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Home My WebLink About2007-01-18 - Agendas - Final Firemen's Pension and Relief Fund Meeting Agenda January 18, 2007 A meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at 11:00 AM on January 18, 2007 in Room 326 of the City Administration Building 1. Approval of the Minutes: • December 28, 2006 Meeting Minutes 2. Approval of the Pension List: • February, 2007 Pension List 3. New Business: • Election Results • Pension Report to the Council — Informational • Current Board of Trustees List — Informational • 2007 Meeting Schedule — Informational 4. Old Business: • Mark Martin report on Baxter International lawsuit • Appointment of Pension Board representative for the Baxter International lawsuit case • Ted O'Neal's DROP amount • COLA — Cash Flow Report received — Can not implement a benefit increase at this time • Pension Protection Act —No new information yet 5. Longer Investments: • Monthly Report • Quarterly Report Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 1 of 13 Firemen's Pension and Relief Fund Meeting Minutes December 28, 2006 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11 :00 AM on December 28, 2006 in Room 326 of the City Administration Building Mayor Coody called the meeting to order Present: Mayor Coody, Marion Doss, Ronnie Wood, Pete Reagan, Ted O'Neal, Chief Johnson, City Clerk Sondra Smith, City Attorney Kit Williams, Trish Leach, Wendy Moore Accounting, and Amber Wood. Absent: Marshall Mahan. Approval of the November 30, 2006 Meeting Minutes: Pete Reagan: Could we note that I was delayed in a foreign state and unable to get here because of the weather. Marion Doss moved to approve the November 30, 2006 Meeting Minutes. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Marshall Mahan was absent. Approval of the Pension List: Approval of the January, 2007 Pension List Mayor Coody: Do we have any changes to the pension list. Sondra Smith: We have Teddy O'Neal listed so that is the difference in December's pension list and January's pension list. Since he retired in the middle of the month do you all do prorated amounts? Pete Reagan: We never have. Marion Doss: It would make no difference he's on DROP anyway. So the amount either goes into his DROP or monthly check so there's no difference. He doesn't get two checks it either goes into his DROP or his retirement. Kit Williams: Is that right Trish? So it really doesn't make a difference. Marion Doss: So there is no change in the dollar amount. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 2 of 13 Sondra Smith: I just wanted to make sure that we have in the record that you all do not do a prorated amount. Police pension does a prorated amount so if someone retires in the middle of the month they would get paid for a partial month. Kit Williams: As long as it doesn't make any difference. Pete Reagan: It doesn't matter we only have two more on DROP. Kit Williams: Ted you are retired now? How many active members does that leave now? Pete Reagan: Two. Kit Williams: Who are they? Pete Reagan: Marshall Mahan and Joey Pierce. Pete Reagan: Where is Marshall? Sondra Smith: Marshall said he could not attend this meeting because he already had a medical procedure set up. He will attend the January meeting as far as I know. Pete Reagan moved to approve the January, 2007 Pension List. Marion Doss seconded the motion. Upon roll call the motion passed 5-0. Marshall Mahan was absent. New Business: Elections to fill Dennis Ledbetter's position — Nomination letters have been sent out Marion Doss: On this eligible list you've got one name shaded, Charlie Jordan, did he not want to serve on the board. Did he just call? Sondra Smith: He called and said: If I get nominated I don't want to serve. Marion Doss: Okay. Sondra Smith: We had several people nominated so I will call them before I send it back out for election and make sure they are willing to serve. Kit Williams: You don't want to elect someone that doesn't want to serve. Marion Doss: As soon as you get an answer from everybody you will send out letters with the ones that have agreed to serve. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 3 of 13 Sondra Smith: I plan on doing that next week. What I want to do is give them until January 15th to return the ballot, and then maybe the new board member can be at the meeting in January. Pete Reagan: That's good. Kit Williams: If you put it off too long they put it off and lose the ballot. Sondra Smith: It is good timing because people have been bringing their affidavits in so they're remembering to bring their nomination in too. Current Board of Trustees List — Informational A copy of the current Board of Trustees list was given to the board. 2007 Meeting Schedule — Informational A copy of the 2007 meeting schedule was given to the board. Teddy O'Neal Retirement — Need to vote to accept Mayor Coody: Congratulations Teddy. Sondra Smith: Let me give you some quick figures on Teddy's retirement, his DROP check will be around $202,000 and his monthly benefit will be around $4,100. Marion Doss moved to approve Teddy O'Neal's retirement. Pete Reagan seconded the motion. Upon roll call the motion passed 5-0. Marshall Mahan was absent. Discussion on Prorating Monthly Benefit upon Retirement Kit Williams: I think we have already discussed this and it doesn't have any affect, so we don't need to have a policy. Old Business: Ashland Management Letter — Copy of the letter that was sent Sondra Smith: That is just a copy of the letter that you asked me to send to them because they wanted to attend one of our meetings. