Public Retirement & Social Security Programs-Joint
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Unknown speaker
0:52
Somebody does or does not share yeah no they really don't
Speaker 1
1:26
an email and a documents she's been quite fine are you on my team or not I'm trying to help you
Speaker 2
2:07
it looks super planner something something need
Speaker 15
2:15
wouldn't speak out loud if it were secret but don't know
Speaker 1
3:08
had to go think war I don't know didn't like some no but ours had like waking up to
right members we're gonna call this meeting to
order first off consideration of approve all of June4,2024 meeting minutes item B do I have a motion to approve? I got a motion do I have a second? I get a second. Any discussion all in favor any opposed motion carries right itemd overview of the
summary of actuarial change actual valuation data and results oh sorry I skipped directly over sea BCd all right well item C first consideration of a motion to authorize chairs to approve special expenses incurred by the sub by the committee Do I have a motion ? I get a motion second any discussion on that motion all in favor
any opposed motion carries all right now item d jody if you would come and you are recogni state your name for the record and you are recognized to present
Speaker 33
10:36
Good afternoon. I'm Jody Carrero and today I am here as the actuary for the pension review boardard and what is the pension review boardard you may ask. well
in the dark days of the previous century fire and police pensions were provided by individual funds for each different city prelopfi and then lopfi came in in 1983 and then everyone who had been hired after that waslopy and everyone before that was in one of these individual plants well those individual city plans are governed by another board which is the pensionview Board
that uses the same staff aslopy it's the same folks but they they are the folks that do that so what this is is as asked for by the law a review of what's going on with those local plans if everybody had to be hired before 83 then since those plans had 20 year retirement 20 out type retirement. Everybody was eligible to retire back in 2003
and by now everybody except for one or two weird exceptions. Everybody has retired from these plants and these are all just retiree plans so I guess as to what's in your packet in your packet there is an exhibit d is the report that we presented to the pension review boardard back in May and well in June was their meeting the reports dated May twenty6th and the first page of the cover letter there kind of shows you how that that number
of plans has went down our firm's worked for the pension review boardard for over30 years. I don't know, I can't count beyond that. but there were about 200 plans that we valued when we started and those have consolidated into lopfi or all the participants have passed away or some combination but for the most part they've all consolidated into t lopfi and lopfi pays the benefits for those remaining retirees so
now you can see the last four years here51,41,33,31. there are31 plans that are remaining that we valued at the end of last year since the end of last year there have been two police plans and5 firefighter plans so7 other plans have consolidated looks like about half of those three or four of those were
because they had did not have enough participants to form a board as is required by the law and part of them were ones that had decided it was just time to consolidate and letloffi pay the benefits instead of maintaining a local board . So with7 more that means at the end of this year there we'll have 24 plans that will we will value at the end of this year so you can see there's still485
participants each of those plants has its own assets and liabilities and the unfunded liability from all that group is still several million dollars $4 million 14393 that you see there on the report but you can also see that there are have improved funding the last several years because of some of the efforts that have been made and mainly because several of them have started putting in more money so that hopefully
they can either increase their benefit or joinlopy or both you know that that that is available so the remainder of the cover letter just covers some of the some of the hot spots the the other thing on page three of that report is that the pension review boardard and the work that we do watches for those that might be a projected insolvent plan if
if we look at the stream of money that's coming in and the benefits that are going out if it looks like it could could use up all of its assets in a fairly short period of time there's some interventions that are there that we can talk to the cities and and hopefully do that there's very few of these left happy to the report that in the last 15 years that we've had that ability to to talk with these projected insolvent plans
that most all of them have improved their funding and or consolidate it with with lopfi. In fact, two of the ones that are consolidating this year are ones that we'd worked with for many years to get them improved and now to there to the point that they can consolidate and and have their benefits guaranteed for the remainder of the lives of those participants the only other thing I want to show you and there's there's several pretty graphs in
there. I know they're pretty because I generated them. just seeing if anybody was awake but at the very end of the report is a listing of the of the cities that still have a local plan and you know it's a twopa last two pages of the report and there are different metrics which are described on the page before that that we use to kind of let them know where they're at and how they're doing and we
