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HomeMy WebLinkAbout2011-04-28 - Agendas - Final Fayetteville Fireman's Pension and Relief Fund Meeting Date Adjourn Time Attendees: "Aa maa�� A S.C: /H aA (311,46 I (A)IIIinA"i a,;41 Ond :rjAft 'doAtIt, Wi4k rKA10-111 v Subject: Subject: i rvA& oc�,O�� /-?I ,-J dAV LaAA.,L 2.1 .2 0 r) Motion By: Motion B . �g 0 0 14 Seconded: Seconded: Mayor Jordan Mayor Jordan Marion Doss Marion Doss Pete Rea-gan 4,65z*,t Pete Reagan Gene Warford Gene Warford Ronnie Wood Ronnie Wood Sondra Smith Sondra Smith Subject: Subject: Motion By: Motion By: Seconded: ROAAL�, Wold Seconded: UJOA Mayor Jordan Mayor Jordan Marion Doss Marion Doss Pete Reagan Pete Reagan Gene Warford Gene Warford Ronnie Wood Ronnie Wood Fsondra Smith Sondra Smith Fayetteville Fireman's Pension and Relief Fund Meeting Date -Ov-/I Adjourn Time I M Attendees: Subject: Subject: Motion By: Motion By: eT� Seconded: Seconded: Mayor Jordan Mayor Jordan Marion Doss Marion Doss Pete Reagan (Jc- Pete Reagan Gene Warford VII Gene Warford Ronnie Wood vl� Ronnie Wood Sondra Smith VII, Fsondra Smith Subject: Subject: 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 ISondra Smith Sondra Smith Ron Wood Position 4/Retired Uoneld Jordan Chairman Pete Reagan Position 2/Retired Sondra E.Smith Secretary Gene Warford Position 3/Retired Marion Does Position IlRetired Tayve e;lile ARKANSAS Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda April 28, 2011 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees will be held at 3:00 PM on April 28, 2011 in Room 326 of the City Administration Building. Approval of the Minutes: October 18, 2010 Special meeting minutes, January 27, 2011 meeting minutes and the February 14, 2011 Special meeting minutes Pension List Changes: None Approval of the Pension List: May, June and July 2011 Pension List Old Business: 0 Letter to PRB regarding the projected insolvency status of the fund New Business: * Revenue Expense Report for March 31, 2011 * Parking tokens are available for the board to use when attending meetings. Pleasego by the Parking office to get your tokens. * 2011 Elections: Gene Warford and Ronnie Wood are up for election. Do we send ballots regardless of the number of nominations Do we need to call a Special Meeting to open the ballots and count the votes Longer Investments: Quarterly Report— 1 at Quarter 2011 Informational: 2011 Meeting Schedule Special Meeting Minutes October 18,2010 City Council Board Members Firemen's Pension Board of Trustees Pension Review Board Mayor Jordan Chairman Page I of 16 Sondra E.Smith Secretary Marion Doss Position I/Refired Pete Reagan Position 2/Refired TayeVI Gene Warford Position 3/Retired Ronnie Wood Position 4/Retired Special Meeting Minutes October 18,2010 City Council Firemen's Pension and Relief Fund Board of Trustees Pension Review Board A Special meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees, City Council, PRB, and Actuary Jody Carreiro was held at 4:30 PM on October 18, 2010 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Fire Pension: Ronnie Wood, Pete Reagan, Marion Doss, Gene Warlord, Sondra Smith and Mayor Jordan. City Council: Brenda Thiel, Adella Gray, Bobby Ferrell, Sarah Lewis, Kyle Cook, Shirley Lucas and Matthew Petty. Other Attendees: Kit Williams, City Attorney, Paul Becker, Finance & Internal Services Director, Jody Carreiro, Osborn, Carreiro & Associates, David Clark, Pension Review Board,Audience, and Press. A meeting to discuss the insolvency of the Fayetteville Firefighters Pension Fund. Special report from Jody Carreiro of Osborn, Carreiro & Associates Inc. Actuaries Consultants Analysts. Jody Carreiro, Osborn, Carreiro & Associates Inc.: We have been the actuaries for the Fire and Police Pension Review Board for 20 years. These analysis have been different, it's different because we have had to stretch our muscles to do some of these things. Some of the Pension Board members have seen this and some of it will be new. Mr. Carreiro presented a PowerPoint presentation regarding the actuarial report. A copy of his report and graphs is attached. Now that everyone has retired the liability should be trailing off. Between 2007 and 2008 you had the last big DROP payment out of the plan. The Pension Review Board decided they were 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 2 of 16 going to review and adjust the discount assumption for the liabilities on a routine basis. They did that based on the returns of the previous five years. This created a $3.8 million increase in liabilities from that change in assumptions. The discount factor going from 7% to 5% really increased those liabilities. There was a 23% increase in this last evaluation. What we are presenting to you is a cash flow simulation process. The evaluation is a snapshot in a particular year versus in this cash flow simulation it is year by year the expected income and expected benefits for every year during this projection period. With an evaluation we have liability assumptions, interest, discount, mortality, and other things like that. With this we have some added asswriptions about what the asset income pieces are going to be. These assumptions are not guesses but they are not predictions either. They are not going to be accurate but they are going to give us the best idea of the direction that things are in. We hope it is right- Page I I and page 12 of the report is 10 years of financial history. At the bottom of page I I is a line called non investment cash flow. Ignoring investment income is the income minus the expenses. That is important because we are in the phase of life of this plan that our non investment cash flow is an out flow. It is no longer net income because everyone is retired now. Ten years ago it was a small number and now it is up to about $800,000 every year. That is our benefit payments, which the benefit payments have increased over the past ten years, the benefit payments less the income items is going to be over$800,000 out flow every year. Page 12 shows where the assets were ten years ago they were over $12 million and now we are down to under $6 million. We want to be closer to ten years of benefits in our assets and we are down to right at four years, which is too low. The last ten years in the market have been brutal. Market returns have been around 2% over a ten year period. There has been ten years of under performance. The next several pages are the profiles. Page 15 shows you the age of all the retirees, page 17 and page 18 lists the plan provisions. Page 19 lists the benefit increases that this plan has received over the years. The base benefit in the law is 50% of pay. In 1996 that was increased from 50% to 65%, in 2001 the plan went from 65% to 90% of pay as a base benefit. In 2003 there was a three year temporary 3% COLA that was approved. In January 2007 you asked us if you could afford any other benefit increases and you could not at that time. The liability assumptions are on page 20 through page 22, mortality assumptions is the big thing here. We did a study on all the fire and police plans in the State and determined the table. The 1983 Group Annuity Mortality Table was closest to the mortality of the folks through the period that ended at the end of 2007. We Will continue to review that every few years to see if it needs to be updated. We also project based on the mortality of the retirees with spouses. