HomeMy WebLinkAbout157-04 RESOLUTION• •
RESOLUTION NO. 157-04
A RESOLUTION AUTHORIZING THE PAYMENT OF $464,483.00
TO THE ARKANSAS DISTRICT JUDGE RETIREMENT SYSTEM
(ADJRS) TO COVER THE CITY'S INITIAL UNFUNDED
LIABILITY FOR NEW STATE -MANDATED PENSION PLANS
FOR THE DISTRICT JUDGE AND THE DISTRICT COURT
CLERK; CLOSING THE MUNICIPAL JUDGE RETIREMENT
FUND; AND APPROVING A BUDGET ADJUSTMENT.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby authorizes the payment of $464,483.00 to the Arkansas District Judge
Retirement System (ADJRS) to cover the city's initial unfunded liability for new
state -mandated pension plans for the District Judge and the District Court Clerk.
Section 2. That the City Council of the City of Fayetteville, Arkansas
hereby approves the closing of the Municipal Judge Retirement Fund and the
transfer of the balance remaining after payment of current liability to General
Fund to be used for future required contributions to ADJRS and the Arkansas
Public Employees Retirement System (APERS).
Section 3. That the City Council of the City of Fayetteville, Arkansas
hereby approves a budget adjustment in the amount of $464,483.00 from the Use
of Fund Balance to the Pension Expense account.
PASSED and APPROVED this 5th day of October 2004.
,1\- KIT.R.c %
;•�G�, ,...... sG% APPRO
4�k.. 01 O,c •.�P
_U• •��s
:FAYETiEVILLE:B
_ Y
%9319KgN5PevJ°1/4
' l AN COODY, Mair
ATTEST: "C/A'GroA co.,.
'"'uuwIua"
By: oN4c4Jnt
SONDRA SMITH, City Clerk
City of Fayetteville, Arkansas
Budget Adjustment Form
•
Budget Year
2004
Department: Mun Judge Retire Expense
Division:
Program:
Date Requested
9/15/2004
Adjustment Number
Project or Item Requested:
$464,483 is requested in the Pension Expense account.
Project or Item Deleted:
None. $464,483 from the Use of Fund Balance.
Justification of this Increase:
The funding will be transferred to ADJRS for the initial
liability for the new state required pension plan for the
District Judge and the Court Clerk.
Justification of this Decrease:
There is sufficient funding available in Fund Balance to
comply with City Policy and objectives.
Increase Budget (Decrease Revenue)
Account Name Account Number
Pension expense 6820 9820
Account Name
Use of fund balance
5335 00
Amount
464,483
Decrease Budget (Increase Revenue)
Account Number Amount
6820 0982
4999 99
464,483
Project Number
Project Number
Approval Signatures
Requested By Date
gadget Ma(fagerer Date
Department Director
Date
9-u
Finance n emal vices Direc or Date
,ere sem'/ / -�
Mayor Date
Budget Office Use Only
Type: A B C � E
Date of Approval
Posted to General Ledger
Posted to Project Accounting
Entered in Category Log
Initial
Initial
Initial
Date
Date
Date
Initial Date
NAME OF FILE:
CROSS REFERENC
Item #
Date
•
Resolution No. 157-04
w/budget adjustment
Document
•
1
09/16/04
Staff Review Form
2
memo to City Council
3
draft resolution
4
letter from Ark. Dist. Judges Retirement System to mayor/city
clerk -treasurers
5
Ark. Dist. Judges Retirement System Actuarial Valuation
6
memo to Marsha Farthing
7
8
9
10
11
12
13
14
15
16
17
18
19
20
STAFFRVIEW FORM - FINANCIAL OBLIGATI
X AGENDA 'REQUEST
CONTRACT REVIEW
GRANT REVIEW
For the Fayetteville City Council Meeting of: October 5, 2004
FROM:
Marsha Farthing
Name
Accounting and Audit Finance and Internal Services
Division Department
Approval to remit $464,483 to ADJRS for the intial liability for the new state required
pension plans for the District Court Judge and Court Clerk and to close the local
retirement fund for the judge with residual funds to be designated for future judge and
court clerk retirement expenses. Approval of a Budget Adjustment in the amount of
$464,483 for the transfer out of the funds and approval of any necessary future Budget
Adjustments for transfer of funds out of the Municipal Judge Retirement Fund.