show those on this page so if you think your area has one of these local plans that are still there. they would be listed on these two pages and you can kind of see based on the little color blips, the1,2,3,4 5 , what kind of shape they are in so to speak from an actuarial standpoint and that's all I have for you
you've heard a report are there any questions representative andrews thank you Mr Chair so Mr
Representative Wade Andrews
Unverified
17:17
Jody this is what you're saying is if some of these plants that are gonna be insolvent and
cities don't pay into them or fix it these retirees are just out of luck basically right I wish it was that simple yes
Speaker 34
17:39
and no or or is there some wiggle is or
Representative Wade Andrews
Unverified
17:43
is there some obligations to pay them even if
Speaker 33
17:47
the plane goes insolvent it's not been a tested theory legally but we we think it's kind of our opinion that the that the city does have an obligation that they have promised those benefits and and they have in writing done that so the city has an obligation there is something in law that
benefits can be proportionately reduced if the plan completely runs out of money but that has only been tested once and only lasted for a couple of months and all of that was straightened out and everybody was so question is is this entirely the responsibility of the local governments or are
Representative Wade Andrews
Unverified
18:27
they going to come to the legislature and say we need money. I would not be surprised if somebody got close to being
Speaker 33
18:41
broke that they didn't come to the legislature and say it was your fault and can you help us pay for it but yeah it's these are the city's responsibility and you and that's why we asked for and got some of the changes I mentioned about dealing with them on a projected basis so that it's several years away and there's time to correct you know get some more income in usually or do some other things to try
Representative Wade Andrews
Unverified
19:12
to help the plants. I was looking here on page three it says do mis Earl Glenwood and Nashville are gonna be depleted in 10 to20 years do those cities have a plan in place or what to do or to have an estimation of they think they're gonna have retirees roll off the plan in that time period or well I mean that
Speaker 33
19:33
was part of what went into the the projection was the ages and the people that are drawing a benefit right ok cause I
Representative Wade Andrews
Unverified
19:40
just did rough math in my head
of you said 1983 was the cutoff year right? so 20 years later03 those people would have been about41 if they started at 21 years old so you got like 37 more years potentially of these plans if if if I can do math right some yeah in
Speaker 33
20:01
in rough terms yeah most of the board members and the people that from the locations are in their70s that they're talking to us so that's the main you know they're they're the ones that are involved Bible
Representative Wade Andrews
Unverified
20:15
says you lived 12 so what's maybe maybe it's do more math on that what s ok my my my friendly ba ba baptist is a help me up out of here thank you Mr Chair. right any other
questions ing un thank you sir appreciate your presentation that will there's no action necessary on that so that will take us to item E
apers if lets fetcher if you will introduce yourself for the record and anyone who is joining you and then you reconcised to present E one Amy Fetcher with apers we
Speaker 51
21:03
have two rules one new rule and one that we're repealing in your packet on the first one this is a rule in response to
Act370 of2025 which allowed district judges to be appointed a special judges immediately upon retirement. and so we had to make some changes so their benefits would not be suspended because there's the normal 180 days, uh6 months of separation normally so that's what that one's about. any questions members So these are review items so
without objection we'll consider E one reviewed E2. The other one is for the
Speaker 51
21:54
judicial retirement system and this is just repealing a rule that had some obsolete language in it that sets specific times for the board to meet, um, which they're really you know they do meet quarterly like the law says but they can move those meetings around so it's just obsolete language that
Speaker 59
22:12
we're repealing. any questions by members
without objection we'll consider that one reviewed. thank you thank you for your oh uhre representative Walker thank you chairir. while Misssetcher's
Speaker 40
22:27
at the table can I ask a quick question is this in
Representative Steven Walker
Unverified
22:33
relation to the review item that we just it's not that's
why I tried to buzz in after ok so that one's reviewed we've done that if if it's try to keep it
pretty relevant to the purpose we're
here for which is retirement rules
Representative Steven Walker
Unverified
22:54
yes it's just about the co increase that was just recently changed I just need some help understanding why we did it and how it works. I know before I think just a few years ago before that we've done it forever to where it was a3% compounding cola increase and then here recently we changed it to where it was the lesser you'll just have to explain
that to me a little bit more to help me understand it I've had some constituents ask me about it here recently and and seeing you at the table made me think of it but I'm assuming it's because the old way wasn't sustainable so we had to change things up. and then I'm wondering I'm trying to consolidate all this into one question and the other part that I'd like to know is why was it better to go this way than how we're doing it in the Arkansas teacher retirement to where it's a simple3% cola increase.
