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House panel backs changing pension board qualifications

by Brian Fanney, Michael R. Wickline | January 26, 2017 at 3:39 a.m. | Updated January 26, 2017 at 3:39 a.m.

A House committee Wednesday endorsed legislation changing requirements for six of the Arkansas Public Employee Retirement System's nine trustees, and the panel acted despite a warning that the bill appeared to eliminate three board members who are system retirees.

The bill could potentially affect the continued service of trustees Artee Williams, Ouida Wright and Bill Gaddy, system Executive Director Gail Stone said later in an interview.

When asked about Stone's comment, House Speaker Jeremy Gillam, R-Judsonia, initially said Wednesday night in an interview that he agreed with Stone.

A few minutes later, Gillam called the newspaper back to say that he interprets state law to mean that the three trustees should have been replaced when they left state employment.

Williams is a former director of the state Department of Workforce Services, whom Republican Gov. Asa Hutchinson replaced in 2015. Williams' initial term on the board started in 2003 and his current term expires in 2020, according to system records.

Wright formerly worked for the Conway Human Development Center. Her initial term on the board started in 1989 and her current term expires March 17 of this year, according to system records. Gaddy formerly worked for the state Department of Finance and Administration. His initial term started in 2007 and his current term expires in March 2019, according to system records.

Gaddy declined to comment about the bill. Williams and Wright could not be reached for comment by telephone this week.

With no audible dissenting votes, the House State Agencies and Governmental Affairs Committee sent House Bill 1258 by Gillam to the House for further consideration.

The board of trustees for the Arkansas Public Employees Retirement System includes six appointees from the governor, the state treasurer, the state auditor and the director of the state Department of Finance and Administration. The system is state government's second-largest retirement system, with more than $7 billion in investments and more than 75,000 working and retired members from state and local governments.

Under state law, the governor appoints three members who are state employees and three members who are nonstate employees. Each appointee must have 10 years of continuous service with a public employer and be a working or retired member of the system.

HB1258 would reduce the 10-year service requirement to five years, require appointees to be "a member" and eliminate language allowing them to be "a retired member" of the system. It also would shift the authority for replacing board members who are state employees who leave or retire, or a nonstate employee who quits working for a participating public employer, for the remainder of their unexpired term from the board of trustees to the governor.

"This act applies to a member currently serving on the Board of Trustees of the Arkansas Public Employees' Retirement System as of the effective date of this act," according to HB1258, which would be become effective on the date of its approval by the governor.

Rep. Andy Davis, R-Little Rock, who presented the bill for Gillam, told the House committee that the legislation would require these trustees merely to have five years' employment rather 10 years and shift the authority for filling a vacancy from the board to the governor.

Stone, the system director, said the legislation "would appear to take off all retirees [from the system's board of trustees] and therefore our retirement population, which is 34,000 population, would not be represented.

"If his attempt is to allow retirees to be on this board, as I think there should be proper representation, I think we need to rework it," Stone said. "Finally, Section 3, which states 'do not codify,' seems to point at a single individual. I wonder about the constitutionality of a one-person bill. Perhaps that could be reconsidered."

Rep. Dwight Tosh, R-Jonesboro, told House committee members that he wasn't sure what the legislation aimed to accomplish.

"Is there no retirees on this board for the representation of the retirees?" he asked.

Stone said that "judging from Rep. Davis' testimony, that was not the intention. But that's how we read it."

Davis said that the bill "states the governor shall appoint a state employee member or a nonstate employee member to fill a vacancy for the remainder of the unexpired term within 30 days. My understanding is, while you currently have three retired members on the board, we don't have any active state employees on the board."

Stone said that's not correct.

Davis said he thinks the governor could put another retiree on the board if he wanted.

But Gillam said in a subsequent interview that he intends to allow only working members of the system.

"My intent was on this was to be able to bring it into the way it was supposed have been with active" working members rather than retirees as trustees, he said.

Gillam said that he's worked in consultation and cooperation with Hutchinson on his bill.

Hutchinson had no role in developing the legislation, but he agreed to support it after Gillam told the governor about the bill this week, Hutchinson spokesman J.R. Davis said.

A Section on 01/26/2017

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