HomeMy WebLinkAbout2009-07-16 - Agendas - Final Fayetteville Fireman's Pension and Relief Fund
Meeting Date -Q
Adjourn Time
Attendees:
Subject: OQQ Subject: / Au tm
Motion To: Motion To:
Motion By: Motion By: Q¢
Seconded: Seconded:
Mayor Jordan ✓ Mayor Jordan ✓
Marion Doss ✓ Marion Doss r✓
Pete Reagan ✓ Pete Reagan ✓
Gene Warford ✓ Gene Warford v
Ronnie Wood Ronnie Wood ✓
Sondra Smith Sondra Smith
Subject: Subject:U Ii
Motion To: Motion To:
Motion By: got,A 1cbyJ Motion By:
Seconded: Seconded: IUA AOF 000 w
Mayor Jordan ✓ Mayor Jordan ✓
Marion Doss ✓ Marion Doss r✓
Pete Reagan ✓ Pete Reagan ✓
Gene Warford ene Warford ✓
Ronnie Wood Ronnie Wood
Sondra Smith / Sondra Smith
V'�
Fayetteville Fireman's Pension and Relief Fund
Meeting Date
Adjourn Time
Attendees:
�f
QA.
Subject: P /hA Subject:
Motion To: Motion To:
Motion By: Motion By:
Seconded: Seconded:
Mayor Jordan t/ Mayor Jordan
Marion Doss ✓ Marion Doss
Pete Reagan ✓' Pete Reagan
Gene Warford ✓ Gene Warford
Ronnie Wood ✓ Ronnie Wood
Sondra Smith Sondra Smith
Subject: Subject:
Motion To: Motion To:
Motion By: Motion By:
Seconded: Seconded:
Mayor Jordan Mayor Jordan
Marion Doss Marion Doss
Pete Reagan Pete Reagan
Gene Warford Gene Warford
Ronnie Wood Ronnie Wood
Sondra Smith Sondra Smith
Uoneld Jordan Chairman PeteReagan Position 2/Retired
Sondra E.Smith Secretary Gene Warford Position 3/Retired
Marion Doss Position 1/Retired a e .e;li Ron Wood Position 4/Retired
ARKANSAS
Firemen's Pension and Relief Fund
Meeting Agenda
July 16, 2009
A meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at
3:00 PM on July 16, 2009 in Room 326 of the City Administration Building.
Approval of the Minutes:
• March 12, 2009 and April 9, 2009 special Firemen's Pension meeting minutes
• May 14, 2009 Firemen's Pension meeting minutes
Approval of the Pension List:
• August, September, and October, 2009 pension list
Old Business:
• Election results
• Election process discussion
• Actuarial study update
New Business:
• Revenue/expense report
• Turn back information
• 2008 DROP interest
• Attorney General's opinion dated May 14, 2009 sent by Kit Williams
• City Attorney May 29, 2009 memo Pension Board Power to Reduce Benefits to
Avoid Exhaustion of the Pension Fund
• Parking Permits should be used at meter parking only
Longer Investments:
• Longer Investment— investment report
• Longer View—July 1, 2009
• Longer Investments second quarter 2009 report
Board Members Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
Mayor Jordan Chairman March 12,2009
Sondra E.Smith Secretary
Page 1 of 30
Marion Doss Position(/Retired
Pete Reagan Position 2/Retired
Gene Warford Position 3/Retired
Ron Wood Position4/ReSred
TaayeV
Special Firemen's Pension and Relief Fu . .
Meeting Minutes
March 12, 2009
A special meeting of the Fayetteville Firemen's Pension elief as held at 6:00 PM
March 12, 2009 in Room 326 of the City Administratio in
s
ph
Mayor Jordan called the meeting to order.
Present: Mayor Jordan, Ronnie Wo , Marion Doss, eagan, Gene Warford, Sondra
Smith, City Attorney Kit Williams,Pa cker and audie
r
New Business:
Mayor Jordan: I receive bership dire • and Pa the actuary report. We can start
with the actuary report ve. What Id you lik to do first?
1. Steps that need to 1 t; Ain th an
Reports:
1: nt market B e
tl
�pA
Osborn, Carreiro & Associates, Inc. Actuarial Study March 11, 2009
A copy of the report was given to the board.
Paul Becker: We commissioned the actuary to look at the plan because we saw some
significant things taking place, for example in 2007 the asset valuation was approximately $8
million by the end of 2008 it was $5.8 million and it has declined since then. We asked the
actuary to look at the report and give us an evaluation of where the plan was and how sound the
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 2 of 30
plan looked, that included both the Fire and Police Pension Plans. Based on the actuary report
taking into the assumptions of the revenue in flow to the pension plan which is .4 mills from the
taxpayers, an allocation of premium taxes, and deducting that from pay outs which are roughly
$1.5 million dollars a year the actuary did the study and came to the conclusion that the plan
would probably run out of funds in approximately 9 to 10 years. Based on that we discussed
what the options were and what to look at in the plan.
We had a meeting where the actuary was here plus a representative from LOPFI to discuss
options. Options were discussed such as pension benefit decreases, it would take to send
the plan to LOPFI, which it would take City Council approval at is heir authority. The
trustees do not have the power to do that. The bottom line of ort is that in 9 to 10 years
the plan would be in trouble. We're certainly looking at unK in mic times and we have
been paying out more than a million dollars more than we ,a een t in.
Mayor Jordan: What questions does the board hav out the actuary repo
Pete Reagan: I would like to first thank Paul d y f M or doing this ort. It is my
understanding that this is the 2007 valuation with th um l plugged nto it. Is that
correct Paul?
Paul Becker: That's correct.
y
Pete Reagan: In some of them it says dep 'on o 15� 20 years and some places it
says 10 years. I don't thi changed all o ordin b with the numbers.
Paul Becker: That' : ` ect. will see two ifferent graphs one takes it where the actuary
valuation was in 2 f cour we had atmos million market decline last year. That's
why these have dropped s i ut it was sed on the 2007 study updated based on the
conditions th in 20
f
Pete an: The bo ine o : n bers in the fund some of those are unrealized gains
and d losses alon ' 'th re ali gains and losses.
k.
Paul Becke = at's correct ey are unrealized losses though.
Kit Williams: Its ket . 'ue.
Pete Reagan: Right, if you don't sell them you haven't lost nothing.
Paul Becker: Well that's correct but you have to market to market.
Pete Reagan: I understand I just want to make sure were comparing. On page two on the
current status of the fund the first sentence I don't believe is applicable.
Paul Becker: No.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 3 of 30
Pete Reagan: I think that was the part that was left in here. I'm just making light of this not to
correct anybody just so our members will know.
Paul Becker: Just so the members will know the analysis, the 15 to 20 years was based on the
2007 actuarial study which is required every two years. Because of the market conditions that
has changed dramatically and from then on it discusses what numbers is used.
Pete Reagan: I would also like to draw light to the second paragraph titled benefit decrease
second paragraph of that heading. I received a memo from Kit s at the start of the
meeting and I haven't fully read it but I would like for the membe . to a note of that. This
is something that has never been done before in the State of Ar The actuary notes that a
reduction in benefits would have significant legal hurdles to t ss my knowledge has not
been in Arkansas history.
Paul Becker: I would like to encourage the pensio 'i to get a copy of the and if we run
out Sondra will certainly get you a copies becaus . ink it i 'm your best int look at it.
If any of us can help you with deciphering it we Ivo happ
Marshall Mahan: The eight to ten years is with the prese ds of the market?
Kit Williams: That's where we are right ing 7% gro here on.
Paul Becker: That is 7%return on your inv ed
Kit Williams: It does account J and F ruary losses which are even more
significant.
