PRB Meeting Agenda Wednesday, December 12, :30 a.m. 1. Call to Order Recognition of a quorum and notification of news media

Transcription

1 1 PRB Meeting Agenda Wednesday, December 12, 218 9:3 a.m. 1. Call to Order Recognition of a quorum and notification of news media 2. Approve September 12, 218 minutes Review November 8, 218 ASC minutes Chairman Miller Chairman Miller 3. Old Business a) Premium Tax legislative changes Jody Carreiro 4. New Business a) Future of the PRB Mr. Lundy b) September 218 financial statements Chairman Miller c) ASC report Mr. Lundy d) Proposed 219 budget Chairman Miller e) Review/approve benefit increase items Chairman Miller f) Set dates/times for 219 meetings Chairman Miller 5. Other Business Chairman Miller 6. Adjourn Chairman Miller Lunch hosted by Osborn, Carreiro & Associates will be served for Board and staff upon adjournment.

2 2 November 28, 218 Arkansas DemocratGazette PO Box 2221 Little Rock, AR 7223 Via Fax: and (2 pages) Dear Ladies and Gentlemen: The Arkansas Fire and Police Pension Review Board will hold their quarterly board meeting December 12, 218 at 9:3 a.m. The meeting will be held at 62 W. 3 rd, Suite 2 in Little Rock. An agenda is included with this notice. Respectfully, PRB Staff

3 3 November 28, 218 Arkansas Business PO Box 3686 Little Rock, AR 7223 Via Fax: (2 pages) Dear Ladies and Gentlemen: The Arkansas Fire and Police Pension Review Board will hold their quarterly board meeting December 12, 218 at 9:3 a.m. The meeting will be held at 62 W. 3 rd, Suite 2 in Little Rock. An agenda is included with this notice. Respectfully, PRB Staff

4 4 Minutes Arkansas Fire and Police Pension Review Board (PRB) Quarterly Meeting The Arkansas Fire and Police Pension Review Board met on Wednesday, September 12, 218 in the PRB office at 62 W. 3 rd, Suite 2, Little Rock, Arkansas. Members Present: Excused Member: Staff Present: Steve Miller, Employer Member, Chairman Lance Spicer, Employer Member, ViceChairman Bill Lundy, Fire Employee Member Farris Hensley, Police Employee Member Rusty Watson, Police Employee Member Jim Gates, Fire Employee Member Buddy Ledford, Public Member Sara Lenehan, Employer Member Jessica Wallace, DF&A Member David Clark, Executive Director Lesley Weaver, Secretary to the Board Chairman Miller called the meeting to order at 9:32 a.m. and recognized a quorum and notification of the news media. Chairman Miller advised Ms. Wallace needed to be excused. Mr. Lundy made a motion, seconded by Mr. Watson, to excuse Ms. Wallace. The motion passed unanimously. Approval of minutes Mr. Hensley made a motion, seconded by Mr. Ledford, to approve the June 13, 218 PRB meeting minutes. The motion passed unanimously. Future Supplement Fund Mr. Jody Carreiro, actuary, Osborn, Carreiro & Associates (OCA), presented the three (3) Future Supplement Fund structures as requested by the Board. The structures are as follows: 1. Police starting at 2,24, fire starting at 1,62, and volunteer at 324, with an annual 2% cost of living adjustment (COLA), and the additional provision that fire be brought up to parity with police in a level manner over a 7year period. 2. Police starting at 2,24, fire starting at 1,62, and volunteer at 324, with an annual 2.5% COLA, and the additional provision that fire be brought up to parity with police in a level manner over a 7year period. 3. Police starting at 2,, fire starting at 1,5, and volunteer at 3, with an annual 2% COLA, and the additional provision that fire be brought up to parity with police in a level manner over a 7year period. Ms. Lenehan expressed concern regarding the effect the structures could have on reducing Additional Allocation. After further discussion from the Board, Mr. Hensley made a motion, seconded by Mr. Spicer, to increase the Additional Allocation factor from 1% to 15%; for police to start at 2,24, fire start at 1,62, and volunteer start at 3; use an annual 2.5% COLA; ensure that fire is brought up to parity with police in a level manner over a 7year period;

5 5 PRB Meeting September 12, 218 Page 2 of 3 and that any remaining unallocated monies from one year s Additional Allocation are rolled forward to the next year s Premium Tax allocation formula. The motion passed unanimously. Summary of 217 actuarial valuations Mr. Jody Carreiro provided a summary of the December 31, 217 Annual Actuarial Valuations. Mr. Carreiro stated that 82 valuations were performed for the locally administered Fire and Police Pension Plans. There were a total of 19 active members, 2 members on DROP, and 1,562 benefit recipients. The total assets applied were 183 million, with a total unfunded actuarial accrued liability of 119 million and Police Plans being 75% funded, Fire Plans 52% funded, and Volunteer Plans 93% funded. Overall, the actual employer contribution amounts for the Local Plans continue to be less than the actuarially determined contributions. Mr. Carreiro then reviewed four (4) locations shown in the summary of valuations that are considered Projected Insolvent. The following three (3) have previously been designated as Projected Insolvent: Batesville Fire, Fayetteville Fire, and Marion Fire. This year one new Local Plan should be declared Projected Insolvent: Salem Fire. Ms. Lenehan made a motion, seconded by Mr. Ledford, to add Salem Fire to the Projected Insolvent list. The motion passed unanimously. This action will result in a Special Report being issued in the 219year for Salem Fire. No updated reports are expected to be scheduled for the three (3) previously declared Projected Insolvent Local Plans. After further discussion, the Board thanked Mr. Carreiro for the report. June 218 financial statements Chairman Miller stated the financial statements have been available in the Board Packet for review and shows the yeartodate status of expenditures are in line compared to the approved budget. Mr. Ledford made a motion, seconded by Mr. Spicer, to approve the June 218 financial statements. The motion passed unanimously. Review/approve benefit increase items Mr. Clark reviewed the internal checklist for Alma Fire, Dermott Fire, Eureka Springs Fire, Fordyce Fire, Harrison Fire, Harrison Police, Rogers Fire, and Siloam Springs Fire Pension Fund. Staff and the actuaries agree that these eight (8) Local Plans met the requirements of a PRB Recognized Investment Management and Trust Arrangement for the purpose of an Alternate Cash Flow Valuation. Mr. Hensley made a motion, seconded by Mr. Ledford, to approve the PRB Recognized Investment Management and Trust Arrangement for these eight (8) Local Plans. The motion passed unanimously. Mr. Clark also reviewed staff action on the following nine (9) benefit increase requests: Alma Fire approved 3 per month increase Dermott Fire approved 3 per month increase Eureka Springs Fire approved 4 per month increase Fordyce Fire approved 4 per month increase Hamburg Fire approved 2 per month increase Harrison Fire approved 7% increase Harrison Police approved 1% increase

