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Minutes from the Finance Committee meeting on July 20, 2006.
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Finance & Administration Committee Minutes
Thursday, July 20, 2006
4:00 p.m.
Members Present were: Darrel Dover, Alec Farmer, Jim Hargis, Harold Perrin and John Street. Councilwoman Williams was unable to attend. Councilman Hargis left at 4:25 p.m.
PRESENTATION
Non-uniform Employee Pension Fund Report, Principal Financial Group: Ms. Rae Willis was present to discuss the City’s defined benefit plan, proposed changes to the plan and some alternatives. She stated to increase the pension multiplier from 1.5% to 1.75% it would cost an extra $133,936 for 2006. Councilman Dover questioned what determines how much the City has to contribute every year. Ms. Willis explained it’s made up of several factors, including the City’s earnings from investments, the makeup of the employee group and the benefit formula. Councilman Perrin noted the figures Ms. Willis provided would be the cost if all the variables stayed the same. Chairman Farmer was questioned how they came up with the percentage for the normal cost as a percentage of compensation. Ms. Willis explained they based it on the census for 2005. She further explained the normal cost as a percentage of compensation percentage means it will take the equivalent of 6.82% of the payroll in 2005 to fund the requirements for the current plan. She added to increase the multiplier it will take the equivalent of 7.89% of the payroll in 2005 to fund the requirements for the plan. Chairman Farmer questioned if Jonesboro’s plan is similar to those of other places of employment. Ms. Willis stated she could find some comparative data for defined benefit plan and what the average employer contributes to the plan. Chairman Farmer then questioned what the deficit is for the current plan. Ms. Willis explained the plan is not 100% funded and is in a deficit. She stated a change in census, such as adding younger employees, could help shrink the deficit. She added fo...
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