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HomeMy WebLinkAbout2017-01-26 - Agendas - Final Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes November 17,2016 Page 1 of 1 • OF FAME TTP f/ 1 ! Lioneld Jordan Chairman :j` m Pete Reagan Position 2 Retired Sondra E.Smith Secretary o ' Dennis Mullens Position 3 Retired Roy Cate Position 1 Retired Ron Wood Position 4 Retired 9gKAN5PS Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda January 26, 2017 Meeting Cancelled A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees scheduled for January 26, 2017 was cancelled due to lack of a quorum. • • Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 . Page 1 of 10 ioF AY r 4. Lioneld Jordan Chairman c, re.• n't;,\ Pete Reagan Position 2 Retired Sondra E.Smith Secretary r ropart Dennis Mullens Position 3 Retired Roy Cate Position 1 Retired 11:CS#ITI Ron Wood Position 4 Retired / Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda April 27,2017 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 p.m. on April 27, 2017 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Dennis Mullens, Pete Reagan, Roy Cate, Mayor Jordan, Ron Wood, Sondra Smith, City Clerk, Paul Becker, Kit Williams, City Attorney, Glenn Atkins and Kerry Bradley, Garrison Financial Absent: None Garrison Financial: 4th Quarter Reports 1st Quarter 2017 reports Kerry Bradley: The markets have performed quite well since we last met in October. Again, if you look at last year's report in the packet the account is up 9.5%, again it's very strong. A lot of those gains were in the last half of the fourth quarter after the election the market is anticipating probusiness or pro-growth things out of the current administration, hopefully we get some of that. The tax conference was yesterday, so, hopefully those will get implemented and we will see some of this continued growth cycle and maybe it will pick up the pace a little bit. On large scale, we are right on policy. So, we're a little bit under because we have the cash, about 40% fixed income and 60% stocks. A little bit under that for both, the cash holdings. We have enough cash to get us through the fall. I think summer is usually the light time for you guys to make withdrawals. Again, we are right on par with the asset allocations and given the withdrawal rates and such in the account that's a good place for you guys to be. Certainly, the equity markets have helped out the last four or five years to a great degree since the withdrawal rate is so high. I looked last March the account • was worth about $3.4 million we pulled out $525,000 in distributions over that time about a 15% withdrawal rate and the accounts just under $3.2 million. The account is down about 6% and we Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 Page 2 of 10 pulled out 15% so that makes up for the difference we are up about 10%year over year for March. The strong equity markets have certainly helped fixed income has done fine. Fourth quarter fixed income was relatively weak, interest rates spiked after the election with the expectation with some of the progrowth initiatives that the republicans have been talking about. Glen Atkins: For the quarter ending 2016 we were under the market; twelve months was 3.61 versus 2.08 on the index. Considering rates have done this during the quarter performance has been quite good. Bonds in the first quarter were up 1.16 °"°versus .78 % on the market and then trailing twelve months, bonds are up 2.07 versus .42 on the index. The duration on the portfolio is about 4.75 years which is about three quarters of a year longer than the benchmark. That's actually the perfect place to be. It's a little bit longer in case were wrong, if the rates happen to go back down again. If you look at from July last year to December the ten year went from 1.37 to 2.62 from July through December, this afternoon it's at 2.40. So, we still have some volatility going on. Knowing or thinking that the rates are going to go up at some point. So, the portfolio is relatively short and if they do go up we won't get hurt that bad. I think we are in good shape. I'm sure you all are aware of this but we should probably mention for the record that Kerry, James, and I bought Garrett Asset Management in January 2017. Kerry Bradley: Briefly back on the portfolio you will see the S&P 500 was up about 6.07 for the quarter we were about 5.46. The S&P is a market half weighted index it's mostly large cap and it's a little more weighted towards growth companies, the larger market cap companies like the • Googles and Amazons of the world carry a larger weight. We have your portfolio structured more, we have some international in there, we have some small cap names and it's a little bit tilted towards value because of the income needs that you guys have. Again, last year the value did very well so it's a little tilted that way, our equities outperformed, this quarter growth took back over. We have a good mix of small cap. The other thing on the agenda is a Proxy Policy and our offer for our ADV Part 2. That's the document that we have to send to the SEC in order to conduct business. Sondra has included that in your packet. Garrison Ownership Transition/Assignment—signed agreement Garrison Annual ADV Amendment and Privacy Policy Pete Reagan moved to approve the Garrison Ownership Transition Agreement. Ron Wood seconded the motion. Upon roll call the motion passed 6-0. Approval of the Minutes: Approval of the November 17, 2016 Meeting Minutes . Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 • Page 3 of 10 No meeting in January,2017—Cancelled for lack of a quorum Roy Cate moved to approve the November 17, 2016 meeting minutes. Dennis Mullens seconded the motion. Upon roll call the motion passed 6-0. Pension List Changes: None Approval of the Pension List: Approval of the February, March, April, May,June, and July 2017 Pension Lists Pete Reagan moved to approve the February, March, April, May, June, and July 2017 Pension Lists. Ron Wood seconded the motion. Upon roll call the motion passed 6-0. New Business: • 4th Quarter 2016 Revenue and Expense report 12/31/16 A copy of the report was included in the agenda. 1st Quarter 2017 Revenue and Expense report 03/31/17 A copy of the report was included in the agenda. Pension Affidavits - Beneficiary Information: Sondra Smith: The PRB is asking for a lot of additional information, even more than what we send down to them. I am trying to get marriage licenses and death certificates. Pete Reagan: Now the only thing we need to be concerned with is the spouse at the time of retirement. Sondra Smith: We don't know if you were married at the time of retirement unless we have a marriage license. We don't have marriage licenses on everybody and there are some people that have listed a spouse but they were married after retirement. So, if the affidavits are not filled out correctly the actuary report is not going to be correct. • A discussion followed regarding the beneficiary information. Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 Page 4 of to Attorney General Opinion: • City Attorney Memo 01/17/17 regarding Attorney General opinion: Kit Williams: I wrote that memo immediately after receiving the Attorney General's opinion and we discussed it two days later at the Policemen's Pension and Relief Fund. Let me read you what I said to the police after we discussed it a little bit. "I think she (Attorney General) has logical reasons. I haven't studied it in depth and if it's going to be a sizable amount of money, which I know for the Fire Pension Plan it would be, I would look at it extremely carefully. This thing just came out and I didn't even look at it or receive it until Tuesday. This is my first look at it. But, I think her initial answer that, yes, we can put general funds there looks good to me." Unfortunately, I've looked at it more in-depth and I do have some issues with using general funds like that and that's why I still think the millage is the way to go. I gave this to the Police Pension Fund Board a week ago and basically it says, "There is some issues that I have with her statement about using general funds at this point in time to prop up your fund. I think it is the safest thing, and the only way to ensure that your pension benefits will never go down, is if the citizens would vote an increase in the millage so that your fund could be stabilized and then consolidated with LOPFI. That way, your pension funds would be guaranteed. It takes twenty people to have a petition to put it on the ballot. One of the problems with putting it on the ballot is that right now the statute is contradictory about whether you could do a special election or not. It talks about special election and then it says it must be held like an initiated act. All initiated ordinances must • be done at a general election. So, its self-contradictory. It would have been good if the legislator had changed that statute or clarified that you can have a special election but I don't think that occurred this year. It is going to be more difficult to get it passed in a general election because most people will not have heard anything about it and they see an increase in taxes they will probably vote it down. When the library did their millage, they did_it in a special election so it was only one issue and the people came to vote on that issue and didn't just show up and not know anything about it. So, it has a much better chance of passing which the library issue did. It does show that if you make a good case for millage increase, yours would be much smaller than what the library asked for, that it can pass. At a general election, I think you would have a more trouble. If you have friends in legislator you might want to ask them to change that statute that is now contradictory and make it where you can have it in a special election. Pete Reagan: So, tell me again how the library referendum did a special election? Kit Williams: There is specific statute talking about how you handle Police and Fire Pension elections and within that statues it says two things, it talks about both special elections and general elections so if that's all it said, that would be great. Unfortunately, it goes on and has another provision and says the election shall be conducted as initiative"X". You always do an initiated act at a general election that's the only time you can do it. Referendums are done by special election normally. They are far enough away from a general election that it must be called a special • election. A referendum is when there has already been something passed and somebody says I Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 411 Page 5 of 10 don't like it, I want to vote against it or whatever and its referred to them by city council. Initiated act is a new thing, like a new ordinance or a new law. As you can see every time you go to a general election there's always these state laws issuing tax. They are never at a special election because that's what Amendment 7 says. For some reason, I have no clue why, the legislator put that language in there that it must be done as an initiated act, because that's contrary to the other parts of the statute. I don't know how the courts would resolve that. When you're dealing with millage and potentially a lot of money,my recommendation would be that we must do it the safest way possible and that would be a general election. I know it can be done at a general election,both provisions would say that. But that is also not a good thing for you to try and do because it's going to be much more difficult to get it passed in a general election. It's not going to be a breeze in a special election but at least you would have a reasonable opportunity to get it passed in a special election. My other memo talks about use of general funds at this point in time when you are no longer employed. So, is it really a part of your wages or compensation like it was while you were employed or would the courts term it a "gratuity" or that we are paying the debt of another entity that's not actually part of the city. More like the Resource Recovery Authority was back when the incinerator case, seven of the nine board members were Fayetteville City Board of Directors, they had absolute control over that board and yet the Supreme Court said that was another entity and we could not help them out like we did. We could not guarantee their debt and so that's why that case was lost. In here you have two members of the government that are members of your board. • So,that's the issue and I would hope the legislature would change that although they got real close by trying to do away with all kinds of special elections. If they do away with all special elections, then that won't be a possibility. Fortunately, that did not pass because that would put everybody behind the eight ball anytime you have a millage or sales tax election or anything like that. Obviously, you go into a general election with.a lot of people, that don't know the issues and they see a tax, it is almost certainly going to go down in defeat. I wanted to clarify my initial statement. Pete Reagan: So, basically Kit you're not in agreement with anything she says in the opinion? Kit William: Not her key point which indicated that the city could raise the millage rate without another vote of the people. Pete Reagan: To not more than one mill. Kit William: Right, to not more than one mill. However, she does say that she is not going to consider Amendment 59. Amendment 59 is what caused the rollback. She cites the Hot Springs case where they were found to have improperly raised it back without a vote of the people and reversed on that case and sent it back to Hot Springs. She cites the very case where they said the city cannot do that and she said her opinion is not related to Amendment 59, of course that's our issue. Unfortunately, Amendment 59 is what has caused us to do a rollback. Pete Reagan: Does Amendment 59 state that the county cannot collect a tax over and above the • 10% increase in any given year? Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 Page 6 of 10 Kit Williams: It's a 10% increase that will trigger Amendment 59 and could require a rollback • which it has done in the past. They rollbacked the school district considerably too, but the school district came back the next year with their election and reinstated it with a vote of the people. You only need three tenths of a mill and you could stabilize your fund and we wouldn't have to worry about this subject anymore. A discussion followed on the previous millage rollback. Pete Reagan: We have an Attorney General that says the city can raise it. But we also have a City Attorney that says it needs to go to a vote of the people and then the question is special election or general election. Kit Williams: That is correct on the special election. Do we have the Attorney General opinion in here? My memo reads: "Does the Fayetteville City Council have the authority to increase the millage rate from its current level .4 mill to the rate of not more than one mill without submitting the question again to the Fayetteville voters?" She began her discussion saying, "It is further my opinion that the council of the city may increase the prevailing tax rate without a new election." However, you have to look at the fine print. A few pages later, she acknowledged an Arkansas Supreme Court case that holds directly contrary to her opinion. One that I have cited and has caused me a lot of concern. Here is what she says about it. "In Wright v. Story, (which is a 1989 case out of Hot Springs) the city's electors had approved in 1941 an Amendment 31 tax of up to one mill. Ours did the same thing for a local firemen's fund, and the city had levied the full mill. • We did that for a while, and the rate was rolled back to 0.4 mills sometime in early 1980 in compliance with Amendment 59 at that point in time, without another vote the city levied another full mill,without another vote,the city once again levied a full mill. "The Arkansas Supreme Court held that the city's action in increasing its millage from .4 mills to one mill was prohibited by the operations of Amendment 59 even though the restoration might have seemed permitted, literally by Amendment 31." My whole concern is that the same thing happened to us. You all remember back in 2001 when we had to agree to .4 mill and a rollback of.1 mill because of Amendment 59. The Mayor's research showed that we were originally at one mill, and they had to roll it down in the 80's to .5. I guess Hot Spring's wasn't hit with another case, but we were and we had to roll it down to .4. The Supreme Court says the City Council of Hot Springs did the wrong thing in raising the millage without another vote. The answer to her real question is and she does acknowledge that she is not basing her opinion on Amendment 59 and it might have some different factors and I think it does. The real answer here is that, no, the City Council cannot do that safely. So even though she started off and said yes, but I'm not considering Amendment 59, she has to consider that in order to give us a correct answer. In the Hot Springs case the Supreme Court said the Hot Springs City Council couldn't do that. That's why I have grave concerns that we can do that. I wish she had been a little more up front on the first question. Then she comes out five or six pages later and says, "oh yeah, there's this Amendment 59 issue." That is the issue, if we didn't have Amendment 59 we wouldn't have a problem. Pete Reagan: I think we need to study this some more. • Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 411 Page 7 of to Mayor Jordan: You need to study the history of the pension. That helped me understand how things evolved. A discussion followed on the rollback and the history of the millage. Kit Williams: I have the opinion and I will give you a copy of the opinion. My request is that you don't end with her first paragraph and that you read further on at her opinion where she talks about and I cited it in Wright v. Story, that city electors approved in 1941, Amendment 31 tax of up to one full mill for the local fireman's fund and the city had leveed the full mill. The rate was rolled back to .04 mill in early 1980, in compliance with Amendment 59 of the Arkansas Constitution. In 1987 without another election the city once again leveed a full mill. Arkansas Supreme Court held that the city's actions in increasing its mileage from .04 mills to 1 mill was prohibited by the operation of Amendment 59. I quote the Attorney General "Even though the restoration might have seemed permitted literally by Amendment 31, the application of Amendment 59 and the extent to which it may restrain the city from a large percentage increase in the millage rate, are questions that require fact finding in addition to the application of legal principals to those facts. Because I am neither charged nor equipped to act as a finder of fact in issuing official opinions. I am unable to render an opinion with respect to the amount by which Fayetteville, or any other particular city, may increase Amendment 31 millage rate without an election." Pete Reagan: We rolled back in 1988? • Kit Williams: There was a voluntary rollback, I don't think there was a suit. I think Amendment 59 passed and at that point it went forth from the state saying you better look at your stuff because Amendment 59 passed by the citizens required a rollback to .5. It stayed at .5 until 2001 when we, and all the school districts were sued and the court rendered a decision that we had to do a rollback. Pete Reagan: Who can we get to figure, to see if we can legally increase up to 1 mill and not be in violation of Amendment 59? Kit Williams: I think that the Hot Springs case says that we can't do it. Pete Reagan: They did it in violation of Amendment 59. If we are not in violation and don't go over the 10%, then we can do it, correct? Kit Williams: Once you have been rolled back you cannot increase it again without a vote. That's what the school district did, they had another vote, got it the increased back and everything was okay. We have not had anothervote. The general fund has issues also and my opinion remains the same, that a millage election is the key. A discussion followed on Amendment 59. Pension Fund report to the City Council Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 Page 8 of 10 Sondra Smith: That's what was read at the city council meeting. • Elections Sondra Smith:Nominations have been received. I haven't looked to see who has been nominated. We will be