Speaker 51
23:55
so that was in the 2021 session and I I was not at apers at the time but I'll tell you what I've been told that that was based on actuarial assumptions and projections and that yes it's not sustainable where we are and so I believe and Jody may have to help me the anyone that was was the the date July 1 of 2022 or think that's what it was. So
everyone before that date was grandfathered in so they had to start employment with the state on July 1 of 2022 or after and then to this point we've had no one retire under the new new law. but yes it is not just a flat3% anymore it's the lesser of the3% or the CPIW and that's the part I how does
Representative Steven Walker
Unverified
24:54
that work the CPIW part I'm
Speaker 51
24:58
gonna ask Jody to help us on that that's
Representative Steven Walker
Unverified
25:00
where my confusion's at. I know it's a lesser of the two and I'm I wasn't sure how that part
Speaker 51
25:06
worked. I do believe just to give you a little context I know that the former director of apers and some of the staff went around the state and did town halls and the reason they chose that option to ask for in legislation is because they heard resoundingly that people didn't want their benefits cut. they would rather have things like that and also on the employees pay a higher
Speaker 54
25:29
employment employee contribution that have benefits cutjody if you
would state your name for the record just
Speaker 33
25:36
for thisjody Carrero and now I'm the actuary for the retirement committee the CPIW is one of two or three CPIs that that the department of laborbor produces every month and you can you can look it up online. it's it's out there it's available. it is the one that most plans around the country that use that feel as closest to a retiree
cost of living so it's it's just when they somebody says what inflation is that's one of the numbers that they might use to to say what that is is to what that and so whatever that rate is for the 12 months that's what's applied for that unless it's over3% and then it's it stops at3%. 1 other little quick thing is that colas haven't been3% forever. The3% didn't go in until 992001 1 of
those two sessions and it was3% all those years so majority of the people in apers now is that that's what they're covered and everybody before that was grandfathered up to the3%. so the colas have changed over the years OKd do you know when this was changed by any chance
Representative Steven Walker
Unverified
26:48
why we went this route instead of the way the Arkansas teacher retirement does it where it's a3% or a simple3% cola. I I think every I think the the
Speaker 33
27:01
consensus was when they asked around was they preferred it to still be tied to something that was a cola as opposed to because the three the teacher cola kind of diminishes over time. it gets less than3% as time goes on since it's a simple and and so I think they the the membership liked that better and I I agree that's why I'm asking these
Representative Steven Walker
Unverified
27:25
questions I was just curious on how you guys went that route instead of the way Arkansas
teacher retirement. I don't really like how that's done with Arkansas teacher retirement because of like you said it diminishes it. if you've been retired for 2030 years at3% now originally what one point 6 % or less depending on how bonuses were distributed. but anyway, you guys answered my question. I appreciate it and I appreciate the work you do, Miss
Fetcher, but thank you thank you Mr Chair thank youpresentative. right thank you M Fetcher and that completes
item E, item F ARs Mr. White, if you would state your name for the record and you are recognized we'll just take these one at a time members if you're looking
basically1 there is the full list of 187 pages of the rule but then you get down to item F2
and that's within that 187 pages so I don't know how you're wanting to present those but F2 starts on page nine and so if you just want to take these one at a time
and I'll I'll I'll stop explaining your presentation go ahead thank you Mr Chairman Mark White Arkansas teacher retirement systemstem and yes
Speaker 78
28:52
Mr Cha I'm happy to do it how whatever is best for the committee but I'll start just walking through
Speaker 79
28:57
these individually if we can just take them one at a time and I've written down the page numbers if you don't happen to have them so
people can scroll to it real quick. OK and I andd I do with the patient everalter I mention those
Speaker 81
29:11
as well right so thank you Mr Chairman committee members these rules changes we do have quite a few you have the full rules so that you see the context of those changes all of the changes I'm going to outline today are either implementing acts from the session or making technical corrections and changes and so I walk through and explain these individually the first one page nine of that of the full rule section 10-207 act
938 eliminated the requirement that we have a board member who is a minority the act changed that so it ' s simply an at large position and so we're changing the language of the rule to match the act. any
Speaker 79
29:56
questions on that one without objection we'll consider that one reviewed if you'll go on to the next
Speaker 81
30:01
thanks chairman. next one is on page 19 this is a change to section 10-302 regarding confidentiality
we're concerned because if you if you read our existing confidentiality language too literally it prevents some things that just come up in the course of administering the
Speaker 78
30:18
system classic example is when a member passes away and we reach out to the beneficiary we need to be able to discuss specifics of that member's s situation with that beneficiary and we may not have a signed authorization so it will make clear in situations like that that we can disclose information in that case. members do we have any questions on F3?
