Joint Public Retirement & Social Security Programs – September 1, 2009
Posted on September 1st, 2009
Date & Time: Tuesday, September 1, 2009 at 1:30 PM
Location: Room 130, State Capitol
Agenda: http://www.arkleg.state.ar.us/assembly/2009/Lists/Meetings/Attachments/12090/I7744.pdf
Attachments: none
The committee shall review the actuarial solvency, adequacy of benefits, and all other aspects of the publicly supported retirement systems of the state. The committee shall also study and review all proposals for changes or amendments to any of the existing public retirement laws or for the creation of new or expanded public retirement systems. (A.C.A. 10-3-703)
1:38 pm – Meeting called to order by Rep. George Overby
1:39 pm – Minutes for the November 24, 2008 meeting approved.
1:40 pm – Ms. Estella Smith is providing a summary of retirement legislation enacted by the General Assembly this last session.
1:41 pm – Mr. Jody Carreiro presented the activities of the committee during the session. More than 62 items were worked on.
1:44 pm – Interim Study Proposal (ISP) 2009-021 approved for study. ISP 2009-051 was withdrawn by Rep. Saunders. ISP 2009-115 by Rep Stewart was approved for study. ISP 2009-089 was skipped over on the agenda. ISP 2009-141 by Sen. Gene Jeffress was approved for study. ISP 2009-146 by Sen. Laverty was approved for study. ISP 2009-185 by Rep. Tim Summers was approved for study.
1:48 pm – We are currently reviewing the status of the state-supported retirement systems. Mr. David Clark, Executive Director of the Local Police and Fire Retirement System reports that the system is currently at a positive return for the year, after taking tough losses in 2008. The system is currently 82% funded. He feels like the system is sound but has some recovery needed to return to the above 90% funding prior to 2008.
1:51 pm – Sen. Key asked Mr. Clark if the Police and Fire Retirement system has a retire and return policy. Briefly, it appears that they do, but the rules seem to be quite abit more stringent than those of other public retirement systems.
1:53 pm – Mr. Mike Boyd, Assistant Chief Fiscal Officer is reporting on the Highway Employees Retirement System. Like the other retirement systems, they took losses in 2008. They have a positive rate of return now.
1:54 pm – Rep Lea is asking why the Highway Employees Retirement System is separate from other state employees. The answer was “that is the way it has always been.”
1:55 pm – Mr. George Hopkins, Executive Director is reporting on the Teacher Retirement System. He has been the ED for onlyl about 8 months now.
1:57 pm – Crawford County currently has 1,854 active members of the system with a salary of $50,762,165. There are 474 retirees with an annuity of $10,162,547. The T-Drop count is 78 with lump sum of $6,073,744.
2:00 pm – Washington County currently has 6,172 active members of the system with a salary of $165,625,145. There are 1,297 retirees with an annuity of $25,869,079. The T-Drop count is 189 with lump sum of $17,505,461.
2:02 pm – As of 2008 the Arkansas Teacher Retirement System has 19.5 years of unfunded liabilities. The investment return for the year of 2009 is currently down -18%. The others systems reviewed so far have been up for the year.
2:04 pm – In 2005 the unfunded liabilities was 3.8 years.
2:05 pm – Sen. Gene Jeffress is pointing out the ratio of active teachers in the retirement syste versus the number of retirees.
2:07 pm – Mr. Hopkins is being asked why ATRS is not investing more heavily in Arkansas by Rep. Kidd. He seems to think that if ATRS had been invested in Arkansas it would not have fallen 18% last year. He may be right, but Mr. Hopkins pointed out that if ATRS had stuffed the money in a mattress it would not have lost 18%.
2:10 pm – Mr. Hopkins is discussing a new hire that he believes is will be a hot dog real estate investor. He made a joke pointing out that there is a building that he would like to sell the state to house legislators.
2:11 pm – There are 23 retired teachers in the ATRS system over 100 years of age. Earlier Mr. Hopkins discussed looking at increasing their benefits sometime in the future because the structure of the system means their benefits are low compared to recent retirees. They have an average of 30 years of service and recieve an average monthly benefit of $1,502. Thier average final salary was $5,708 and have a total benefits paid to date of $322,527.
2:17 pm – Mr. Hopkins is currently discussing discussing the fact that ATRS is currently requesting refunds from those who illegally received retirement funds. He said that he believes those people didn’t know that were not supposed to do it.
2:20 pm – Rep. Roebuck is asking if Mr. Hopkins is limited in the information he has and if he is recieving cooperation from the school districts. He said yes but the school districts use the school data collection software so they are not a problem, but it is the universities, colleges, and technical schools still need to provide additional information. He expects that there will be full compliance of all the employers once proper internal processes occur.
