HomeMy WebLinkAbout140-02 RESOLUTION1
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RESOLUTION NO. 140-02
A RESOLUTION AUTHORIZING THE TRANSFER OF THE
SWORN OFFICERS OF THE FAYETTEVILLE POLICE
DEPARTMENT FROM LOPFI BENEFIT PLAN #1 TO LOPFI
BENEFIT PLAN #2, EFFECTIVE OCTOBER 1, 2002.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council hereby authorizes the transfer of the
sworn officers of the Fayetteville Police Department from LOPFI Benefit Plan #1
to LOPFI Benefit Plan #2, effective October 1, 2002.
PASSED and APPROVED this 3'd day of September, 2002.
ATHER WOODRUFF, City Clerk
APPROVED:
By
z
3
NAME OF FILE:
CROSS REFERENCE:
Resolution No. 140-02
09/03/02
Resolution No. 140-02
08/07/02
Memo to Mayor Coody and Members of the City Council from Rick
Hoyt, Chief of Police, regarding Police Pension System - LOPFI Benefit
Program 2 , .
06/26/01
Letter to Mayor Coody from David B. Clark, Assistant Director,
Arkansas Local Police & Fire Retirement System, Arkansas Fire &
Police Pension Review Board in Little Rock, AR
08/20/02
Staff Review Form
09/06/02
Memo to Rick Hoyt, Police Department, from Heather Woodruff, City
Clerk
NOTES:
FAYETTEVIKE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
MEMORANDUM
TO: Mayor Dan Coody and Members of the City Council
FROM: Rick Hoyt, Chief of Police eabtir
DATE: August 7, 2002
SUBJECT: Police Pension System — LOPFI Benefit Program 2
Attached you will find a resolution authorizing the Police Department to improve its
pension plan benefits by taking advantage of a State retirement plan called Benefit
Program 2.
All police officers hired since 1981 are required to participate in the statewide retirement
system known as LOPFI (Local Police and Fire).
The basic provisions of the current plan are this:
Final benefits are based upon the officer's number of years of service multiplied by a
factor of 2.2% and the result is the percentage the officer would draw of their final
average salary. Example: 20 years of service X 2.2% = 44% of final average pay.
Officers with less than 28 years of service must wait until age 55 to draw any benefits.
Benefit Program 2 will increase the multiplier to 3.0%. With that multiplier, an officer
with 20 years of service would draw 60% of final average pay. A worksheet is attached
that shows various examples of the retirement amount differences between Program 1
and Program 2
The idea for going to Program 2 was first advanced by the Local Fraternal Order of
Police Lodge who contacted Mayor Coody. The mayor requested a cost valuation from
LOPFI to see what additional costs the City would have if this plan were approved.
Police Department administration has been fully in support of this idea from the
beginning and advanced it further with a funding request in the 2002 budget process and
rated it a #1 priority on our list of Target Overruns. However, because of budget
shortfalls it was unfunded.
In December of 2001, the City was notified LOPFI was reducing the normal percentage
to submit to LOPFI on a monthly basis. LOPFI reduced the amount to 6% of payroll.
The City had expected to pay the usual percentage of 8.83% of payroll and the Police
Department had budgeted that greater amount. What this means is; adequate funds are
already. available in the Police budget to cover the additional cost of moving to Benefit
Program 2 for the last 3 months of 2002 and no budget adjustment is necessary.
Retirement benefits are an important part of the total employee compensation package.
We believe a move to Benefit Program 2 is a positive one for the City and will enhance
our ability to attract and retain the best employees. We have an above average work
force and changing to the best retirement plan the State has available will further enhance
officer satisfaction and continued professionalism.
Attachments (2)
010 N
LOPFI
Illustrations of benefit amounts for paid service
not covered by Social Security
Final Average Pay
LOPFI Benefit
Program 1*
LOPFI Benefit
Program 2"
28 Years of Service
$1,000.00 $616.00 $840.00
20 Years of Service
$1,000.00 $440.00 $600.00
15 Years of Service
$1,000.00
$330.00 $450.00
* LOPFI Benefit Program 1 equals years of service times 2.2%
times final average pay.
** LOPFI Benefit Program 2 equals years of service times 3%
times final average pay.