\P
Paul Becker: Page five u e and i on look at the graph and look at the yellow
lines going d 's the a It time based on the actuarial assumptions.
Mario oss: $55 mplo„- ontributions that's a combination of the .4 mills plus
ins back fund, It Corr
Paul Becke uglily $44 v 0 in millage and approximately $140,000 worth of premium tax
turn back. Th a rrect.
Marion Doss: Mill vary with property values they could decrease or go up or the City
could annex them or could possibly go up.
Paul Becker: They could go up but I doubt it is going to be dramatic but yes they would
fluctuate. That's correct.
Marion Doss: The old pension fund is the only one that gets the .4 mill, right?
Paul Becker: The old Fire Pension Fund and the old Police Pension Fund. That's correct.
special Firemen's Pension and Relief''Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 4 of 30
Kit Williams: That's always been the case.
Marion Doss: Yes, .4 mills each.
Paul Becker: That's correct.
Marion Doss: The balance like the insurance turn back funds that's prorated between the
LOPFI employees and the old employees.
Paul Becker: That's correct.
Marion Doss: Is that based on the total number of members th he department and total
number of members.
Paul Becker: It's a little more complex like that the driver is the tot mbership. It's
actually actuarial cost and need is factored into ut the I gest driving embers.
There is a formula that calculates that. '
Marion Doss: The .4 mills can the Council increase that es it have to go before the vote of
the people?
F
Paul Becker: That would have to go to re en
Kit Williams: It has to be of the peopl cil c o that.
Marion Doss: Is it 1 to Coll 1 mill for ea the Police and the Fire Pension Funds or is it
.5 a piece,the top?
Kit William • p wo l mnsion fund.
Mario oss: Any in wou e t go before a vote of the people.
Paul Bee Absolutely.
Sondra Smith: cone out going before a vote of the people is when you go before the
vote of the people on for a millage increase they could totally deny the millage and you
not have any millage` aever.
Marion Doss: I understand that's a risk. Did we ever collect 1 mill for the Fire Fund and 1 mill
for the Police or is the most it has ever been is one half of a mill?
Kit Williams: Not to my knowledge. It was half a mill to my knowledge. I don't know if
anybody else goes back further to know if we were collecting a full mill or not.
Pete Reagan: We were at one time collecting a full mill then Amendment 59 did the roll back.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page S of 30
Kit Williams: Still half for each though.
Pete Reagan: Right it went half for each and then a couple years after 59 they refigured the
millage.
Kit Williams: There was a roll back mandated by a suit ag#inst the County, School Boards, and
including the Pension Plans.
Pete Reagan: Right.
Marion Doss: I use to hear the term 1 mill and I thought it .Y,(Y. 1 mill for us and I guess
maybe it did at one time and I didn't know if it meant 1 mil a u's "'' or 1 mill total between
the two funds. : ,
O` z.,
Mayor Jordan: I always thought it to be I mill to
Paul Becker: To the max going back as far as y o d rtainly goes b along ways
before I do but to my knowledge it was always a half ea
Mayor Jordan: I think so but I could ong on that to • I think that is correct. We will
move on to the next item.
Discussion on the membershin.directive
v
Mayor Jordan: Th . will pro y be someo that wants to address us on this. Would the
Board like to hear the )?ershi r rective? I you do but do you have any questions or
statements before we go i t
Pete Ream.' as o opinion at this was directed from the membership to the
represses on this I w how this ended up on the agenda but that was my
undef .a' g it was for u ow a members felt.
Mayor Jorarn �.: t was my rstanding that it was supposed to be discussed tonight.
Kit Williams: T . 4u1 the appropriate time because they should address the members as
a body.
Pat Boudrey: That was a directive of the membership that they wanted the board to hear them
out. I think the board may have some more issues that they also need to raise along with the
directives.
Mayor Jordan: So you did attend to bring this forward?
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 6 of 30
Pat Boudrey: That's exactly right. The membership met and that is why this discussion
meeting was called so the board could at a special meeting discuss what the membership had in
mind.
City Attorney Kit Williams: Maybe you should come up here so you can speak into the
microphone.
Pat Boudrey: John Jenkins is a member of the membership and I feel they need to be
represented by one of their own.
John Jenkins: Could we defer to the board and let them pres " at they have? I know that
there are several issues that the board is going to talk about t would be good for the
membership to hear what Pete has to say and what's goin n.
Mayor Jordan: That's perfectly fine with me.
John Jenkins: I know that might not be the age' da mee .
Mayor Jordan: I just needed to put an agenda together ut it together.
John Jenkins: The membership agreed That's why ere and to see what Pete
has to say.
Pete Reagan: Mr. Chai this time I ke to a motion that this board seek an
Attorney General's op J question whether a can legally and constitutionally
reduce benefits to o gees ancan get a s and on it I would like to speak on it. I would
like the read the t to the utes if I coul an I would be glad to take any questions.
The question • uld li wer orney General of the State of Arkansas is if the
Fayettevi er ense nd Relie Fund Board takes action to reduce pension
benefi retirees w t vio a fights protected under Article 2 Section 17 of the
Arks ate Constitute. inte ed by the Arkansas Supreme Court?
The second f that que n would read if so will members of the pension board and the
City of Fayette a expos to liability should a lawsuit be filled on behalf of any retiree?
Kit Williams: Cert e City has in many cases asked the Attorney General for opinions
about issues that are estionable especially ones that have not been decided before. An
Attorney General's opinion is entitled to some persuasiveness but it's not a real decision like a
court would make. For example when the City was entering into the TIF District situation and I
felt that the law was very unclear. The Attorney General's opinion would not protect the City.
He could have said something and they had already both Attorney General Beebe and Attorney
General Prior before him had spoken about the TIF issue and issued opinions but I knew that.that
would not protect the City if a court found otherwise because the courts don't have to follow
Attorney Generals opinions.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 7 of 30
I'm certainly not apposed to you all requesting an Attorney General's opinion however I think
it's really unnecessary at this point in time. You can certainly do that and see how long it will
take him to respond. It often takes several months especially with the legislature in session and
the Attorney General is concerned about a lot of the laws that the legislatures are attempting to
pass. This is one of the busier times for the Attorney General and his office. I'm not saying that
it would it would necessarily take a long time but my experience has been it is a few months
before you get an Attorney General's opinion.
I looked at this issue. You brought up that part of the constitution an me read you what that
constitution says. Article 2 Section 17 of the Arkansas State , ti ion says no bill of
attainder, ex post facto law, or law impairing the obligation o racis shall ever be passed.
That particular section deals with laws no laws can be pass In articular case that you
sighted to me on that Jones verses Chancy which is a 19 1 case. Supreme Court was
looking at a change in law that the legislature had p i8h change pension rights of
Mr. Jones who wanted to receive a pension. He qualified in every or his pension
except for his age and then the legislature right b. he hit right age the d the law
and said you have to do other things to qualify aid was nger qualified he Supreme
Court looked at that and they decided they didn't like the} said that th would follow
what is the minority view throughout all of the states and at he was going to be qualified.
That had nothing to do with the decisio. ,a pension boar had to do with passing a new
law. That particular case and that const,[ rovision ha ' g to do with whether a
pension board has a right to make a deci 10to ' ension ben. , because in their fiduciary
duty responsibility they believe it is necess to s ns' at least that my opinion. I
certainly don't mind you as e Attorney for ion.
