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HomeMy WebLinkAbout2011-02-14 MinutesLioneld Jordan Chairman Sondra E. Smith Secretary • Marion Doss Position 1/Retired Pete Reagan Position 2/Retired 171ITP PAT] P Gene Warford Position 3/Retired Ron Wood Position 4/Retired i ARKANSAS Firemen's Pension and Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 1 of 10 A Special meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PM on February 14, 2011 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Gene Warford, Marion Doss, Pete Reagan, Sondra Smith, Ronnie Wood, Mayor Jordan, City Attorney Kit Williams, Press and Audience. Old Business: PRB letter regarding the projected insolvency status of the fund. Need to send them a response letter: 1. What actions have you planned as a result of the Special Report? 2. What discussions have you had with the city officials to explore solutions? How has your city board been made aware? 3. Did you find the Special Report helpful in your planning? 4. What would you have wanted to have been included in the Special Report that was not previously included? 5. What additional information could be provided by the PRB to assist your fund? Mayor Jordan: The only order of business that we have is the PRB letter regarding the projected insolvency status of the fund. We need to send them a response letter to their questions. In looking at the minutes it shows that we discussed waiting until after the April legislative session but we did not take a formal vote on that. I was under the assumption that was what the Board wanted to do but since there was no motion and second how do you want to handle this? Pete Reagan: I was under the assumption that was what we were going to do. There are currently two bills in the hopper on the Senate side but that does not help us with this letter that needs to get to PRB. Mayor Jordan: That's my point. They have asked for a letter to be sent. I do not know how to address that. Pete Reagan: Is this your tentative draft or is this Sondra's. Mayor Jordan: That is Sondra's Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 2 of 10 Sondra Smith: I put a draft of everything that I had received from the Board members in the agenda. Mayor Jordan: I did not look at your email. Pete Reagan: I emailed it to everybody. I think in the interest of time why don't we take time to read these. Gene Warford: Here is mine. Gene Warford handed his letter to Mayor Jordan. City Attorney Kit Williams: We could address the questions one at a time. PRB Question #1 What actions have you planned as a result of the Special Report? City Attorney Kit Williams: Sondra said the Board as a whole has not planned any action. I think that is the same thing that Marion said "at this time no firm plans have been made". Mayor Jordan: Does the Board agree or disagree? City Attorney Kit Williams: If they want to change what she said. Sondra Smith: Regarding the comment about waiting until after the legislative session to send a response letter, I have reviewed the minutes and did not find that any formal action was taken. Mayor Jordan: I remember the discussion Ronnie Wood: That is the only thing I remember. We talked about waiting. Mayor Jordan: The October meeting was an informational meeting. From the minutes that I read and the discussion that I remember I asked you what you wanted to do and you said you wanted to wait until after April. Pete Reagan: To see what influx of money could be brought into the Guarantee Fund. Mayor Jordan: That is what I remember but I think Sondra is right that there was no motion and second and no vote taken on that. Sondra Smith: The reason we do a motion and second and roll call vote is because in the past there have been people that said they did not vote for something. The roll call vote eliminates any confusion about who voted or did not vote for an item. Mayor Jordan: If their decision is to wait until after April until they formulate a plan and they send that letter to PRB. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 3 of 10 City Attorney Kit Williams: That would answer the first one that no action has been planned because you are waiting to the end of the legislative session. Is that how you want Question #1 to be answered? Pete Reagan: In a bread basket yes. Mayor Jordan: Sondra said "the Board as a whole has not planned any action although it has been discussed in our meetings". That is a fair statement. She said "I plan to continue to pursue a reduction of benefits. I believe this is the only way to maintain the solvency of the plan to receive future support from our City Council". City Attorney Kit Williams: That is her position. Mayor Jordan: Does anyone want to word it differently? Marion Doss: I think Sondra answered it better than I did. We have not really made any plans. We have talked but not made any plans. City Attorney Kit Williams: Do you want to add that you are waiting for the legislative session to be over? Pete Reagan: I would move that we state in the answer that this Board is waiting the outcome of the 2011 legislative session to see what benefits we can gain out of the Guarantee Fund. Sondra Smith read back the motion for the Mayor. Mayor Jordan: Explain to me the Guarantee Fund. Pete Reagan: The Guarantee Fund is setup for funds that are in distress, both fire and police. The requirements are that they have to have zero benefit increases and a full one mill. There are two bills in the hopper right now. City Attorney Kit Williams: That is the way the law reads right now. You can't pay more than fifty