61 4 FILE No.656 0725 '01 PM 02:24 T DPFI FAX:5016 1 PAGE 1
D
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ARKANSAS LOCAL POLICE & FIRE RETIREMENT SYSTEM
ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
June 26, 2001
Mayor Dan Coody
City of Fayetteville
1 13 West Mountain
Fayetteville, AR 72701
Dear Mayor Coody:
P.O. DRAWER 34164
Lnn.E ROCK, ARKANSAS 72203
TELEPHONE (501) 682 - 1745
FAX: (501) 682 - 1751
email: info°lopfl-prb.com
website: www.lopti-prb.com
Enclosed is the cost valuation for implementing Benefit Program 2 for your police
department. You will notice the valuation was computed using only one beginning date
of adoption of Benefit Program 2 that date being January 1, 2002. As it turned out the
statute governing Benefit Program 2 does not allow for adoption to be retroactive. I am
hopeful this fact has not caused a problem for you.
On page 2 of the valuation you will find the cost of implementing Benefit
Program 2. The computed increase in the Employer contribution rate is 4.06% of payroll.
Keep in mind the Employee contribution rate will not change. For budgeting purposes,
the statute that limits the increase in an Employer's contribution rate from one year to the
next, 24-10-405(h), does not apply when adopting Benefit Program 2.
If you decide to adopt Benefit Program 2 for your police officers please provide a
copy of the resolution from your City Council meeting that approves this action. Should
you have questions regarding this valuation feel free to contact me at 501-682-1745.
Respectfully,
David B. Clark
Assistant Director
Encl:
FILE No.656 0725 '01 PM 02:24PFI
GABRIEL, ROEDER, SMITH & COMPANY
Consultant' & Actuaries
FAX :50161]51 PAGE 2
1000 Town Center • Suite 1000 • Soulhlied. Michigan 41C75 • 248-799-9000 • BOO -521-0498 • lax 248-799-9020
June 25, 2001
Mr. David B. Clark, Assistant Director
Arkansas Local Police and
Fire Retirement System
P.O. Drawer 34164
I.,ittle Rock, Arkansas 72203
Re: Fayetteville Police, Cost for Adoption of Benefit Program 2
Dear Mr. Clark:
As requested, we have computed the expected increase in employer contribution rates associated
with adoption of Benefit Program 2. The following table compares the current provisions of
Benefit Program 1 and Benefit Program 2 lbr paid service members not also covered by social
security. The adoption of Benefit Program 2 provides for a 3,0% benefit multiplier only for
service rendered after the adoption of Benefit Program 2 (which is assumed to be January I, 2002).
Benefit Multiplier
Used
Benefit Program
1
Benefit
(Before
Program
Program 2
start of
2)
Benefit
(After
Program
Program 2
start of
2)
2.20%
2.20%
3.00%
The date of the study was December 31, 2000. This means that the resulis of he supplemental
valuation indicate what the December 31, 2000 valuation would have shown if the proposed benefit
changes had been in effect on that date. This supplemental valuation does not predict the result of
the December 31, 2001 valuation or of any other future actuarial valuation. (Future activities can
affect future valuation results in an unpredictable manner.) Rather, the supplemental valuation
gives an indication of the probable effect of only the benefit change on Cut!. re valuations without
comment on the complete end result of'the future valuations.
•
FILE No.656 0725 '01 PM 02:254111,0PFI
FAX:5011 PAGE 3
Mr. David B. Clark June 25, 2001
Page 2
Except as noted, actuarial methods and assumptions were the same z those used in the
regular valuation as of that date. In particular the economic assumptions used in the
supplemental actuarial valuations were net investment return of 7.5% per year and wage
inflation of 5.0% per year (I'or paid service plans). Changes in actuarial accrued liabilities
were amortized as a level percent of payroll aver a 30 -year period.
The December 31, 2000 actuarial valuation covered R7 paid service members with a payroll
of $2,973,475. The computed employer contribution rate from the December 31, 2000 was
8.83% of member payroll.
The impact on employer cost is illustrated in the following table:
Comment A: Please note that 24-10-602(0 states that the limit on increase in employer
contributions from one year to the next provided by 24-10-405(h) does not apply in the case of an
employer adopting Benefit program 2.
GABRIEL, ROEDER, SMITH & COMPANY
increase in
Total
Employer
Normal
Cost
Accrued 1,iabilities
$ millions
30 year
Amortization
4.06%
$0.00
0.00%
4.06%
Comment A: Please note that 24-10-602(0 states that the limit on increase in employer
contributions from one year to the next provided by 24-10-405(h) does not apply in the case of an
employer adopting Benefit program 2.
GABRIEL, ROEDER, SMITH & COMPANY
FILE No.656 0725 '01 PM 02:25 OPFI
FAX PAGE 4
Mr. David B. Clark June 25, 2001
Page 3
Comment B: A very important part of this proposed benefit change is that the limit on retirement
system benefits of 80% of final average pay (FAP) in 24-10-602(a)(3) rem: ins unchanged. This
means that if an employer adopts Benefit Program 2 as proposed above, an c:nploycc would reach
the maximum of 8U% of FAP after 25.8 years of employment_ This will generally he before a
member is eligible for an unreduced retirement.