As Pete mentioned I ared a memo on 1 . I looked at this because I knew that this was
an issue. Maybe j e crowon all shoul maybe what I think your powers are or
your board's powers are 1 p case. I ed my memo by going back a little bit and
referring to had bac' 31, 2006 to Mayor Coolly, City Clerk Sondra
Smith, P e RAc Ting Manager, Marsha Farthing regarding the increasing
unso ss of the c olices . Pension funds at that point in time. I pointed out that
coni n with LOPFer the ent benefits would cost the city taxpayers millions of
dollars idn't think ity Cduncil would go for that. I stated "without consolidation
and no cha in benefits pension fund is likely to exhaust its savings within several
years. Once s are austed the statutes mandate pro rata payments to retirees
based upon ava► fu s which in that case would only be the .4 millage and the
insurance turnback and this would be a drastic and permanent cut in benefits to our
retirees." I conclud my 2006 memo with this recommendation "to preserve this pension
fund for the retirees as long as possible it would be wise to immediately and substantially
reduce benefits possibly to the pre 2001 levels." This memo was written before the 50%drop
in the stock market which has accelerated the problems that I was concerned about back in 2006.
I still believe my advice to reduce current benefits to preserve the pension fund for the long haul
is correct. Some have questioned including the actuary, who is not an attorney but the actuary
from the LOPFI system, have questioned if the pension board of trustees had the legal power to
reduce current benefits. I believe the board has such legal authority as long as the benefits do not
go below the minimum statutory level of 50% of ending pay.
Special Firemen's Pension and Relief'Fund '
Board of Trustees Meeting Minutes
March 12,2009
Page 8 of 30
The local Police and Fire Pension Relief Fund Chapter of the Arkansas Code is 100 pages long
with numerous sections. The procedures detailing how a board can increase benefits is very
clear. I could find no section explaining what procedures should be followed if a pension board
of trustees determine that benefits should be decreased to preserve a fund that otherwise would
soon be exhausted. I could find no section saying that a board of trustees could not lower
pension benefits to preserve the liability of their pension fund. It's just silent in that, so there's
no expressed statute either way on that. However there are a couple of sections that deal with
under funded pension plans. A.C.A § 24-11-208 is entitled Administration of Under Funded
Plans. It states that basically the Arkansas Fire and Police Review B shall notify plans that
are projected to deplete their assets within 10 years of"options t are available to the fund
to protect the benefits of its members, retirements, and ciaries." The.bi annual
accounting was preformed on December 31,2007 and that's n ere suppose to notify us
and that was before the 50%drop in the stock market,the ro ted in cy of the fund might
have been more than 10 years away at that point in ti a Pete rea on where it might
be 15 years away was probably correct. That means t they are not under uty to notify us
at this point in time. However the current pr ons It e state act a current
situation, where the fund is actually right now en th ' u�s,�es haven't be realized but
the stocks are that down, it shows that our fund will hr me tlme in 2016.a Since A.C.A §
24-11-208 speaks of "options" to. protect the benefi its beneficiaries, I believe this.
demonstrates the legislative intent to au - ' e the local bo trustees of our Fire and Police
Pension funds to consider benefit reduc a permissibl to protect the long term
benefits of the retirees. Now the very ne se this code ntitled Arkansas Fire and
Police Pension Guarantee Fund. This fund all b d tablished in providing a state
fund to provide financial a cc to certain cipal d Police Funds. This fund may
assist funds which have eir funds s not to b able to pay their pensioners. To be
eligible to receive be from uarantee the local fund"must be receiving a dedicated
millage of 1 mill a not ng that and b , is shall not exceed the minimum amount
provided by law. A mim a one half the highest salary year. If a pension board
of trustees c r redu ne 1 ension fund that had ever allowed even a tiny
increase i Si ts, 5 ,} ending pay could qualify for assistance from the Arkansas
Fire olice Pensio tee d. I believe that virtually ever pension fund in the state
has increased b is at I lightly and if no reduction was ever possible then no
fund co er be helped er th Arkansas Fire and Police Guarantee Fund. This simply
makes nose me and vi tes the expected rules of statutory interpretation that courts use to
interpret statut
The basic rule of sta onstruction is to give effect to the intent of the legislature. This is a
quote from 'a Suprem ourt case in 2000. "The Legislative intent is gathered from the plan
language used also a particular provision in the statute must be construed with reference to
this statute as a whole". In other words you look at the whole chapter involving pensions as a
whole. Even though the legislature has failed to set forth how such a benefit decrease should be
approved nor explicitly authorized it by precise statutory language the Supreme Court has long
emphasized that they will use clear legislative intent to analyze the statute even if it is not
perfectly written. I have a couple of long quotes from the courts saying that. The first one is too
long but I will read the second one. "We decline to give such a limited interpretation to the
statute because the literal interpretation does not give effect to the legislative intent. It is a
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,21)09
Page 9 of 30
duty of this court to give effect to the intent of the general assembly even though the true
intention though obvious has not been expressed by the language employed when given its
literal meaning': That's a 1983 case. The obvious legislative intent was to create a pension
system for Fire and Police Retirees that would pay them a life time benefit of at least half of their
highest salary. Disallowing the pension board the right to reduce pension benefits to ensure life
time benefits will be paid would be directly contrary to the most basic purpose and goal of the
legislature when enacting statutes authorizing these pension funds. The Arkansas Supreme
Court is held that trustees have inherent powers when exercising their fiduciary duty in
exercising a high standard of care in managing another's money or erty. The court said
even when the terms of trust do not expressly authorize an accumu n o reserves the trustee is
never the less empowered to create reasonable reserves and he operly withhold enough of
the income to meet present and future expenses which are pr y c able to income.
I was also asked by Pete if reducing benefits might vi > le 2 Sec 7 of the Arkansas
Constitution. I have already explained I think that' estriction on the po the legislature
to pass a law that would do that and not a restricti this bo d.
The court that talked about Mr. Jones and his problems t w a law that s been changed
and I want to point out that obviously that this is not rele here there has been no change in
the law which would make anyone in el for a pension t uld have been eligible before.
We're also not talking about making . eligible we'r about can you reduce
benefits to preserve the pension plan so t e continue receive benefits. Let me
conclude that the pension board in my op 'on al . ht to take corrective action
including lowering pension its if necess revenf llapse of the pension plan.
Pete Reagan: Kit, ; u thi t we as pen n board members or we as the pension board
or the City of Fay ' e as an iability if a s to be brought by a retiree because his
benefits were reduced?
h
Kit Will. : at if duce the enefits and you don't reduce them below 50%
whichIJ e minimum sum I as wrong and the courts said you can't reduce benefits
the red; .t, en would be t who sued and all the pensioners would be paid out of the
pensionf e benefits t norm y would have been getting except for the reduction. The
City would a liable, yo s pension board members would not be liable, the pension fund
would then be ted more ickiy by court order until I guess it went to zero. I would say no
that none of the p bo members or the City would be liable in that particular suit because
the money would be - from the pension fund. The argument would be I should get more
money from the pensi fund, I'm not getting as much as I should and so if they win the judge
will say take more money out of the pension fund. I have talked to the board about this before,
that you all have fiduciary responsibilities to your pensioners. I think that you have fiduciary
reasonability to try to make sure the fund does not go dry and that people don't end up with
nothing except the millage. If that ever happened then one of these good people out here might
say that you have failed in your fiduciary duty and that would be the only way I could see that
there would be any personal responsibility on the pension board members. I should tell the
beneficiaries every benefit increase that has been approved by this pension board and put into
effect has also been approved by the State Pension people after they did a study to say that it
Special Firemen's Pension and Relief FLnd
Board of Trustees Meeting Minutes
March 12,2009
Page 10 of 30
could be approved. It's not like your pension board has been approving benefit increases outside
the law. They have followed the law throughout. I wanted to make sure that's clear that
everybody knows they have followed the law. They have sent studies down, the studies have
been done and even though they would not have come out actuarially sound they came out using
a cash flow method as permissible. Your board has not done anything improper. I want to make
sure you all understand that throughout this entire process. Now we are looking at a situation
where dramatic changes have occurred and there is a real danger that the pension fund could run
out of money.