adj re
$464,483.00 $
Cost of this request Category/Project Budget
6820-9820-5335-00
Account Number
Project Number
$
Program Category / Project Name
Funds Used to Date Program / Project Category Name
$ - Municipal Judge Retirement Fund
Remaining Balance
Fund Name
BUDGET REVIEW:
Budgeted Item
Budget ManageDate
Xi Budget Adjustment Attached
CONTRACT/GRANT/LEASE REVIEW:
Accounting Manager
City Attorn
9P&,/
o1/
Date
9Iilk/
Date
R1�7fent
In ernal ditor Date
9laolo4
Purchasing Manager Date
STAFF RECOMMENDATION:
Division Head
Department Director
Financ
Internal Services
Dir.
Date
Date
4-2/4'
Date
Chie'itdministr. ve Officer
Received in Mayor's Office
Cross Reference:
Previous Ord/Res#:
Orig.
Orig.
New
Contract Date:
Contract Number:
Date
Item: Yes
No
FAYETTEVI
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
Res
• 10/5/0
isi-d`%
1>shve/ 5Prresitiff
To: Fayetteville City Council
Thru: Hugh Earnest, CAO
Stephen Davis, Finance and Internal Services Direct
From: Marsha Farthing, Accounting Manager
Subject:
Municipal Judge and Court Clerk Retirement Plan
RECOMMENDATIONS
Staff recommends approval of remitting $464,483 from the City's Municipal Judge Retirement
Fund to the Arkansas District Judges Retirement System (ADJRS) to cover the initial unfunded
liability for the District Court Judge and Court Clerk retirement fund. Staff also request approval
to close the local Municipal Judge Retirement Fund with excess funds moved to General Fund
and designated to be used for future required contributions to ADJRS and APERS for the District
Court Judge and Court Clerk.
BACKGROUND
Acts 1374 and 1375 were passed during the 2003 State Legislative Session. These bills
established new retirement plans for District Judges and District Court Clerks and become
effective January 1, 2005. The new state plan for the District Judge is the Arkansas District
Judges Retirement System and the District Court Clerk will be enrolled in the Arkansas Public
Employees Retirement System (APERS). Currently the District Judge is covered under a local
retirement plan which we refer to as the Municipal Judge Retirement Plan (Fund) in the City's
financials. The current District Clerk is covered under the General Employee Retirement
Savings Plan.
DISCUSSION
As of December 31, 2004 the local retirement plan for the District Judge will be abolished as
required by the above Acts. The City has received an actuarial valuation report as of December
31, 2004 from the ADJRS. The report establishes the initial unfunded liability for the City at
$464,483 for service for the Judge and court clerk through December 31, 2004. This liability
will need to be paid to the State by the end of the year. The City's Municipal Judge Retirement
Fund had $764,059 in retirement reserves through August 2004.
• •
As of January 1, 2005 the City will be required to send a predetermined rate set by the ADJRS to
the judge's retirement plan on a monthly basis. The employer contribution rate for the judge is
tentatively scheduled to be established by October 1, 2004. The employee contribution rate to
this plan will be 5% of gross wages. The City will also be required to send monthly contributions
to APERS for the court clerk. The employer rate for the court clerk is the current APERS rate of
11.09% and there are no required employee contributions to this plan. The employer rates will be
set annually by the respective plans. Administratively for the City, these plans are similar to the
LOPFI plans for the police and fire employees.
BUDGET IMPACT
The Municipal Judge Retirement Fund has accumulated funds for the retirement plan from a
portion of the court fines and fees and the fund has the ability to pay the required amount to the
State by year end with no budget impact. The City currently receives approximately 21% of the
judge's salary in fines and fees. If the City's required contribution rate for the judge is less than
21% there should be no immediate budget impact to the City for the judge ADJRS will adjust
the rates annually and there should be no budget impact until the rates and the increases to the
judge's salary reach the point where the fines and fees no longer cover the required contribution.