6 6 PRB Meeting September 12, 218 Page 3 of 3 Jacksonville Police approved 5% increase Siloam Springs Fire approved 5% increase for paid; 4 per month increase for volunteer Mr. Lundy made a motion, seconded by Mr. Gates, to vote on each benefit increase individually. The motion passed unanimously. Mr. Lundy made a motion, seconded by Mr. Hensley, to approve the Alma Fire benefit increase. The motion passed unanimously. Mr. Lundy made a motion, seconded by Mr. Gates, to approve the Dermott Fire benefit increase. The motion passed unanimously. Mr. Lundy made a motion, seconded by Mr. Ledford, to approve the Eureka Springs Fire benefit increase. The motion passed unanimously. Mr. Lundy made a motion, seconded by Mr. Watson, to approve the Fordyce Fire benefit increase. The motion passed unanimously. Mr. Lundy made a motion, seconded by Mr. Gates, to approve the Hamburg Fire benefit increase. The motion passed unanimously. Mr. Hensley made a motion, seconded by Mr. Watson, to approve the Harrison Fire benefit increase. Mr. Lundy opposed, with the remaining Board members voting for approval; the motion passed. Mr. Hensley made a motion, seconded by Mr. Watson, to approve the Harrison Police benefit increase. Mr. Lundy opposed, with the remaining Board members voting for approval; the motion passed. Mr. Watson made a motion, seconded by Mr. Hensley, to approve the Jacksonville Police benefit increase. The motion passed unanimously. Ms. Lenehan made a motion, seconded by Mr. Watson, to approve the Siloam Springs Fire benefit increase. Mr. Lundy opposed, with the remaining Board members voting for approval; the motion passed. Other Business Mr. Lundy stated that he believes the PRB has made great progress over the years with the Local Plans under purview of the PRB and in the work on the Future Supplement discussion. Mr. Lundy asked the Board to consider looking at an orderly way to wind down the business of the PRB. Mr. Lundy stated the PRB could ask the Joint Retirement Committee to perform a two year study that, over a six year period, would have all remaining Local Plans consolidate with LOPFI. Mr. Hensley asked if this action would then place the remaining Local Plans under a mandatory consolidation. Mr. Lundy said that was not what he is suggesting. The concept is to properly manage how the PRB concludes its business as an agency since all Local Plans will ultimately consolidate with LOPFI. Mr. Clark stated the topic would be placed on the agenda for the December 12, 218 PRB meeting. With no further business the Board adjourned at 11:13 a.m. Respectfully submitted, Drafted 9/26/18 Lesley Weaver Secretary to the Board

7 7 Minutes of The Arkansas Local Police and Fire Retirement System and The Arkansas Fire and Police Pension Review Board Administrative Services Committee Meeting Members of the Administrative Services Committee (ASC) of the Arkansas Local Police and Fire Retirement System (LOPFI) and the Arkansas Fire and Police Pension Review Board (PRB), met on Thursday, November 8, 218 in the LOPFI office located at 62 W. 3 rd, Suite 2, Little Rock, Arkansas. Members Present: Staff Present: Mayor Mike Gaskill, Employer Trustee, LOPFI Chairman John Neal, Fire Employee Trustee, LOPFI ViceChairman (teleconference) J. Scott Baxter, Police Employee Trustee Bill Lundy, Fire Employee Member, PRB Rusty Watson, Police Employee Member, PRB David Clark, Executive Director Lesley Weaver, Secretary to the Committee Chairman Gaskill called the meeting to order at 9:33 a.m. and recognized a quorum and notification of news media. Approval of Minutes Mr. Baxter made a motion, seconded by Mr. Lundy, to approve the June 7, 218 ASC minutes. The motion passed unanimously. Review of 219 Budget Items Mr. Clark stated that the 219 proposed budget consists of three (3) items: Item 1. Review of staff salaries for compliance with ACA 24124: Mr. Clark stated a function of the ASC is to conduct an annual review of staff salaries. The meeting packet includes a Compensation Study of LOPFI staff salaries with comparative retirement system salaries used in the state pay scale. Mr. Clark advised the Membership Coordinator position will be reclassified to Membership Services. Mr. Baxter questioned the top end of the salary range for the Chief Financial Officer (CFO) since it is lower than other CFO positions in the Compensation Study. Mr. Clark thanked Mr. Baxter for his observation and stated both the CFO and Accountant II salary ranges will need to be reviewed for potential revisions in the future due to the increase in reporting for the Governmental Accounting Standards Board. Item 2. Cost of Living Adjustment (COLA) for 219: Mr. Clark stated the September 217 to September 218 period reflected a 2.3% increase in the Consumer Price Index (CPI). If a COLA is approved, it would be added to the start/end points of the salary ranges to ensure the ranges remain current with market conditions. Mr. Lundy made a motion, seconded by Mr. Neal, to approve a 2.3% COLA increase for the entire staff effective January 1, 219. The motion passed unanimously. Mr. Clark thanked the ASC. Item 3. Division of Salaries between LOPFI and the PRB: At last year s ASC meeting, Mr. Watson requested a discussion about making an adjustment to the existing 6/4 split of staff

8 ASC Meeting November 8, 218 Page 2 of 2 8 salaries between LOPFI and the PRB. With the decreasing number of Local Plans under purview of the PRB, it is being questioned if the allocation of staff salaries remains appropriate. After deliberation, Mr. Neal made a motion, seconded by Mr. Baxter, to table this discussion and ultimate decision of any change of the division of salaries between LOPFI and the PRB to the November 219 ASC meeting. The motion passed unanimously. Confirm timing of June 219 ASC meeting Mr. Clark confirmed with the ASC to continue the current practice of holding the June 219 ASC meeting on the same day as the June 219 LOPFI meeting at 9:3 a.m. When the June 219 LOPFI meeting date is set it will be provided to the ASC. The ASC agreed with this schedule. With no other business, Mr. Lundy made a motion, seconded by Mr. Watson, to adjourn. The motion passed unanimously. The ASC adjourned at 1:9 a.m. Respectfully submitted, Drafted 11/19/18 Lesley Weaver Recording Secretary to the Committee

9 Future supplement funds. (a) A Future Supplement FundPolice and a Future Supplement FundFire are is created for the purpose of providing costofliving assistance and minimumbenefitamount assistance to policemen's pension and relief funds and firemen's relief and pension funds. (b) The Future Supplement FundPolice and Future Supplement FundFire shall be administered by the Arkansas Fire and Police Pension Review Board. (c) Each year the Future Supplement FundPolice and Future Supplement FundFire will receive moneys from: (1) The portion of each location's premium tax allocation based on number of members as of December 31, 2, who are no longer receiving benefits and these amounts as defined in (g); and (2) The portion of the increase in the amount allocated to general revenues under as this amount is defined in that section. (c) Each year the Future Supplement Fund will receive moneys from the premium tax allocation based on total of the amounts defined in subsection (d) of this section and provided in (g). (d) (1) In each regular session, the General Assembly shall decide the method and amount to be distributed from the Future Supplement FundPolice and Future Supplement FundFire. (2) (A) Beginning June 3, 23, and June 3 of each following year, the Future Supplement FundPolice and Future Supplement FundFire are authorized to distribute one hundred percent (1%) of the amount added to the Future Supplement FundPolice and Future Supplement FundFire the previous June 3 and any current reserve funds. (B) The amount shall be distributed to the local policemen's pension and relief funds and local firemen's relief and pension funds to be paid to members who are retired, beneficiaries, or members on the deferred retirement option plan. (C) For the purposes of distribution, a volunteer member shall receive an amount equal to onefifth (1/5) of the amount distributed to a paid member. (D) The distribution shall be calculated and approved by the board. (d) (1) Beginning June 3, 219, and June 3 of each following year, the Future Supplement Fund is authorized to distribute to members who are retired, beneficiaries, or members on the deferred retirement option plan the following amounts: (A) For each member who is retired, a beneficiary, or on the deferred retirement option