Sondra Smith: I don't mind getting an Attorney General opinion . tha pis not going to affect
any other decision that I make tonight. If we decide to reduce is I think what we need to
do is reduce them on temporary basis immediately and then ... ey General's opinion. I
respect our City Attorney he has always given us very so nal adv d I think we need to
take his advise in this situation too. t
In January 2008 the market value was $8,331,00 d as o March 6, 2009 ket value
is $4,809,458.89. That's a drop of$3.5 million in j ittle a year. I can' ' e us waiting
another several months and see the fund drop even mo re are at an e treme alarming
amount. To me we are at an alarming amount right now:; I on't think we have a choice as a
board. I know I don't have a choice a and benefits ne be reduced. I think we have
some pensioners that have requested that at step.
Pete Reagan: I would just like to say that a bo• er, derstand the predicament that
we are in. It did not happe out us notici ut we ow what has happened in the last
year. Anybody that It ws what h appened, erything is down, and if you made
money it was by a m in y 401k. I Id like to go on record as saying that our
investment advisor , have a us an excel: 'ob for the time period that we are talking
about. I don't know that exact nu ers but I believe that for the last five years
that Longer I t Firm ver aul does that ring a bell with you?
Paul er: I don't ber o to of my head.
Pet Rea - I think that i ose s 's nothing that was done on the investment side. There's
no money m ' If it in this al. This is all because of market fluctuations. I still say to make
sure that we ar g this c ctly because there is no state statutes and Kit I take your opinion
on this that we catY S I would like to have the Attorney General, that is his job, to do an
interpretation for us e there is no state statute dealing with reduction of benefits. I think
we can have a turn nd in 30 to 45 days of an AG's opinion. I have contacted our State
Senator and she said that as soon as we got her the language that she would ask for it and if we
would send it to her by email she could do it tomorrow. It's not something that is going to drag
this out. I think we all understand the predicament we are in. I want to make sure that what
monies that are left in the fund, the City, and the pension board are doing it correctly. I don't
think we need to do anything in haste. If we are going to do something let's make sure we do it
right.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 11 of 30
Marion Doss: I appreciate what Kit said about the board. We didn't just act on our own and do
this. We had to send everything down to Little Rock and get an okay from the Pension Review
Board before we could do any of these benefit increases. Everything came back saying we
could. I'm kind of in favor of doing what we need to do to combine with LOPE that's just my
personal opinion. I'm not speaking for the rest of the board that's just myself. I think that is the
only thing we can do. If we did combine with LOPFI what effect will this have on current
employees, Fire Department employees and city employees in general?
Mayor Jordan: The only thing I can tell you Marion about that we actually get with
LOPFI and we get some scenarios it is difficult for me to antha . We heard several
different things it could affect. I heard one quote that if it sta the current benefits and
there's a COLA it was about$1.7 millions a year. Is that pw�h ou ember?
Paul Becker: That was the quote. It's in an excess of a 91r ollars.
Mayor Jordan: To me until someone down uts it a pen and bri back it's
difficult for me to say what that cost would e. actu resented that remember
correctly.
Kit Williams: So much of it depends at benefits are to be paid. If you have the
benefits at this level, you have a COLA r more expens e city taxpayers to pay.
There's obviously a limited amount of mo - ers pay we have to send a million
or a million and a half dollars a year down LOP , ur cwrrent employees are going to
suffer because current e is over 80% budge
Mayor Jordan: Tru.
Kit Williams: If we ha It uch mon out that means raises and other benefits to
city employe ffer. ' so Xamount of money.
Mario oss: This i he S ent plan no COLA that it will cost a million a year
but 0 of that won cove der the .4 mill and the insurance tumback so the City
would be 450,000. a
Paul Becker: 's still$4 ,000. That's accurate according to the report.
Marion Doss: I just to clarify.
Paul Becker: These numbers are different than what was estimated at the meeting.
Mayor Jordan: That's what I'm trying to get at we're getting all kinds of different figures here
on this stuff. We need someone who really does this to come back and give us some accurate
figures. Keep, in mind the City of Fayetteville last year in the budget process wanted to take
$500,000 out of reserve funding to balance the budget. So there's not a whole lot of money to go
around. We have tightened up money and we are trying to squeeze it as best as we can but if we
are hit with another$500,000 or something like that I'm just going to honest with you something
Special Firemen's Pension and Relief,Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 12 of 30
is going to have to give somewhere and I don't know exactly where we go. So if we were
looking at taking money out of reserves to balance the budget last year and we are hit with
another $200,000 to $500,000 it could be somewhat interesting around here for services and
employees that are here. I just want everyone to keep that in mind too.
Sondra Smith: I did not say that Longer Investments wasn't doing a good job. I think they
have done a very good job for us. Regarding the 401k's going down, I agree with that
everyone's 401k has gone down but on a 401k you are not paying.out over a million dollars a
year like we are. When our fund goes down and you've got pensio ks that have to go out
and you're paying out over a million dollars a year in pension ch tha urts you even more
than if you were on a 401 k.
Pete Reagan: I understand that.
Mayor Jordan: The other concern that I have is I want everyone to erstand I'm not
blaming the board. This is what it is. There's mo ung out coming in of saying
it's anybody's fault and I'm not talking about I' s We a situation th e've got to
work our self out of.
Some of the concerns I have is the to on wait. Th our yearly turnback millage
income is about $565,000 and the yearly $1.5 million. ke it down monthly and
it's about $47,000 coming in and $119,500 oin1 hat conce me and if you have to wait
a month or two then that's that much furthe on c wn, in not saying you would but
you could be in that kind o, ' tion. What I - j hg to ake sure this pension plan stays
solid, stays functional: p here tryin to do what e know is best. You all may have
a different opinion hat I h but both of u what the same thing. Wewantthis pension to
last and be good.
Sondra Smit a mi ri n £ ' 2008 Elaine Longer our investment advisor
said "Yes• el pfu ; ow what t at would be because your options are A, B, or C,
get mo apital into t A d, cu 10, or roll into the state fund You probably don't have
ano on outside o three. ,
Marion Do hink our di 'tive says that the members of the old plan are interested in seeing
what it would o an to . 'PFI. Paul weren't you down at Little Rock recently or did you
just get this sent t ? W you actually down there talking to the people?
tiv
Paul Becker: This w sent to me but I was at the Pension Review Board meeting Tuesday.
Marion Doss: How long does it take to get into LOFPI if everything worked out and everything
is okay? Do they just except you at certain times of the year like your insurance company?
Mayor Jordan: Even if everything went smooth you still need Council approval.
Marion Doss: Council has to approve it.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 13 of 30
Paul Becker: First you have to have Council approval, then LOPFI has to except it, which
normally isn't the issue, but they have to do an actuarial study. There are steps, you go to
Council, the Council has to make that decision and then LOPFI has to do an actuarial analysis to
find out exactly what the City's cost would be.
Pete Reagan: Mr. Chairman we have a motion on the floor on the AG's opinion.
Mayor Jordan: You all still want to speak on this issue don't you?
John Jenkins: Mr. Mayor we had deferred for the board to en a case and I had a
question.
Mayor Jordan: Let me make sure I am legal here with a hing. a need to vote on the
motion and the second first?
Kit Williams: I can say I have no problem re ng an tomey Genera ;,tlion. I'm
always happy to have the Attorney General give "s h 'nion. lk"
Mayor Jordan: Is there any discussion on getting the it Generals opinion?