sending out the ballots tomorrow or Monday. You will have until the 15th to get your ballot back returned. Pete Reagan: We don't know who has been nominated? Sondra Smith: I don't, I haven't had a chance to look at yet. Mayor Jordan: You'd like to know who has been nominated. Pete Reagan: Yes, there is no sense in having an election if.... Sondra Smith: There are three people willing to serve. Mayor Jordan: You would like to know now. Pete Reagan: Sure, we are in a board meeting. • Sondra Smith: I need to ask another question first. The special meeting in May to open the Ballots, I scheduled that May 25t1'at 3:00 p.m., it's on a Thursday. There has been a question about whether or not those meetings have been legal because we haven't had a quorum and its considered a special meeting of the Fireman Pension Board. We need to make sure we have a quorum. The - last two meetings the Mayor and I were the only ones that showed up. City Attorney Kit Williams handed out the Attorney General opinion. A discussion followed on the Attorney General opinion. Pete Reagan: Mayor, do you have someone on staff that can do a little research on valuations of real-estate properties inside the City of Fayetteville since 2001 and the increases per year, which would be a percentage. Mayor Jordan: You need valuations of real-estate properties since 2001 per year and the percentages. Sondra Smith: The nominees are Alonzo Farrar, Jack Boudrey, Larry Poage, Ron Wood and Dennis Mullens. We have only heard back from three of those five on whether or not they are willing to serve. Ron Woods and Dennis Mullens have confirmed that they would be willing to serve. Pete Reagan: That's why I think we need to have "run for a position." • Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 • Page 9 of 10 Sondra Smith: We do the same things without positions. I ask everyone if they are interested in running. Pete Reagan: But in this situation, its whoever gets the most votes and that's not right. Sondra Smith: That's a democracy. Pete Reagan: Democracy is you run for a position and whoever gets the most votes out of that and if they don't get 51%then there is a runoff. Mayor Jordan: Your talking like on council, Position 1, Position 2. Sondra Smith: We have no positions assigned to the Fire Pension. Pete Reagan: It states right here on top of the pension board stationary that we are assigned to positions. Sondra Smith: Because you, at one point in time wanted that and then it wasn't working and the board voted to take those positions away for elections and we haven't changed the minutes. • Pete Reagan: I don't recall voting to take the positions away. Sondra Smith: It's in the minutes Pete if you want me to pull those minutes for you I would be happy to. I'm not going to do anything behind your back. • Pete Reagan:-The reason for the position was for election process. Mayor Jordan: How long do we have to pull them? Sondra Smith: It's not on the agenda and that's something that the board would need to vote on again. Pete Reagan: I have another question. We have five people running for two positions, what happens if we receive a ballot and someone just votes for one position? Sondra Smith: It happens all the time. It happened when we had positions.They were so confused; they would vote the same position for two different people. We get ballots all the time with one name on it. Mayor Jordan: The best thing we can do Sondra is pull the minutes later. Sondra Smith: There were issues with the position, some of them had no clue what that meant. • There are problems with the nomination process because they think when they send in the Firemen's Pension and Relies Fund Board of Trustees Meeting Minutes 04/27/17 Page 10 of 10 nomination that they are actually voting. Then when we send the ballots out they don't send the • ballots back in because they think they have already voted. Pete Reagan: I get several calls from my member's because they are confused about the nomination letter because the nomination letter says you must nominate from this list. A discussion followed on the election. Special meeting in May to open the ballots: Thursday, May 25, 2017 at 3:00 pm in Room 326 Sondra Smith: We can't schedule it any sooner than that because we have a deadline of the 15tn and ballots must be postmarked. We receive the ballots in next week and that gives us time to get everything prepared and get ready for the meeting. Informational: 2017 Meeting Schedule July 27, 2017 • Adjournment: 4:26 p.m. • Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes November 17,2016 • Page l of l Lioneld Jordan Chairman 7 -" ```1, Pete Reagan Position 2 Retired Sondra E.Smith Secretary ' ', Dennis Mullens Position 3 Retired Roy Cate Position 1 Retired y 3 I;1' '"1 i Ron Wood Position 4 Retired 1 \4gKA'N4p`? Special Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 25, 2017 Could not meet due to lack of a Quorum A special meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees scheduled for 3:00 PM on May 25, 2017 in Room 326 of the City Administration Building was not conducted due to a lack of a quorum. Mayor Jordan called the meeting to order. • Present: Mayor Jordan, City Clerk Sondra Smith, Kim Johnson, City Clerk office, City Attorney Kit Williams, and Trish Leach, Accounting. Mayor Jordan: We will wait 10 minutes to see if we have a quorum. There was no quorum therefore the meeting could not be conducted. Meeting Adjourned: 3:10 p.m. • Firemen's Pension and Relief Fund Board of Trustees • Meeting Minutes 07/27/17 Page 1 of 8 e�Yer? Lioneld Jordan Chairman Ada Pete Reagan Position 2 Retired Sondra E.Smith Secretary ( Dennis Mullens Position 3 Retired Roy Cate Position 1 Retired 1E'2' a• Ron Wood Position 4 Retired 47,44 4'9kAt4.,.. Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda July 27,2017 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 p.m. on July 27, 2017, in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Dennis Mullens,Pete Reagan,Roy Cate,Mayor Jordan,Ron Wood,Sondra Smith, City Clerk, Glenn Atkins, Kerry Bradley, Garrison Financial, Marsha Hertweck, Trish Leach, Accounting, Lawrence Watts, Osborn, Carreiro and Associates, Jody Carreiro, Osborn, Carreiro and Associates and David Clark,Pension Review Board (PRB). • Absent: None Presentation by the Pension Review Board (PRB): David Clark: We are here today to present a report on the status of the Fayetteville Fire Pension fund. This will be the third report PRB has provided since 2010. The purpose is to communicate any available options to protect the benefits of the pension fund so that beneficiaries receive benefits for the rest of their lifetime that they were promised. This report, there are actually some improvements in the positive direction. The whole purpose of PRB being here is by statute we have to present to the boards of pension funds, that have assets that are