The City currently contributes 12% to the general employee retirement plan for the court clerk.
The current APERS rate of 11.09% will result in a small positive budget impact to the City. The
APERS rate will be adjusted annually and if future contribution rates increase above 12% then
there could be a negative budget impact in future years.
There will be excess funds in the local retirement plan of approximately $299,000 after payment
of the current liability that could be designated for future retirement contributions which would
mitigate future increases.
• •
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE PAYMENT OF $464,483.00
TO THE ARKANSAS DISTRICT JUDGE RETIREMENT SYSTEM
(ADJRS) TO COVER THE CITY'S INITIAL UNFUNDED
LIABILITY FOR NEW STATE -MANDATED PENSION PLANS
FOR THE DISTRICT JUDGE AND THE DISTRICT COURT
CLERK; CLOSING THE MUNICIPAL JUDGE RETIREMENT
FUND; AND APPROVING A BUDGET ADJUSTMENT.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS*
Section 1. That the City Council of the City of Fayetteville, Arkansas
hereby authorizes the payment of $464,483.00 to the Arkansas District Judge
Retirement System (ADJRS) to cover the city's initial unfunded liability for new
state -mandated pension plans for the District Judge and the District Court Clerk.
Section 2. That the City Council of the City of Fayetteville, Arkansas
hereby approves the closing of the Municipal Judge Retirement Fund and the
transfer of the balance remaining after payment of current liability to General
Fund to be used for future required contributions to ADJRS and the Arkansas
Public Employees Retirement System (APERS). yde+
Section 3. That the City Council of the City of Fayetteville; rl gFansas+
hereby approves a budget adjustment in the amount of $46448310.0
of Fund Balance to the Pension Expense account.
PASSED and APPROVED this 5th day of October 2004.
A TE$T:
By:
SONDRA SMITH, City Clerk
COODY, Mayor
•
•
•
ARKANSAS DISTRICT JUDGES RETIREMENT SYSTEM
TO:
FROM:
DATE:
SUBJECT:
City Mayors/Recorders-Treasurers
County Judges/Court Clerks
District Judges/District Court Clerks
Gail H. Stone, Executive Director „(
August 10, 2004
. BOARD OF TRUSTEES
J. LARRY ALLEN
District Judge, Sheridan
STEVE ROUTON
District Judge, Forrest City
JUDY WEST
Court Clerk, N. Little Rock
MARK R. HAYES
Employer Rep.. N. Little Rock
RODNEY PARKS
Citizen al Large, Little Rock
GAIL H. STONE, Executive Director
124 West Capitol Avenue, Suite 400
Little Rock, Arkansas 72201
ARKANSAS DISTRICT JUDGES RETIREMENT SYSTEM (ADJRS)
Act 1374 of the 84'h Arkansas Legislative Session requires that a uniform retirement system be established for
all district court judges; hence, the Arkansas District Judges Retirement System (ADJRS). This new System
will be comprised of five (5) components: 1) prior service of active district court judges and court clerks as of
December 31, 2004; 2) current service after January 1, 2005 of district court judges; 3) retired members of the
local retirement plans as of December 31, 2004; 4) future retirees from the System, and 5) deferred members as
of December 31, 2004 that are eligible for a future retirement benefit from the local retirement plan.
Some local plans are fully funded; some aren't. Regardless of the establishment and/or funding of your local
retirement plan, all eligible district court personnel will be covered under the new System. The only exception
would be those district court personnel that are currently being covered under the Arkansas Public Employees
Retirement System (APERS). The enabling legislation directs these members to remain in APERS. However,
new district court Judges are to be covered under ADJRS effective January 1, 2005.
To find out more information on the new System, the ADJRS Board of Trustees recommend that you attend one
of the scheduled Town Hall Meetings" that are listed on the attached registration form.
