FAYETTEVILLE — The Fayetteville Firemen’s Pension and Relief Fund Board of Trustees may not be able to reduce retirement benefits for its members, even though the pension fund seems headed for insolvency.

“Because you have not indicated that the fund is currently unable to pay benefits, it is my opinion that the answer to this question is no,” wrote Elisabeth Walker, deputy Arkansas Attorney General in a Nov. 4 opinion.

The pension board - which serves 62 retired firemen or their spouses - asked the attorney general for an opinion asking if the board can reduce benefits. Recent studies have shown the firemen’s pension is headed for insolvency in about 10 years.

At the last meeting, the pension board discussed consolidating its plan with the state-run Local Policeand Fire Retirement System, known as LOPFI. This move would require City Council approval. However, without a benefit reduction the cost for taxpayers would be substantially greater and would make consolidation a steeper uphill climb.

Another option open to the retirees is the Arkansas Fire and Police Pension Guarantee Fund, which is available to pensions that have exhausted their own funds. However, the catch here is that access to the guarantee fund is only available if the local municipality has at least 1 mill of property tax revenue going into the pension fund. Fayetteville funds the Firemen’s Pension and Relief Fund with 0.4 mill.

It’s not clear what options the pension board may be mulling. No one would comment yet on the attorney general opinion.

“I don’t have any comments right now. I haven’t yet read the opinion yet,” said Marion Doss, a member of the board of trustees.

“This is the first that I have heard about the new opinion,” said Kit Williams, Fayetteville City Attorney, on Thursday. “I need to read it before commenting.”

The opinion did not exclusively rule out a benefit reduction, if only because attorney general opinions are just that - an opinion, and not law.

“There is no express statute prohibiting a benefit reduction by the board,” Walker wrote. “In my opinion, however, the absence of such a statute is not necessarily determinative of the board’s authority to e◊ect a reduction.”

The Fayetteville Firemen’s Pension and Relief Board of Trustees oversees a closed plan. Today’s fire and police service members are part of the financially stable LOPFI.

News, Pages 4 on 11/06/2009

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