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,20 10 City Council Firemen's Pension Board of Trustees Pension Review Board Page 3 of 16 Pages 23 and page 24 is the asset projections assumptions. For each income piece we had to project how much income was going to be produced with that. The millage in the last several years has increased more than 2%per year. The 2% a year is a national real estate average. Since everyone is retired there is not any employer match any more. The premium tax is very difficult to understand. In 2010 the plan received about $123,000. It is based on a long complicated formula that allocates based on the cost of every old plan and every LOPFI plan and then a percent is applied to it, and then there is a second round to where hopefully you will get some more money. It has been hard to predict and it is not growing as fast as the needs of the pension plans. The pension plans on the LOPFI side and the old plan side both have growing cost. For this study we did not assume a discount rate, we assumed a portfolio. That portfolio is broken into six categories. Page 24 will show how much was allocated to those categories. The first thing in the results to look at is on page 3. There are several charts that we are going to go through. With the portfolio we did 2000 simulations over 30 years in six different categories. We arranged the results from worst to best. What the graph tells us is that right now your fund has about 91% chance of using up assets before the liabilities. You have a risk of rain of 91%. That is not very good. We do not want to ever ran out of money. We would like a risk of ruin to be 5%and no more than 10%. That means we have a lot more risk than we want to have. The next two graphs show what will happen if you are more conservative to take away some of the risk or more conservative to make more money. If you are more conservative it gets a little worse. Being more conservative does not give you enough earnings to increase anything. A more aggressive portfolio still has you running out of money in 12 years. It is fractionally better as far as the risk of ruin. It is just under 90%. If you can find a 15% CD you could earn your way out of this hole. They do not exist. A 15% portfolio is not going to happen. It would have to be a 15% risk free portfolio to earn our way out. If you add money to the plan over the next fifteen years you might make this plan solid or reduce our risk of ruin to 5%. It would take $325,000 per year for 15 years and $250,000 a year for 30 years. I don't think there is money to do that. The following are possible actions you can take: I. Maintain the current direction. There is a high probably of running out of money if we do not do anything. 2. Additional City contributions. City probably does not have the money. 3. Consolidation with LOPFI. City makes up any difference. The City pays the unfunded liability. 4. Benefit reductions. The opinion is that is not probably possible. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 4 of 16 The benefits after 30 years are still $665,000. That is just less than half the benefits that are being paid out now. Some of your retirees are not very old and many of them have spouses. This plan pays benefits to the spouses as well. If the plan consolidates with LOPE the estimated costs go up every year. The LOPFI amortization when you consolidate is based on a 15 year amortization but it is a level percent of payroll so it grows by 4%per year. Mayor Jordan: Any comments or questions from the pension board? Pete Reagan thanked Jody Carreiro and David Clark for coming. You talked about the local millage on your report. I will direct this towards Paul. I don't know if our numbers are going to be up or down. I suspect that in my own personal piece of property the amount it was appraised forisdownfor2010. Does that mean our part of the millage will be down? Paul Becker: From the projections on the assessed valuation I've seen it'Arill not be down but it Will not be up compared to last year. Next year I don't see a big decrease but we are not going to see much of an increase. Pete Reagan: Thank you. Jody on the fire insurance premium tax do you see any way to increase that solely for old funds that are in distress and then roll it over into LOPFI once they become able to stand on their own? Jody Carreiro: The current frame work to present to the legislature is that the old plans would get a portion of their calculated similar to now. Then there would be an extra portion based on unfunded, so the bigger your unfunded the more your portion would be. This second portion would be assuming the City did everything it could, now defining that is still in�negotiations. The thing was the I mill but it may be a combination of 1 mill or a percent of a pay off of the unfunded. It maybe a deal where the City has to come up with a little extra money to get more extra money. The idea is the cities that are in need would be able to get some more. To be honest the proposal is that calculation would be based on base benefits. That wouldn't cover all your liability because you guys have a significant benefit increase. There will be a calculation based on base benefits and then that's the calculation that people will get help on. Pete Reagan: Do you think it is possible to pass an increase in the fire insurance premium tax? Do you think that is a viable alternative? Jody Carreiro: The proposal that's out there right now is a better distribution of money and a way to increase that pot faster. It is probably one of our best bets on doing that but frankly the Governor and DF&A are going to fight it tooth and nail because they need every penny they've got right now. Does it have a great chance, I don't know. I think there is a lot of support from both boards and they are building support from the Municipal League. Sondra was at the meeting where that committee voted to endorse it. I was almost surprised. We are beginning to come together. The Legislative Committee, whenever they meet again, will hear the same 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 5 of 16 presentation. If they get behind it too then we can sit down with the Governor and say there are a lot people behind this and here is a way to fix this problem long term. It's not going to bother your budget this year but it's going to cost more money in future years but this is a way you can fix this once and for all. That's the hope and direction. Whether it works I don't know. Pete Reagan: Assuming this passes can you put a dollar figure to that piece? Jody Carreiro: Not yet. Not until I know more of what some of these things mean and that's going to come from the discussion from other people. Paul Becker: Jody I have seen your preliminary numbers. I think the thing we should let everybody know is that is not going to solve this problem. Changing the distribution of premium taxes is not going to be large enough to resolve this problem. I feel a responsibility to let you know where we are. You have to understand the Council, Mayor and Administration are looking at approximately a $1.4 million short fall in the General Fund alone that we are going to have to come to grips with. We are either going to have to use reserves, cut capital, or cut operating �xpenses. It's a rather difficult time to have a discussion of coming up with additional funding. Jody Carreiro: I understand. Paul Becker: Especially when we are talking about, if I recall the numbers correctly, if we sent it to LOPFI your estimate is $163,000 the first year graduating to roughly $600,000 after 15 years or putting in $250,000 over a 30 year period. You have to understand in these discussions the Council is already grappling with a problem beyond this. City Attorney Kit Williams: I have attached an opinion letter to our budget every year for our auditors that says the City is not currently liable for any short fall in the pension firrid. The pension fund is controlled by this Board. They are the ones that voted increases in it without the increase to 90% and a 3% COLA for five years we wouldn't have this kind of problem. The Mayor and City Clerk are also on the board but it's really the responsibility of the board and not the City, legally and in my opinion not even morally because there is nothing that the City Council can do to say you're spending to much money and you need to cut benefits. It's totally up to the board on that. This is their pension plan just like the police, they have their own independent board. It's not the City Council's responsibility legally or in my opinion morally. They have to decide as trustees. They have a fiduciary duty to every beneficiary out there to make sure this pension plan does not go bankrupt. We have a difference of opinion about some of the options. One option they did not discuss is an option I believe is the only true option available to this board and that is to reduce benefits. The benefits would not have to be reduced dramatically at this point in time. It would still be way over the 50% that the statute originally set this as but the Attorney General and this board disagrees with me. If the board decided to go forward like that someone or some pensioner might possibly sue the board and say no I am entitled to the full amount. A judge would then decide and basically we would have a true decision on it. My opinion is the board does have that inherent power. There are things within the statute that I