Dennis Mullen: This thing has gone on awhile. Has ,•waste why do we not get
his opinion. It's takes long enough to ge 1 one an d if we can get it back I
think it's a valuable tool. '
Pete Reagan made a ek an Atto ey Genera, opinion on whether benefits can
be reduced. Gene ,a ord s ded the in on. Upon roll call the motion passed 4-2.
Mayor Jordan and"S Smit oting no.
Johne nkin.: It
kno o Rules of Order. We have a lot of people here
that aren' s iliar that and I understand there has to be order to the meeting and
absolu appreciate cause er those same rules in the job I do. There's going to
be s.. estions that co p like . uld like to know a time line on what you were talking
about. yg. everyone b here ould like to know a timeline if we present it to LOPFI.
Howlong d' at take bes ' a scenario and worse case scenario? We would like to ask those
' questions.
Paul Becker: I wis d give you a definitive answer unfortunately I don't have one. First
we would have to 1t to Council it takes at least two weeks before we request it to get to
Council. Depending on if Council deals with it immediately it could be dealt with in two weeks
or it could be tabled for further discussion. That could take between two to six weeks. Then we
would send it down to LOPFI they would have to have an actuarial report. I would assume that
would take at least three or four months. I would say from the time a decision is made to take it
to the board for discussion I'm going to guess six months.
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Board of Trustees Meeting Minutes
March 12,2009
Page 14 of 30
Mayor Jordan: The Council might pass it on the first night but I don't look for it to. There is a
lot of information. I have done a lot of studying on this stuff and it's not easy. It's relatively
complicated.
Kit Williams: I think the real issue is whether the City Council would entertain this at all. They
are faced with a decision of whether or not they want to commit a least a half a million dollars
every year for at least the next 15 years so that the retired pensioners can receive 90% to 100%
of their ending pay, at the same time they have many other demands for their money. We have
had a loss of revenue so that money is extremely tight. I don't belie v s will pass the Council
unless there is a benefit decrease so that the cost to the taxpayer is Stan' ly reduced. That's
just my opinion. I have no vote one way or the other and I won' one way or another on it,
it's purely a Council decision. It's a policy decision on wha do ' '' e Citizens' money. If
the Council will passes it you are there.
Mayor Jordan: You have to understand you are ing with eight peop You're not just
dealing with me, Sondra, or Kit you are dealing legis la ' e body that ha a budget
at the end of the year.
Pete Reagan: I was at the Arkansas Pension Review B eeting and I asked David Clark
who is the executive director about a t, e. I said if w e to do that when would that
happen? He said it cannot happen until 3151. That is of.the changeover. We
were talking about a timeline we have got h onsolidati eport and all of that has to
be done and ready so that on December 31 it 'll ch T 's my understanding.
Paul Becker: That is assets. I d task hi at question precisely.
John Jenkins: Ki W ou sai half a millio 1lars is that a half millions that is already
coming in or is that an n 'Ilion do s that the city has to provide plus the half
million in in bac ey y coming in?
Kit W' ms: I re w co t to the City other than what the City is paying right
now: of a mill and uranc back then I don't think that would be a problem.
John Jenki that the It million dollars you referred to?
Kit Williams: N hal ,Ilion dollars I was referring to is the actual real cost,the additional
money that the City >1 would have to come up with. They would have to decide well we
don't need anymore ice or Fire or we don't need to put money over here because we are
going to put the money into LOPFI instead. If this was a wash, if this wasn't going to cost the
city taxpayers additional money beyond the four tenths of a mill they are already paying, there
would be no problem I would think with the consolidation. The only problem with consolidation
is that there is going to be substantially long term revenue cost to the taxpayers that the City
Council has to decide is that the appropriate use of taxes and it's up the City Council.
special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 15 of 30
Ralph Tate: In some of the scenarios that I understood if LOPFI would come back with a
percentage of rate decrease on our pension. Is that not the case Mr. Becker did you hear that
mentioned at the meeting or were we under the wrong impression?
Paul Becker: No, if you're referring to what I remember at the meeting we discussed that the
board may wish to go and ask them to analysis it under certain scenarios to see exactly what they
would have to do under different scenarios and analysis it.
Ralph Tate: That's my question is if we take a rate decrease now I, "' it would be better to
wait until they tell us how much of a decrease we would have to in dtder for it to not cost
the City anything.
Paul Becker: Let's be clear on that. What would have.to pen i 4 - board would have to
have a contractual relationship and actually hire an ac n that. ould not be done
by LOPFI. So that's what was discussed at the o . meeting that we ha ' ., the board may
wish to have a separate study done to see wh ould ;j;atical get it in at's not
something that LOPFI or the Pension Review Board do ly.
Jan Judy: I am a widow on the plan I appreciate you ng this meeting and getting this
together. We all talked about it before agreed that we be willing is necessary to do
this. I do think that the AG's opinion is t and I do th we can get that in short
notice that Senator Madison will help us da a . think we king about a long period
of time. My question is how do we arbitr ` •,y jus at. vbe are going to cut everybody
back to 50% or 70%? How.k a going to c with ` ber? Say we cut 30%or 40%
tonight and we all agre .;.,when it co back an a really could have stayed at 60%
are we going to get oney b We don't ve enough tools tonight to make a decision or
I don't feel the boar to our figure ne be of decrease.
Mayor Jord do yo' e an you would figure the cut?
,
Jan J It's an arbi num thi point you don't know.
Paul Bee ': That's true it f arba arily number however if you do look at the study that was
done it does some estim ;"s but you are right those are not necessarily precise estimates.
Jan Judy: Woul k k,oar,4�. en be allowed to increase us back to say 65%?
Paul Becker: There' very definite procedure for what it takes to increase benefits.
Kit Williams: If the study showed that you could support 65% then obviously you could go
back to 65% but I don't think that anybody is suggesting that 50% is where the benefits should
go at this point in time. If you look at the actuarial studies they don't even talk about that kind of
cut. You have to have one mill dedicated which means it requires an election.
Jan Judy: Do you have to have both or can you just have one?
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 16 of 30
Kit Williams: Statute requires both.
Jan Judy: So even if we went back to 50%they wouldn't bail us out.
Kit Williams: No they wouldn't. If we had a mill we would be getting substantially more
money and we would be in better shape.
Gene Warford: If we did a 10% decrease and they gave us an estimate without any cost of
living it would cost the City $300,000 a year. Is that correct?
Paul Becker: That is what the study said. No COLA 10%. se it would cost the City
$300,000 that's correct.
Gene Warford: We went from a million down to $30 rect?
Paul Becker: Yes, a COLA really drives your ac Study c t.
Gene Warford: Just in my simple figures if we drop no COLA it to s like the City
would be close to zero.
Paul Becker: No. A 20% decrease wo e City $175, u look at the final table
in the study.
Pete Reagan: Paul I know. n the consoh repo ne basically it is an actuary and
were you of the unders . ; we could p .'scenarios ' that or are you understanding that
we have to do a Sep actuary scenarios t etermine what the actual cost is?
Paul Becker: No, you h a separapone to put scenarios in there. The actuary
study that w tial d be PFI. They are two separate actuaries one that
works for a view and one at works for LOPFI. That actuarial study would
have t done by L Ther o cenarios involved. Then they would determine what
the tual cost S.
Dennis Led Is there ay you can talk to these people on the phone and they kind of
give you an es ? I can. . derstand they say lets fire off 30% and they say sure we can do
that but you could go ay with 20% or 25% but their not going to tell you that. They are
going to look at wh send down. I'm wondering if before someone gives a figure if you
could talk to them o e phone and kind of get a feel of what you can work in instead of
jumping off the deep end.