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 4 of 13 This Ashland Management that wanted to be our advisor they are the same ones that we got into a fight with. Sondra Smith: Yes. Pete Reagan: Yes. Kit Williams: That had so dropped the ball that they have not even accepted our offer of "we will pay you this much" and we never heard from them. Pete Reagan: They just wrote it off and now they are back at us. Kit Williams: That's strange. Dennis Ledbetter Resignation — Need to vote to accept Sondra Smith: We never did approve Dennis Ledbetter's resignation. I don't know if we need to approve his resignation or not. Mayor Coody: How do you approve a resignation? Pete Reagan: We just accept it don't we. Pete Reagan moved to accept Dennis Ledbetter's resignation. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Marshall Mahan was absent. City Attorney Kit Williams Report on Baxter International lawsuit Kit Williams: There is nothing new to report since last month when I talked to you. I have not heard anything more from the attorney's on either side. However as noted in the minutes and what we discussed at our meeting last time we need to have a representative from this board that would be the representative for the board if we are appointed as one of the lead plaintiffs. If so we would need someone that is willing to sit at the trials with the attorney's and possibly be deposed and just kind of act as a representative for this board. Obviously our attorney's will work with the person and I will work with this person to try to get them prepared for any deposition or any testimony they might have. It could be anyone on the board including the Mayor and the Clerk but I think it would be better to have one of the fire fighters to be the representative. Does anybody want to be the representative? Pete Reagan: I nominate Marshall Mahan. Ronnie Wood: I second. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 5 of 13 Kit Williams: One problem with that is he wasn't on the board when the board heard everything about this and made the decision to join as lead plaintiff so we really need someone that's willing to have a commitment and if you three are not willing to have a commitment then we need to postpone this decision until we can get someone that is. If you want we can ask Mark Martin and maybe the other attorney out of Little Rock to come up and further explain this before you decide who the representative should be. Ronnie Wood: We are talking about very possibly going to New York? Kit Williams: Where ever the trial would be I'm not sure it could be Chicago. I think it is in Illinois at this point and time. You wouldn't have to go there on your own cost the attorney's would have to fly you there and pay your expenses. Same thing with the deposition they would come here to depose you or if they did that at another location your expenses would be paid but it would be your time, in other words you would not get paid for your time only your expenses. This is a commitment but this is something that needs to be done if we are going to be a lead plaintiff. If we are not willing to do this then we are going to have to notify the court that we do not want to be lead plaintiff. That is up to you to decide. Marion Doss: This would be no cost or expense to the pension fund? Kit Williams: That is correct. These are all contingent fee cost so that if in fact they eventually where successful they would recover this cost back themselves. It would not ever cost the pension fund anything. Pete Reagan: I think you have an excellent idea that it probably should be a firefighter it would probably look better in the courts eyes. Kit Williams: I think so. Pete Reagan: Since we don't really have to have it right now can we table this until next meeting and talk among ourselves. Kit Williams: Let me invite Mark Martin to be at the next meeting and if he wants to he can have one of the other attorney's here to further explain this. Pete Regan: Okay. Kit Williams: When is our next meeting? Sondra Smith: It's January 25, 2007. Kit Williams: At 11 :00? Sondra Smith: Yes sir, room 326. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28, 2006 Page 6 of 13 Kit Williams: I will invite Mark to show up. Mayor Coody: Any other information on that? Alright thanks. Appointment of Pension Board representative for the Baxter International lawsuit case Mayor Coody: We will deal with this later. COLA — have not received the Cash Flow Report Mayor Coody: We don't have anything new to report do we? Sondra Smith: No sir, because we have not received the report. Longer Investments: Monthly Report Mayor Coody: We just have the paper work she is not coming to make a presentation. Kit Williams: She only comes every quarter. .Sondra Smith: Yes, she will be here in January. Other: Pete Reagan: I have a couple of things unless anybody has any questions on the portfolio. I received a letter and I was trying to quote the act number but I can't. Trish Leach: The one that requires you to list if you received any gifts or not for the year. The Mayor has to sign an affidavit and we send it in with the fire pension report to the PRB Board and our goal this year is to get it in earlier. We are hoping by the end of February because we think the earlier we get it in the quicker they will do the things they do with it that takes them so long. Pete Reagan: Right. Trish Leach: Were trying to beat the rush. Pete Reagan: I read the act and it said gifts. I went to two or three receptions while I was at the NCPERS conference in Florida. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 7 of 13 Kit Williams: I will have to look at that again. You said the statue just talks about gifts. Pete Reagan: Yes. Mayor Coody: Did you have anything more than hors d'oeuvres? Pete Reagan: There was alcohol there. Kit Williams: Were you receptive to it. Pete Reagan: Yes I was. Sondra Smith: Was it an investment manager that was hosting it? Pete Reagan: Yes. It wasn't anybody that was related to who we use. It was just a reception for the whole group of us. Sondra Smith: Doesn't matter. Pete Reagan: I can put it down I have to put a dollar value. Mayor Coody: Do they have a dollar value or is it over a certain amount? Kit Williams: Basically it's almost anything. Trish Leach: It doesn't specify. I think you can say "attended reception" hors d'oeuvres and. . ... Kit Williams: You might just say that, in abundance of caution, if it says "gifts" that might not be a gift but who knows maybe the ethics people think it is a gift. So just to be careful I would say I attended these receptions presented by a financial advisor which we do not employ. Mayor Coody: Sondra, I'm supposed to have my gift paper work turned in by January? Kit Williams: That's right he has to do a written report. So you need to get yours to the Mayor, is that right. Sondra Smith: That is the reason we are asking the board to report what they have received so we can get the information to Trish and Trish can get the report to the Mayor for the Mayor to sign. Marion Doss: I like the affidavit form that you sent us that was actually the Mayors form I just wrote on the bottom of the cover letter. Sondra Smith: That is all you needed to do if you had not received any gifts. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 8 of 13 Marion Doss: That is what I thought. Mayor Coody: Anything else. Pete Reagan: The Pension Protection Act was in last month's minutes and I apologize for not being here. The implementation of this, are you familiar with this Kit? Kit Williams: No I am not. Sondra Smith: It was in last month's packet. Kit Williams: No I haven't seen it. What is it? Pete Reagan: It is a memorandum from NCPERS, the president signed this bill and basically what it does is allow pensioners to defer up to $3,000 of their pension to pay for medical care or medical insurance. Mayor Coody: Like an HSA? Pete Reagan: I don't know what a HSA is. Mayor Coody: A health savings account. Pete Reagan: But it has to be done by the pension fund. Kit Williams: So Accounting would hold this money and send it out to you as you use medical care. Pete Reagan: I have Mega Life and Health insurance now, Accounting would have to pay direct to Mega for my health insurance and deduct it out of my retirement check and Accounting would have to pay the insurance company directly. It's more work for them. Kit Williams: It is only $3,000 they just do a premium payment they are not doing the other payments right? Mega would take that $3,000 and then dole it out if you had medical expenses. Sondra Smith: No it's to pay his premium and what it sounds like they are trying to do is pre tax. Kit Williams: You would just be paying the premium out of their pension and then Mega would be the one paying the medical. You might have a monthly payment but it would always be the same. Trish Leach: Like we do for regular employees with Blue Cross or Cigna. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 9 of 13 Kit Williams: I'm just trying to figure out how difficult it will be. Not to difficult it looks like. Trish Leach: The difficult part will be if everyone signs up for it and everyone has a different premium. Pete Reagan: They probably will and if you take someone, I'm going to use Ronnie for an example him and his wife both work and they work at different places so they are probably not going to spend $3,000 out of their pocket combined for health insurance. So they might want to do it towards hospital bill's which is allowed under the law from what we understand. NCPERS says it is but the IRS has not issued regulations on it yet. Sondra Smith: It wouldn't be just one check to just one insurance company; it would be to however the pensioner is insured with. Trish Leach: We could set a cap on what we could deduct but if Ronnie wanted to do something like that he would have to set up a HSA or something he would administer, all we would do is cut a check and send it to that place. We are not