These meetings will cover, but not be limited to, the following topics:
- Intent of Acts 1374 and 1375 of 2003
Funding of the new retirement system
o Cost for prior service
o Cost for current service (After January 1, 2005)
Effect of the new system on retirement benefits
• District Court Clerks being covered by the Arkansas
(APERS) effective January 1, 2005
Reciprocity
Public Employees Retirement System
We look forward to seeing you at these meetings. If you have any additional questions, please contact Michele
Williams, APERS Deputy Director, at the telephone number listed below.
Enc.: Registration Form
Phone Number (501) 682-7800
FAX Number (501)682-7825 WATS Line I-800,682-7377
•
• •
Arkansas District Judges Retirement System
Actuarial Valuation of the
Initial Unfunded Liability
As of
December 31, 2004
Fayetteville District Court
• •
Osborn, Carreiro & Associates, Inc.
ACTUARIES • CONSULTANTS • ANALYSTS
August 23, 2004
Board of Trustees
Arkansas District Judges Retirement System
One Union National Plaza
124 West Capitol Avenue, Suite 400
Little Rock, AR 72201
Ladies and Gentlemen:
One Union National Plaza,Sulte 1690
124 West Capitol Avenue
Little Rock, Arkansas 72201
(501)376-8043
This report presents the results of our actuarial valuation of the assets and liabilities of the
Fayetteville District Court Local Retirement Plan as of December 31, 2004. The purpose of
this report is to determine the Initial Unfunded Liability for an individual district court local
plan that will be transferred to the Arkansas District Judges Retirement System as of December
31, 2004.
A brief summary of the important figures developed in this valuation follows:
12/31/2004
Individuals. included
Actives
Terminated Vested, due a future benefit
Retirees, Beneficiaries, receiving a benefit
Current Annual Benefit being paid
2
0
0
0.00
Total Initial Liability for all participants $ 464,483.16
Net Local Plan Assets
Initial Unfunded Liability
Divided by Factor for 30 year level dollar amortization
Annual Payoff of Initial Unfunded Liability
For 30 years, first due December 31, 2005
$ 0
$ 464,483.16
12.409041
$ 37,431.00
This report will be updated in January 2005 to reflect the actual assets and liabilities transferred
from the local plan. The final annual payoff amount will be the Initial Unfunded Liability
(using actual assets transferred) divided by the factor shown above.
This district court Has submitted all of the required information as of the date of this report.
Board of Trustees — page 2
August 23, 2004
•
Osborn, Carreiro & Associates, Inc.
ACTUARIES • CONSULTANTS • ANALYSTS
Report Format
The report is been broken into three "Exhibits". The first Exhibit shows the information that
was supplied by the sponsoring location. The last two Exhibits contain certain technical
information that we feel is necessary to meet professional actuarial standards. However, the
information in these Exhibits may not be particularly useful to you.
This report is based on the participant and financial data supplied by the local district court or
the sponsoring city or county. We did not audit this data, although we did review it for
reasonableness and consistency.
We have relied on the data provided to us. If any of the data provided to us is incorrect, or
incomplete, the results of our calculations could be materially different. The purpose of this
report is to determine the initial unfunded liability for a sponsoring location and the
contribution that is required as defined in Arkansas Code Annotated 24-8-810 and 24-8-902.
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 about this report, please let me know.
Sincerely,
2Caneiro, A.S.A., E.A.
Actuary
• EXHIBITS:
Exhibit 1
Exhibit 2
Exhibit 3
TABLE OF CONTENTS
•
Participant Data
Principle Provisions of the Plan
Actuarial Cost Methods and Assumptions
E
r
>.
we -
to
Eo
0 0
E To
X j Z O
W -I a) '>
U 0 N
s
0 W u-
N
rn
c
m
w
LL
M
co D
W
c
am
To
c a -
LL
CD N
al
P
rn o
W co
mo
dl
Q; u
(o Z
0 co
U
O
CD
m
Name (First/Last)
• •
COCO
N (f0) M
CO CO R
T- N
M� 3
E9 a
to
0 O
N N
0 0
0 0
0 N
tr
01n
R
69
r
0 0
0 0
0
o O
o CO
(O O)
to V
69
0 0
0 0
0
O
0 M
M t`
in
M
M O
10 o)
O
N
N
CT
D O
- U
y
cii
EC n Q
0 To
C
Ce to ....