Mayor Jordan: I hope you are more successful with them than I have been.
Paul Becker: I think all we can do is look at the particular study we are looking at and it says if
you take a 20% decrease you're in an estimated $175,000 cost to the City. This isn't official but
just off the top of my head I would suspect that it would take about a 25% decrease to go close to
a zero cost if we can extrapolate from this table that's not an official calculation.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 17 of 30
Sondra Smith: Kit is there anyway that we can do a temporary decrease dependent upon the
study coming back?
Kit Williams: Of course there's nothing within this particular section that tells you how you
decrease, whether it has to be approved by anybody besides the board. It doesn't seem like it
would be because you would never be making your plan more actuarial unsound by decreasing
so I don't know why you would want to have a study done and send it down to them to say yes
you are not as bad as you were if you decrease. I don't see any reason for that but I would
certainly want to talk to LOPFI and see what kind of documentati .ey would want. That
same would be true for whether or not we can do a temporary one, permanent one. We would
like to ask them about whether or not if we did a temporary on d they honor that and then
allow us to put back 5% if we wanted to if our studies sho• tha as better and we could
afford it. I don't know what they would say and they mi t us the It know because this
is uncharted water we haven't done this before.
Mayor Jordan: So you are basically saying that ht be a to wait until a studies
back.
Kit William: If we are trying to hit it right on the dot I say you could do that. The other
thing you can look at was the fact that a th the 20% de a and no COLA it's still going
to cost the City $175,000 a year. I don b 's a 20% dec t the study would come
back and say that you didn't have to decre b' . I'm not an y but I don't know how
that would work. I think with a 20% decre don' it Wuld be too much and that you
left something on the table.
John Jenkins: I'm s Mayor still strung ,t on this cost to the City.
Kit Williams: It is the st receive . e millage and the tumback the net General
Fund money o go in
John J ns: I'm so don't is aily.
Kit Will I don't thi fair• talk about anything else we should just talk about the net
cost to the
.M A
John Jenkins: s wl we've got to have.
Marion Doss: It's ne ost but at the same time when you say $1 million there is an estimated
$550,000 coming in from the tumback funds and the millage.
Kit Williams: Yes, but I'm talking about the net cost.
Paul Becker: If you look at the column that said net to City out of pocket. I know we are
looking at the report and you are not and we are certainly here to try to clarify as much as
possible to everybody.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page IS of 30
Sondra Smith: They have the report.
Kathleen Doss: Once you go to LOPFI with a 20% decrease and no COLA is that forever?
When would we be allowed to creep back up?
Paul Becker: The decision would no longer be in your hands. It would be sent down and
administered by them as the plan is sent down.
Kathleen Doss: So no more monies from the City would be required?
Kit Williams: The millage would still be going down there. T•¢, ill would continue and so
would the turnback.
Kathleen Doss: In ten years if we got a COLA won raean mor ies from the City
having to go in other than when what's is in this col
Gene Warford: You're not going to get a rais . it go _ ..... LOPFI it's a ''-, ne deal. No
raises period.
Pete Reagan: I think the City Council a right to raise
Kit Williams: I think one thing the it o be cone about is that even if the
benefits are reduced enough where it won't cos ty uncil much money. Once it
goes to LOPFI then the Ci sponsibI fo ort f �e legislature decides they want
to give you a COLA th do it and t City will y for it. That is one thing that the
City Council is goin be con d about ev if we get to an original place were it doesn't
look like it's going o he Cit d the tax pa , -any additional money besides the .4 mills.
They will be concerned ere wil e an unfunded mandate by the legislature to
increase you by a an do it real easily because they won't pay for it
they will aye for it. at's one thing the City Council will be concerned
about that's anoth of h o all have. I hope that we can get it to LOPFI because
I'm ed that this pl nev ng to be totally secure until it goes to LOPFI and you
have that of protectio thi at's the best thing for both this plan and the police plan
which is nos much tro a as you all are but I still think they are looking at something
happening on I line ew years after you. I hope they will look at what you are going
through and act a ter
Paul Becker: I wou ike to expand on that just a little bit so we all understand what we're
asking. If you go forward to the Council and you say send it to LOPFI it's not going to cost you
anything. It ends there but what Kit is eluding to is then the City assumes market risk. If the
market goes down or the asset portfolio goes down the City still has to assume that risk and make .
up any short fall. We are asking the City to take a risk when you ask them to take over the plan
even though initially it doesn't appear there would be any cost. The City would be taking on that
risk so that's what you get from the City. It would be more or less a partnership here.
Kathleen Doss: Is that risk still there after that 15 years of paying out the unfunded part?
special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March l2,2009
Page 19 of 30
Paul Becker: Sure you always have that market risk. That 15 year amortization that you are
referring to we would have to pay $175,000 in the lowest over a 15 year period according to the
study but then the next two or three years the market could have a down fall we don't know.
This is based on an actuary study which is based on a 7% increase in the portfolio. If that
doesn't happen the City would have to make up the difference. The City is still taking market
risk, the City still has to consider that, and the City would still be participating in attempting to
help you with the situation.
Chuck Lewis: How much over this millage and turnback has the . had to be out on this
group of men over the years that our pension has been there?
Kit Williams: The only thing the City has contributed up no 'des the millage and the
turnback which comes from the state even though it mi ht e base City stuff is just the
amount of contribution it made like the amount of c • _i0h you alb' e while you were
getting this established. The City has not had to dip ' o general reserves an act this is not a
liability to the City right now. It's a liability o - the p • ion board and You all
have the fund you can control it. It's your liabrlit not ity's liability is point in
time. If it gets sent to LOPFI it becomes the City's lia d th City will h ve to pay what
ever it takes.
Marion Doss: Do LOPFI employees get
Kit Williams: I think they do but I'm not s
Paul Becker: It's my is they do.
Marion Doss: Ho s their LA?
Mayor Jord . y ho ch is
Jere m shley: 3%.
�F
MayorThat's wh ou
Gene Warfor w much you all retire at?
'C H
Jimmy Vinyard: is 85% but that's unattainable in 28 years. You are not eligible to
get a benefit until yo ave retired 28 years and accumulated that and have met certain age
requirements. They have different age requirements at 20 years and 25 that a person has to meet.
You're technically not eligible without an age requirement at 28 years unless you draw
disability. Current maximum for a LOPFI member is 85% which is not attainable in the 28
years. LOPFI one plan would be close to 33 years of service to get 85%.
Gene Warford: I thought it was attainable if you were a volunteer and worked for full paid
department both.
Special Firemen's Pension and Relief Fund `
Board of Trustees Meeting Minutes
March 12,2009
Page 20 of 30
Jimmy Vinyard: You would have to have an accumulation at both departments at the same
time of 28 years but your paid time contribution would be against your paid time. Say you
worked as a volunteer and a paid department and you put in 14 years your multiplier times 14
years would be what you would achieve and it would be somewhere around 40%of your pay.
Gene Warford: What is your widow's benefit?
Jimmy Vinyard: We don't have a widow's benefit technically. We have a pay as you go
widow's benefit in our system. If we die in the first five years of ' ment she will receive
probably 50% or your pension left for that 60 month period. It's li life Insurance policy.
Audience: But you have to take a reduction to get on the pl the lace.
Jimmy Vinyard: Plan B you pay for. You have a P • 0 d a PI 75 and you take a
reduction in your retirement. Say you were at 800 'ey take and nock d % of that 80%
down to 91% or somewhere in that range and the spous benefit would /o of what
you were making but you take that reduction' or lifet - in that plan. B 75 if I
understand it drops you down to getting 84%. If it w u w re going to et you are only
getting 84% of that. You take a 16% reduction in your b t to get a spousal benefit of 75%.