staffed to do much else. Sondra Smith: You could have fifteen different pensioners with fifteen different insurance companies and you would be cutting checks to fifteen different insurance companies each month. Pete Reagan: The benefit is tax deferment and they have estimated it between $700 and $800. Ronnie Wood: Per pensioner. Kit Williams: If you took the maximum out of$3,000. Mayor Coody: Ted did you have a question? Ted O'Neal: Could you offer the pensioners the city medical plans? I don't know if that helps or hurts or does anything else. Mayor Coody: I think the rule is if you have been with the city for twenty years you have an option to stay on with_the city policy, you have to pay your own premium and all that. Ted O'Neal: I have twenty five years but I am not age fifty five. Mayor Coody: Oh is that it. Kit Williams: You have to be fifty five? Pete Reagan: That's the state statue. I was not aware that the city offered that. It wasn't offered to me when I retired. Mayor Coody: How old are you? Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 10 of 13 Sondra Smith: You're not fifty five. Mayor Coody: I think you have to be fifty five and have at least twenty years of service with the city then you can stay on the program but then you pay the full premium. Pete Reagan: The full premium. Marion Doss: Is that state statue the 25 & 55. Pete Reagan: Yes. Mayor Coody: I'm not sure. Pete Reagan: It's state statue. Kit Williams: Is it. Marion Doss: The city could offer that as a benefit to retirees if they wanted to, couldn't they? Mayor Coody: Well it makes everybody's insurance go up because those are really expensive insurance plans. Kit Williams: The young people don't have near as much cost as us older guys. Marion Doss: I didn't know for sure if it is a state statue. I knew that the city did that and then I heard not too long ago it was a state statue. That would be a good benefit if the city offered that for retirees. Pete Reagan: I was at the LOPFI board meeting last week and the LOPFI board voted to adopt to do this even though IRS regulations are not out yet and they are going to follow the NCPERS guide lines. I don't know if we need to get with them and see how they plan on setting it up to make it easier for us to set up. I think it is a definite benefit to the retirees that we need to be able to take advantage of. Kit Williams: What we might want to do if we are going to do this is limit the number of different options that the pensioners would have so that we don't have the Accounting department trying to write out 40 or 50 different checks to different companies. Maybe give 3 or 4 different options that you all could select from so it is feasible for the Accounting department to be able to handle it. Pete Reagan: I understand that problem. We've got how many on the pension fund now? Sondra Smith: Fifty. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 11 of 13 Pete Reagan: Everyone is going to have a different insurance company and the law states that it has to be done by the fund. Now why that is I have no idea. Trish Leach: So it can be pre taxed as well as it will change our reporting. Pete Reagan: Okay. Trish Leach: If we do this for Fire we will need to do this for Police also. I had not seen it until it was in last month's packet. I did read it and Marsha and I talked a little bit about it. To be honest we were hoping that no one would read it. It is terribly selfish on our part it is a very good benefit for you guys. It will be more work for us but I will be glad to talk to LOPFI and see how they are going to handle it because we have a good working relationship with LOPFI. Sondra Smith: There are sixty two people drawing pension funds. You would also need to decide whether you are going to allow the spouse/widow to do this or if it will be strictly for the pensioners. Kit Williams: You need to look at everything because it might be that it is all or none. Might be that we can't decide that. The only reason I was saying that you might try to limit the actual choices to where some might be paying a premium and some might be direct pay or something like that because if you look at the city we offer the city employees two different options. They can have the city insurance or else they can go to the health savings account. City employees don't have the option of everybody getting their own individual insurance. I think it would be reasonable if we can figure out what the most selected options would be that would make the program more feasible for the Accounting department to be able to handle. Ron Wood: Would that not build an opportunity for insurance companies to maybe bid? Mayor Coody: So all of it would go to one company? Kit Williams: It could if they think fifty is a big enough group for them to be interested in. Marion Doss: I think if you look at that you are probably going to look at the ones that are full paid retirees. Kit Williams: It is difficult sometimes to change insurance because then you have the pre existing injury problems. Ron Wood: I see what you are saying there are so many different insurance companies and as many options as there are out there. Kit Williams: We will have to hire a