predicted to run out fewer - than ten years, and Fayetteville Fire is one of those plans. Jody Carreiro: Everybody is retired now for the last few years, so the liability is no longer going up it's coming down, but the bad news is the assets are coming down. The funded status was only at about 30%and it has dropped down getting closer to 20%funded. Funded status or funded ratio is just assets over liability. It's a pretty simple measure to tell us where we are. You can see that we continue to decline from that standpoint. Another measurement that's from the valuation is a calculated contribution versus what's actually made and the calculating contribution is taking the unfunded liabilities and amortizing those over five years. The reason that was decided long ago is that the plan is closed, most everybody is retired,we should be pretty close to funding. So, "pretty close" being five years as a good proxy for "pretty close". That's a five-year amortization of the unfunded. There is a big difference between the calculated contributions and the actual contributions. The actual contributions are what the city is required to make by law. But you see • that they fall well short of what we've suggested. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes 07/27/17 Page 2 of8 • 8 Now, in the report on page nine and ten, which is also in the valuation report, is a ten-year side by side financial report of the fund. The income sources and the benefits, the number on page nine that I would like to point out, is the outflow. There's an item C. Non-Investment Cash Flow that is the plan cashflow, is what's coming in less what's going out, it excludes the investment income. For the fund to stay level that means you would have to get that much investment income every year. That's not possible most years. That number is well over $500,000 it's been even more in the past when benefits were higher, $500,000 to$600,000 is going out every year and that is what we have to deal with. On page ten, you can see what the assets have been for the last ten years. Pete Reagan: The number on page six, $537,920 did you say that does not include investment earnings? Jody Carreiro: That is correct. On page ten you can see what the assets have been for the last ten years. Another ratio that we all look at is the ratio of assets to annual expenses and that number should be at seven or eight at least and its 2.4 now, it was several years ago. One good thing to point out, is that over the last ten years, the assumption for the valuation starting places is 5%and the ten-year average market return is right at 5%. That is one good thing. Page eleven, grew out of our discussion two years ago, it wasn't in the report but it was worth- while information, is some detail on the sources of income. This has all the pieces of income here, the general employee, the employer/employee has gone away because there's no more active. Back in 2008 was the last time anything came in from that.The premium tax,additional allocation, • and the local millage, add all those together and there's our number again $784,143 which was the total income pieces to the plan. Mayor Jordan: You're talking about that making it over a five-year run? Jody Carreiro:That gets us fully funded at five years. What we are going to talk about in a couple of minutes, is what we need to do to keep from going broke. Which is the more immediate concern as opposed to whether you can get fully funded in five years. Mayor Jordan: But your $2.8 million will make it solvent in five years? Jody Carreiro: $2.8 million per year for five years will make it fully funded.This is background, we know what the local millage is, we had a period of very slow growth after the crash from 2009 through 2013 and in 2014 it started growing again. It looks like you had a revaluation in the last couple of years because 2016 had a bigger than normal jump with the collections on the local millage. Changes since 2015, this is outlined in the cover letter of the report. On page two, one of the most important things is what's happened in the last two or three years that changes the trajectory. The 2015 report projected that the unfunded liability would be a $1.2 million bigger than it actually is at this time. So, we have reduced the unfunded by $1.2 million through increasing the millage related income. We have the same 0.4 millage but it has grown in the last couple of years and property valuations have risen. There are some demographic corrections in the last year, evidently Firemen's Pension and Relief Fund Board • 7/27/17 rustees Meeting Minutes 07/27/U Page 3 of 8 you went back and checked everybody and made sure they had spouses and that saved quite a bit of money.That reduced the liability by almost a million dollars,that is where most of the reduction in the funded came. That reduced the future outflows to the plan. The mortality experience has been favoring the plan. Going forward the premium tax is greater. What we have done at the PRB level, the formula that goes into the formula that puts out the premium tax we increased that so that the plans that were having the most trouble would get more money. We have some more flexibility now than we use to have. In 2017, you see the first$30,000 to $35,000 more coming in going forward from the premium tax formula. We have more income coming in and less outflow going out, those have helped. We did a cash flow simulation where we looked over a long period of time and projected the outflow for every year and projected these income pieces. The median result runs out of money in 2030. We are in a much better place but not a good place. We can't earn our way out of this. The starting allocation based on the plans actual portfolio, which has an expected rate of return of over 6%, if you average all the various asset classes, that the plan is currently vested in,that's where we are. Mayor Jordan: You still think we are going to get 6% return. Jody Carreiro: The portfolio the way it is invested,you put all those asset classes together, that's a little over 6%. The fund is a little more aggressively invested than it was a few years ago. The average return went up but the variances went up too. • Lawrence Watts: That is not assuming any affects that come from liquidity issues. As you start to run out of money your investment advisors will start needing cash on hand to pay benefits. Jody Carreiro: What we did then is to try to solve what amount of money, if we put it through that same simulation, could we put in every year so it would go down but not run out of money or the 5% line would stay above zero. The result was $80,000 over the next fifteen years. Mayor Jordan: You believe that the earnings plus the $80,000 a year will keep the plan solvent? Jody Carreiro: Yes, that was our conclusion. It doesn't make it fully funded but it does make it solvent. Mr. Carreiro