Comment C: For purposes of the cost analysis above, it was assumed that ratcs at which
members elect to retire remain unchanged. It has been our experience that as the take home pay
for a worker reaches the amount of after tax carnings possible during retirement that a higher
percentage of workers will generally elect to retire when first eligible. In the case of employees
under the proposed Benefit Program 2 this may possibly be the case. Depending on the tax
treatment of retirement benefits in the state the member may retire in and other retirement savings
it is possible that many members in this case will have about the same alter tax income before and
after retirement. if a member retires sooner then expected due to the 80% cap on benefits the cost
shown on the previous page will be higher.
Please feel free to contact us with any questions or comments.
DLII:msw:lr
CC: Cathym E. Hinshaw
Mary Ann Vitale (GRS)
Heidi Barry (CRS)
Respectfully submitted
irium.
David I.. Ho an Mita D Drazilov
GABRIEL, ROEDER, SMITH & COMPANY
'4
X AGENDA REQUEST
CONTRACT REVIEW
GRANT REVIEW
9
STAFF REVIEW FORM
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For the Fayetteville City Council meeting of August 20, 2002
FROM:
Rick Hoyt
Name
Police
Division
Police
Department
ACTION REQUIRED: Adopt a resolution moving the City of Fayetteville Police LOPFI
retirement benefits from plan 1 to plan 2 as of October 1, 2002.
COST TO CITY:
$40,500.00 $4,534,004.00
Cost of this Request
1010-2940-5109.03
Account Number
Project Number
Personnel
Category/Project Budget Category/Project Name
$2,539,301.00 Patrol
Funds Used To Date Program Name
$1,994,703.00
General
Remaining Balance Fund
BUDGET VIEW: X Budgeted Item Budget Adjustment Attached
�l_ot
Bl, g Man er Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY:
Ae C2 ng Ma
Purchasing Officer
7/7/UZ
dilate Internal Auditor Date
VCI WO L
Date Fj,Drdinatyr
Date
DateGrants Coordinator Date
STAFF RECOMMENDATION: The City Council to approve a resolution moving the Police
Department's sworn officers from LOPFI benefit Program 1 to LOPFI Benefit Program 2
beginning October 1, 2002.
Division Head
Cross Reference
New Item: Yes No
Prev Ord/Res R:
Orig Contract Date:
Page 1
STAFF REVIEW FORM
ir I
Description Adopting LOPFI Benefit plan 2 Meeting Date August 20, 2002
Comments: Reference Comments:
Budget Manager
Accounting Manager
City Attorney
Purchasing Manager
Internal Auditor
ADA Coordinator
Grants Coordinator
Page 2
STAFF REVIEW FORM
X AGENDA REQUEST
CONTRACT REVIEW
GRANT REVIEW
••
For the Fayetteville City Council meeting of August 20, 2002
FROM:
Rick Hoyt
Name
Police
Division
Police
Department
ACTION REQUIRED: Adopt a resolution moving the City of Fayetteville Police LOPFI
retirement benefits from plan 1 to plan 2 as of October 1, 2002.
COST TO CITY:
$40,500.00 $4,534,004.00
Cost of this Request
1010-2940-5109.03
Account Number
Project Number
Personnel
Category/Project Budget Category/Project Name
$2,539,301.00 Patrol
Funds Used To Date Program Name
$1,994,703.00
General
Remaining Balance Fund
BUDGET REVIEW: X Budgeted Item Budget Adjustment Attached
trl-01
Budg t Man er Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY:
Accounting Manager
'17fra
ate Internal Auditor Date
ClL�p tt rney Date7jDM•r r
DateGrants Coordinator
Purchasing Officer
Date
Date
STAFF RECOMMENDATION: The City Council to approve a resolution moving the Police
Department's sworn officers from LOPFI benefit Program 1 to LOPFI Benefit Program 2
beginning October 1, 2002.
Departmedt DiEector
Administrative Services Director
Mayor
Date
f %-0Z
Date
Date
ace
Page 1
Cross Reference
New Item: Yes No
Prev Ord/Res #:
Orig Contract Date:
STAFF REVIEW FORM
Description Adopting LOPFI Benefit plan 2 Meeting Date August 20, 2002
Comments: Reference Comments:
Budget Manager
Accounting Manager
City Attorney
Purchasing Manager
Internal Auditor
ADA Coordinator
Grants Coordinator
Page 2
STAFF REVIEW FORM
X AGENDA REQUEST
'CONTRACT REVIEW
GRANT REVIEW
For the Fayetteville City Council meeting of August 20, 2002
FROM:
Rick Hoyt
Name
Police
Division
Police
Department
ACTION REQUIRED: Adopt a resolution moving the City of Fayetteville Police LOPFI
retirement benefits from plan 1 to plan 2 as of October 1, 2002.
