just like that with a starting date of
January 1, 2004, current and future members, temporary compound COLA. Mayor that will be
for your signature as Chairman of this Board.
Jerry Surles: Five year temporary COLA.
Mayor Coody: Alright.
Kit Williams: Because that's what the actuarial said right. Five years.
Mayor Coody: So that's all taken care of.
Kit Williams: Yes.
Jerry Surles: I move that we adjourn.
Mayor Coody: Meeting adjourned.
Meeting Adjourned at 10:15 AM
Sondra Smith
Secretary