10 1 plan of a policemen's pension and relief fund, an amount equal to Two Thousand, Two Hundred and Forty dollars (2,24); (B) For each member who is retired, a beneficiary, or on the deferred retirement option plan who was a paid member of a firemen s relief and pension fund, an amount equal to One Thousand, Six Hundred and Twenty dollars (1,62); (C) For each member who is retired, a beneficiary, or on the deferred retirement option plan who was a volunteer member of a firemen s relief and pension fund, an amount equal to Three Hundred dollars (3); (D) Beginning June 3, 22, and each following year, these amounts will be increased with a two and onehalf percent (2.5%) compound cost of living adjustment. (E) Beginning June 3, 22, and each following year, the amount for the paid members of a firemen s relief and pension fund will be further increased in seven installments so that the amount beginning June 3, 226 will be equal to the amounts for members of policemen s pension and relief funds. (2) The distribution shall be calculated and approved by the Arkansas Fire and Police Pension Review Board. (e) At the time that there are no longer any members covered by local policemen's pension and relief funds and local firemen's relief and pension funds, any remainder of the Future Supplement FundPolice and Future Supplement FundFire shall be transferred to the Arkansas Local Police and Fire Retirement System solely for use by the covered employers to defray their employer contribution costs to the system. (f) The Arkansas Fire and Police Review Board has the authority to use amounts allocated in previous years for the Future Supplement Fund that have not yet been distributed to ensure that amounts described are distributed and to help offset reductions described in

11 Allocation of insurance premium tax Division among localities. (g) (1) There shall be allocated an amounts to the Future Supplement FundFire and the Future Supplement FundPolice under determined as the total amount defined under subsection (c) of this that section. multiplied by the ratio of the number as determined in subdivision (g)(1)(a) of this section to the number as determined in subdivision (g)(1)(b) of this section as follows: (A) The total number of active, retiree, and beneficiary members of all of the firemen's relief and pension funds and policemen's pension and relief funds as of December 31, 2, minus the total number of active, retiree, and beneficiary members of all of the firemen's relief. pension funds or the policemen's pension and relief funds as of the most recent December 31; and (B) The number of active, retiree, and beneficiary fire or police members of the system plus the total number of active, retiree, and beneficiary members of all of the firemen's relief and pension funds or the policemen's pension and relief funds as of December 31, 2. (2) In the case of multiple beneficiaries of a single deceased member, those beneficiaries shall be counted as one (1) for the purposes of this subsection. (3) In the case of paid service and volunteer service members in one (1) location, one (1) paid service member shall be equal to five (5) volunteer service members for the purposes of this subsection.

12 Allocation of insurance premium tax Special provisions. (a) Revenues distributed to the State of Arkansas as general revenue are subject to the allocations in this section. (b) (1) All taxes that are levied on insurers that are allocated to general revenues under may be allocated to the Fire Protection Premium Tax Fund, underfunded plans under , and then to general revenues. (2) (A) For the state fiscal year, six hundred thousand dollars (6,) of the fire portion of funds transferred to general revenues under this section and shall be transferred to the Fire Protection Premium Tax Fund. (B) In all subsequent years fifty percent (5%) of the percentage increase in the amount allocated to general revenues under this section and , using the dollar amount allocated in fiscal year as the baseline, shall be transferred to the Fire Protection Premium Tax Fund in addition to the six hundred thousand dollars (6,) per year until the time that a cap of two million dollars (2,,) annually is transferred to the Fire Protection Premium Tax Fund. (C) Thereafter, the annual transfer shall be set at two million dollars (2,,). (c) After transfers are made to cover funds distributed under subsection (b) of this section and the portion of those premium taxes set aside for transfer to the State Police Retirement Fund under 24629(b), the Director of the Department of Finance and Administration is directed to make annual transfers from the police portion of the revenues to the Policemen's Pension Supplement Program Fund on or before July 25, 1999, and each year thereafter as certified by the Arkansas Fire and Police Pension Review Board on July 1 each year as the amount needed to pay the expenses of and to make payments to the eligible retired police officers and survivors under the Arkansas Policemen's Pension Supplement Program for the coming year of the program. (d) Fifty percent (5%) of the increase in the amount allocated to general revenues under ง , using the dollar amount allocated in fiscal year as the base amount, shall be transferred to the Future Supplement FundPolice under ง (e)(d) The amounts under shall be reduced proportionately so that the remainder portion for general revenue does not fall below four million dollars (4,,). (f)(e)(1)(a) The factor applied to groups allocated under ง (l) is forty percent (4%). (B) The factor applied to groups allocated under ง (m) is thirty percent (3%). (2) The factors under subdivision (f)(e)(1) of this section may be reduced proportionately to meet the following criteria:

13 13 (A) The general revenue portion resulting from this subsection does not fall below four million dollars (4,,); and (B) If the amount resulting from the percentages under subdivision (f)(e)(1) of this section and the amounts in subsections (b)(d) and (c) of this section in total reduce the general revenue portion of the allocation below four million dollars (4,,), the amounts resulting from the percentages take precedence.

14 Additional allocation for certain underfunded plans. (a) (1) Beginning with the allocation in fiscal year 212, an additional allocation for certain underfunded plans as described in this section is created. (2) The additional allocation replaces the Arkansas Fire and Police Pension Guarantee Fund under [repealed] after the allocation in fiscal year 215. (b) The additional allocation shall be based on ten fifteen percent (115%) of the actuarial cost under and shall be available for certain policemen's pension and relief funds and firemen's relief and pension funds, including the portion of the actuarial cost for policemen's pension and relief funds and firemen's relief and pension funds that are administered by the Arkansas Local Police and Fire Retirement System. (c) The policemen's pension and relief funds and firemen's relief and pension funds shall qualify for the additional allocation after approval of the Arkansas Fire and Police Pension Review Board and after meeting the following criteria: (1) The policemen's pension and relief fund or the firemen's relief and pension fund is in compliance with all applicable laws and rules; and (2) The policemen's pension and relief fund or the firemen's relief and pension fund shall receive employer contributions other than premium tax allocations that are at least eighty percent (8%) of the actuarial cost under during the calendar year before an allocation. (d) Any amount not distributed due to not meeting the criteria of subsection (c) will be retained and used to supplement the amounts needed for future years when the reductions of subsection (e) apply. (d) For the allocations in fiscal years 212 through 215, the amount of the additional allocation to a policemen's pension and relief fund or a firemen's relief and pension fund shall not be less than would have been provided by the Arkansas Fire and Police Pension Guarantee Fund under [repealed]. (e) The amounts provided under this additional allocation are subject to the limits under

