The Arkansas State Police Retirement System's investments dipped in value by $6.7 million last fiscal year to $272.9 million, according to a report to the system's board of trustees Thursday.
The system's investments are in the Arkansas Public Employees Retirement System's portfolio, which dropped $196 million in value in fiscal 2016 to end up at $7.62 billion on June 30, the last day of the fiscal year. Act 1242 of 2009 transferred the State Police Retirement System's assets to the Public Employees Retirement System to hold in trust.
During fiscal 2016, the Public Employees Retirement System's investments posted a 0.30 percent return; the median return for public retirement systems nationally was 0.54 percent, Chicago-based investment consultant Callan Associates said.
Last fiscal year was "just a struggling year" for the stock markets, Gail Stone told the police retirement system's trustees. Stone serves as executive secretary for the state police system as well as executive director of the public employees system.
The State Police Retirement System's assets dropped in value last fiscal year because its investment gains were outstripped by retirement benefit payments, Stone said.
The system's investment income totaled $906,360 in fiscal 2016, while the system paid out $26 million in retirement benefits and had investment expenses of $1.1 million, the system's report shows. The state paid $19.6 million into the system, and system members contributed $30,170 last fiscal year, according to the report.
Attorney Jay Wills, who is the Public Employees Retirement System's deputy director, told the police retirement system's trustees that he hopes the state Supreme Court rules this year on the system's appeal of a Pulaski County circuit judge's ruling against the system last year.
If the ruling by Pulaski County Circuit Judge Mackie Pierce is upheld, it may cost the system between $2 million and $4 million, Wills said afterward.
Six retired troopers -- Maj. Cleve Barfield, Cpl. Ricky Briggs, Capt. Loyd Franklin, Capt. Myron Hall, Lt. Glenn Sligh and Sgt. Mack Thompson -- sued the 54-year-old pension program in January 2012 over changes in how interest rates on the Deferred Retirement Option Plan were calculated.
The plaintiff pool grew to 51 officers after Pierce granted the lawsuit class-action status in October 2013, making eligible any trooper who enrolled in the program before March 2007 and whose benefits were affected by the trustees' 2009 rate change.
The original rate calculations were established in 1995 when the program was founded, but they were altered by state law in 2007, when the Legislature handed over authority to set rates to the trustees, and again in 2009 by the trustees, according to the lawsuit. That final rate change was applied in an unconstitutional manner, the troopers argued, and Pierce agreed in May 2015.
Meanwhile, the police retirement system's actuary -- Michigan-based Gabriel, Roeder, Smith & Co. -- won't issue its actuarial report for the system for the last fiscal year until the trustees' next meeting on Nov. 17, system officials said Thursday.
As of June 30, 2015, the system included 558 working members, who have an average age of 41, average service of 13 years and average annual salary of $53,637, according to Gabriel, Roeder, Smith. The system also included 622 retired members and beneficiaries with an average annual pension of $35,158, Gabriel reported.
The system's unfunded liability totaled $124.1 million as of June 2015 with a projected pay-off period of 24 years, according to Gabriel.
Actuaries often compare unfunded liabilities to a mortgage on a home. Unfunded liabilities are when the system's liabilities exceed an actuarial value of the system's assets.
Metro on 08/19/2016