continued to explain the graphs and scenarios. He also gave examples of the different scenarios. What can you do? You can maintain your current direction but that direction is south. The plan is not running out of money as fast but it is still running out of money. You can try to do the additional contributions. Those additional contributions, when we made that same calculation a few years ago, was$200,000 to $250,000. So, $80,000 to $115,000 is still a lot of money but it is a lot less than $200,000 to $250,000. Our growth projections are small on the real estate millage tax. Let's discuss LOPFI administration if that is something you are interested in pursuing. If that happens the plan assets are transferred to LOPFI, the local board here would be dissolved, and the city signs an agreement to pay the LOPFI rate. But, the benefits are guaranteed and if the fund within the fund ran out of money the benefits would still be guaranteed and the city would have to • pay more over that period. The payment plan under LOPFI administration is a 15 to 25-year Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes e/ 8 • Pagg 4 of e 4 of 8 amortization of the unfunded. That's a longer period of time than what we put in the evaluation. It's a closed amortization level dollar payment. What that means is it looks like a mortgage. Their liability is based on a 7.75 interest discount assumption that's higher than the 5% that we use. Which means they would have a lower unfunded. The thing to remember though is that the level dollar payment increases by 3.75% every year. That means you can't just look at the first year. You have to look at the income stream and the liability stream. That is what we did and we included that information. In short this is what you get to. The 15-year amortization option the city would have to come up with more money to fund the LOPFI contribution and that is without and gains or losses,or changes in assumptions. Based on what we have heard in the past that 15-year option is not an option for you. The 25-year amortization option the excess millage and the other contributions we use that to pay down. So, we are not paying the 25-year amortization, we are paying all your current sources of income and putting that against that. So, it is like making an extra mortgage payment or two every year. That is the only way this would work, if you do the 25-year amortization and make the additional payments. There are other risk factors associated with this. Mayor Jordan: I need to get some bottom lines here. You calculate for$115,000 per year we can keep going for 15 years? Jody Carreiro: It kept it going over the study period, our study period was 30 years. It kept the plan solvent over 30 years. The plan would survive. • Sondra Smith: Is that number the same if it goes to LOPFI? Jody Carreiro: No, under LOPFI you would need some additional money but in future years. Mayor Jordan: But, I can keep it going here with my property tax and about$115,000 per year. Jody Carreiro: Yes sir, that's the bottom line, $1 15,000 per year for the next 15 years. Marsha Hertweck: That's a 5% return? Jody Carreiro: 5% return with mortality risk and it is the full investment scenario. A discussion continued regarding the graphs and different scenarios. There was also discussion regarding the graph in the agenda and the cost to the city if the plan is sent to LOPFI. You have two ways that you can see the light at the end of the tunnel. One is $80,000 to $1 15,000 more from the city and maintain local control or consolidate with LOPFI, if you want to reduce those risks that LOPFI has, you can put some extra money to reduce the risk of the LOPFI contribution growing faster than millage and premium tax. That is what the risk is with LOPFI, the contributions growing faster than the sources of income. Garrison Financial • Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes 07/27/17 Page 5 of 8 2nd Quarter 2017 Reports Kerry Bradley: The markets continue to be strong and equity markets continue to perform well. We have an asset allocation policy of 60%equity and 40%fixed income, we are very close to that asset allocation. We always keep a fair amount of cash for your distributions. We haven't made any major structural changes in the portfolio. Year to date the equities are up 8.38 versus 9.34. That is a function of us keeping you well diversified between growth and value stocks. Large cap growth stocks have been driving the market. We are comfortable with the performance in the portfolio. I think it is prudent that we keep you diversified in other areas of the market. As far as the market going forward we had a great year. Valuations are on the high side of what we are comfortable with. Earnings are coming in pretty strong. As earnings continue to come in that is what drives stock prices and keeps the multiples in line. Unless earnings stall we are going to stay on our present course. Glen Atkins: The fixed income market has been extremely difficult to manage the last two and half years. That is the yield on the ten-year treasury fund. We have the portfolio structured the way we want it to be and the performance bears that out. For the quarter,the fixed income portion of the portfolio was up 1.43%the index was up .94% and 2.60%year to date versus 1.73%on the index. The bonds were up 1.26%year to date and the index was down to .22 %. • We went ahead and sold the rest of that treasury bond, for two reasons to fund the cash positions for distributions and because the maturity was becoming so short that the yield on it,when we sold it, was around 1%. I think we are in good shape. Kerry Bradley: We have had some pretty good performance, the last 12 months the account is up a little more than 9%. Since we took over in 2012 the portfolio has earned 7.8%. I think your numbers were in the 6%range before. I think the 5%to 6% is a realistic number versus the 7.75% that is used at LOPFI. That seems really aggressive to us. _ _ Glen Atkins: The target asset allocation of 60% equity and 40% fixed is conservative and consistent with foundations and retirement funds. If you look back to starting in the mid 1920's, to present, stocks have averaged about 10% per year. Bonds over that same time period have averaged about 5% a year. If you do that with a 60%/40% weighting that would get you to an expected return of 8%. So, the LOPFI number is a little aggressive. Kerry Bradley: I would be curious to see the numbers if you are looking at$1 15,000 contribution what would that have to be if you made this portfolio completely safe. If you assumed a 2%return. This comes with some risks. 