seeing none without objection that rule is reviewed F4. All right this
Speaker 81
30:47
section 10-329 starting on page 40 and this is from actc587. this is the act that allows certain child care employees and child care facilities to become members of the retirement system and this is limited to child care facilities that accept state vouchers for child care and so we've in the rule we've
Speaker 78
31:11
outlined the process of how that will work how they'll become approved as employees employers excuse me we've tried to parallel as much as we can our other situations where we approve nonschool employers the one big
Speaker 81
31:25
difference is that the act and this rule allows us to appoint one fiscal agent who can represent all of those different providers they'll be responsible for making that initial approval decision to approve that new employer and then they'll be collecting the contributions and
Speaker 78
31:42
remitting those to us and that just simplifies things for us administratively so we're dealing with that one fiscal pastor agent but as far as qualifications it doesn't add anything to what's
in the act. and Mark at the risk of of opening a can of worms here the childcare vouchers that we're referring to are those ABC vouchers or do they also apply to the ones that were federally
Speaker 79
32:14
funded that are being pulled back on how does that work? It applies to any childcare funding that is flowing through the the state department ofducation so for receiving
the dollars from the fed for a grant purpose whatever it is those education facilities still potentially qualified to participate in the apers program under this however obviously once those federal funds if they're not available the grant is no longer renewed and that goes away that program ends then they're gonna have to find
alternative sources of funds but they still remain in the apers or in in the the ATrS system. yes sir as long as long as they
Speaker 78
32:53
have that agreement with the department even if the funds aren't there as long as they maintain that agreement with the the department they continue to be eligible uhpresentative andrews thank you what's
Representative Wade Andrews
Unverified
33:05
the fiscal impact to this rule change? it should be neutral because the
Speaker 81
33:09
act provides that these individuals are coming on the same terms as everyone else they'll pay the same contribution rates and
everything else so we don't expect it to have any change well let
Speaker 78
33:20
me say if anything the change will be positive because we have more members making more contributions but no expense makes sense thank you any other
questions of the committee seeing none without objection4 will be reviewed moving on to F5 right so the next one starts on page the section starts
Speaker 78
33:41
on page 58 the actual change is on page
Speaker 81
33:49
59. this section 10-501. This is implementing Ac 227 this act may change what used to be known as gap year service. this is where a classroom teacher they leave the district for a year and then later come back this allows them to buy that service back and add that to their their credit with us the issue we saw was under the old legislation you had to miss at least a year and so if you had for example a teacher who was on maternity leave for a
semester they could not buy that back so act 227 revised that so we can issue credit as little as quarter to a member who's willing to purchase
Speaker 79
34:29
that back and so this just implements the act any
questions seeing none without objection that rule is reviewed
Speaker 78
34:39
and F6 and this starts on page 72 section 10-51el and this is the second piece of that same act does the same thing
any questions seeing none without objection that rule is reviewed and the
Speaker 81
35:00
next one starts on page 74 section 10-513 and all we're doing is correcting the misspelling in the title. any questions
Speaker 78
35:11
without objection F7 is reviewed. takes us to F8. F8 begins on page the section is
Speaker 81
35:23
on page 100 the actual change is on page 103 and this is implementing two acts this first change on page 103 that is implementing Act222 and that just clarifies language around the deadline for a member to cancel an annuity option. annuity option is where when they retire they decide they want to receive a slightly smaller annuity so that a spouse or a dependent child can continue to receive benefits
after their death and then if I may explain the other half of this same section and that is on page 106 this is implementing act363 and that allows us when benefits are owed to a beneficiary this allows us to make those payments to a special needs trust that has been set up
Speaker 78
36:16
for that beneficiary to protect their medicaid eligibility. Any questions on this one
seeing none without objection that F8 is a reviewed F9. right the next
Speaker 79
36:30