Those are options that you have to take before you r
Pat Boudrey: I just want to address the b" d say tha ave put in countless hours
myself on coming up with these figures that on. in ails and mailings and its my
understanding after setting onight and li that 1 ity chooses not to send the plan
to LOPFI and if the mi `i centage of crease is %, which is what the guys were
promised when they , hired ere is no o on except to decrease the fund to 50%until it
zeros. Is that the o 10 . ?
ti
Mayor Jord. It kno t
Kit W' ms: I acm on't at"this point in time that you would have to go.to the
mini think you we X90%1 , tl?
Pete Reaga hink that's ect.
Kit Williams: T er there was a COLA. If you add the five years of 3%COLA to that
90% it actually is at int a little bit more than 100% of ending pay. Obviously there has
been inflation, that's there was a COLA, but the final one right now is a little bit better than
100%. I don't think that with the millage that is coming in and the tumback even with the
market being down as low as it is that you would have to go to 50% at this point in time. I asked
in 2006 for them to think about reducing it then because the longer you,wait the farther you will
haveto reduce. I don't think at this point even with a bad market that we have had I don't think
a 50% limit is necessary at this point for the solvency of the fund. I think you can be higher than
that.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 21 of 30
Pat Boudrey: I sit down and put a simply math equation out to the membership and at $1.5
million per year to be changed only by death to the benefit fund and there are no absolute figures
here because we don't know what Longer Investments is going charge and we don't know the
deaths they are just variables. When I put a pencil to $1.4 million per year and this year or for
last Friday night we had $4.8 million in the fund that will last three years.
Kit Williams: Keep in mind we're getting over$500,000 a year in millage and tumback.
Pat Boudrey: You're one million dollar deficit per year. That's a de
Paul Becker: That's correct so you are assuming no change in ket value,
Pat Boudrey: That's exactly right. I'm assuming no to es may n more losses or I'm
assuming no gains. This was just a simple math equati Ranted mbership to know
the severity of the situation. I came up with two p two does equal four when you have
$4.8 million and$1.5 million coming out it's not to last ry long.
Sondra Smith: Pete Reagan asked when the last large crease was. On anuary 1, 1997
the plan went from 50% of final salary to 65% of final s On January 1, 2001 the request
was to go to 95% but it was denied and my approved f °°. It was January 1, 2001 that
we went to 90% of base.
•`.�r
Marion Doss: You said that the first thing '.the to 11pprove this before we can do
anything but we would ac . have to ge - • ° lgures than this estimate to give the
Council wouldn't we.
Mayor Jordan: Abso
Kit William d say ca�lxy�, on't legally have to do it but practically if you
hope to h o ove 1
Mani ss: In this in , rship ive on number five it says that possibly the City would
help with administrati osts. xactly what does that mean?
Mayor Jordan.. on't rem her. That was explained to me. Jan didn't you bring that up.
Jan Judy: I went to ith Mayor Jordan and Mr. Becker last Friday and we were discussing
the fact that the city ably would be a hard sell to get them to pay any yearly amounts and
Mr. Becker brought up that even once we switched to LOPFI there would be an administrative
cost. Mr. Becker said that would probably be the only possibility or a possibility that the City
Council might pick up the administrative costs.
Paul Becker: This wouldn't be part of the $175,000 we are quoting in here, in other words this
would not be a cost amortized over time. Once the plan goes to LOPFI there would be an
administrative cost charged for LOPFI administration and that would be absorbed.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March l2,2009
Page 22 of 30
Pete Reagan: Is that a percentage?
Paul Becker: Yes it is but I can't remember what the percentage is off the top of my head but it
is a percentage. Once it goes down there the City is responsible for keeping the funding sound
so the administrative costs are correlated into there.
Marion Doss: This projected cost of$2,200 for some variable scenarios is that through Carreiro
or LOPFI?
Paul Becker: That is the actuary. The question was asked to ctuar and he is a Pension
Review Board actuary. If you wanted a study done under d' t scenarios to see what it
would come out that that was his estimated cost. Now you w, ha contract with them as a
board I would not. I represent the City. This particular st y as req u by the City and paid
for by the City. You would need to work something oe a contr ` 'th him to analysis
whatever scenario you would want. I guess what we talking about here 1 X do you get the
cost to the City at zero under some circumstan c t was a discussion ith him.
He is the actuary. A
Marion Doss: Are we talking that it would have to be w the City had absolutely zero or is
there some negotiable amount in there we could wor ething out. That is providing
that we could do this decrease type thing are askingttorney Generals opinion
on.
Kit Williams: I don't th' can ask s se tha to the City Council. They are
the ones that will make on whether not they ant to devote money to it or not.
Mayor Jordan: It c oes of our hands es to the Council.
Kit Willias'. on s vo
Mayo rdan: I do.
Paul Bee ,I'm going to eve ody's attention if you all read the papers and look at what
we went thro last budget ar. We had a $500,000 gap in the budget. It took us months to
deal with that of that have,.a couple hundred thousand dollars to allocate to anything.
We are struggling4, ovi the citizens the current level of services that we are providing to
them now. I'm just o be realistic to you that I don't particularly feel and I can't speak for
the Council that it wo be receptive for them to entertain additional costs but that's a personal
view.
Mayor Jordan: Keep in mind also that the workers in the City have not received a cost of
living raise this will be their third year. I believe that's correct.
Kit Williams: I think you're right.
Mayor Jordan: That's kind of what we face too.
special Firemen's Pension and Relief Fund
Board of Trustees Mating Minutes
March 12,2009
Page 23 of 30
Gene Warford: This is kind of off subject but how come we can have money for speed bumps
but we can't have money for raises?
Mayor Jordan: That's a great analogy I asked the same question in another previous deal.
You've got CIP money and you have General Fund money too. Paul can explain that better than
Ican.
Gene Warford: That rubs me too. You've got a million dollar bridge out there at Lake
Fayetteville. k.
R �a
Mayor Jordan: Those are Capital Improvement Projects no ral Fund. We are talking
about General Fund. There's CIP and General and we've m d money out of CIP into
General.
.i
Kit Williams: We've had a resolution for a long t' about how the sale will be split so
much into operations which is wages and som ' . ch into"' apital and so Council
obviously doesn't like to continue to rob the cap i I to pu ire and more in, operations.
Gene Warford: Most of us were around when that sales as passed and they also promised
that they would take care of us when thee,' assed it and w ed them pass it.
Sondra Smith: What sales tax was that?
Gene Warford: The one c ales tax.
,t
Sondra Smith: Wh � fb
Kit Williams: That is pr y . Q are talkiabout.
Gene Wa.0% w
Pet . ' n• I think Mr. es City Manager at that time.
Kit WilliamVe didn't h a City Manager at that time it was when I was on City Council.
We just had thi < that inv adated the other sales tax and so we substituted that bond sales tax
with an operating in 'd.
Sondra Smith: If thy' as in 1993 at that time you were at 65% of benefit and they probably
could have taken care of you at 65% but when you go from 65% to 90% it makes it a lot more
difficult.
Audience: When I was working there was a law, an ordinance, state law or something that I had
no choice but to participate in this pension fund. I could not join social security or pay into
social security and I was wondering if someone could answer my question as to whether that was
a city ordinance, state law or whatever.
special Firemen's Pension and Relief Tund '
Board of Trustees Meeting Minutes
March 12,2009
Page 24 of 30
Kit Williams: It was actually part of the State law. For the City to be able to have this pension
fund and have the millage supporting it then it required that the firefighters and police at that
point in time were in it and then later the state law got changed so that we had a statewide system
that the current employees are in. Both times it has been state law that has required that.