new clerk just to handle this. Trish Leach: Because we will have people's insurance companies contacting you saying we didn't get your premium and you will contact us and we will say we sent it and there will be Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 12 of 13 some going around. We had a retiree come in yesterday and he was fortunate enough to be at the right age that he can continue on the city's plan and he was talking about he can't get his own insurance because of his health difficulties. We all know the premiums have gone up and he's paying both parts. I'm sure Cigna would be glad to have everyone come on but it's expensive. Kit Williams: It is expensive but everything is going to be. Pete Reagan: Not to be prying but how much was the premium. Trish Leach: He paid the premium for last year which his part and the part the city pays was approximately $500 and in January it had gone up to approximately $600. Marion Doss: My Blue Cross was $586 and this year it was going up to $621 or you could get the high deductible. Ron Wood: For the year? Kit Williams: High deductible is much cheaper. Sondra Smith: No per month. Pete Reagan: I'm paying $509 a month for a $2,500 deductible. Kit Williams: You will do better in a group. Ted O'Neal: Cigna might offer a separate plan where it doesn't affect the city employees but still can protect the pensioners which would be a great benefit. Kit Williams: But who knows what they would charge because the pensioners are going to be older and more likely to have more medical expenses than the younger workers. Ted O'Neal: But as a group you should get it better than an individual. Pete Regan: Is Cigna the new insurance company? Kit Williams: Yes, after all these years Blue Cross was a little bit too high. We just had a bad year last year lots of multi million dollar claims. Trish Leach: The library tacked on to the city policy to get the group rate so if someone from the board talked to Michele I'm sure she would be glad to look into that possibility. In the mean time we will talk to LOPFI and see what they are doing and we will have something we can share with Sondra. Pete Reagan: At the next meeting? Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes December 28,2006 Page 13 of 13 Kit Williams: That might be your best option and then at least your premiums would be tax free. Pete Reagan: It would be a lot easier to set up and make it a lot easier for finance. Kit Williams: Yes and be a lot better program. Pete Reagan: I don't really care which insurance company gets my money as long as it is not very much. Mayor Coody: Any thing else? So you are going to bring us more information at the next meeting then. Meeting Adjourned at 11:45AM FIREMEN'S RELIEF AND PENSION Feb 2007 2 THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMENS RELIEF FUND FOR THE MONTH LISTED ABOVE YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE PAYEES, IN THE AMOUNTS SHOWN , AND FOR THE PURPOSE SO STATED. DATE OF Regular Mo Year To Date EMP#RETIREMENT NAME Benefit Reg Benefit O 79 11/99 ARMSTRONG(DILL), PAMELA 1,812.74 3,625.48 R 177 4/04 BACHMAN, EDDIE 2,618.55 5,237.10 S 74 3/86 BAIRD, JULIA 1,802.08 3,604.16 V 63 5f72 BOLAIN,ANN 109.27 218.54 R 68 7/99 BONADUCE, MICHAEL 2,988.76 5,977.52 S 44 9/86 BOUDREY, BETTY MRS. 2,477.42 4,954.84 R 45 9/86 BOUDREY,HOWARD 2,089.28 4,178.56 R 49 7188 BOUDREY, JACK 1,647.63 3,295.26 V 5 5172 CASELMAN,ARTHUR 131.13 262.26 R 57 5/90 CATE, ROY 1,788.90 3,577.80 V 6 4/68 CHRISTIE,ARNOLD 109.27 218.54 V 8 10/76 COUNTS, WAYNE 109.27 218.54 R 77 11/99 DILL,GARYJOHN 1,812.75 3,625.50 188 12105 DOSS,MARION H 5,376.91 10,753.82 R 11 2f76 FARRAR ALONZO 998.86 1,997.72 R 192 4/06 FARRAR, DANNY 4,155.36 8,310.72 R 38 5/84 FRALEY,JOSEPH G. 1,768.12 3,536.24 R 170 5/03 FREEDLE, LARRY 3,816.75 7,633.50 R 92 03/02 GAGE,TOMMY 2,596.69 6,193.38 V 34 6179 HARRIS,JAMES E. 109.27 218.54 V 70 11/99 HARRIS,MARY RUTH 109.27 218.54 O 182 10/04 JENKINS, EILEEN 1,788.75 3,577.50 R 93 06/02 JENKINS,JOHN 1,788.76 3,577.52 R 86 07/01 JOHNSON,ROBERT 3,073.47 6,146.94 R 64 4195 JORDAN,CHARLIE 2,274.95 4,549.90 S 76 5188 JUDY,JAN 1,647.63 3,295.26 R 37 3/84 KING,ARNOLD D. 1,522.37 3,044.74 R 54 5/89 KING,ARVIL 1,711.21 3,422.42 V 12 3/60 LANE, HOPE MRS 109.27 218.54 R 13 10/67 LAYER, MERLIN 456.22 912.44 R 173 12/03 LEDBETTER,DENNIS 3,775.80 7,551:60 V 181 10104 LEE,VIOLA LOUISE 109.27 218.54 R 51 10188 LEWIS, CHARLES 1,647.63 3,295.26 R 40 9/85 LOGUE, PAUL D. 2,868.28 5,736.56 R 50 9/88 MASON, LARRY 1,631.25 3,262.50 R 39 4/85 MC ARTHUR, RONALD A. 1,753.74 3,507.48 V 35 2182 MC CHRISTIAN, DWAYNE 109.27 218.54 R 15 4f77 MC WHORTER,CHARLES 1,334.51 2;669.02 R 29 8/81 MILLER, DONALD 1,304.07 2,608.14 R 73 2/00 MILLER,KENNETH 3,180.02 6,360.04 V 42 2/86 MOORE,JAMES H. 109.27 218.54 V 176 4/04 MORRIS, DIXIE E. 125.66 251.32 R 48 7/88 MULLENS,DENNIS W. 2,191.30 4,382.60 R 184 3105 NAPIER,LONNIE 3,518.28 7,036.56 R 196 01102 ONEAL, TEDDY 4,120.99 8,241.98 R 46 5188 OSBURN,TROY 1,899.66 3,799.32 R 81 02/01 PHILLIPS,LARRY 2,765.09 5,530.18 R 53 2/89 POAGE, LARRY 2,346.70 4,693.40 R 186 06105 REAGAN,PETE 3,535.71 7,071.42 V 22 4173 REED,JOE 109.27 218.54 S 172 12/03 SCHADER, MADGE 1,386.01 2,772.02 R 41 