believe give them the power and also there is the simple responsibility that they 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 6 of 16 have a fiduciary duty to preserve this pension plan. That gives them inherent rights to take whatever action is necessary within their power to make the plan last and not to have a 95% chance of this plan going broke. This is not a surprise. More than four years ago 1 told them I was concerned about the pension plan and that they needed to reduce benefits. They have heard this for more than four years from me and that was in August 2006 before any crash in the market. That is after a big run up in the stock market where our financial advisors for the pension plans had done wonderful. She earned them lots and lots of money and yet their fund was still going down and that's why I could see the hand writing on the wall. That's why I asked them to consider that. Alderman Ferrell: Kit, we talked about on any kind of benefit change that the Attorney General says he doesn't think that would be allowed. Did the Attorney General have to opine on any of these votes to increase benefits from 50%to 65% and 65%to 90%? City Attorney Kit Williams: No. Every time benefits were increased by this board it went through the State Pension Board and they had to approve it. To approve it they always used a cash flow method at least for the last few years because actuarially it would not have made it. They used those assumptions, it use to be 6% growth then it went up to 7% growth and now it is back down to 5% growth. They are using the assumptions that the investment portfolio would grow fairly aggressively and when that did not happen that is why things got in trouble. The pension board always followed the law. They only approved increases when they were approved to do so by the State. Sondra Smith: We proposed in two separate meetings a benefit reduction that the Mayor and I supported. In one meeting one other board member supported it but we did not have a majority vote to reduce the benefits. Alderman Ferrell: What kind of reduction did you propose? Mayor Jordan: Twenty percent wasn't it? Sondra Smith: Jody gave us a presentation at one of the meetings. In that presentation he stated it would take a 20% to 23% reduction. One motion was a 20% reduction. I believe the other one was 23%or what Jody thought it would take to gets us even. Mayor Jordan: Both votes failed. Paul Becker: Jody, people have asked me about the cash flow analysis. We could not pass the actuarial analysis test because that is based on a five years of actuarial soundness. Is the cash flow analysis a statutory analysis, or is that defined by statute? Jody Carreiro: The statute says the Pension Review Board can define actuarial soundness, For many years they defined actuarial soundness as if your assets over liabilities were over a certain 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 7 of 16 percent, whatever that was, and if your plan was making the calculated actuarial contributions. The calculated actuarial contributions, since everyone was eligible to retire in 2003 under these plans, they were quickly moving so that the amortization of any unfunded was over a fairly short period and rightfully so. The trouble with that is nobody can make that kind of a contribution. They weren't going to get it paid off in five years. The decision was made probably 15 years ago to use the cash flow method. The big thing about that was that millage and premium tax would continue after 2003. Those things would continue for quite some time and if we looked at the cash flows, what was coming in, and the expected benefit payments, and the plan was not expected to run out of money, then the board's definition of actuarial soundness was that the plan would then be sound. That is the method that was used for all of the benefit increases that this plan has had. Paul Becker: That was an administrative decision by the PRB. Jody Carreiro: That's correct. Sondra Smith: There is one thing in the report on page 19 that I would like to point out. In the changes in benefits, on November 20, 2003 it says extend the DROP to 10 years, that was approved by the pension board to go to the City Council but the City Council voted against that and that motion failed. We did not extend the DROP to 10 years. We only had a five year DROP. That DROP is finished. I don't know if everyone here understands what the DROP was. Alderman Ferrell: Would you explain that? Sondra Smith: I don't know as much about it as some of these gentlemen here do. They were allowed to go ahead and work for an additional five years and money was set aside in a lump sum distribution for those pensioners during those five years because they weren't drawing from the pension fund during that time. The way I understand it their dollar amount was frozen that they could draw when they went on the DROP. So if they got any pay increases during those five years they would stay at the same level they were at when they went on the DROP. Jody Carreiro: That's pretty good. Sondra Smith: But in doing that there was an additional $3.3 million paid out to 19 pensioners on the DROP plan. That may have made a little bit of difference too but you don't know whether they would have gone ahead and retired or continued working. Jody Carreiro: Sondra did call me to point that out. I took it off my slide but I couldn't take it out of the book. There are lots of issues here that we can talk about. The benefit increases and all that evidentially puts a huge weight on this but those were all approved with some type of interest rate assumption. The market has treated us poorly for 10 years which is not anyone in this rooms fault. You earn 2% for 10 years if your assumption is 5%, 6% or 7%, it doesn't matter you're way behind if you do that for 10 years. Whatever effect the DROP ultimately had its hard to quantify but again that was an affect that was in there. This was not intended to try to 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 8 of 16 dissect all the affects of why we got here but maybe to throw out some ideas to spawn some discussion so that maybe we can find some solutions of how to get to where we need to be. Alderman Petty: I looked back at the financial records provided for the fund and it seems that it's been obvious that this has not been actuarially sound for quit some time. I was wondering why benefits were raised so much in the first place? It doesn't seem like it was a responsible decision to begin with even when the market was gang buster the fund wasn't sound. Why has it taken so long to get to a point where we are talking about actions? Mayor Jordan: That was before my time. I don't think I have voted for a benefit increase since I have been here. What were the circumstances that you all raised it from 50%to 90%? Jody Carreiro: The fund was sound at the time every benefit increase was made or it would not have been made. It met the definition of soundness. Clearly since I did a lot of those actuarial reports I've sit around and said why, did we put in enough room for variance? Did we put in enough area that was there? I think based on what we knew at the time that each of those reports were done, what information we had, except for investment returns they have been pretty much been on track. I went back to some old cash flows and said where does it say we are in 2010. If I add what happened in the market from that point to 2010 it explains what the difference is. The plan was always sound and as your attorney has said they followed the proper steps each time the benefit was done. Sondra Smith: If they had asked for the benefit increase on an actuarial soundness study would they have still gotten those benefit increases or was it because they asked for them on a cash flow basis? Jody Carreiro: There were two definitions that were available, two ways to prove that you were actuarially sound. You could meet this assets over liabilities were over a certain percent or you could prove that this cash flow was going to meet my benefit out flows over the long term. Evidentially they didn't choose method number one, which says assets over liabilities had to meet a certain percentage,they chose method number two each time which said the income items as we knew them at that time were going to be greater than the benefit stream. Alderman Petty: From my understanding what you just described and from the presentation