percent and they have to be receiving a full one mill. Mayor Jordan: So you want to wait and see how that turns out. Pete Reagan: There are two or three more bills that could affect the money that flows into the Guarantee Fund out of the Governors side of the fire insurance premium tax. Mayor Jordan: My position has been, from the October meeting, that it is your pension fund and if you want to wait until after April it is whatever you all want to do. I am not wrapped around the axel one way or the other, but the longer you wait the worse shape you are going to get in. Pete Reagan moved that we state in the answer to Question #1 "this Board is waiting the outcome of the 2011 legislative session to see what benefits we can gain out of the Guarantee Fund". Gene Warford seconded the motion. Upon roll call the motion passed 5-1. Sondra Smith voting no. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 4 of 10 Sondra Smith read back the motion for the Mayor. Marion Doss: I would like to see added to the motion "as of now we have not done anything except wait", because we have not down anything but wait. City Attorney Kit Williams: You can start the sentence with "the Board has not yet make any plans'. Mayor Jordan: Although it has been discussed at our meetings. Marion Doss: I think taken no action is good. Pete Reagan: I think we have taken a lot of action. We have been informed by several different groups on what is available to us. We have two Attorney General Opinions. I do not think we have not done anything. Sondra Smith: I do not think the Board as a whole has done anything. I think we have listened. City Attorney Kit Williams: It says "since the special report". Mayor Jordan: Since the special report. That would probably be true. City Attorney Kit Williams: You considered options but at this point not made a plan of action. You would have to move to amend his statement. Marion Doss moved to amend the answer to Question #1 to say "the Board as a whole has not yet taken any action since the special report". Gene Warford seconded the motion. Upon roll call the motion to amend passed 5-1. Sondra Smith voting no. PRB Question #2 What discussions have you had with the city officials to explore solutions? How has your city board been made aware? Mayor Jordan: Sondra said "a joint meeting was held with the Fayetteville City Council, Firemen's Pension Board and the Pension Review Board on October 18, 2010. At that meeting several of the City Council members expressed that a reduction in benefits should be pursued. A copy of the October 18, 2010 minutes is attached". The other comment I received is "the only solution the City of Fayetteville officials have on their radar is the reduction of benefits to all retirees. It is quite obvious that the City Attorney has explained to them his position which is the City of Fayetteville has no liability for the fund and we as the Pension Board can reduce benefits to retirees, even though two Arkansas Attorney General Opinions say different". Pete Reagan: To clarify, these questions have been asked of us since the special meeting with PRB? City Attorney Kit Williams: I think that was only on question number one because number one says as a result of the special report. Question number two does not say that. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 5 of 10 Mayor Jordan read Question #2. The only one I remember besides us was the joint meeting with the City Council. Gene Warford: Right, the joint meeting and they made it pretty clear. We did not have any discussion all they could come up with was us reducing benefits. Mayor Jordan: That is correct. City Attorney Kit Williams: There is a second part to number two which is how has your City Board been made aware. Look at what Sondra said. Because of State law the Fayetteville City Council has been informed, at the first meeting in January of every year, of the financial condition of the Pension Funds. For the last several years it has been revealed to the City Council that the Fire Pension fund is not actuarially sound. That is another way they have been informed not of this specific thing but of the general overall financial health of the fund. Pete Reagan: I would say that no discussions have been held with the City Council members other than their attendance at the special meeting where they expressed no desire to assist with the funds problems. The City Board was made aware of it when they were invited to the meeting and attended. Mayor Jordan: That is not exactly accurate because I give a report every year on the condition of the retirement fund at a City Council meeting. Pete Reagan: Right, okay. City Attorney Kit Williams: He does that not only as Mayor but as Chairman of this pension fund. Pete Reagan: We can add that as a friendly amendment. No discussions have been held with the City Council members other than the October 18, 2010 Special Meeting....... Mayor Jordan: We are going to have to reword that because we have had....... City Attorney Kit Williams: I think there has been discussion at the City Council level when the Mayor has made his report to them. Pete Reagan: The Mayor notified the City Council of the financial status of the fund at his yearly State of the City Address. Mayor Jordan: It was not at the State of the City. By law I am required to give a report. City Attorney Kit Williams: Sondra has "Pursuant to State law the Fayetteville City Council has been informed several times during recent years that the Firemen's Pension Fund is not actuarially sound". Marion Doss: I think that sounds good. When I was still working I went to some of the Council meetings where the Mayor would make that report. I don't think anyone seemed too concerned about it. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 6 of 10 City Attorney Kit Williams: For a long time there was not much discussion but here more recently there actually has been some discussion by the City Council. Mayor Jordan: The Mayor has been talking about this for a while. Pete Reagan: The answer to Question # 2 — A. will be the first sentence of Sondra's letter. Mayor Jordan: I also want in the letter that there have been other discussions with the City Council besides that meeting. Marion Doss: The Council has discussed this but not with us. City Attorney Kit Williams: Except the Mayor and Clerk are both members of the Board and the Mayor is the Chairman. Mayor Jordan: Also we had a couple of other meetings that were open to the Council to come. Sondra Smith: We have had numerous discussions with the Council over the years. In 2003 or 2004 we brought forward the change in the DROP to ten years, there were two things that went to the Council and at that time they asked a lot of questions. We were not actuarially sound at that point and therefore they did not approve those actions that the Board had requested. This has been brought before the City Council for years. They know the condition of the plan and that it has been gradually getting worse for several years. Marion Doss: I think it has been brought up every year when they have to renew the millage. The Council has to be made aware and vote to continue that. Sondra Smith: There has been more than one time a year that the Council has been made aware of the plan. Gene Warford moved to answer Question #2 as follows A. Pursuant to State law the Fayetteville City Council has been informed several times during recent years that the Firemen's Pension Fund is not actuarially sound. Pete Reagan seconded the motion. Upon roll call the motion passed unanimously. Pete Reagan moved to answer Question #2 as follows B. The Fayetteville City Council has been made aware of the dire financial condition of the fund several times. Marion Doss seconded the motion. Upon roll call the motion passed unanimously. PRB Question #3: Did you find the Special Report helpful in your planning? Gene Warford moved to answer Question #3 with "yes". Pete Reagan seconded the motion. Upon roll call the motion passed unanimously. PRB Question #4: What would you have wanted to have been included in the Special Report that was not previously included? Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 7 of 10 Pete Reagan: I think we were given several options by David Clark, Chairman of PRB and Jody Carreiro the Actuary. I put in my comments to you Mayor that I would prefer to have it prior to the meeting so we could analysis it a little prior to the meeting. Other than that I thought the information was very good. Sondra Smith: I think we received that prior to the meeting and did not have time to look at it. Mayor Jordan: I think we can certainly agree that we would have preferred to have the report a little sooner that when we received it. It came prior to the meeting it just did not come as soon as it should prior to the meeting. Marion Doss: I think when they schedule a meeting like that and they schedule it a few weeks ahead of time, I don't think it is asking too much that the report get here a few days ahead of time so you can go over it. Mayor Jordan: I am all for that. Ronnie Wood moved to answer Question #4 as follows It would have been helpful if the report came a few days prior to the meeting so that the Firemen's Pension Board would have more time to study the information. Pete Reagan seconded the motion. Upon roll call the motion passed unanimously. PRB Question #5: What additional information could be provided by the PRB to assist vourfund? Pete Reagan: In my comments I put none. The PRB staff has been very responsive to my questions and informational requests. I would like to know if they are tracking bills that are currently in the legislative hopper that would benefit our fund and the Guarantee Fund. City Attorney Kit Williams: You can ask them to forward any information that they would have on any bills that could be helpful to the fund. Pete Reagan moved to answer Question #5 as follows the Pension Review Board staff should track and advise our Board of any legislative changes that would affect our fund or the Guarantee Fund. This motion was voted on after discussion. Mayor Jordan: I like Sondra's statement that say's the PRB Board should implement a rule change that allows for a reduction in benefits, if a plan is above the State mandated level. City Attorney Kit Williams: If the fund is above fifty percent. Sondra Smith: The reason I put that comment in there is because PRB allowed the rule change for a cash flow basis only study. Some of the benefit increases would not have been implemented if they had been on an actuarial soundness basis. So, if they can implement a rule change to make it favorable for a benefit increase then I think they should look at a rule change when the plan is not sound because of some of the benefit increases that were implemented by the cash flow basis. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 8 of 10 Pete Reagan: The problem there is it is State law that does not allow for the reduction of benefits. Mayor Jordan: It also asks PRB to lobby State legislators to change the State statutes to allow for a benefit reduction for plans that are above the State mandated level. Sondra Smith: The State law does not say anything about a cash flow basis either. Mayor Jordan: If a fund gets in trouble and we see the only way that we can help it survive is to reduce the benefits and we do not have any State legislation to allow us to do that I do not see how we benefit by letting it run into the ground. That is my opinion. When we do a budget at the City and we get in trouble then we have to make cuts and freeze things. Nobody is saying that we are going to do that but we should be able to at least be able to explore that option. I want to vote on that as an amendment. Mayor Jordan moved to amend the answer to Question #5 to add The Fayetteville Firemen's Pension Board asks the Pension Review Board to explore a change to State statute to allow a benefit reduction for plans above the State mandated level. Sondra Smith seconded the motion. This amendment was voted on after discussion. Marion Doss: I would like to know what happens, from them on paper, when the fund goes broke during that last year. Does that mean our payment stops until we get the full mill and it goes to fifty percent? I would like to hear what they say. For a long time I thought the Guarantee Fund meant that when it got to that point they took it over. City Attorney Kit Williams: That is not what happens, the statute is pretty clear. You pay out all the money you can until the millage and whatever else is used up and then you pay out proration amounts. Then there are no more payments the rest of the year until the next millage comes in. Pete Reagan: It is prorated City Attorney Kit Williams: It is prorated as to how much you were getting, not per person but as to how much your benefits were. The next year when the millage comes back in they pay out benefits again until there is nothing left. That is how it is set up right now. Sondra Smith: I hate to see anybody take a benefit decrease but the whole reason behind that is I feel like we can get some support from the City Council to send it to LOPFI if we did a benefit decrease. Therefore the fund would be protected to the end of everyone's life. Right now, at the current level and without it going to LOPFI the fund is not protected. That is my concern, protecting the fund to the end of everyone's life span. Marion Doss: That is kind of what I think. If we could negotiate with the Council and come up with something that we could both live with. One Councilman indicated that if we would bend a little he would be willing to help us but if we were not going to he would not. Mayor Jordan: The problem that we face right now is that we do not have any State enabling legislation, according to the Attorney General to decrease the funds. Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 9 of 10 City Attorney Kit Williams: That is the Attorney General's opinion but I disagree. I think you have the inherit power and statutory power to do it. Mayor Jordan: If it is State legislation at least that gives us that option. City Attorney Kit Williams: If they would change it they could certainly clarify it and make sure that you did have that option. If there is that option they should have a procedure set forth and limitations on it so that it would only be done if the fund appears to be likely to run out of money within a certain number of years. It should not be reduce the funds to reduce the fund. Pete Reagan: There is the question of liability and everything else. City Attorney Kit Williams: And how many votes would it take. Pete Reagan: You are exactly right. It took six to increase it does it take six to decrease it. Mayor Jordan: If you have enabling legislation, if this Board does not want to do, then by a vote of this Board we will not do it. It just gives us an option. Sondra Smith: It also shows the City Council that we are pursuing actions favorable to what they are requesting us to pursue. The Board asked that the amendment be read. Sondra Smith: The amendment states "ask PRB to explore a change to State statute to allow a benefit reduction for plans above the State mandated level". Mayor Jordan: That's my motion. Marion Doss: I think that's a step. To me it looks like nobody wants to reduce benefits but at the same time a reduction is better than nothing. Mayor Jordan: That is all I am saying. It gives us that option to explore. Marion Doss: Before I would want to do a benefit reduction I would want to consolidate also. Mayor Jordan: I am not saying that you shouldn't. I am just trying to give us all the options that we can. It is going to take State legislation maybe to do that, I don't know. Sondra Smith: The sooner we proceed in that direction the sooner things might get changed to where we can look at it in the future without maybe a lawsuit being brought against it. Mayor Jordan: Nobody really wins in a lawsuit. Pete Reagan: Yes they do. Mayor Jordan moved to amend the answer to Question #5 to add The Fayetteville Firemen's Pension Board asks the Pension Review Board to explore a change to State Firemen's Pension & Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 Page 10 of 10 statute to allow a benefit reduction for plans above the State mandated level. Sondra Smith seconded the motion. Upon roll call the amendment passed 5-1. Pete Reagan voting no. Pete Reagan moved to answer Question #5 as follows the Pension Review Board staff should track and advise our Board of any legislative changes that would affect our fund or the Guarantee Fund. Gene Warford seconded the motion. Upon roll call the motion passed unanimously. Meeting adjourned at 3:45 p.m.