60%/40% is a fairly moderate portfolio but it certainly comes with risks. Approval of the Minutes Approval of the 04/27/17 Meeting Minutes • Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes ge/6 of 8 11111 Page 6 of 8 Pete Reagan moved to approve the April 27,2017 meeting minutes. Ron Wood seconded the motion. Upon roll call the motion passed 6-0. Approval of the 05/25/17 Special Meeting Minutes Sondra Smith: There was no meeting because we did not have a quorum. We did not open the ballots. We will open ballots today. Pete Reagan: There were only two people nominated. Mayor Jordan: City Attorney advises that we open the ballots. Sondra Smith: State law says you have to open the ballots in open session. It states you must have ballots and not nominations. You can ask PRB since they are here. Kit said we have to do a ballot election and it does not matter how many nominations are received. Pension List Changes None Approval of the Pension List Approval of the August, September, and October 2017 Pension Lists • Pete Reagan moved to approve the August, September, and October 2017 Pension Lists. Dennis Mullens seconded the motion. Upon roll call the motion passed 6-0. Unfinished Business Open Election Ballots Sondra Smith and Kim Johnson opened each ballot. The ballots and envelopes were shuffled, according to the ballot procedure that was approved by the Board. Seventeen ballots were received (1 received after the deadline). The ballots were read and counted. Dennis Mullens received 16 votes, Ron Wood received 15 votes.There were no write-ins. Dennis Mullens and Ron Wood were re-elected. Board of Trustees 24-11-802—Act 126 Sondra Smith: A new state law changed the number of members on the Fire Pension Board that goes into effect August 2, 2017. We must have five retired members serve on the board according to this new law. David Clark,Pension Review Board: What the change does is the position stated in the law,the active member positions labeled Fire Chief or the highest ranking member, if you do not have an • Firemen's Pension and Relief Fund • Board of Trustees Meeting Minutes 07/27/17 Page 7 of 8 active position, which you don't when everyone retires. This change in law will now allow the fund to have that position filled with a retired member. Sondra Smith: So, we need to have another election. Pete Reagan: A nomination process. Election Process Sondra Smith: Pete had questions about the election process. I have included the minutes where the board approved the City Attorney's suggested election process and the minutes regarding the position numbers being removed from the election process. Pete Reagan: I appreciate you doing the research on this. I would like to make a motion that we reinstate the positions for the purpose of the election process. In the process in the past these positions on this board need to be, if someone is going to run against someone for a position on the board,they need to state which position they are running for and not be a free for all that whoever gets the most votes wins. A discussion followed on the special election. • Pete Reagan made a motion to reinstate the positions for the election process. Dennis Mullens seconded the motion. Upon roll call the motion passed 6-0. New Business Evaluating Local Plan Investments—PRB letter 06/02/17 Sondra Smith: We receive this letter every year. A copy was sent to our investment advisor. 2"d Quarter 2017 Revenue and Expense Report 06/30/17 Sondra Smith: That is the report that Accounting completes for us every quarter. 2016 Annual Actuarial Valuation Sondra Smith: That is the annual actuarial valuation we received for December 31, 2016. Turnback Funds 2017 Sondra Smith: A copy of the turnback funds,how we disburse the funds, and a copy of the checks received. Property Tax Revenue per Mil 110 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes 07/27/17 • Page 8 of of8 Sondra Smith: Pete asked for this report. Informational Attorney General Opinion Sondra Smith: You asked for a copy of the Attorney General Report at our last meeting. Millage Information Prepared by Sondra Smith Sondra Smith: That is another copy of the history of the millage turnback. 2017 Meeting Schedule October 26,2017. Pete Reagan said we do not need a special meeting to open the ballots for the new position. They will be opened at the October 26, 2017 meeting. Adjournment: 4:25 p.m. • • Firemen's Pension and Relief Fund • Board Trustees Minutes Minutess 10/26/17 Page 1 of 3 dE EAYfr1F, Lioneld Jordan Chairman `u A �r ak`s�l Pete Reagan Position 2 Retired Sondra E.Smith Secretary ! Dennis Mullens Position 3 Retired RoyCate Position 1 Retired lru ., ., Ron Wood Position 4 Retired 4 6 / Gene Warford Position 5 Retired « J Firemen's Pension and Relief Fund Board of Trustees Minute Meeting October 26,2017 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 p.m. on October 26, 2017, in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Pete Reagan,Mayor Jordan,Ron Wood, Sondra Smith,City Clerk,Gene Warford, Glenn Atkins,James Bell,Garrison Financial,Kit Williams,City Attorney,Trish Leach and Kristin Cavette,Accounting Absent: Roy Cate and Dennis Mullens • Garrison Financial: 3rd Quarter 2017 Reports James Bell: We brought our quarterly report from September 30 and starting on page two with the graph, the account value at the end of the quarter, was just over $3.1 million. Our target asset allocation is 60% in stocks, 40% in bonds and then we hold a pool of cash so that we have cash available to fund pension payments, etc. We are close to our target policy which is currently 57% stocks, 32% bonds and 10%cash. Turning to the next page to give you a sense of what we are doing, I work on the stock side, the equity side and Glen is our fixed income manager, so he works on the bond side. So, speaking to the equities, the account has to be all in mutual funds by state law because of the size. What we have done is selected a pool of very well diversified, low cost, mutual funds to get you exposure through the entire equity market. You have funds that are diversified by the size of the company they invest in, the sector of the economy they invest in, different styles, growth, stocks, value of stocks and diversified by geographies. We have domestic funds, international funds and emerging market funds. It's a well-diversified portfolio of equity exposure as you are ever going to see. We have the portfolio structured the way we like it, we think it is allocated the way it should be and you're in spin down mode now. Pretty much all you're going to see from our side are sales to raise cash periodically so that we have cash available for the pension payments. The sales that we • made this year, were strictly done to raise cash to fund the payments as needed. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes 10/26/17 • Page 2 of 3 On the equity side for the quarter your stocks were up 4.3% (13% YTD) on the bond side fixed income 1.1% for the quarter (3.75% YTD) and the overall account is 2.8% for the quarter (8.6% YTD). Equity markets have been strong all year. Glen Atkins: Fixed income continues to be very strange. It's the yield in the quarter for the ten- year treasury bond. We have 30 or 35 basis points in volatility in both directions we have to try to manage around in one particular quarter. In almost any period going back three years you will see that inter period volatility. Coming out of 2015, when they raised the rates in December, I think there was a little confusion in the market because they raised rates a quarter, December 2015, and rates went straight down, we were well positioned for that and it went against us. In terms of structure we've got it in about seven or eight mutual funds that manage money kind of like what we do if we were able to do individual securities. They're heavily researched and primarily weighted in corporate bonds. James mentioned the performance for the quarter we were up against the index almost three quarters of a percent (YTD 1.4%) and the last twelve months we were 1.25% higher than the market. On duration, which is another measure for maturity on the portfolio, 5.6 years, its longer than the index. If we get fast moving rates that can hurt us a little bit, if we get gradual increases in rates that coupon could make up for that as we go along. The market going forward the consensus is that the Fed will raise rates one more time in December and maybe a couple of times • in 2018. Unfinished Business: Board of Trustees 24-11-802,Act 126 - Open Election Ballots Election-Ballots Opened Sondra Smith and Kim Johnson opened each ballot.The ballots and envelopes were shuffled,according to the ballot procedure that was approved by the Board. 19 ballots were received.The ballots were read and counted. Gene Warford received 18 votes. There was one write-in vote for Dennis Ledbetter. Gene Warford was elected. Approval of the Minutes Approval of the 07/27/17 Meeting Minutes Pete Reagan moved to approve the July 27, 2017 meeting minutes. Ron Wood seconded the motion. Upon roll call the motion passed 5-0. • Firemen's Pension and Relief Fund • Board of Trustees Meeting Minutes 10/26/17 Page 3 of 3 Pension List Changes None Approval of the Pension List Approval of the November,December 2017 and January 2018 Pension Lists Pete Reagan moved to approve the November, December 2017, and January 2018 Pension Lists. Ron Wood seconded the motion. Upon roll call the motion passed 5-0. New Business: 3rd Quarter 2017 Revenue and Expense Report 09/30/17 Sondra Smith: No approval needed,just informational. NCPERS Invoice • Pete Reagan moved to approve the NCPERS Invoice. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Informational: 2018 Meeting Schedule January 25,2018 Adjournment: 3:19 p.m. • Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes November 17,2016 Page I of 1 • of Fay ETTF L Lioneld Jordan Chairman m Pete Reagan Position 2 Retired Iv Sondra E.Smith Secretary % Denniso—'� ! Mullens Position 3 Retired Roy Cate Position 1 Retired '" A i Ron Wood Position 4 Retired „ 4RKANSP�i Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda January 26, 2017 Meeting Cancelled A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees scheduled for January 26, 2017 was cancelled due to lack of a quorum. I I FIREMEN'S RELIEF AND PENSION January 1 2017 THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH LISTED ABOVE YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE PAYEES,IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED. • DATE OF Regular Mo Year To Date Act 1373 EMP#RETIREMENT NAME Benefit Reg Benefit Future Supplement R 177 4/04 BACHMAN,EDDIE 2,618.55 2,618.55 ✓ 63 5/72 'BOLAIN,ANN 109.27 109.27 R 68 7/99 BONADUCE,MICHAEL 2,988.76 2,988.76 S 44 9/86 BOUDREY,BETTY MRS. 2,477.42 2,477.42 R 45 9/86 BOUDREY,HOWARD 2,089.28 2,089.28 R 49 7/88 BOUDREY,JACK 1,647.63 1,647.63 R 57 5/90 CATE,ROY 1,788.90 1,788.90 R 188 12/05 DOSS,MARION H 5,376.91 5,376.91 R 188 12/05 DOSS,MARION H plus 25 additional pay 731.61 731.61 R 11 2/76 FARRAR,ALONZO 998.86 998.86 R 192 4/06 FARRAR,DANNY 4,155.36 4,155.36 R 170 5/03 FREEDLE,LARRY 3,816.75 3,816.75 R 170 5/03 FREEDLE,LARRY plus 25 additional pay 141.37 141.37 R 92 03/02 GAGE,TOMMY 2,596.69 2,596.69 ✓ 70 11/99 HARRIS,MARY RUTH 109.27 109.27 Q 182 10/04 JENKINS,EILEEN 1,788.75 1,788.75 R 93 06/02 JENKINS,JOHN 1,788.76 1,788.76 R 86 07/01 JOHNSON,ROBERT 3,073.47 3,073.47 S 219 4/95 JORDAN,SANDRA K 2,274.95 2,274.95 S 76 5/88 JUDY,JAN 1,647.63 1,647.63 R 37 3/84 KING,ARNOLD D. 1,522.37 1,522.37 R 54 5/89 KING,ARVIL 1,711.21 1,711.21 R 173 12/03 LEDBETTER,DENNIS 3,775.80 3,775.80 R 51 10/88 LEWIS,CHARLES 1,647.63 1,647.63 R 40 9/85 LOGUE,PAUL D. 2,868.28 2,868.28 R 202 02/08 MAHAN,MARSHALL 4,077.28 4,077.28 S MASON,DONNA 1,631.25 1,631.25 ✓ 35 2/82 MC CHRISTIAN,DWAYNE 109.27 109.27 R 15 4/77 MC WHORTER,CHARLES 1,334.51 1,334.51 S 209 8/81 MILLER,ALICE GAYLE 1,304.07 1,304.07 R 73 2/00 MILLER,KENNETH 3,180.02 3,180.02 R 73 2/00 MILLER,KENNETH plus 25 additional pay 170.60 170.60 VS 217 2/86 MOORE,BETTY L 109.27 109.27 R 48 7/88 MULLENS,DENNIS W. 2,191.30 2,191.30 184 3/05 NAPIER,LONNIE 3,518.28 3,518.28 196 01/02 ONEAL,TEDDY 4,120.99 4,120.99 R 46 5/88 OSBURN,TROY 1,899.66 1,899.66 R 81 02/01 PHILLIPS,LARRY 2,765.09 2,765.09 R 203 02/08 PIERCE,JOEY 3,647.18 3,647.18 R 53 2/89 POAGE,LARRY 2,346.70 2,346.70 R 186 06/05 REAGAN,PETE 3,535.71 3,535.71 ✓ 201 1/0 REED,JUNE 109.27 109.27 R 41 9/85 SCHADER,TROY 1,524.99 1,524.99 R 190 04/06 SHACKELFORD,GLEN 3,647.18 3,647.18 S SPRINGSTON,BARBARA 806.19 806.19 S 90 03/02 STOUT,IMOGENE W. 767.80 767.80 R 165 12/02 TATE,RALPH 3,668.10 3,668.10 R 71 1/00 WARFORD,THOMAS 2,502.72 2,502.72 R 88 01/02 WOOD,RONNIE D 3,077.15 3,077.15 S 208 9/88 WRIGHT,Barbara 1,691.34 1,691.34 107,481.40 107,481.40 ID 11/3/2016 K:\Fire Pension\Pension List\Pension List 2017\FP 013117 WM DATE OF Regular Mo Year To Date Act 1373 EMP#RETIREMENT NAME Benefit Reg Benefit Future Supplement 0.00 Double check--should be zero IllTHE UNDERSIGNED,DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE ST AND CORRECT;THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID;THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND;THAT THE SERVICES OR SUPPLIES FURNISHED,AS THE CASE MAY BE,WERE ACTUALLY RENDERED OR FURNISHED;AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR IMILAR SERVICES OR SUPPLIES ,SLI/LA.--S. Aff-* - e.t.--...... SECRETARY CHAIRMAN PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) p ,h al '�g'�L .•,2_O % ck ..Nt D jot* SWORN TO AND SUBSCRIBED BEFORE ME THIS DAY OF .� .Y �J ij �••. `�.��Q�.• •,SS\0N#4,••11,. rPy• i & NOTARya:2= NOTARY PUBLIC =S. PS ••�` . PUBLIC •�: MY COMMISSION EXPIRES: �.C•0uii •.Q. l' • .810 .• Q, • YTD 0 �••••• �0�� 6810-9810-5335-00 0.00 107481.40 6810-9810-5335-06 0.00 #REF! Drop Payout/Intrest Checks to Drop Retirees 0.00 YTD Column 0.00 Difference 0 00 "(should be off Supplemental amount for DROP part) S III 11/3/2016 K:\Fire Pension\Pension List\Pension List 2017\FP 013117 WM