15 Future supplement funds. (a) A Future Supplement FundPolice and a Future Supplement FundFire are is created for the purpose of providing costofliving assistance and minimumbenefitamount assistance to policemen's pension and relief funds and firemen's relief and pension funds. (b) The Future Supplement FundPolice and Future Supplement FundFire shall be administered by the Arkansas Fire and Police Pension Review Board. (c) Each year the Future Supplement FundPolice and Future Supplement FundFire will receive moneys from: (1) The portion of each location's premium tax allocation based on number of members as of December 31, 2, who are no longer receiving benefits and these amounts as defined in (g); and (2) The portion of the increase in the amount allocated to general revenues under as this amount is defined in that section. (c) Each year the Future Supplement fund will receive moneys from the premium tax allocation based on the total of the amounts defined in subsection (d) of this section and provided in (e). (d) (1) In each regular session, the General Assembly shall decide the method and amount to be distributed from the Future Supplement FundPolice and Future Supplement FundFire. (2) (A) Beginning June 3, 23, and June 3 of each following year, the Future Supplement FundPolice and Future Supplement FundFire are authorized to distribute one hundred percent (1%) of the amount added to the Future Supplement FundPolice and Future Supplement FundFire the previous June 3 and any current reserve funds. (B) The amount shall be distributed to the local policemen's pension and relief funds and local firemen's relief and pension funds to be paid to members who are retired, beneficiaries, or members on the deferred retirement option plan. (C) For the purposes of distribution, a volunteer member shall receive an amount equal to onefifth (1/5) of the amount distributed to a paid member. (D) The distribution shall be calculated and approved by the board. (d) (1) Beginning June 3, 219, and June 3 of each following year, the Future Supplement Fund is authorized to distribute to members who are retired, beneficiaries, or members on the deferred retirement option plan the following amounts: (A) For each member who is retired, a beneficiary, or on the deferred retirement option plan of a policemen s pension and relief fund, an amount equal to Two Thousand, Two Hundred and Forty Dollars (2,24);

16 16 (B) For each member who is retired, a beneficiary, or on the deferred retirement option plan who was a paid member of a firemen s relief and pension fund, an amount equal to One Thousand, Six Hundred and Twenty Dollars (1,62); (c) For each member who is retired or a beneficiary who was a volunteer member of a firemen s relief and pension fund, an amount equal to Three Hundred Dollars (3); (D) Beginning June 3, 22, and each following year, these amounts will be increased with a two and onehalf percent (2.5%) compound cost of living adjustment. (E) Beginning June 3, 22, and each following year, the amount for the paid members of a firemen s relief and pension fund will be further increased in seven installments so that the amount beginning June 3, 226, will be equal to the amounts for members of policemen s pension and relief funds. (e) At the time that there are no longer any members covered by local policemen's pension and relief funds and local firemen's relief and pension funds, any remainder of the Future Supplement FundPolice and Future Supplement FundFire shall be transferred to the Arkansas Local Police and Fire Retirement System solely for use by the covered employers to defray their employer contribution costs to the system. (f) The Arkansas Fire and Police Pension Review Board has the authority to use amounts allocated in previous years for the Future Supplement Fund that have not yet been distributed to ensure that amounts described are distributed and to help offset reductions described in HISTORY: Acts 21, No. 1543, 3; 23, No. 1373, 1; 25, No. 1962, 112; 27, No. 73, 2; 27, No. 849, 1.

17 Allocation of insurance premium tax Apportionments. (a)(1)(a) The premium taxes collected under ง shall be placed in a fund combined with the premium taxes collected pursuant to ง (B) The combined fund shall be entitled the "Firemen's and Police Officers' Pension and Relief Fund". (C) The Firemen's and Police Officers' Pension and Relief Fund shall consist of a "fire portion" and a "police portion". (2) The remaining revenues collected under งง 23612, , , , and shall be distributed to the Firemen's and Police Officers' Pension and Relief Fund and to the State of Arkansas as general revenues. (3) Revenues distributed to the State of Arkansas as general revenues are subject to the allocations under ง (b) The revenues shall be distributed in a manner that the Firemen's and Police Officers' Pension and Relief Fund and the General Revenue Fund Account will each receive distributions of no less than they received in fiscal year 1999, except that: (1) If the revenues to be distributed in a subsequent year are less than the revenues distributed in 1999, the distributions to each shall be reduced proportionately; (2) If additional fire departments become eligible for distributions from the Firemen's and Police Officers' Pension and Relief Fund, the base amount for the state shall be reduced in proportion to the population in the area served by the fire department to the portion of the population of the state not covered by a fire department receiving a distribution from the Firemen's and Police Officers' Pension and Relief Fund; and (3) If additional police departments become eligible for distributions from the Firemen's and Police Officers' Pension and Relief Fund, the base amount for the state shall be reduced in proportion to the population in the area served by the police department to the portion of the population of the state not covered by a police department receiving a distribution from the Firemen's and Police Officers' Pension and Relief Fund. (b) The allocation of funds between the Firemen s and Police Officers Pension and Relief Fund and the General Revenue Fund Account under this section shall be subject to the following conditions: (1) Each calendar year the Arkansas Fire and Police Pension Review Board shall review its previous calendar year distribution of funds to each qualified city, town, or fire protection district prior to disbursement to each of the areas qualified pursuant to (f); (2) The certification of any new city, town, or fire protection district to participate in the Firemen s and Police Officers Pension and Relief Fun shall be considered in the board s

18 18 assessment each calendar year of the allocation of the disbursement of the funds under (f): (3) (A) Any change in the legal description of any city, town, or fire protection district will be considered in the board s assessment each year. year. (B) Any changes shall be reported to the board by December 15 of each calendar (c) The associated population change caused by the change in legal description shall also be considered. (4) The total population of the cities, towns, or fire protection districts qualified to participate in the Firemen s and Police Officers Pension and Relief Fund will be determined by a census population assessment in the city, town, or fire protection district; (5) (A) The legal description of the metes and bounds of the city, town, or fire protection district shall be based on standard physical features of the area, (B) If the legal description cannot be based on standard physical features, a Global Positioning System survey shall be conducted to determine the boundaries; (6) (A) The preferred description of the area will be based on standard physical features. (B) Each local department shall change the department s description of metes and bounds to the standard physical features description. (C) In the case of a fire department, if the local chief cannot agree on a standard physical features description, the county quorum court will make the decision. (7) The mayor or other qualified representative of each city or town or the county fire coordinator for a rural fire protection district shall certify to the board the accuracy of the metes and bounds legal description of the area; (8) The metes and bounds legal description shall be determined by a surveyor licensed in the State of Arkansas, by a preexisting map held by the city, town, or fire protection district, or by the Institute for Economic Advancement at the College of Business Administration at the University of Arkansas at Little Rock s Geographic Information System s Lab; (9) The population of the area shall be determined by the Census State Data Center at the Institute for Economic Advancement at the College of Business Administration at the University of Arkansas at Little Rock s Geographic Information System s Lab; and (c) (1) The portion to be distributed to the Firemen s and Police Officers Pension and Relief Fund under this section shall be: (A) Forty percent (4%) of the total actuarial cost for paid goups covered by the Arkansas Local Police and Fire Retirement System; plus (B) One hundred percent (1%) of the actuarial cost for volunteer goups covered by the Arkansas Local Police and Fire Retirement System, less the required employer contribution; plus