11.7 E a V.
fa ,co co
G § o Ga
io
d
,4M Co a CD
V In
W N (p a
Q O O) .a. d
CO 1- t• 0
> 0.1 n0) v 0 5 0
uvv yZ .o
Q C' I--
. Z
Total Present Value of Benefits
Exhibit 2
Principle Provisions of the Plan
STATUTORY AUTHORITY:
EMPLOYER:
EMPLOYEE.
PLAN YEAR:
COMPENSATION:
FINAL COMPENSATION:
ACCRUED BENEFIT.
NORMAL RETIREMENT:
Eheibility:
Benefit:
Form:
VESTING:
•
The local plans are govemed by Arkansas Code Title 24,
chapter 8, subchapters 3, 4, and 5. The Arkansas District
Judges Retirement System was creataed by Acts 1374 and
1375 of 2003, which created subchapters 8 and 9.
Fayetteville District Court
District (formerly Municipal) Judge and Clerk. Other
district court clerks as allowed in the Statutory Authority,
locally enacted and reported to the system.
January 1 to December 31.
Total compensation excluding deferred compensation.
The Participant's Compensation in the final calendar year of
employment.
The Accrued Benefit as of the freeze date (12/31/2004) is
the Normal Retirement Benefit using the current Final
Compensation times Credited Service as of the freeze date
and divided by the Credited Service that would be earned at
Normal Retirement Date. See A.C.A. 24-8-810(e) and 24-8-
902(d)
(a) Age 60 and 10 years of Service, OR
(b) Any Age with 20 years of Service, OR
(c) Provisions of A.C.A. 24-8-300 et seq., 24-8-400 et seq.,
24-8-500 et seq., as Locally enacted and reported with data.
50% of Final Compensation.
Joint & 50% Survivor, if married, or Life Annuity.
100% upon eligibility for Normal Retirement.
For this report, all Accrued Benefits are 100% vested. See
A.C.A. 24-8-810(a) and 24-8-902(a).
2
•
•
COST METHOD:
• •
Exhibit 3
Actuarial Cost Methods and Assumptions
The initial unfunded liability is the present value of
frozen benefits less current assets available. The
amortization is level dollar 30 year amortization.
PRE -RETIREMENT MORTALITY. None assumed.
POST-RETIREMENT MORTALITY- The 1983 Group Annuity Mortality Table ("83
GAM") was used. The life expectancy according to
this table is as follows:
Age Male Female
55 24.82 years 30.23 years
65 16.69 years 21.28 years
75 10.15 years 13.37 years
ASSUMED INVESTMENT RETURN: For valuation purposes,
Pre -retirement
Post-retirement
7.00%
7.00%
SALARY GROWTH: None assumed since benefits are frozen.
DISABILITIES: None assumed.
EXPECTED RETIREMENT PATTERN: We have assumed that retirement would occur on
the date first eligible for retirement.
VOLUNTARY TERMINATIONS: None assumed.
ASSET VALUATION: Market Value of Assets.
3
FAYETTOLLE
THE CITY OF FAYETTEVILLE, ARKANSAS
City Clerk Division
DEPARTMENTAL CORRESPONDENCE
•
113 West Mountain
Fayetteville, AR 72701
Telephone: (479) 575-8323
Fax: (479) 718-7695
city_clerk@cilayetteville.ar.us
To: Marsha Farthing
Accounting Manager
From• Clarice Buffalohead-Pearman*
City Clerk Division
Date: October 12, 2004
Re: Resolution No. 157-04
The City Council passed the above resolution October 5, 2004, authorizing
payment to the Arkansas District Judge Retirement System covering the City's
unfunded liability for new pension plans as requirement by law. I have attached
a copy of the resolution and budget adjustment allowing for the funds.
This resolution will be recorded in the city clerk's office and microfilmed. If
anything else is needed please let the clerk's office know.
Attachment(s)
cc: Nancy Smith, Internal Auditor
et -cadged =