it sounds like obliviously mistaken projections were made about investment income. To me the fact is the board counted their chickens before they were hatched. That was something that was not right to do. Speaking for myself as a council member, if responsible decisions were being made by the board and benefits were at a responsible level, then I would be willing to step in as a City and help it reach solvency. Until we've seen a willingness to demonstrate action on the part of the board I'm not willing to do that. I hope today we can get this discussion started on how we are going to get these benefits lowered. I know the Attorney General and the City Attorney have a disagreement of opinion. Attorneys aren't judges and their opinions are wrong sometimes and it's up to a judge to figure that out. The Attorney General has been wrong before. I think this is a case where we need to go forward and we need to have the courage to do this so we can all do 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,20 10 City Council Firemen's Pension Board of Trustees Pension Review Board Page 9 of 16 our part. I'm not willing as a City Council member to take action on the part of the City until that is the case. Alderman Thiel: I agree with Matthew. I feel like the board can vote to reduce their benefits and it may be challenged and it may not be challenged. I think the Council would like to help but the pensioners should help too. Alderman Gray: I agree as well. The City does not have plenty of money. We've had to make some big cuts and we are going to make more cuts. I think we have to have everyone's help in making this balance and make it work. Alderman Ferrell: On June 6, 2001 the market was on fire. Some of the returns coming in were incredible. I'm not an actuary and there's a lot more to it than looking at this year. Understanding that I still go back to the organizational function which says there are fiduciary obligations by a pension board. The fiduciary obligation means you are compelled to take a look at the solvency if this. That is where we are now and we need to figure out a way to get it back. Alderman Lewis: Thank you for explaining some of this to me. I agree with Alderman Petty. I would have to ask myself, according to the probabilities in the current market, is this going to run out before I die. I have to ask myself if I would like for it to run out or if I would like it to last me longer. There is a chance that the market can turn around and if I leave some money in the market to come back up, then I can make more money. With the economy as slow as it is we are probably not going to see the bubble that we've seen in recent years that means I would want to stretch that out as long as I can. From a former grad students point of view I would want to be stretching every penny because across the board we are all trying to do that. We are all trying to squeeze out every bit of the City budget and our personal budgets. I would really like to see an effort to reduce those benefits and really look at the numbers, to see what that means for the individuals and how long would it be before there would be a reconsideration of that. It could be revisited if the market turns around. Even with this plan there are only three little bullet points that look at a reduction of benefits and it doesn't include all of the different reasons. Alderman Lucas: I agree With what the Council members have said. When people retire from a company they usually have a choice of taking a big pay out that begins in 10 years or ends in 20 years or they take less and hope it lasts as long as they do. There is a board that decides this and decides how much you should get with your expected life expectancy. Like Bobby said it was the fiduciary duty of the board to make sure this lasted this long. I would like to see them work at doing that. Alderman Cook: What is the LOPFI payout benefit? What is their percentage compared to this plans payout? David Clark: LOPFI has a maximum benefit payout of 100% if the person works 34 years and one month under benefit program one. We don't have anyone there because this system is at 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 10 of 16 year 28 in its existence. That was a legislative change that occurred in 2009. It use to be a max of 85% if you were under program two or 80% if you were under program one. On the discussion about the fiduciary responsibilities of the local board and how the benefit increase works, I'm not sure everybody fully understands how the benefit increase process occurs. The local board has to pass a resolution to be able to enact any type of benefit increase proposal. That takes six of seven board members signatures and your benefit increases had six of seven signatures. Two of those were your City official representatives which would have been your Mayor at the time. Mayor Jordan: David, I have not voted for an increase. David Clark: I said Mayor at the time. I understand that Mayor. These increases occurred before your time. I think everyone heard me correctly but it was before this Mayor was in office. The point being is that there was an employer representation on these benefits increases that occurred. Six fiduciaries signed the resolutions and it was processed through PRB. PRB did a cash flow analysis and said whether or not the fund could afford the increases and then pushed it back with the approval letter that it was up to that same board to go ahead and act on the benefit increases at that time. That is the reason why the PRB has said that there is a statuary provision 24-11-102 that says a local board can do a benefit increase. There is not a 24-11-102 and a half that says you can decrease benefits. There is a section that talks about prorating benefits in the year that the pension fund runs out of assets. That's the reason the Attorney General has come back and said, and the PRI3 agrees, that there is not a statutory provision to reduce benefits. Clearly there is some wisdom behind that, because of where the pension fund is at, but wisdom and what the state law allows at this time are not necessarily in alignment. That's the reason why PRB has tried to be very cautious in this report to not spend time on reducing benefits. If we got on board and said you need to reduce benefits that is going to interject the PRB into possibly a lawsuit that we don't want to be a party to, If you guys go through the benefit reduction process you have to question yourself whether or not this board is following state law. That's up to board to make that decision that's not up to me or the actuary. There is not a provision to actually roll benefits back on the local plan. It only indicates where the fund runs out of assets in that one year. City Attorney Kit Williams: Actually that's not what the statute says. It says should thefund providedfor in this subehapter be insufficient to make full payment of the amount ofpensions to all persons entitled there to, not in that year, then thefund shall be prorated among those entitled by proper authority as made to be deemedjust and equitable. It does not say you have to wait for the fund to hit the ground and die. It says if it shall be insufficient to make full payment of all money to the pension of all persons entitled there to. We just heard from Jody Carreiro that's where the fund is now. David Clark: No it's not. The fund is not there. He said the report shows that it is 10 years out or perhaps I I years out. So no Sir that is not correct. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,20 10 City Council Firemen's Pension Board of Trustees Pension Review Board Page I I of 16 Kit Williams: It does not say you have to wait until the last year. It says if it becomes insufficient and I think we have seen it is insufficient at this point in time. If it is not going to able to survive and pay full benefits the statute says they will be prorated. The difference between the Attorney General and myself is that they think the fund must be driven into the ground before this board can reduce benefits. My belief is they have a fiduciary duty and they can keep this ftmd from being driven into the ground. Mayor Jordan: David we could end up in court by letting this thing run into the ground. David Clark: Yes Sir. Mayor Jordan: I don't want this to go into the ground. I don't want these people without some kind of pension around here. David Clark: I don't think they do either. Mayor Jordan: We say we can't reduce benefits because we could end up in court but I can assure you when this d-iing runs into the ground some of these folks out here may take us to court and I don't blame them. It is our job to keep the thing a float. I agree with Shirley Lucas, you can take a big lump sum or you can reduce the benefits and keep it going and then reconsider it later and if things get better you can add back to it. David Clark: I agree with that way of thinking. That common sense mind set, which is really what we are taking about here, is not in alignment with current state law. That is the position of PRB. Alderman Gray: Jody, have you done any kind of calculation as to what kind of a reduction it would take? Can you give us an idea of what some of our pensioners and widows are getting and what it would mean to their monthly check? Jody Carreiro: We did those calculations last year. They would be a little different now but there is a report that states what that reduction would mean. That's certainly calculations that are pretty straight forward to do. We have a profile page that we looked at earlier that showed how old everybody was and what their benefits were. Vit Williams: Sondra do you have the monthly payment list? Sondra Smith: Yes. Alderman Ferrell: I worked for a big company and when you elected to retire you had options. You could elect to take an annuity or then in the case of your death you could elect to have a survivor's annuity which your survivor would get a discounted annuity. Is this the same deal? 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 12 of 16 Jody Carreiro: The state law in Arkansas, for the fire and police funds, is that their member gets a benefit and without having to take a reduction their spouse, that's defined in the law, keeps the same benefit. It is what's considered a very generous joint and survivor type annuity. Typically especially in the company setting you'll take $95 instead of$100 to get a 50% benefit for your wife. There is no reduction in state law and the spouse gets 100% of what the member was getting. Kit Williams: That was the old plan but with the new plan in LOPFI they have to take a reduction if they want to cover their spouse. David Clark: That's correct. Kit Williams: How big of a reduction is that? David Clark: If they do one of the"A" options there's hardly any reduction. If they do the "B" option, which is a continuing life time payment to the spouse its 50% of the life time benefit to the member or 75% of the value benefit goes to the survivor if they choose "B" 75. It is a pretty significant reduction but it also goes against the age difference of the member verses the surviving spouse. Kit Williams: That is all of our current employees for police and fire that are working under this plan. David Clark: That's right,yes. Marion Doss: I think that is spousal benefits until they remarry. It's not forever. Jody Carreiro: That's true it does have a remarriage provision. Pete Reagan: Do you know what the current rate is for LOPFI employees for the Fayetteville Fire Department? David Clark: Employer contribution? Pete Reagan: Yes. David Clark: I don't know off the top of my head. Paul Becker: For fire? Pete Reagan: Yes. Paul Becker: I think it's a little over 23% if I remember correctly. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 13 of 16 Pete Reagan: The City is paying 23% of payroll on every employee in the Fayetteville Fire Department for their pension fund. Paul Becker: If my recollection is correct, yes. Kit Williams: That is set by law, right? David Clark: In effect it is because it's an annual evaluation process. Pete Reagan: For the City Council members and the public that is watching the maximum that the City ever paid into the old fire pension fund and the old police fund was 6% of payroll. That did not start until 1983. Before that the City paid 1% of payroll into the fund. Also we talked about the minimum benefit that was set by state law was 50%, that's the minimum. Nothing can happen to that. I also want everyone to understand this fund has no COLA built into it. I think the LOPH fund has a 3% compounded COLA built into it. The members of the old fund are not covered under social security. This is all that was offered to us when we hired on. We don't pay social security. We are not involved in the social security fund. This is our pension with no built in COLA. Sondra Smith: Are the LOPH benefits for the widows as generous as this plan? David Clark: No, significantly different and it is because of the actuary reduction. If the member chooses one of the continuing lifetime benefits, it's not automatic that they have a lifetime benefit. Sondra Smith: You're really comparing apples to oranges when you are comparing the old plan to the LOPFI plan. David Clark: I tend to agree but you are still comparing fire fighters and police officers. Paul Becker: We are talking about benefits for the current LOPFI. The salary is averaged over a five year period? David Clark: Three years, the last ten years of employment we grab the highest 36 consecutive months within that 10 year period. Paul Becker: If I recall the old plan did not average. Pete Reagan: Base salary at retirement. Paul Becker: If we are going to talk comparison about the plans we also have to consider that. Sondra Smith: Does the LOPE plan have the DROP? 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Devicc for the Deaf)(479)521-1316 Special Meeting Minutes October 18,20 10 City Council Firemen's Pension Board of Trustees Pension Review Board Page 14 of 16 David Clark: It does but it has a different DROP structure. It has a five year just like this plan does but if the person has 28 years of service 75% of their benefit goes into a DROP account as opposed to a 100%benefit. If they have something less than 28 years of service than it is 72% of their benefit goes into their DROP account. Kit Williams: Would that have to be approved by the City Council? David Clark: No, that is a product of state law. LOPE already has the DROP so your current firefighters could go into DROP once they reach eligibility if they choose to do so. Sondra Smith: I've been on this pension board since 2003 and I have been concerned ever since then. At one point in time I asked the question about if we raise benefits can we ever reduce them, it was my understanding we can. We can when the plan goes bankrupt basically. I did not vote for these two large increases because I wasn't here then, but I would not have voted for benefit increases knowing that you can never reduce them if you needed to. There was probably people that sat on that board at that point in time, other Mayors and City Clerk's that if they had know that benefits can not be reduced they probably wouldn't have voted for the benefit increases either. That's an assumption but I know I wouldn't have, knowing that in bad times we couldn't reduce the benefits. Kit Williams: I think you can before it goes bankrupt. Pete Reagan: I think that's the reason they have courts so lawyers can argue. Kit Williams: So we can have decisions made. Sondra Smith: We had a question about how much they are currently drawing and what a 20% reduction would be. We have several folks that are drawing under $150 a month if they were a volunteer or a spouse of a volunteer. The majority of the pensioners draw anywhere from around $1,600 a month to $5,000, there are a few that a drawing under a $1,000 per month but not very many. Most of them that are drawing under $150 a month are retired volunteers. Carl Springston: You have a retired assistant chief drawing less than $500 a month. Sondra Smith: There are a few drawing under $1000 but not very many. I can run those percentages if you would like them. Mayor Jordan: What does the board want to do? Do you want to wait? Pete Reagan: My opinion is we need to wait and see what the proposal is from Municipal League. They are going to endorse a proposal and see what the numbers look like before anything is done. I've said all along the courts are made for attorneys to argue in. We've got oar attorney who says we can reduce benefits and the Attorney General of the State of Arkansas who 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 15 of 16 says we can't. We have a session coming up. I've said all along I don't want to rush into this. We have been doing this for a year and a half now. Mayor Jordan: So we will wait. Pete