19 19 (C) Thirty percent (3%) of the consolidation and local pension and relief fund actuarial costs as defined under (b)(2)(A)(iii) and (b)(2)(B). (2) Then, the remaining amount shall be distributed to the General Revenue Fund Account of the State Apportionment Fund. (3) The portions distributed are subject to the limits under (c) (1) Except as provided under subsection (b) of this section, the portion distributed to the Firemen's and Police Officers' Pension and Relief Fund shall be based on the ratio percentage of the total population of the cities, towns, or fire protection districts qualified to participate in the Firemen's and Police Officers' Pension and Relief Fund in comparison to the total population of the State of Arkansas. (2) The remaining percentage shall be distributed to the General Revenue Fund Account of the State Apportionment Fund. (3) (A) Beginning with the allocation in fiscal year 212, the portion distributed shall be at least the portion distributed under subdivision (c)(1) of this section. (B) The portion distributed under this section shall be: (i) Forty percent (4%) of the total actuarial cost for groups covered by the Arkansas Local Police and Fire Retirement System; plus (ii) One hundred percent (1%) of the volunteer costs for these groups less the required employer contribution; plus (iii) Thirty percent (3%) of the consolidation and local pension and relief fund actuarial costs as defined under ง (C) The portion distributed is subject to the limits under ง (d) The allocation of funds between the Firemen's and Police Officers' Pension and Relief Fund and the General Revenue Fund Account under this section shall be subject to the following conditions: (1) Each calendar year the Arkansas Fire and Police Pension Review Board shall review its previous calendar year distribution of funds to each qualified city, town, or fire protection district prior to disbursement to each of these qualified areas in compliance with ง (h); (2) The certification of any new city, town, or fire protection district to participate in the Firemen's and Police Officers' Pension and Relief Fund shall be considered in the board's assessment each calendar year of the allocation of the disbursement of the funds under ง (h); (3) (A) Any change in the legal description of any city, town, or fire protection district

20 2 will be considered in the board's assessment each year. (B) Any changes shall be reported to the board by December 15 of each calendar year. (C) The associated population change caused by the change in legal description shall also be considered; (4) The total population of the cities, towns, or fire protection districts qualified to participate in the Firemen's and Police Officers' Pension and Relief Fund will be determined by a census population assessment in the city, town, or fire protection district; (5) (A) The legal description of the metes and bounds of the city, town, or fire protection district shall be based on standard physical features of the area. (B) If the legal description cannot be based on standard physical features, a Global Positioning System survey shall be conducted to determine the boundaries; (6) (A) The preferred description of the area will be based on standard physical features. (B) Each local department shall change the department's description of metes and bounds to the standard physical features' description. (C) In the case of a fire department, if the local chief cannot agree on a standard physical features' description, the county quorum court will make the decision; (7) The mayor or other qualified representative of each city or town or the county fire coordinator for a rural fire protection district shall certify to the board the accuracy of the metes and bounds legal description of the area; (8) The metes and bounds legal description shall be determined by a surveyor licensed in the State of Arkansas, by a preexisting map held by the city, town, or fire protection district, or by the Institute for Economic Advancement at the College of Business Administration at the University of Arkansas at Little Rock's Geographic Information Systems Lab; (9) The population of the area shall be determined by the Census State Data Center at the Institute for Economic Advancement at the College of Business Administration at the University of Arkansas at Little Rock's Geographic Information Systems Lab; and (1) (d) The amount of revenues allocated to the Firemen's and Police Officers' Pension and Relief Fund shall be kept separate for the fire portion and the police portion. HISTORY: Acts 23, No. 1797, ง 1; 211, No. 979, ง 4; 213, No. 1134, ง 3.

21 Allocation of insurance premium tax Division among localities. (a) An actuary certified by the Society of Actuaries shall evaluate the information submitted under to determine the amount of the premium tax revenues to be directed to each city, town, or fire protection district. (b)(1) It is the intent of the General Assembly that the allocation of revenues to the Firemen's and Police Officers' Pension and Relief Fund be directed to a city, town, or fire protection district based on the actuarial cost of their retirement programs. (2) The actuarial cost for a calendar year: (A) (i) For a group that is a member of the Arkansas Local Police and Fire Retirement System, shall equal that group's calculated contribution rate, as defined in 24145, as of the beginning of that calendar year multiplied by that group's estimated annual payroll as of the beginning of that calendar year. (ii) The group's actuarial cost under this section shall be reduced by the group's estimated annual payroll as of the beginning of that calendar year multiplied by one percent (1%) for the 28 allocation, two percent (2%) for the 29 allocation, and three percent (3%) for allocations after 29. (iii) (ii) However, for volunteer members the actuarial cost shall equal the group's perperson cost, less the mandatory employer perperson cost, as of the beginning of that calendar year multiplied by the number of volunteer members in that group as of the beginning of that calendar year. (iv) (iii) The additional cost for a group that is a member of the Arkansas Local Police and Fire Retirement System that results from a consolidation of a local policemen's pension and relief fund or a local firemen's relief and pension fund shall be calculated separately for this allocation purpose; (B) For a group that is covered by a local policemen's pension and relief fund or a local firemen's relief and pension fund, shall be the actuarial cost calculated by the actuary for the Arkansas Fire and Police Pension Review Board for the preceding calendar year; and (C) Shall include the cost of any benefit enhancements mandated by state law but shall not include any benefit enhancement that is the result of local options or increases after January 1, 23; (D) Shall not include the cost of any benefit enhancements, either mandated by state law or as a result of local options, enacted after January 1, 27; and (E) (i) Beginning with the allocation in fiscal year 212, all All actuarial costs in this subsection shall be calculated on the base benefit. (ii) The base benefit is the minimum amount prescribed under et seq. and et seq., excluding all elective benefit increases.

22 22 (c) The amount of revenues to be directed to cities, towns, and fire protection districts shall equal the amount in the Firemen's and Police Officers' Pension and Relief Fund, less: (1) The the payment for the administrative and actuarial expenses of the board under subsection (k) (i) of this section and under (k) (j) (3); and, (2) (d) The amount of revenues to be directed to cities, towns, and fire protection districts shall equal the amount described in subsection (c) of this section less the amounts described in subsection (g) (e) of this section. (d) (1) In general, the revenues shall be allocated in each calendar year to each city, town, or fire protection district so that each city, town, or fire protection district receives the same percentage of its total cost as it received in 22 but not more than one hundred percent (1%) of its cost. (2) Any remaining revenues are to be allocated to those receiving less than one hundred percent (1%) of their cost. (e) This allocation shall keep the fire portion and the police portion separate and shall be accomplished by the following steps: (1) The actuarial cost for calendar year 22 for each local policemen's pension and relief fund or each local firemen's relief and pension fund shall be determined; (2) The actual dollar amount of contributions for calendar year 22 for each group covered by the system shall be determined; (3) The total of subdivisions (e)(1) and (2) of this section shall be determined for each city, town, and fire protection district, and this total shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined; (4) The amount of premium tax revenue allocated to each city, town, and fire protection district in calendar year 22 shall be determined, and this amount shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined; (5) A percentage called the "calendar year 22 percentage of costs covered by premium tax" shall be determined as the ratio of subdivision (e)(4) of this section divided by subdivision (e)(3) of this section, and the percentage shall be determined separately for the fire portion, for the police portion, and for the combined total; (6) (A) A percentage called the "minimum percentage covered" shall be determined as the lesser of: (i) The calendar year 22 percentage of costs covered by premium tax; or (ii) One hundred percent (1%).