one starts on page 108 the actual change
Speaker 81
36:34
is on 109 this is section 10-616 and this is just there was some theres four words that were in there as a subsection heading and at some point in this all this transition around rules it got pulled into the language of the
Speaker 78
36:51
rules so we're just eliminating what was a heading
any questions on F9? about objection that rule is reviewed 10 . ex t one starts
Speaker 81
37:06
on page 1 twenty. this is section 10-710. and this implements Ac 226 and what this does is this clarifies when a member may cancel their teerop distribution election so when they they're in the tearo program they accumulate retirement earnings while they continue to work and then once they finally
stopped working they had the option of either rolling that over to another qualified retire retirement account they can take a lump sum distribution they can leave it with us in a cash balance account or they can use it to increase their monthly payment and so this just allows them to make a change within a certain period of time after they make
that initial election. any questions seeing none without objection that rule is reviewed itemteam F11. right and then
Speaker 81
38:01
this is on page 121 section 10-712 the change is actually on 122 we're just correcting a tao should say cash balance account
Speaker 78
38:12
and it says cash account balance so we're correcting that questions without objection F11 is reviewed F1el. the next
Speaker 81
38:22
one starts on page 127 this is section 10-804
and there's changes in two places on this one the first change on page 127 this is implementing A224 there is a if you are a retired member and you marry there's a waiting period before your spouse can become eligible for survivor benefits you have to be marriedurt Law was at least 2 years this bill changes that to one year so we're reflecting that in the rule there on page 127. and then on page 128 we're just making explicit that before
surviving spouse can receive benefits they have to provide us all the documentation that we ask for and two key things are bank information and tax forms we have to have those before we
can make payments. any additional documentation required by the system is the way that's kind of broad is there any other those are specifically bank statements and
Speaker 79
39:30
tax records it's what for most members that's
Speaker 78
39:35
going to be their bank account information of where the deposit should be made and then also their tax forms where they may need to
Speaker 81
39:41
provide us their tax ID number they may need to send us a W9 form but we also leave it open because there are situations where there may be some possible suggestion of fraud and so we may want to ask for some additional documentation around that so should there be a list of
what some of those other documentations are so I wouldn't say that you would do this but 10 years from now I don't know who's going to be sitting in that chair making
this determination of what those documents might be but could it be punitive to where hey we don't want this survivor to to get these benefits so we're going to make it impossible with
this new documentation I I had that thought as well and we we talked through that the
Speaker 78
40:21
the concern though is that when you're talking about in cases where you may have a suspicion of fraud that can be that that's a very open ended list of things you might want to ask for if you're trying to determine if there is something abusive or something else going
on in that situation and so we thought because of that uncertainty we thought it better to leave it open ended any other questions seeing none p re s
Speaker 90
40:50
ent ative b ur ke s thank you I actually think you're off by one exhibit. This is exhibit 1
Speaker 91
41:09
ta f f is going to speak to that you're correct he has been going in the proper order of what we've been talking about on the agenda it has the roman numerals or the numerals we are on it is exhibit 11 but
Speaker 11
41:22
for the sake of the agenda we are in the right order. thank you right
any any other questions on this particular item? without objection this rule is reviewed
itemam F13 survivors dependent children this is starts
Speaker 81
41:50
on page 131, the actual changes start on 132 section 10-807 this is implementing Ac 225 and what that does is it allows qualifying child survivors to receive benefits through age 22. the old law was they had to meet certain specific requirements about being in school and that was repealed by the legislation so we're making the changes here and then as we'll
see in these next couple of rules
Speaker 78
42:19
they're making other changes to implement that act
as well any questions on this rule without objection that one will be reviewed
Speaker 81
42:36
item F1410808. and so this is again page132 we're repealing the language that was repealed by the act. any questions ?