Reagan: I would like to thank Jody and David for taking time out of their schedules to come up here and educate us on this. Mayor Jordan: Is that the agreement of the board? Marion Doss: How long are we talking about waiting for this change? Pete Reagan: The session starts in January and runs until they get done. Kit Williams: According to Paul it's still not going to be enough even if they pass it. Pete Reagan: I understand but if there's more money coming into the fund we need to look at that. Kit Williams: I will note that judges cannot make a decision unless there is a case in front of them. We can't bring a case in front of a judge at this point in time because there is no case in controversy. In order for there to be a case in controversy this board would have to take affirmative action to at least attempt to reduce the benefits. Then one of the beneficiaries out here could say, Attorney General they did something wrong and why don't you sue them for that. Then the Attorney General and I could go up in front of a judge and let the judge determine what the law is. If I am wrong there is not much down side for this. You have money in the pension fund to pay everyone back what they should have been getting because I was wrong and they should have got 100% instead of 70%. However if I'm right and you have figured out a way to fulfill your fiduciary duties and not let this fund go bankrupt, then you will have done that and a judge will say you have that power. If you continue to take no action then I don't know how it will ever get before a court until it is too late and all the money is gone. Mayor Jordan: Again I will ask the board for a recommendation. Do you all want to wait? Pete Reagan: Yes,that's my recommendation. Gene Warford: I second it. Marion Doss: I will say I am in favor. I would like to see when we find out about this some kind of a compromise. I would like to see consolidation. I don't know how the other board members feel about that, this is my personal opinion. I think that's the only hope to get this problem away from the City. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Special Meeting Minutes October 18,2010 City Council Firemen's Pension Board of Trustees Pension Review Board Page 16 of 16 Mayor Jordan: My opinion would be if that is what you want to do we can wait until after April, it's your pension. I will go along with that if you want to do that. Mayor Jordan thanked the City Council members, board members, retires, and Jody and David for coming. Meeting Adjourned at 6:00 PM 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board Members Board of Trustees Meeting Minutes January 27,2011 Mayor Jordan Chairman Page I of 10 Sondra E.Smith Secretary Marion Doss Position I/Retired Pete Reagan Position 2/Rctired TayeVie Gene Warford Position 3/Retired ARKANSAS Ronnie Wood Position 4/Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PM on January 27, 2011 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Gene Warlord, Marion Doss, Pete Reagan, Sondra Smith, Mayor Jordan, Paul Becker,Jason Kelley, Trish Lcach,Kim Cooper,Longer Investments, Press and Audience. Ronnie Wood was absent. Lon2er Investments: Ouarterly Rei)ort—4th Ouarter 2010 Sondra Smith: Do we want to go ahead and let Longer Investments give their report? Mayor Jordan: Yes, I would. Kim Cooper, Longer Investments: Elaine is attending an investment conference today. She is sorry that she missed your meeting. I will deliver your reports and try to answer any questions that you may have. The first page is a portfolio appraisal as of year end. Your equities or common stocks are listed first and they were 53.7% of portfolio. Your foreign stocks are 4.6% of portfolio. Your total equities were 58.3% so we need your approval to be at that level. Equity Overae Pete Reagan moved to approve the equity overage. Gene Warlord seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. Vim Cooper: Continuing on page two you can see your fixed income holdings. We own a couple of fixed income mutual funds that are yielding 4.8%. Your preferred debt is yielding 6.3%. You've got a couple of corporate bonds in there that are yielding over 7%. The government bonds are at 4% and on page three government agencies are yielding 5.9%. The alternative investments that are listed on that page, The Central Fund of Canada, that is a gold and sliver fund that we are using to get some precious metal exposure for you. Your cash is 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firmen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 2 of 10 about 4% of portfolio. Your total portfolio value as of December 31't was $5,541,883.00. Your overall yield on the portfolio is 3.6% and that includes your stock dividends and your bond interest. As an update the portfolio appraisal as of yesterdays close is on pages four, five and six. Your value is still at that$5.5 million level. Page seven is your realized gains and losses and income and expense summary for the year. Your realized gains and losses for the year were $244,000 and your net income which is your dividends and interest net of any fees was $132,971.00. Page eight is a summary of your bond holdings. The right hand side of the page lists your weighted average yield to maturity as of December 31" which was 4.8%. Your average maturity was just under 10 years and your average coupon was 4.85% and the average duration was 7.2%. That 4.8% yield to maturity compares to the current 10 year yield which is now 3.45% so you are still well in excessive of the 10 year yield even though that is where your average maturity is as well. The lower portion is a breakdown by maturity of the various bonds that you hold. Page nine has a lot of information. That is your performance summary. It lists each year and then for 2010 in the equity column your equity is up at 12.5% which is in line with the S&P 500 cash basis index. Your equity mutual funds in 20 10 were up 9.4%. Your bonds were up 8% and that compares to the Lehman Bond Index which is 4% for the year so we about doubled that index. Your gold and silver is not listed on this report but that gold and silver fand was up 32% for the year. Your total account performance for 2010 was 11.5%. The blended S&P 500 50% government bond index was up 8.9% so that 11.5% compares with that 8.9% so we outperformed that as well. Your annualized return on equities is 4.7% and that compares to the S&P cash basis return of 3.7%. Your total annualized return over the time that we have been managing the account has been 5%. Paul Becker: And that is over the period that you have managed it since 2002. Just to point out that is 5% and that is what the actuarial basis was. That was their discount rate the last time they did the evaluation so that is right in line with that actuarial. Kim Cooper: As of year end your account had fully recovered from the decline that began in the beginning of 2008 and in fact was up about 3.7% from January 2008 through year end. Mayor Jordan: That's good. Kim Cooper: We are glad to be able to see that. The next page is a contribution and withdraw report. Contributions since inception were about $1.12 million and distributions have been$8.79 million. The next page is an account reconciliation, that takes your beginning value, interest income, realized gains, the contributions and distributions that have gone in and come out of the account and reconciles back to your ending value. Your net investment return since 2002 has been $3,313,000. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 3 of 10 As always we included a copy of your investment policy in the packet. We are currently in the process of updating all of our investment policies for our clients to comply with any recent SEC regulations and advisories that we have been getting. We Will get a proposed investment policy to you sometime in the next few weeks. I will get it to Sondra and she can get it to all of you. We will incorporate into that new policy the use of utility funds and some high dividend funds for the income side of the portfolio, we can get some higher yields for you than we have been Able to get in bonds so right now you own a fund called the Guggenheim Multi Asset Income Fund and we are using that for income and will incorporate that into your investment policy that we do for you. Are there any questions? Mayor Jordan: This is a lot better than what I have seen in a long time. The last time we had a meeting they said the retirement plan was in trouble, do you think there is a change? Kim Cooper: 1 don't think there is any change because those numbers were based on actuarial assumptions of what was coming in and what was going out and a fixed rate of income on it. Mayor Jordan: So you are telling me that even though everything is up it's still not good. Kim Cooper: That's right. Paul Becker: On page two under Government Bonds you have a $150,000 U.S. Treasury Note, and die maturity is 2038, is that true? Kim Cooper: Yes,that is the long bond with a 30 year maturity. It's a couple of years old. We addressed the underfunded status at the time that we started managing the account. Mayor Jordan: Even though it is up a little bit it is not up where it needs to be then, is that what you are saying? Kim Cooper: Right. Anything else? Pete Reagan: I would just like to thank you for what you do for us. You have always done a great job for us and we appreciate you coming and giving us our report. Api)roval of the Minutes: November 18,2010 Meetimt Minutes Pete Reagan moved to approve the November 18, 2010 Firemen's Pension and Relief Fund Board of Trustees meeting minutes. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. Pension List ChanLyes: None 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 4 of 10 Approval of the Pension List January,February,March and April 2011 Pension List Pete Reagan moved to approve the January, February, March and April 2011 Pension Lists. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. NCPERS Membership Has Been Paid Pete Reagan: That was $150 1 believe. a Mayor Jordan: Everything is good and we don't need any motions or anything? Sondra Smith: I just wanted to let them know that that has been taken care of Pete Reagan: I wanted to thank Sondra for sending that out to all the members because they give us a weekly report from around the entire United States and it is very interesting what is going on. We are not the only ones in the duck pond. Fayetteville Firefighters Pension Fund Special Report dated 10/18/2010 Sondra Smith: That report is in the packet and that is what was handed out at that special meeting that we had. I enclosed it in the packet so you would have it for future reference and also because of us receiving the PRB letter stating that we need to send them a letter stating what we plan to do with the fund since it is insolvent. PRB Letter Regarding the Proiected Insolvency Status of the Fund Mayor Jordan: I did not want to write that letter until I talked to you all and see what you wanted to do on that. Marion Doss: I tried to answer some of those questions. I was hoping that all of us would go ahead and try to answer those. I have something written. Mayor Jordan: Do you want me to go through these questions and then take them one at a time? How do you all want to do it? Marion Doss: I can read my response as a member of the board to the Pension Review Boards letter of December 16, 2010. A copy of the response letter is attached. I would like to make a motion that our secretary prepare a response to this special report as requested by PRB that includes my questions and any other questions that board members may 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Dowd of Trustees Meeting Minutes January 27,2011 Page 5 of 10 have by February 17, 2011. We need to have a special meeting once the letter is prepared and officially approve the contents before it is sent. If that sounds acceptable I would like to make a motion that we setup a special meeting for February 17, 2011 in order to approve that. I might add this is my personal answer to those questions and I would really like to have each board member answer the questions too. Pete Reagan: From my point, if we are having problems understanding, David Clark is available via email and phone to answer any of these questions. Also Jody Carreiro who did the actuarial study on the fund is available for that. I don't see any reason for a special meeting on it. We had a special meeting in September with the City Council and PRB. Marion Doss: The Council members were here, I don't know that we had an open discussion. They presented their report and we wanted to digest it for a while and we haven't done anything since. Pete Reagan: When do these have to be sent in? Mayor Jordan: The end of February. I don't care how we handle this but a letter is going to have to be sent to answer these questions. If you all would like to submit your answers we can compile a letter, email it to you and then get you something back. I think the board as a whole needs to get a letter back to these folks by the end of February. That is what they are asking for. Marion Doss: I agree. They want information to present at their March meeting and I am afraid if we do not send a letter back to them and ask questions they will say we want to help them but they are not telling us what to do and they are not asking us for anything. Mayor Jordan: I don't care how we do it. We are going to have to send it. Pete Reagan: I like your thought process on the situation and I will submit my answers to the questions. Gene Warford: I can't see much change. Mayor Jordan: All I'm saying is we have to answer these questions and get them a letter back. Gene Warford: Well I will have you some answers. Marion Doss: We need to be working with them and not be adversarial or anything like that and the same with the Council. We need to work together to try do something to solve it. It looks like we are not doing anything to solve it. We have had the same meetings time after time, the same discussion and information. Elaine Longer at almost every one of her presentations has had the caveat at the end stating that the fund is not going to sustain itself Sondra Smith: I think this board needs to work together too because what if Pete sends something we do not agree with. How are we going to work out those differences? We need to have a consensus from this board. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 6 of 10 Jason Kelley: We have an FOI issue about working on a letter all together and emailing it back and forth. There needs to be a proposal and then consideration and discussion and a vote on whether that is the boards answer before it's sent. Sondra Smith: Exactly. Mayor Jordan: That is a very good point. Pete Reagan: I do recall that we voted to wait to see what happened in the Legislative Session. Sondra Smith: We didn't vote on that. That was your suggestion but we didn't vote on that. Mayor Jordan: I thought we did. Sondra Smith: At the October meeting there was no vote taken on that because we weren't set up to really do any voting or anything at that meeting. That was just an informational meeting. Unless we did it some other time but in October we did not vote. 1 checked the minutes and reviewed the tape. Mayor Jordan: Okay, do that. Sondra Smith: I did today. Someone said: I move we wait and see what is going to happen with the tumback fund and in the Legislative Session and Gene said I will second that but nothing was ever done. No vote was taken. Marion Doss: We can only do what the law says now. We can't wait for the legislature to do something. We have waited two or three years and we keep thinking they are going to do something. Well it's been the same. Mayor Jordan: Jason, I want to make sure we are in compliance with the law, if they submit their questions and it comes in here by email or letter? Jason Kelley: You and Sondra are members of the board and they are members of the board. You can't be submitting and working out responses to this letter without the press being notified. Mayor Jordan: So that applies to any board. Jason Kelley: That applies to any board or commission of the City. Sondra Smith: We are all members of the governing body of this pension. Mayor Jordan: So what do we need to do here? Jason Kelley: This is an opportunity to go through these questions and have a majority vote of what the answers are going to be and the majority vote is the answer and then submit it. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 7 of 10 Mayor Jordan: Okay, so the recommendation is to discuss each of these questions and..... Jason Kelley: And come up with a board answer in public. Mayor Jordan: Okay, do you all want to do this today or on the l7th ? Marion Doss: I have my questions written out. If I did not have mine written out I would want to go home and think about it and write it out which is what I did after I got that letter. Mayor Jordan: Then we will all meet at a certain time. Marion Doss: Yes. That is why I suggested the February 17 th meeting. I didn't know that Ronnie wouldn't be here but that way Ronnie would have an opportunity to present his input into it. Pete Reagan: Why could we not each individually answer the questions and they be submitted to PRB? Jason Kelley: That is not an official Board response� They want a Board response. You can send your individual response but they need to know what the board has agreed to. Mayor Jordan: What you are saying is if we do that we are not doing it in public where everybody can view it. Sondra Smith: We are not doing it as a board. You are doing it as individual people. I can send what I feel down there and Pete can send what he feels like down there but they are asking for a reply from the board. Mayor Jordan: What if we don't agree on anything? Jason Kelley: You would have a majority vote. It may not be everyone's answer but it's a majority vote. Mayor Jordan: So let me get this straight, we can do this today or we can meet another time when you think Ronnie might be here. Marion Doss: Tbat was just a guess on that date because that is two weeks away and I that might conflict with everyone else's schedule. Mayor Jordan: I don't even know what my schedule is that day. Marion Doss: Sondra is the one that we rely on for that. Mayor Jordan: My next question would be if all the board members are not here on the 17 th then it's just majority rule. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 8 of 10 Jason Kelley: As long as you have a quorum to do business. Mayor Jordan: What is your decision? A discussion followed on a date for a Special meeting of the Board. Jason Kelley: The board could vote to authorize the Mayor to answer the questions. Marion Doss: If I would have known we could do that I would not have had to answer the questions. Mayor Jordan: As Mayor I would be more comfortable with this board meeting as a whole and deciding. I do not want to decide what needs to be done for the board and the board not be pleased with my answers. Marion Doss: Pete is right about the PRI3 being helpful. I have called down there before with questions and they have been helpful and answered them. You can't ask for anything better than that. Mayor Jordan: We can answer them individually and bring them here correct? Jason Kelley: Right. A discussion continued on a date for a Special Board meeting. Sondra Smith: I sent the letter out in December. We have had time to look at the letter from PRB; and think about our responses. So I don't know why we can't work on it today. We have had it a month or longer. Mayor Jordan: I guess that will be the determination of the board. Pete Reagan: I know Ronnie planned to be here and he is tied up in another meeting but I would hate to do it without him at least knowing that we are going to do it. Not that I am trying to stall anything. Gene Warford: I think we are going to have to plan another meeting so that Ronnie has a chance to be here. Jason Kelley: I probably will not be at this meeting but I am trying to think of a way to focus discussion regarding this. Even though Mayor, you are not comfortable with drafting something with authority it could be that perhaps someone might desire you to draft something for discussion at the board meeting. Mayor Jordan: I will have something. Jason Kelley: So you will have something on letterhead ready to be voted on. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 9 of 10 Mayor Jordan: I will bring a proposal and then we can adjust it. I won't send anything out. Jason Kelley: They can have a copy as part of the packet, there just can't be a discussion. It's just like it is on Council. All the documents have been presented before hand and we have all had a chance to look at them and review them. A discussion followed on who it can and cannot be sent to. Jason Kelley: You have to be given the agenda with the information before it can be discussed atthemeeting. You just don't need to be calling one another, emailing and discussing it. A discussion followed on what was acceptable under the FOIA Law. Paul Becker: Can't each person who has a response submit it to Sondra and she put it all together and then they can look at them? Jason Kelley: That would be okay. Paul Becker: Each has their own specific response and then you can select from among them when you meet. Everyone agreed that this was a good idea. Marion Doss: This way everyone has a chance to look at it before hand. Paul Becker: If you don't have something you will be all day. Mayor Jordan: So we are good for February l41h at 3:00 p.m. We can send answers to these questions to Sondra. Jason Kelley: She will gather them all and distribute the responses in the agenda for the next meeting. Mayor Jordan: That will be a wonderful thing. 2011 Annual NCPERS Conference Information Sondra Smith: At one point in time we were sending people to the NCPERS Conference. I do not think the ftind can afford to do that but there is information in the packet regarding that conference. Pete Reagan: I have been twice and maybe three times but I have never been to a legislative conference. I always went to the trustee educational workshops. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27,2011 Page 10 of 10 Revenue/Expense Report for 12/31/2010 Sondra Smith: That is the report that Trish prepares for us that shows the revenue and expenses. Pete Reagan: So last year we were$335,876.80 in the hole if I am reading that correctly. Sondra Smith: We had a loss. The book value in 2009 was $5,44 1,000. The book value now is a little over $5 million. The market value in 2009 was $5,700,000 and the market value now is $5,500,000. Paul Becker: That is correct Pete. You had a loss, before the market adjustment, of$355,876 so that was your loss before mark to market. Pete Reagan: Thanks Trish for Us. 2011 Meetine Schedule Sondra Smith: This shows the meetings that we have scheduled for this year. There is also a letter in there from Elaine Longer stating that the Northern Trust Report was incorrect. Pete Reagan moved to adjourn the meeting. Gene Watford seconded the motion. No vote was taken. Meeting adjourned at 3:40 p.m. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 Lioneld Jordan Chairman Firemen's Pension&Relief Fund Sondra E.Smith Secretary Board of Trustees Marion Doss Position 1/Retired rayel 01-1 Special Meeting Minutes Pete Reagan Position 2/Retired February 14,2011 Gene Warford Position 3/Retired Page 1 of 10 Ron Wood Position 4/Retired VpVVY We ARKANSAS Firemen's Pension and Relief Fund Board of Trustees Special Meeting Minutes February 14, 2011 A Special meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PIVI on February 14, 2011 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Gene Warlord, Marion Doss, Pete Reagan, Sondra Smith, Ronnie Wood, Mayor Jordan, City Attorney Kit Williams, Press and Audience. Old Business: PRB letter regarding the projected insolvency status of the fund. Need to send them a response letter: 1. What actions have you planned as a result of the Special Report? 2. What discussions have you had with the city officials to explore solutions? How has your city board been made aware? 3. Did you find the Special Report helpful in your planning? 4. What would you have wanted to have been included in the Special Report that was not previously included? 5. What additional information could be provided by the PRB to assist your fund? Mayor Jordan: The only order of business that we have is the PRB letter regarding the projected insolvency status of the fund. We need to send them a response letter to their questions. In looking at the minutes it shows that we discussed waiting until after the April legislative session but we did not take a formal vote on that. I was under the assumption that was what the Board wanted to do but since there was no motion and second how do you want to handle this? Pete Reagan: I was under the assumption that was what we were going to do. There are currently two bills in the hopper on the Senate side but that does not help us with this letter that needs to get to PRB. Mayor Jordan: That's my point. They have asked for a letter to be sent. I do not know how to address that. Pete Reagan: Is this your tentative draft or is this Sondra's. Mayor Jordan: That is Sondra's