23 23 (B) This minimum percentage covered shall be determined separately for the fire portion, for the police portion, and for the combined total. (C) The minimum percentage covered shall be a fixed percentage and shall not change over time, except as provided in subdivision (e)(6)(e) of this section. (D) The minimum percentage covered for the volunteer portion of the actuarial cost for a calendar year in the Arkansas Local Police and Fire Retirement System shall be one hundred percent (1%). (E) (i) The minimum percentage covered shall be adjusted when a local fire or police pension fund assigns administrative responsibility for the fund to the Arkansas Local Police and Fire Retirement System under and (ii) The minimum percentage covered shall be adjusted so that the dollar amount of premium tax allocated under this section for the year after the assignment of administrative responsibility will be the same as it was the year of the assignment of administrative responsibility. (iii) For the purpose of this adjustment, subdivision (b)(2)(d) of this section does not apply to the addition of a costofliving adjustment of three percent (3%) compounded each year, provided the addition was a part of the consolidation process; (7) The actuarial cost for the calendar year of allocation for each local policemen's pension and relief fund or each local firemen's relief and pension fund shall be determined; (8) The actuarial cost for the calendar year of allocation for each group covered by the system shall be determined; (9) The total of subdivisions (e)(7) and (8) of this section shall be determined for each city, town, and fire protection district, and this total shall be determined separately for the fire portion and for the police portion, and a combined total of the fire portion and the police portion shall also be determined; (1) (A) The "first allocation" for each city, town, and fire protection district shall be equal to the result of the minimum percentage covered from subdivision (e)(6) of this section multiplied by subdivision (e)(9) of this section. (B) This first allocation shall be the greater of: (i) The "first allocation" for the fire portion plus the "first allocation" for the police portion; or (ii) The "first allocation" for the combined total; (11) The results of subdivision (e)(1) of this section shall be reduced, but not below zero (), by the amount in the subsidy account of the city, town, or fire protection district at the beginning of the calendar year under subsection (f) of this section;

24 24 (12) (A) If the total premium tax revenue as determined under subsection (c) of this section is less than the total allocated through subdivision (e)(11) of this section, the total premium tax revenue shall be allocated pro rata on the amounts under subdivision (e)(1) of this section, so that the total through subdivision (e)(11) of this section equals the amount determined under subsection (c) of this section. (B) If the total premium tax revenue as determined under subsection (c) of this section is more than the total allocated through subdivision (e)(11) of this section, the excess, not to exceed the total of amounts under subdivision (e)(9) of this section minus the amounts under subdivision (e)(1) of this section, shall be allocated pro rata on the excess, if any, of the amounts under subdivision (e)(9) of this section over the amounts under subdivision (e)(1) of this section. (C) If the total premium tax revenue as determined under subsection (c) of this section is more than the total allocated through subdivision (e)(11) of this section plus the amount allocated under subdivision (e)(12)(b) of this section, the excess shall be allocated to the Future Supplement FundPolice or Future Supplement FundFire under ; and (13) The total amount allocated to a city, town, or fire protection district shall be the sum of amounts under subdivisions (e)(11) and (12) of this section. (f) (1) The allocation in subdivision (e)(1) of this section is reduced under subdivision (e)(11) of this section by the subsidy account for each city, town, or fire protection district. (2) The subsidy account for a city, town, or fire protection district as of January 1, 23, shall be determined by the board to be the excess, if any, of the total premium tax for firemen's relief and pension funds and policemen's pension and relief funds allocated to the city, town, or fire protection district in the calendar years 1997 through 22 over the sum of: (A) The contributions paid to the system for calendar years 1997 through 22; plus (B) The amount of premium tax allocated to the local policemen's pension and relief funds or local firemen's relief and pension funds for 1997 through 22; plus (C) Any transfers from the "LOPFI subsidy account" to the local policemen's pension and relief funds or local firemen's relief and pension funds from 1997 through 22. (3) Beginning January 1, 24, and each January 1 thereafter, the subsidy account for a city, town, or fire protection district shall be determined by the board to be: (A) The subsidy account at the prior January 1; plus (B) The premium tax allocated in the prior calendar year; minus (C) The contributions paid to the system for the prior calendar year; minus (D) The actuarial cost of the local policemen's pension and relief funds or local firemen's relief and pension funds for the prior calendar year; but

25 25 (E) Not less than zero (). (g) (e) (1) There shall be allocated an amounts to the Future Supplement FundFire and the Future Supplement FundPolice under determined as the total amount defined under subsection (c) of this that section. multiplied by the ratio of the number as determined in subdivision (g) (e) (1)(A) of this section to the number as determined in subdivision (g) (e) (1)(B) of this section as follows: (A) The total number of active, retiree, and beneficiary members of all of the firemen's relief and pension funds and policemen's pension and relief funds as of December 31, 2, minus the total number of active, retiree, and beneficiary members of all of the firemen's relief and pension funds or the policemen's pension and relief funds as of the most recent December 31; and (B) The number of active, retiree, and beneficiary fire or police members of the system plus the total number of active, retiree, and beneficiary members of all of the firemen's relief and pension funds or the policemen's pension and relief funds as of December 31, 2. (2) In the case of multiple beneficiaries of a single deceased member, those beneficiaries shall be counted as one (1) for the purposes of this subsection. (3) In the case of paid service and volunteer service members in one (1) location, one (1) paid service member shall be equal to five (5) volunteer service members for the purposes of this subsection. (h) (f)(1)(a) All cities, towns, and fire protection districts having fire departments organized under , , , and , and all cities and towns having police departments organized under et seq., et seq., et seq., et seq., and , , , , , and that have provided the information required under (d) (b) and to the board and to the system shall qualify for participation in the revenues distributed. (B) Those cities, towns, and fire protection districts that make an irrevocable decision to elect coverage in the Arkansas Local Police and Fire Retirement System by December 14 shall qualify for participation in the revenues distributed in the following calendar year. (C) Those cities, towns, and fire protection districts that have not provided the required information shall not qualify for participation in the revenues distributed. (2) On or before June 15 of each calendar year after 22, the board shall certify to the Department of Finance and Administration the exact amount of tax revenues each city, town, or fire protection district is entitled to receive for the calendar year under this section. (3) (A) The eligibility of the city, town, or fire protection district shall be continuous for a tenyear period without recertification unless otherwise directed by the board.

26 26 (B) The first year of implementation shall require a nineyear cycle from June 15, 21. (C) Thereafter, each city, town, or fire protection district shall resubmit the information required in (d)(2) and (3) every ten (1) years beginning on December 15, 21. (4) (3) The Arkansas Fire Training Academy and the Arkansas Law Enforcement Training Academy are not eligible for participation in the receipt of or funding with premium tax revenues. (i) (g) All nonprofit corporations formed for fire protection purposes and that participate in the system shall participate in the distribution of insurance premium tax revenues to the same extent as other fire protection organizations under this section, , , and , and any other laws providing for the distribution of insurance premium tax moneys to fire protection organizations. (j) (h) (1) There shall be no administrative fees charged to these entities by the board upon qualification. (2) The board shall incur all administrative and actuarial costs associated with obtaining the information required under this section. (k) (i) (1) The board shall establish a certain percentage of the insurance tax revenues to use to meet its proper actuarial expenses and administrative costs incurred in obtaining and evaluating the population information required under , but in no event shall the board be entitled to more than one percent (1%) of the Firemen's and Police Officers' Pension and Relief Fund as defined in (a)(2). (2) This assessment shall be collected in addition to the assessment provided in (k)(3). (3) This revenue shall also be used to provide the administrative costs incurred in obtaining and evaluating the population information for unqualified cities, towns, and fire protection districts. (l) (j) (1) Beginning with the allocation in fiscal year 212, the The amount allocated to groups that are members of the Arkansas Local Police and Fire Retirement System excluding consolidation costs under subdivision (b)(2)(a) (iv) (iii) of this section is the actuarial cost under subdivision (b)(2) of this section multiplied by the factor in (f) (e). (2) For the allocations in fiscal years , the actuarial cost less the allocation amount shall not increase by more than one percent (1%) of covered payroll each year above the allocation amount in fiscal year 211. (3) For the allocations in fiscal years , any amount needed to meet the transition under subdivision (l)(2) of this section shall proportionately reduce the percent of payroll of the other groups.