without objection that rule is reviewed. Item F1510809. and
Speaker 81
42:54
this is on the following page on 133 again repealing language that is no longer needed
Speaker 79
43:02
because of Act225. any questions seeing none without objection that
rule is reviewed itemtem F1610811 and this
Speaker 81
43:14
begins on page 134 just 10-811
this also relates to act 225. this is the other part of that act which is it allows children of disability retirees to
Speaker 78
43:28
receive children survivor benefits if the member passes away and so we are making that explicit in
the rule any questions seeing none without objection that rule is reviewed Item F1710826 and this one starts the section starts
Speaker 78
43:43
on page 145. the changes are on the following page on 146
Speaker 81
43:53
this relates to qualified domestic relations orders or as we call them quads these are when you have a member who's married and they divorce very often the court will enter an order dividing assets between those two individuals and so in some cases we may we have a member who has an ex spouse we will have to pay a portion of that member's benefits to the ex spouse based on the court order this language here we're just making explicit that we do not incur any obligation to pay out until we've actually received a
Speaker 78
44:23
court order that meets the requirements we shall make sure that there's no indication where we've already paid out to the member and someone wants to go retroactive even though we did not have the court order any
questions on this rule without objection that rule is considered reviewed and then F18 is just a summary so I think I think you may be done p re s ent ative Mcola, you are recognized for a question. Thank you Mr Chair. Is it ok if I go I
Representative Tippi McCullough
Unverified
44:54
just wanted to ask a couple of questions about a rule that was up above kind of got away from me is that ok? thank you so I want to go back up to I believe it's exhibit F1 but F2 maybe on the agenda so can you remind me is that was that part of the eradication of of all language kind of in relation to DEI it
Speaker 81
45:18
was there was a bill I think it's run bypresentative Brown it it eliminated minority
board positions in about 20 different boards including ours thank
Representative Tippi McCullough
Unverified
45:28
you and if I can follow up just on that. do you know how long this rule had been in place for that minority position before it was do you know when it was first put on? I am not certain about that it wasn't statute but I I don't
Speaker 87
45:41
know offhand when that statute was originally passed. Is there any way to find that out that out for you great thank you thank you Mr. Chairlcom. all right any other questions
before we let the witness go seeing none thank you Mr White and seeing no other business we are adjourned
Agenda
A. Call to Order
B. Consideration to Approve June 4, 2024, Meeting Minutes [Exhibit B]
C. Consideration of a Motion to Authorize Chairs to Approve Special Expenses Incurred by the Committee
D. Overview of the Summary of Actuarial Valuation Data and Results as of December 31, 2024, Arkansas Local Fire and Police Pension and Relief Funds [Exhibit D] - Jody Carreiro, Actuary, Osborn, Carreiro & Associates, Incorporated
E. Review of Rules from Arkansas Public Employees Retirement System (APERS), and Arkansas Judicial Retirement System (AJRS) [Exhibits E1–E2] - Amy Fecher, Executive Director, APERS
G. Other Business
H. Adjournment
Documents
Speakers
Speaker 1
Speaker 2
Speaker 15
Senator Jim Dotson Chair
Unverified
Speaker 33
Speaker 39
Representative Wade Andrews
Unverified
Speaker 34
Speaker 51
Speaker 59
Speaker 40
Representative Steven Walker
Unverified
Speaker 54
Speaker 78
Speaker 79
Speaker 81
Speaker 90
Speaker 91
Speaker 11
Representative Tippi McCullough
Unverified
Speaker 87