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HomeMy WebLinkAbout2015-09-30 - MinutesBoard Members Mayor Jordan Sondra E. Smith •Roy Cate Pete Reagan Dennis Mullens Ronnie Wood Chairman Secretary Position 1/Retired Position 2/Retired Position 3/Retired Position 4/Retired Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 1 of 6 aye e0KANSAi le ARS Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 A special meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 8:00 a.m. on September 30, 2015 in Room 111 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Mayor Jordan, Roy Cate, Pete Reagan, Dennis Mullens, Ronnie Wood, Sondra Smith, City Clerk, Paul Becker, Finance Director, Trish Leach, Accounting, and Audience. New Business: Discussion of sendiniz the Firemen's Pension Plan to LOPFI • Pete Reagan: Mayor, after last night's meeting with the City Council, yourself and Sondra, I thank you all for being there, the presentation given by Jody Carreiro of Osborn, Carreiro Associates and David Clark, the chairman of the Arkansas Pension Review Board, I would move that we pass a resolution that's in your packet to assign this plan's administration to LOPFI using the twenty-five year amortization schedule. We were given two choices last night the fifteen was going to cost money and twenty-five didn't look like it was going to cost, if any, very much. Mayor Jordan: Let's have discussion on that, I have some concerns. Maybe you all could discern more from the presentation than I could. I couldn't really get a straight answer on what it's going to cost. Sondra Smith: How many of you live within the city limits of Fayetteville and pay the millage that is taxed upon the City of Fayetteville? Pete Reagan: I own two pieces of property inside the city limits. Sondra Smith: That's not what I'm asking. I'm asking if you live in the city limits. Pete Reagan: No, but I still pay the tax. Sondra Smith: So none of you live in the city limits of Fayetteville? I've talked to Fayetteville • taxpayers and they are very concerned about the additional money that the city is probably going 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 2 of 6 • to end up having to pay out on this plan. I do live in the city and pay the tax, so that's a concern that I have. Roy Cate: I have properties in the city, if you're referring to the assessed tax on it. I have eight properties that I pay on. The concern that was mentioned last night, what is the concern? You don't know, it's kind of the unknown. At this point, I think if we don't move on this we may not have another opportunity to save this thing. Sondra Smith: We've brought several options forward and they've all been denied by the board. We also talked to the State Legislature about doing a benefit decrease and they were going to pass a law to do that. That was fought by people on this board. We've had options that were fought by people on this board. That's another concern I have. You can go back and ask for more millage, there's all kinds of options that probably wouldn't cost the city as a whole any extra funds. But no one is willing to do the things that we could do to save the plan. Roy Cate: It's still somewhat of a band aid. You've still got the unknown somewhat with that other than cutting people's benefits. It's very little money going out to a lot of people. Pete Reagan: If any, and we don't know what that amount is. Roy Cate: I think with the $750,000, if that applied directly to this, you are kind of paying down a note and you've got a coverage there of five years or two years of bad economy or millage that is I think would help offset that. I see it like paying a mortgage, the more you pay on it you'd have that bumper. • Sondra Smith: We haven't had enough funds coming in to cover the pension payouts for quite some time. Roy Cate: I was referring to this with the $750,000 that we are receiving towards this plan of this twenty-five year. Sondra Smith: But we are paying out over a million. Mayor Jordan: I asked him last night and he says the projections are a projection, not a prediction and that they will be re-evaluated year to year. When I asked him what if your 8% doesn't hold, he said you would still be alright with 7%. I said, what if you hit 5% or 6%? I don't have any numbers. I heard one of the Council members say we don't have those numbers, we don't know what that means. I think if that is clarified, it would certainly make me feel better. If they are going to review it year by year, and I agree with you Roy if they don't raise it for five, six or seven years, well that's one matter. If he's going review it this time next year and you're only hitting 5% then we're going to have to pay the difference between that, if I'm reading that correctly. Pete Reagan: I'm assuming that. It can't go five years and have an actuary done to see what the new cost is going to be. It's going a little bit up or a little bit down every year. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 3 of 6 • Mayor Jordan: As long as it's a little bit. It says, on page 3 of the Osborn, Carriero & Associates report, note that the results show that this study are projections and not predictions. The results of the projections depend, of course, upon the actuarial assumptions being met. It says the actual results, in big capital letters, will vary on a year by year basis from the projections. What I tried to get an answer from him last night was, if your projections hold and you hit 8% and the property tax grows at a 3% rate, everything is going to be everything. My concern is, what if he doesn't hit 8%. He says, well if you hit 7% you'll still be okay. Pete Reagan: If we're putting the $750,000 in. Mayor Jordan: My question is, and I never got what I wanted to hear from him last night was what if you hit 5% or 6%? What's that going to cost us? Pete Reagan: He said he didn't run those numbers but if we were at 7% we would still be okay. Mayor Jordan: If we hit a downturn in the economy like we've seen and you hit a 5% or 6%, how much more of an extra cost would it be to the city? I need to know that number. Ron Wood: Mayor, didn't he say that he would fax you that? Paul Becker: He didn't agree to fax him that. I will e-mail him today and specifically ask him that question, if he can run them. • Mayor Jordan: I will tell you this, and I maintain my statement I've stood behind before, if it can be shipped to LOPFI without an extra cost to the city, I'm okay with it. I'm not absolutely sure of that with what I see in this document and what he said last night. I thought all along, when the scrape was going on with the legislation to reduce the funds, was that, it was told to me by these folks, that it could be shipped down to LOPFI without any extra cost to the city. Pete Reagan: That was from Gabriel, Roeder, & Smith, right? The actuary for the LOPFI system? Mayor Jordan: That's what I was told so I was okay. What concerned me last night is when he says will, in big capital letters, vary on a year by year basis. I don't know what that means. Pete Reagan: If I can give a summation of it, it's a lot like our LOPFI situation. Paul help me out here and make sure I'm saying this correctly, there's an actuary done on Fayetteville Fire LOPFI members and there's an actuary done on Fayetteville Police LOPFI members ever year. The amount, from there determines what the cost to the City of Fayetteville per employee is in those departments. Mayor Jordan: But it can't go up more than 1%, right? Pete Reagan: Right. • Mayor Jordan: What I'm trying to find out from him, is it going to go up 1% on this fund? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 4 of 6 • Paul Becker: For the Fire, for the LOPFI side, legally can only go up I%. This could go up more than that. That's coming from the Executive Director, David Clark. I asked him that quite specifically. There are two reports done, one for the old pension plan which would be consolidated if in fact that decision were made, and one for current LOPFI employees. They would then merge those together and give us a single rate. The rate applicable to those current employees working for LOPFI can only go up I% legally at this point in time. This plan could go up more than 1 % if necessary. That's what was told to me. Mayor Jordan: I need to know, as Mayor, what that would be and I don't think I got from him what I needed last night. I never got well if it's going to be 5% it will be x or if it's. 6% it will be x or if it's 7% it'll be okay. He's assuming it's going to run 8% and historically over a ten year period, it's run 8% on an overall average. In the first ten years it was quite a bit higher. But what has it done in the last ten years? If you take an overall average of 8% if the average holds then it'll be fine. I would be curious to know what it's done the last ten years. Sondra Smith: That's a question that I asked. Roy Cate: If they can present you with 6%, I think we've come upon that we all feel comfortable with 7% that we'll be covered. What you're looking at is what those percentages would cost the city? You're okay with this plan obviously if it doesn't cost the city anything. Ideally that would be great for everyone for sure. • Mayor Jordan: Or it's going to be so many years down the road and it kicks in at a certain amount, I can understand that. You've got Council members looking at this and they're going to say, well what is it going to cost us if it's 5% or 6%? Roy Cate: There's a lot of unknown between the millage and the economy and everything. Mayor Jordan: There's unknown. I don't mind taking the plan to the Council and I'll walk it on. I think until some of these unknowns are answered, I would not want to guess what the Council would or would not do. Sondra Smith: I'm not even willing to walk it on to the Council meeting right now because there is no assurity that it's not going to cost the city any money. We were told five years ago that it was going to cost us about $300,000 a year to bail it out and the plan has deteriorated since then. The other issue is, Jody Carreiro did all the actuarial reports when the benefit increases were done, and those were not very accurate evidently because the plan deteriorated from the time we did benefit increases. Mayor Jordan: What I'm saying is, all I'm going to do is take it to the Council. The Council would decide what they want to do with it from there. If we wait to the 22nd then it has to be something done before the 31St of this month and it gets to be a bit of a time crunch, or, I can call another Special City Council meeting too. • Sondra Smith: Can't we send it down in May so that the Council and everybody has time to review? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 5 of 6 • Paul Becker: If we don't hit October, the next opportunity would be May. Sondra Smith: So that everybody's not rushed? We received Jody's report the day before the meeting. Pete Reagan: We spent the $1,300 for the study. There will have to be another $1,300 spent next year. Mayor Jordan: Why would we have to do another study? Pete Reagan: Because it has to be done. Paul Becker: I believe that's correct. Mayor Jordan: Also in my thinking, it's not just your pension. I've got to be looking at the Policemen's Pension too. I don't know what that is. They have not done a study. That is in decline, I think would be a fair estimation. Paul Becker: It's not in the same condition compared to Fire. Pete Reagan: They're fifteen year, aren't they? • Paul Becker: They're talking about the Fire plan. They're talking about it being at risk. They are talking about the Fire plan being almost assured a failure. Sondra Smith: The Fire plan is insolvent. Mayor Jordan: What I'm saying is eventually I or some mayor, will to have to deal with both plans which will be Council decisions. At the end of the day, the Council will make the final decision. I don't mind taking it to the Council but I don't want to commit to anything until I have seen those numbers. I don't know how that works in with your motion. Pete Reagan: This motion was produced by the Arkansas Pension and Review Board, I'm sure David Clark. It's basically fill in the blank. They've had 126 funds merge with them. All its saying is we're taking it to the City Council. If the City Council approves it, this board is dissolved using the twenty-five year amortization. Mayor Jordan: You all have enough votes to do whatever you want to do here. I will take it to the Council. Pete Reagan: Jody and David Clark, I'm sure, will get you all the information that you requested. It might be a good idea to have them here for the City Council meeting. • Mayor Jordan: I was hoping they could stay over where I could ask those questions today, but they didn't. I've got too many unanswered questions. You all go ahead and vote and I will move 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes September 30, 2015 Page 6 of 6 • it on to the Council for you. I don't think I can support this until I've got all the numbers I need, but I'll be certainly glad to take it to the Council. If I get the numbers and everything looks okay then I'll look at it then. What I got from them before, they said if we send it down it won't cost us anything and I didn't quite feel that I got the same kind of answer last night. • • Pete Reagan: This is the Gabriel, Roeder, & Smith actuary. We're dealing with two actuaries here. Mayor Jordan: I'll look everything over. Pete Reagan made a motion to pass a resolution to send the Firemen's Pension Plan administration to LOPFI using the twenty-five year amortization schedule. Roy Cate seconded the motion. The motion passed 4-2. Mayor Jordan and Sondra Smith voted no. Mayor Jordan: I'll be glad to take it. I'll look at the numbers as they bring it to me. Meeting adjourned at 8:25 a.m. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316