9/85 SCHADER,TROY 1,524.99 3,049.98 R 190 04/06 SHACKELFORD, GLEN 3,647.18 7,294.36 S 83 03/01 SKELTON, KIMBERLY 2,434.98 4,869.96 R 36 5176 SPRINGSTON,CARL 806.19 1,612.38 S 90 03/02 STOUT, IMOGENE W. 767.80 1,535.60 R 165 12/02 TATE, RALPH 3,668.10 7,336.20 V 65 3/66 TUNE, BILLIE SUE 136.59 273.18 R 71 1/00 WARFORD,THOMAS 2,502.72 5,005.44 R 28 7168 WATTS, DONALD 437.09 874.18 R 88 01102 WOOD,RONNIE D 3,077.15 6,154.30 R 52 9/88 WRIGHT, RANDALL 1,691.34 3,382.68 113 316.82 226 633.64 DROP DATE DROP EMPLOYEES NEW BENEFITS 03/01/03 MAHAN, MARSHALL 4,077.28 03101/03 PIERCE,JOEY 3,647:18 WE,THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE JUST AND CORRECT; THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID;THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE B&ARM111 2007 WM DATE OF Regular Mo Year To Date EMP#RETIREMENT NAME Benefit Reg Benefit THE SERVICES OR SUPPLIES FURNISHED,AS THE CASE MAY BE, WERE ACTUALLY RENDERED OR FURNISHED;AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR SERVICES OR SUPPLIES SECRETARY CHAIRMAN AND PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) SWORN TO AND SUBSCRIBED BEFORE ME THIS DAY OF 2006. NOTARY PUBLIC MY COMMISSION EXPIRES: 1/17/2007 C.\Documents and Set6ngs\ssmith.000\Local Settings\Temp\XPgrpwise\February 2007 WM I ARKANSAS THE CITY OFFAYETTEYILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE To: City Council Me tLoen From: Dan Coody, Date: January 2, 2007 Subject: Firemen's and Policn Funds - A biennial actuarial valuation is required to be performed by the Arkansas Pension Review Board pursuant to Arkansas Code Annotated 24-11-2005. An actuarial valuation matches the projected future value of current assets to the future value of projected liabilities. The last valuations were conducted as of December 31, 2005. The conclusions reached were that the funds were not actuarially sound under Arkansas State Law. The unfunded liability for the Fire Pension Fund as of 12/31/05 was $9,876,369. This represents a funding ratio of 50.9%. The unfunded liability for the Police Pension Fund as of 12/31/2005 was $9,568,908. This represents a funding ratio of 52.5%. The unfunded liabilities of both funds have been increasing since 12/31/99 when the police pension board voted to increase the benefit paid to its retirees from 50% of salary to 90°1o. In 2001 Fire pension maximums increased from 65%to 90%. Both increases were approved by the State Board on a cash flow analysis basis. It should be noted that actuarial calculations change due to economic conditions at the time they are performed. This year has been a very good year for investments. Today we would expect the actuarial unfunded liabilities to be much less if they were currently calculated. There is no immediate danger to pension recipients concerning benefits and as long as revenue streams continue at the same level, benefits can continue at current amounts on a cash flow analysis basis. An actuarial valuation shows the long term viability of the fund. Any benefit increase at this time would negatively affect this valuation. On a cash flow analysis basis, as long as current revenue streams continue, current benefit payments can be accommodated, however, a major reduction in the revenue stream in the f4ture, or further increases in benefits, could force benefit payments to be reduced unless sufficient assets are maintained. The current revenue streams committed to pension fund contributions are a .4 mil Property Tax Levy and State Pension Insurance Turnback. While there is an interest in increasing pension benefits among board members, using either the cash flow or the actuarial analysis method, I feel it is important to maintain the current level of benefits so we will not have to face a shortfall that would require us to reduce those benefits in the future. i ' Firemen's Pension And Relief Fund Board Of Trustees Chairman Position 3/Retired Mayor Dan Coody Vacancy 113 W. Mountain Fayetteville, AR 72701 Replace Dennis Ledbetter 575-8330 — Work 06/01/05-05/31/07 Replaced Fred Hanna 01/01/01-Indef. Position 4/Retired dcoody@ci.fayetteville.ar.us Ron Wood 17315 Lake Sequoyah Road Secretary Fayetteville, AR 72701 City Clerk Sondra Smith 442-5925 — Home 113 W. Mountain 444-1699 — Work Fayetteville, AR 72701 466-2817 — Cell 442-7838 — Home 444-2700 — Pager 575-8323 — Work 07/27/95-04/30/03 Replaced Heather Woodruff 05/01/03-05/31/05 02/03/03-Indef 06/01/05-05/31/07 ssmith@ci.fayetteville.ar.us rwood@co.washington.ar.us Position 1/Retired Position 5/ Marion Doss Marshall Mahan 1125 Cato Springs Road 122 Holland Drive Fayetteville, AR 72701 Farmington, AR 72730 521-8988 — Home 267-2509 — Home Replaced Danny Farrar Replaced Ted O'Neal 05/31/91-Indef. (Highest Ranking Member) 12/14/06-Indef (Highest Ranking Member) 01/01/06-05/31/06 (Retired Member) mmahangci.fayetteville.ar.us 06/01/06-05/31/08 Mhdoss42@aol.com Position 2/Retired Pete Reagan P. O. Box 1922 Fayetteville, AR 72702 521-7542 — Home 841-0320 — Cell Replaced Darrell Judy 05/11/93-04/30/02 05/01/02-05/31/04 06/01/04-05/31/06 00/01/06-05/31/08 a pfffaynaol.com 23 2007 Meeting Schedule Firemen's Pension and Relief Fund Board of Trustees Last Thursday of each Month 11 :00 AM City Administration Room 326 innuar-y 25 Rescheduled to January 18, 2007 February 22 March 29 April 26 May 31 June 28 July 26 August 30 September 27 October 25 November 29 December 27 CITY of FAYETTEVILLE :. y.....; �: 8/ : CEieckaiE.:. 