COST TO CITY:
$40,500.00 $4,534,004.00
Cost of this Request
1010-2940-5109.03
Account Number
Project Number
Personnel
Category/Project Budget Category/Project Name
$2,539,301.00 Patrol
Funds Used To Date Program Name
$1,994,703.00
General
Remaining Balance Fund
BUDGET VIEW:
X Budgeted Item Budget Adjustment Attached
fi-01
BU.g- Man-.er
Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW:
p GRANTING AGENCY:
aNOZ
date Internal Auditor Date
Accounting Manager
Cp, t rn
tey Date PZD
Purchasing9\Officer �6
Da
dinator
Date
eGrants Coordinator Date
STAFF RECOMMENDATION:'The•City Council to approve a resolution moving the Police
Department's sworn officers from LOPFI benefit Program 1 to LOPFI Benefit Program 2
beginning October 1, 2002.
Division Head
Departmedt-Dilector
Date Cross Reference
870..02
Date
Administrative Services Director Date
Mayor Date
Page 1
New Item: Yes No
Prev Ord/Res tl:
Orig Contract Date:
STAFF REVIEW FORM
Description Adopting LOPFI Benefit plan 2 Meeting Date August 20, 2002
Comments: Reference Comments:
Budget Manager
Accounting Manager
City Attorney
Purchasing Manager
Internal Auditor
ADA Coordinator
Grants Coordinator
Page 2
oa
•
FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
To: Rick Hoyt, Chief of Police
From: Heather Woodruff, City Clerk
Date: September 6, 2002
Please find attached a copy of Resolution No. 140-02 authorizing the transfer of the sworn
officers of the Fayetteville Police Department from LOPFI Benefit Plan #1 to LOPFI Benefit
Plan #2, effective October 1, 2002. The original will be microfilmed and filed with the City
Clerk.
cc: Nancy Smith, Internal Audit
IFAYETTEVILLE
City Clerk's Division
City Clerk's Division
113 West Mountain
Fayetteville, Arkansas 72701
Phone- 479-575-8323 ' Fax 479-718-7695
Einaihcityclerk@ci.fayetteville.ar.us
September 23, 2002
Cathyrn Hinshaw
Executive Director
LOPFI/PRB
P.O. Drawer 34164-72203
Little Rock, AR 72203
Dear Ms. Hinshaw:
On September 3, 2002, the Council for the City of Fayetteville voted 7-1-0 to transfer the
sworn officers of the Police Department from LOPFI Benefit Plan #1 to LOPFI Benefit
Plan #2, effective October 1, 2002.
I have enclosed a copy of Resolution 140-02 requesting the transfer. If I can be of
8trther assistance, please contact me at 479-575-8323.
Sincerely,
Bather Woodruff
City Clerk
cc: Rich Hoyt, Chief of Police
Michele Bechhold, Human Resource Director
Marsha Farthing, Accounting Manager
Heather Woodruff, City Clerk
113 West Mountain
Fayetteville, AR 72701
575-8323
email: hwoodn$@d.fayetteville.ar.us
•
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RESOLUTION NO, 140-02
A RESOLUTION AUTHORIZING THE TRANSFER OF THE
SWORN OFFICERS OF THE FAYETTEVILLE POLICE
DEPARTMENT FROM LOPFI BENEFIT PLAN #1 TO LOPFI
BENEFIT PLAN #2, EFFECTIVE OCTOBER 1, 2002.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council hereby authorizes the transfer of the
sworn officers of the Fayetteville Police Department from LOPFI Benefit Plan #1
to LOPFI Benefit Plan #2, effective October 1, 2002.
PASSED and APPROVED this 3rd day of September, 2002.
APPROVED:
•
ATHER WOODRUFF, City Clerk
By:
DAN COODY, M
010 03
• update
Document
Reference
RES
Date
9032002
City o1 ayetteville
dex Maintenance
Item Action
Ref. Taken Brief Description
140
•
9/10/2002
. 8:51:41
TRANSFER LOPFI #1 TO LOPFI #2
Enter Keywords • RES. 140-02
TRANSFER
SWORN OFFICERS
OFFICERS
FAYETTEVILLE POLICE DEPARTMENT
LOPFI BENEFIT PLAN #1
LOPFI BENEFIL PLAN #2
OCTOBER 11 2002
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