2:23 pm – Rep. Kerr is asking about going forward to make sure that people retire properly, what is ATRS doing to make sure that everyone is following the proper rules. He said that they are providing information and follow-up questionaire.
2:30 pm – Mr. Hopkins was asked a question about keeping retirement information records secret and not making public expenditures transparent. He says that he would not change a long standing policy. He was asked again, “What are the public policy reasons for keeping that information private.” His answer is that it is about of privacy.
2:33 pm – Rep. Sample asked if they has found people who had not properly retired. He said yes, they sent out several letters last week. He says they do not yet fully have the forensic ability to discover these and there will be more who retired over the last seven or eight years.
2:35 pm – Everyone seems to be choosing their word carefully, and indeed there may have been instances of honest mistakes, but what is not being said is many of the cases are simply and can be called nothing more than FRAUD.
2:37 pm – Ms. Gail Stone, Executive Director of the Public Employees Retirement System (APERS), is currently reporting. This is the system in which state legislators and other elected officials participate. They funding ratio is down to 78% from above 91%. The State Police Retirement System had a funding ratio was 55% but is being merged with APERS.
2:43 pm – Rep Summers asked for clarification. The average age of retirement from APERS is 62. Rep. Kerr is asking about the “double dipping” of elected officials and what APERS is doing to correct the problem. She said that under the direction of the Governor and AG, they are starting a review. Mr. Stone has asked the staff attorney to answer further. He said that they cross referenced retirees with list of elected officials and are sending letters to them asking them if they committed fraud on the taxpayers and that they have no other means for determining where to start. They have not requested any repayment yet.
2:49 pm – Lets get this straight. Someone that perhaps defrauded the government perhaps with the culpablity of their employer are being asked to self report if they had done so?
2:54 pm – Rep. Andrea Lea is asking specifically about elected officials and if they are considered for county employee for the purposes of retirement. The end result of the back and forth and legal speak responses was that the elected officials public retirement records can be kept secret. I have this radar that goes off when it appears something icky is going on and somebody is trying to cover for somebody. The alarm bells are sounding.
3:03 pm – Rep. Gaskill is asking why the drop rate had been lowered for the State Police Retirement. Apparently actuarial requirements and the fact that it is being merged with APERS caused this and why it has not been reconsidered.
3:07 pm – Rep. Ann Clemmer is asking why ANY information about ANY elected officed for ANY public compensation not public? Again, the staff attorney is clinging to a word in the rules that refers to the general retirement system “members” and forcing it to mean that it als applies to elected officials who are members. I wonder how many other places in the code or rules this twisted logic would have frightening impact.
3:11 pm – Senator Key asked a question by example. He said, assume a county judge did not resign their position, but “retired” and did not receive payment as a county employee for the prescibed period of time to receive retirement, then is “rehired” by the county and thereby getting retirement AND salary. He asked if APERS had any mechanisms for catching that. They do not and claim that they would need a massive staff increase to find that out.
3:15 pm – Sen. Key asked if that could also happen at the state level. Ms. Stone confirmed that it could.
3:18 pm – Rep. Kerr made the point that all the parties involved in reporting the potential fraud have a vested financial interest in concealing it. The attorney, Jay Wills, tried to redirect in that he does not believe in some grand conspiracy. (no one suggested a conspiracy and to even bring up such a straw man indicates he doesn’t want to really answer the question.) He went on to make vague statements about how Arkansans are trustworthy people who just wouldn’t do such a thing. So, an elected official, who may have intentionally defrauds the taxpayer (and the government agency who aided the official and is also fiscally vested) by double-dipping wouldn’t lie to the APERS officials.
3:26 pm – The Bureau of Legislative Research attorney is explaining their reason for not moving forward in some area. I didn’t understand the reason, but has something to do with separation of powers and how it would encroach on the executive branch. (The Governor). However, it appears they are following other avenues of investigation.
3:29 pm – Apparently the ARRA (Stimulus Package) is consuming time from Legislative Audit that is delaying working on this issue.
3:34 pm – I asked Mr. Wills why the form that has to be filled out upon retirement by officials is not used to identify those who might be double dipping he said that was what was used to send out the letter.
3:36 pm – I followed up by asking why they could not be cross referenced to the records of elected officials and their terms of office to identify the “improperly retired”. He replied that they do not have the staff to go to every county to get that information.
3:45 pm – Mr Wills clarified that the letters were sent from a cross reference within their database. I pointed out that they also could check the retirement date against the elected officials term of office and suggested that they have another method of identifying the “improperly retired” elected officials. He agreed.
3:47 pm – Rep Carnine is pointing out that the database and related software perhaps needs to be upgraded.
3:48 pm – Mr. Stone pointed out that this problem is not unique to Arkansas and other states are also dealing with this sort of thing.
3:49 pm – Consulting actuary contract considered and approved.
3:51 pm – Meeting adjourned.
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