27 27 (m) (k) Beginning with the allocation in fiscal year 212, the The amount allocated to groups that are covered by a local firemen's relief and pension fund or a local policemen's relief and pension fund including consolidation costs under subdivision (b)(2)(a)(iv) of this section is the actuarial cost under subdivision (b)(2) of this section multiplied by the factor in (f). (n) (l) The Arkansas Fire and Police Pension Review Board shall promulgate rules that are necessary to implement this section. HISTORY: Acts 23, No. 1797, 1; 27, No. 73, 4; 27, No. 69, 1, 2; 29, No. 259, 1; 29, No. 654, 4; 211, No. 979, 5; 213, No. 41, 8; 213, No. 522, 4.

28 Allocation of insurance premium tax Special provisions. (a) Revenues distributed to the State of Arkansas as general revenue are subject to the allocations in this section. (b)(1) All taxes that are levied on insurers that are allocated to general revenues under ง may be allocated to the Fire Protection Premium Tax Fund, underfunded plans under ง , and then to general revenues. (2)(A) For the state fiscal year, six hundred thousand dollars (6,) of the fire portion of funds transferred to general revenues under this section and ง shall be transferred to the Fire Protection Premium Tax Fund. (B) In all subsequent years fifty percent (5%) of the percentage increase in the amount allocated to general revenues under this section and ง , using the dollar amount allocated in fiscal year as the baseline, shall be transferred to the Fire Protection Premium Tax Fund in addition to the six hundred thousand dollars (6,) per year until the time that a cap of two million dollars (2,,) annually is transferred to the Fire Protection Premium Tax Fund. (C) Thereafter, the annual transfer shall be set at two million dollars (2,,). (c) After transfers are made to cover funds distributed under subsection (b) of this section and the portion of those premium taxes set aside for transfer to the State Police Retirement Fund under ง 24629(b), the Director of the Department of Finance and Administration is directed to make annual transfers from the police portion of the revenues to the Policemen's Pension Supplement Program Fund on or before July 25, 1999, and each year thereafter as certified by the Arkansas Fire and Police Pension Review Board on July 1 each year as the amount needed to pay the expenses of and to make payments to the eligible retired police officers and survivors under the Arkansas Policemen's Pension Supplement Program for the coming year of the program. (d) Fifty percent (5%) of the increase in the amount allocated to general revenues under ง , using the dollar amount allocated in fiscal year as the base amount, shall be transferred to the Future Supplement FundPolice under ง (e) (d) The amounts under ง shall be reduced proportionately so that the remainder portion for general revenue does not fall below four million dollars (4,,). (f) (e)(1)(a) The factor applied to groups allocated under ง (l) (j) is forty percent (4%). (B) The factor applied to groups allocated under ง (m) (k) is thirty percent (3%).

29 29 (2) The factors under subdivision (f) (e) (1) of this section may be reduced proportionately to meet the following criteria: (A) The general revenue portion resulting from this subsection does not fall below four million dollars (4,,); and (B) If the amount resulting from the application of the percentages under subdivision (f) (e) (1) of this section, and the amounts in subsections (b)(d) of this section, and the amount defined in in total reduce the general revenue portion of the allocation below four million dollars (4,,), the amounts resulting from the percentages in subsection (e) of this section take precedence. HISTORY: Acts 23, No. 1797, ง 1; 211, No. 979, ง 6; 213, No. 41, ง 9.

30 Additional allocation for certain underfunded plans. (a) (1) Beginning with the allocation in fiscal year 212, an An additional allocation for certain underfunded plans as described in this section is created. (2) The additional allocation replaces the Arkansas Fire and Police Pension Guarantee Fund under [repealed] after the allocation in fiscal year 215. (b) The additional allocation shall be based on ten percent (1%) fifteen percent (15%) of the actuarial cost under and shall be available for certain policemen's pension and relief funds and firemen's relief and pension funds, including the portion of the actuarial cost for policemen's pension and relief funds and firemen's relief and pension funds that are administered by the Arkansas Local Police and Fire Retirement System. (c) The policemen's pension and relief funds and firemen's relief and pension funds shall qualify for the additional allocation after approval of the Arkansas Fire and Police Pension Review Board and after meeting the following criteria: (1) The policemen's pension and relief fund or the firemen's relief and pension fund is in compliance with all applicable laws and rules; and (2) The policemen's pension and relief fund or the firemen's relief and pension fund shall receive employer contributions other than premium tax allocations that are at least eighty percent (8%) of the actuarial cost under during the calendar year before an allocation. (d) For the allocations in fiscal years 212 through 215, the amount of the additional allocation to a policemen's pension and relief fund or a firemen's relief and pension fund shall not be less than would have been provided by the Arkansas Fire and Police Pension Guarantee Fund under [repealed]. (d) Any amount not distributed due to not meeting the criteria of subsection (c) will be retained and used to supplement the amounts needed for future years when the reductions of subsection (e) apply. (e) The amounts provided under this additional allocation are subject to the limits under HISTORY: Acts 211, No. 979, 7; 213, No. 5, 1.

31 31 ASSETS Current Assets Accounts Receivable 653, Total Current Assets 653, Total Assets 653, Liabilities Fund Balances Pension Review Board Balance Sheet PRB For the Month Ended September 3, 218 LIABILITIES & FUND BALANCES Fund Balance Beginning of the Year 448, Reserve PRB Current Year Activity 52, Reserve UALR Current Year Activity 151,488. Fund Balances 653, Total Liabilities and Fund Balances 653,213.27

32 32 Pension Review Board Administrative Expenses Summary For the Month Ended September 3, 218 Current YearToDate Budget % of Budget 59:518 Total Personal Services 16, , , % 521 Audit Services. 8,4. 8,4. 1.% 524 UALR Mapping Program. 151, , % 53 Actuarial Services. 116, , % Total Professional Services. 276, , % 537 Insurance Expense. 2,137. 2, % 542 Office EquipmentLeasing/Maint. 1, , , % 544 Office Supplies , , % 545 Printing ,. 1.91% 546 Telephone 1, , ,. 64.3% 547 Postage , , % 548 Publications , % 55 Travel/Prof./Education/Conf. 2, , , % 555 Board / Kitchen Supplies , , % Total General Operating Expense 5, , , % TOTAL EXPENSES 22, , , %