Pete Reagan: Sondra when is our next scheduled meeting?
Mayor Jordan: I would say the next scheduled meeting would be as soon as you get that
Attorney General's report in.
o.
Pete Reagan: I'm not doing that Kit is.
Kit Williams: I thought you dictated it.
Pete Reagan: Do you want me to do it?
Kit Williams: No, I don't care she's got it in th mf we end it off tom w probably.
Pete Reagan: Do we have her email address?
Kit Williams: I do.
Mayor Jordan: That would be my recomm datio
Pete Reagan: It would of quicker t t way then ' mail.
Mayor Jordan: T e.
Kit William 'll pro sen of ways.
Sondr ith: Then edul eti g for the Firemen's pension is April 30ih
Marion Do we want wait f that opinion or do we want to work on trying to get some
scenarios to down now.
Gene Warford: w e going to have to start coming up with some scenarios so when do
get his opinion and i reeable we are ready to act. We've got to have a plan in place.
Marion Doss: We changed to quarterly meeting in the last year just because of time constraints
of the previous Mayor not having time to make the meetings.
Sondra Smith: I think it was Pete also that had a hard time making the meetings.
Marion.Doss: I make a motion that we go back to having regular monthly meetings until things
are resolved and if anything pertinent comes up we have a special meeting.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 25 of 30
Pete Reagan: Can we agree on dates before we set these meetings. I've got no problem with
meeting monthly but I have a schedule. I know you do to Mayor.
Sondra Smith: Right now you are meeting the last Thursday of the month.
Marion Doss made a motion to go back to having monthly meetings on the last Thursday of
the month. Mayor Jordan seconded the motion. Upon roll call the motion passed 6-0
Kit Williams: Since this is March and the next one is already sche A for April I guess we
can keep it that date?
Sondra Smith: Yes, I assume. Is it going to stay the last sd the month so everyone
here will know when those meeting are going to be?
Mayor Jordan: Okay in the mean time we will on the Attorney Ge but we need to
meet and I agree we might even meet earlier to w some narios.
8
Sondra Smith: I would like to know about directiv r tluee that we r ceived? What
exactly that means?
Mayor Jordan: Yes, we probably need n s that among up out here. What do
you all think about directive number thre .w 'cally says membership directed the
pension board to make cuts in benefits nec ary t it . from going solid broke? I
guess hearing everything d just want to and d see what they think or do you
want individuals.
s
Sondra Smith: I won t like ow what th an.
May Jord what at Kai
Delon „ -ullens: Yo a pla h •hare where we could sign them and return them. How
in u get back?
x r
Marshall E. an: Whil a is looking that up my personal opinion is that I would like to
see our boards orking o ome scenarios immediately.
Kathleen Doss: Ho ey going to do this? No offense you guys aren't professionals. How
do they go about no aking a good decision about what it's going to take to keep the plan
afloat? How do they go about doing this? We know what to do to go to LOPFI, if we don't get
to LOPFI, how will they know what to do? Who is going to help them work on these numbers is
there some place to turn?
Kit Williams: That is what that actuarial hiring would be doing, although looking at what was
given to us he says he is not the actuary for LOPFI he is the other actuary but hopefully they will
all come up with the same answers. You never know, but even then a 20% cut would still be
costing the City net about $175,000 a year. I guess what they have to look at is scenarios around
Special Firemen's Pension and Relief-Fund '
Board of Trustees Meeting Minutes
March 12,2009
Page 26 of 30
that level and maybe even greater to see could they get it where it would be a zero, neither cost
nor benefit to the City. I don't know what they want to do but obviously we should not wait
until the end of April for you all to start talking about scenarios.
Kathleen Doss: I was thinking that was two scenarios. One if we go with LOPFI and the other
if the City says no we are not going with LOPFI. Is that what we are looking at perhaps two
different scenarios here?
Kit Williams: Both of them might need to have the same answ cause you want to be
solvent either way. a,
Kathleen Doss: Does Jody do both of those? Whoever do es Is is he the one who
would do both of those?
Pete Reagan: Osborn, Carreiro & Associates, In ill do the one for termination of
keeping the fund in house. They will also give u e project 'ons on what th it will be
if we did cuts but going to LOPE it's my understan e fr ut of Minnesot s the actuary
for the LOPFI Board.
Paul Becker: That's correct and they ld do the offici which would tell us what the
City's cost is but that's after the City has d to send the there. I believe your
question is would this actuary do a coupl i narios, on at would it do to keep it
afloat and fund it over 15 years at zero cosy : the er . y it would be the same. The
study would be the same w you keep it se or s down to make it actuarial sound
over 15 years would be estion.
Kit Williams: As Iori ey us a same input. flier words right now they are using a 7%
profit from your investme It a 6% an ey raised it to 7%. I don't know if LOPFI
is using the s entage t.
Paul er: Yes the d th c osen by their board.
Marion The th a twm says the pension board would start communication
immediately , LOPFI. I saying the members are directing us to work with consolidating
with LOPFI. ,
Paul Becker: You rk with LOPE all you want but the decision there is not going any
where they are going tell you you have to have the City Council approval. There's not much
you can do with LOP I. Carreiro & Associates does the actuarial study for the Pension Review
Board that's what jurisdiction you are under right now. When you say scenarios you want to
specific and your goal could be what type of benefit cost across the board we would have to
make so there would be zero cost to the City if you transfer it down. Those scenarios you have
to decide and you would want to appoint somebody to express that and enter into an agreement
with that actuary firm and set a deadline of when you want those number back.
Special Firemen's Pension and Relief Fund
Board of Trustees Meeting Minutes
March 12,2009
Page 27 of 30
Marion Doss: We received that figure in that meeting we had a month ago, four scenarios for
$2,200.
Paul Becker: That is what he said and that is the representative you would be dealing with.
The reason you would want to deal with him he is the Pension Review Board and he has all of
your numbers. You go to another actuary they start from scratch and believe me you are not
going to get the time of day for$2,200.
Marion Doss: So we need to come up with our scenarios, send it to and get that back and
then that's when we go to Council.
Paul Becker: You negotiate a contract with them,he comes en you put it in place or
do what you need to do and then you would proceed to Co c That be your game plan.
Ron Wood: In other words we would take the con to Council? u�
Paul Becker: You would negotiate and have c t wil e actuary to d e numbers.
Once the numbers come back then we can go to Council -baa., on the actftary's estimates
this is what it would cost. No cost to the City other than et risk, which is a big cost to the
City. If the Mayor agrees we would forward to Co ° ask the Council if they would
agree to that.
Mayor Jordan: The board votes it in we 'll t ungil No matter what the Mayor
wants to do.
Paul Becker: The says y complete application stating the City wants to make the
transfer and we se n21 f the d they do an study but that's our cost and they say
this is the actual.
Kit Willi o e grees wit i the other actuarial study.
a�
Pa ut r: They wil close won't be perfect. That's how I believe you want to
proceed erstand corr wh on want to accomplish.
Mayor Jorda P,Want yo 1 to understand something these are just rough figures, you are
losing about $72, mo So every month we wait and the longer it goes unless the market
does a backward s t that's the figures that I have.
Paul Becker: If everyone agreed you certainly want to solicit input unless you feel you have
sufficient input from your membership of what scenarios they want to look at.
Gene Warford: That is one thing I want to ask, does everyone want a strictly across the board
percentage cut? There's a lot of thought going to have to go into this.
Roy Cate: I don't know about anyone else but I feel we are up the creek. This seems from what
I'm getting tonight that the City is going to be real reluctant to put us in that state fund unless