1.00 L Zoplvyae s 197 #1118-0962. 00!1$1�L;TJIhY—Cj ARLS3 SC8FIl48 IRA `:'6tabe: Withholding. L , S9#3 q Fed'e"ral Withholding: Hours Code Hours G .ork ,Date:". 800 Drop Distribution 67, 339.57 roas 18/28/2006 800 Drop Distribution 67;839.5.7' 12'�;28/2Q:0'6 r 800 Drop Distribution 8'7,,3.39:5.7 12/2;8/200'6' . Aniquint• : V.TDc-: Amount. Gross Pay 202.;018.:71: .. 2.02.:'018.. 71 J Net Pay .. .. . . 202•,G:T:$,'11 - •a02=;p.1:$. 71.:.: L J Message DROP Distribution - .. .. r: v'. _ _ . .. iii•:.�5 V REMOVE DOCUMENT ALONG THIS PERFORATION V CITY of FAYETTEVILLE {� FAYETMMUS,ARKANSAS .r. l v flREMEN'S P dofti rr L RRRi[NSRS ENSION DATE ; !� 12/28/2006 ftdftAi 0w 81-87/M , L =,018 DOLLAM AND 71 CENTS - '� Erg • r a � • PAY #1118-0962 ONEAL,TEDDY-CHARLES SCHW AB IRA eTO Ajo-� ORDS --) PO BOX 1269 """� � n _1 OF FAYETrEVILLE, AR 72742 X. L J Y 11' 100 588 5112 1:0829006721: l i 5 2468 sam r , F a F ? F ? F k J t i See Reverse Side For Easy Opening Instructions pHs ARKANSAS FIRE & POLICE PENSION REVIEW BOARD January 5, 2007 620 W. 3rd, Suite 200 Little Rock, Arkansas 72201-2212 Board of Trustees Telephone: (501) 682-1745 Fayetteville Fire Pension Fund Toll-Free: (866) 859-1745 113 West Mountain Fax: (501) 682-1751 Fayetteville, AR 72701 email: info@lopfi-prb.com website: www.lopfi-prb.com Dear Board of Trustees: On October 2, 2006, your Board passed a resolution to determine the feasibility of implementing either a temporary or permanent 3% compound COLA for all current and future retirees, beneficiaries, and members on DROP, as long as the pension fund would be actuarially sound. In addition, the actuarial method used would be a Cash Flow valuation. In order for a benefit increase to be granted several components must be met. Those components are: A) the annual employer contribution must equal or exceed the actuarially computed employer rate and, B) sufficient fund assets must exist to cover 100% of liabilities for active member contributions and current retired lives plus 100% of liabilities for service rendered by active members OR, C) the funded percentage test must be at least 97%; or the fund may be able to implement an increase using a Cash Flow valuation or an Alternate Cash Flow valuation. These provisions are detailed in PRB Board Rule #4. The enclosed benefit increase valuation from the actuaries dated January 4, 2007, shows the pension fund presently meets the test for actuarial soundness. However, any benefit increase at this time would not permit the fund to remain actuarially sound. (The actuaries did test for a lower temporary COLA, but that was not possible either.) Please see page 2 of the report for further explanation on these points. As a result, the PRB understandably cannot approve any benefit increase. Therefore, I am unable to certify that either of the requested benefit increases may be granted. My decision is subject to review by the PRB. The next meeting is scheduled for March 14, 2007, at 9:30 a.m. in Little Rock. Should you have questions, please feel free to contact me at your convenience. Respectfully, David B. Clark Executive Director RECEIVED JAN 0 R 2007 Osborn, Carreiro & Associates, Inc. One Union National Plaza, Suite 1690 124 West Capitol Avenue ACTUARIES • CONSULTANTS • ANALYSTS Little Rock, Arkansas 72201 (501) 376-8043 FAX (501) 376-7847 January 4, 2007 Fayetteville Firefighters Pension and Relief Fund Board c/o City of Fayetteville 113 West Mountain JAN 0 5 2007 Fayetteville, AR 72701 P R B Gentlemen: This report presents the results of our January 1, 2006 actuarial study of the assets and liabilities of the Fayetteville Firefighters Pension and Relief Fund (the "Pension Fund"). This report goes beyond the present value of the liabilities calculated in the regular valuation to show the timing and development of the income and expense streams. These streams are then reviewed with various benefit proposals under consideration. The purpose of this report is to project the income and expense streams under the current plan and with a possible increase in benefits. The scenarios are: (1) No change is made. The Pension Fund benefits remain as they currently are. This includes the remaining year (2006) of the temporary cost of living adjustments (COLA). (2) A temporary cost of living adjustment (COLA) of 3% compound per year for 3 years. (3) A permanent cost of living adjustment (COLA) of 3% compound. PROCESS We prepared a cash flow analysis. We first project out the benefit payments from the Pension Fund for the next 50 years. Next, the contribution income to the fund was projected. This contribution income includes the 6% member contribution, the 6% city match, local millage contributions, and insurance premium taxes. Exhibit 1 details the assumptions we made regarding these contributions. Note that in the 2003 legislative session, the methodology for allocating insurance premium taxes was changed. This report reflects that change. Once the benefit payout and