33 33 To: Administrative Services Committee (ASC) From: David B. Clark Executive Director Re: 219 Budget Items Date: October 22, 218 This memo covers the following items for the 219 proposed budgets: Review Staff Salaries. Cost of Living Adjustment (COLA). Division of Salaries Between LOPFI and the PRB Review Staff Salaries First is a review of staff salaries for consistency with ACA that states, in part, The pay of the persons engaged by the system [LOPFI] shall be consistent with the pay plan of the state. To assist with the review a spreadsheet is attached with LOPFIPRB (Agency) staff positions listed by title followed by their 218 salary range and the salary range for related positions at the Arkansas Public Employees Retirement System (APERS), Arkansas State Highway Employees Retirement System (ASHERS), and the Arkansas Teacher Retirement System (ATRS). Since the state pay plan covers agencies other than retirement systems, the spreadsheet also provides the pay of similarly titled positions in the state pay plan. And simply for a Little Rock market comparison, related City of Little Rock positions are listed as well. The ASC is aware when evaluating Agency positions a precise companion position does not exist at the comparative locations. In other words, a position title is not allencompassing of the scope of duties for an Agency position. The limited number of Agency staff (nine) requires more responsibility to be incorporated into each position. Therefore, the duties handled by Agency staff are broader than those of their peers with similar titles. A primary example cited in the past is eight of the nine Agency staff are able to perform retirement counseling. Retirement counseling requires a deep skill set to properly complete. In addition, years ago the Agency implemented crosstraining to buildout the strengths of staff. When a staff member is away from the office primary tasks for that person are handled in a fashion that allows business to continue in a fluid manner. Through robust development of staff capabilities we have ensured that the base of knowledge, skills, and abilities is spread across multiple staff members, which is also useful for succession planning. The Agency operates efficiently, yet ensures we deliver accurate, timely, detailed, and friendly service.

34 34 Administrative Services Committee October 22, 218 Page 2 of 3 The ASC may recall from its November 217 meeting, that a revised state pay plan was implemented during the 217 session. Those revisions required changes to the Agency pay plan, which were incorporated in the 218 budget. This reminder simply serves as a refresher of the highpoints of the pay plan brought about by Act 365 of 217. Similar to the longstanding methodology used by this Agency, the changes in the act were intended to attract quality employees to government and then retain the top performers even when they are many years into their career. In addition, the act allows for the maximum salaries to be exceeded. The following four categories comprise the state pay plan: General Salaries: This category uses a minimum salary of 22, and a maximum salary of 14,592. Medical Professional Salaries: This category uses a minimum salary of 63,83 and a maximum salary of 27,455. Information Technology Salaries: This category uses a minimum salary of 33,43 and a maximum salary of 161,681. Senior Executive Salaries: This category uses a minimum salary of 18,11 and a maximum salary of 21,7. All Agency positions below the Assistant Director are grouped in the General Salaries section. The Assistant Director and Executive Director positions are covered in the Senior Executive Salaries. Cost of Living Adjustment (COLA) The next item is a review of the September to September Consumer Price Index (CPI) report to determine what, if any, amount of a COLA to provide staff in the upcoming year. The current CPI report for the measurement period of September 217 to September 218 is attached and reflects a 2.3% increase. If a COLA is approved, it would be added to the start/end points of the salary ranges to help keep the ranges consistent with market conditions. The attached spreadsheet shows the effect of the above COLA in italicized font immediately below the current Agency salary range. Division of Salaries between LOPFI and the PRB The last item, brought back at the request of Mr. Watson, is a discussion from last year s ASC meeting about an adjustment of the existing 6/4 split of staff salaries between LOPFI and the PRB. With the decreasing number of Local Plans under purview of the PRB, a question was raised if the allocation of staff salaries remains appropriate. Both agencies divided staff salary expenses (except for payroll taxes and benefits, which are covered solely by LOPFI) using a 5/5 division until the 23 budgets. At that time the current 6/4 formula was implemented with LOPFI covering the 6% factor. Also,

35 35 Administrative Services Committee October 22, 218 Page 3 of 3 the Membership Coordinator position is a LOPFIonly funded position, so this means LOPFI and the PRB share the salary costs for the remaining eight staff positions. The 23year began with 244 Local Plans monitored by the PRB and when the 218year arrived that number had reduced to 82. When the 218year closes, the number of locallyadministered Local Plans will drop below 75 as a result of additional consolidations. The PRB shares all other costs such as equipment, phone/internet, etc., using a 5/5 formula; however, it does not pay rent to LOPFI for use of the office, so the division of these costs should remain unchanged. For staff salaries the ASC may consider: Changing the 6/4 ratio to a 7/3 configuration. Had that ratio been used in the 218 budgets, 26,66 in salary expense would have shifted from the PRB s budget to LOPFI s budget. Maintaining the current ratio until the number of locallyadministered Local Plans and the frequency of PRB meetings decreases to something much less than is current. In terms of PRB meetings, the Board meets quarterly in the same months as the LOPFI meetings. Should you have any questions regarding the items discussed in this memo, please feel free to touch base with me. Thank you.

36 Compensation Study LOPFI (1) APERS (2) ASHERS (2) ATRS (2) State Pay Plan (2) City of Little Rock (1) Executive Director 139, ,981 N/A 149, ,5 N/A 189,24 (3) ASC to determine Assistant Director 18,11 147,2 N/A 18,11 147,2 N/A 1, ,548 11,597 15,586 S e Chief Financial Officer 72,895 95,933 e 116, ,228 86, ,986 5, ,1 61,13 142,663 74,572 98,139 A Membership Coordinator 4 53,223 7,38 T 55,68 89,13 4,34 72,822 36,155 67,267 35,88 69,425 54,447 71,649 R S Accountant II 53,223 7,38 55,68 89,13 4,34 81,257 5,222 72,822 52,889 15,549 54,447 71,649 Membership Services 48,274 63,526 46,254 89,13 29,46 58,493 45,1 65,265 31,821 62,79 49,384 64,987 (1) 218 Salary Ranges (2) Fiscal Year 218 amounts and represents similarly titled positions (3) City Manager and Assistant City Manager positions Note: ASHERS does not have Executive and Assistant Director positions in their agency for the retirement section. 4 In February 219 this position will be retitled Membership Services (MS) and use the MS salary range, but remain a LOPFIonly funded position.

37 37 Transmission of material in this release is embargoed until 8:3 a.m. (EDT) October 11, 218 USDL Technical information: (22) Media Contact: (22) CONSUMER PRICE INDEX SEPTEMBER 218 The Consumer Price Index for All Urban Consumers (CPIU) increased.1 percent in September on a seasonally adjusted basis after rising.2 percent in August, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 2.3 percent before seasonal adjustment. The shelter index continued to rise and accounted for over half of the seasonally adjusted monthly increase in the all items index. The energy index declined.5 percent in September after rising in August. The food index was unchanged in September, as an increase in the index for food away from home offset a decline in the food at home index. The index for all items less food and energy rose.1 percent in September, the same increase as in August. The shelter index increased.2 percent, and the indexes for apparel, motor vehicle insurance, recreation, and airline fares also rose. The medical care index increased as well, though its components were mixed. The index for used cars and trucks, which fell sharply, and the new vehicles index were among the indexes that declined in September. The all items index rose 2.3 percent for the 12 months ending September, a smaller increase than the 2.7percent increase for the 12 months ending August. The energy index rose 4.8 percent over the last year, a notably smaller increase than the 1.2percent increase for the 12 month period ending August. The index for all items less food and energy rose 2.2 percent for the 12 months ending September and the food index increased 1.4 percent; these were both the same rate of increase as for the 12 months ending August. Chart 1. Onemonth percent change in CPI for All Urban Consumers (CPIU), seasonally adjusted, Sep. 217 Sep. 218 Percent change Sep'17 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep'18