contribution income projections were prepared, 6% investment return was added. The benefit payout stream was also projected based on the current plan and the proposals. Exhibit 1 shows the results. Osborn, Carreiro & Associates, Inc. ACTUARIES CONSULTANTS ANALYSTS Fayetteville Firefighters Pension Fund - p 2 January 4, 2007 CURRENT STATUS OF FUND If no changes are made, the Pension Fund is projected to be fully funded between in about 25 - 30 years from now. This means the Pension Fund is not expected to deplete its assets and is considered actuarially sound under Pension Review Board Rule 4. At the point the plan is fully funded, the dedicated millage would not be needed. However, if benefits were increased, the millage would still be needed. It should be noted that this result is dependent as always on investment results being near the assumed rate. But, in this case, it is even more dependent on the city maintaining the assumed increases in millage income. BENEFIT INCREASE We reviewed the effect of the two proposed COLA increases for all retirees, beneficiaries, and DROPS. We found that the fund would be depleted before all benefits were paid under either scenario. We did test an even lower temporary COLA amount (1% per year for 3 years). Under this reduced level, the plan was found to need more than 30 years to fully fund the actuarial liabilities and the range of reasonable results included depleting the assets. Therefore, we cannot recommend ANY increase in benefits at this time. In our opinion, the cash flow projections show that the fund is currently actuarially sound based on Arkansas Fire and Police Pension Review Board Rule 4, but cannot remain sound if ANY increase in benefits is given at this time. That is, neither COLA proposal would be considered actuarially sound. These results depend, of course, upon the actuarial assumptions being met. Note also that actual results WILL vary on a year-by-year basis from the projections. Because of the size of the group, some of the results may vary materially from these projections. This report is based on the participant and financial data you supplied to the Arkansas Fire and Police Pension Review Board. We did not audit this data, although we did review it for reasonableness and consistency. The purpose of this report was described earlier. This report is not intended for any other purpose or for use by persons who are not familiar with such matters. If you have any questions or comments, please let me know. Sincerely, Jod Carreiro, A.S.A., M.A.A.A. Actuary TABLE OF CONTENTS EXHIBIT 1 PROJECTION OF FUTURE CITY OUTLAYS EXHIBIT 2 SUMMARY OF FINANCIAL INFORMATION EXHIBIT 3 DATA PROFILES EXHIBIT 4 SUMMARY OF THE PLAN'S PROVISIONS EXHIBIT 5 ACTUARIAL ASSUMPTIONS EXHIBIT 1 PROJECTION OF ASSET LEVELS There are three charts of results, followed by the graphs of those results. These are based on two sets of assumptions: (1) Using the plan provisions in effect on January 1, 2006 and the assumptions used by the Arkansas State Fire and Police Pension Review Board that were used in the December 31, 2005 actuarial valuation. This chart and graph are labeled as "Current Plan". (2) Using the same assumptions in (1) above, except increase the monthly benefits by 3% per year for the three years, 2007 — 2009. (3) Using the same assumptions in (1) above, except increase the monthly benefits by 3% compound per year permanently. The graphs show that the current income will maintain the fund under only the current benefit structure. The graphs also show an area around the most likely scenario line that represents other possible results tested. For example, the lower parts of these bands are reached if investment earnings are .75% less than expected OR if the millage grows 1% slower than projected. In addition to the assumptions listed in Exhibit 5, the following assumptions were also made: (1) The local millage of one mill was assumed to produce $339,000 in income per year to begin. This amount averaged about $300,000 over the past three years. The increases have averaged about 8% over the last several years. The city has a current projection of 7.8% per year without further development. Using this information, we have assumed 7.8% for the first five years, grading down to level 2% over the next ten years. This assumes that the millage continues indefinitely. (2) The City's matching contribution was assumed to be 6% of covered payroll. (3) The actual insurance premium tax turnback of$151,560 for 2006 was used. ($225,492 was the amount in 2005). The overall premium tax was spread much thinner this year and will continue to be. Since the premium tax allocation is now based on the cost of the plan as defined by the calculated contribution, we projected the calculated contribution in future years. Then we assumed that the same percentage of that the minimum percent covered, 8.8%, that was received for 2006 would be received in future years. Since the current plan is projected to be fully funded in 25-30 years, the premium tax income is projected to stop at that same time. The premium tax allocation is not adjusted up when benefit increases are given. 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