Gov. Asa Hutchinson announced Wednesday that he appointed Dale Douthit of Russellville, chairman of the Arkansas Workers' Compensation Commission, to the board of trustees of one of the state's largest retirement agencies.
Douthit fills the vacancy created in July after former Sen. Steve Faris,D-Central, resigned from the Public Employees Retirement System board, citing the need to devote more time to family matters. Faris, a self-described "very conservative Democrat," was appointed to the nine-member board in March 2017 by the Republican governor.
The retirement system is the state government's second-largest such agency with more $8 billion in investments and more than 75,000 working and retired members. The largest is the Arkansas Teacher Retirement System.
"Dale meets the qualifications required by law and he has demonstrated his ability to listen and make reasoned judgments in his current position," Hutchinson said in a written statement when asked about the appointment. "He will do an outstanding job on the APERS board."
In the past two months, lawmakers have held meetings across the state to get feedback about state retirement. Some members of the Public Employees Retirement System have pressed lawmakers to pursue legislation in the 2021 regular session that would allow the agency's members to elect some of their own to the board.
Douthit said he will continue to serve as chairman of the Workers' Compensation Commission, to which he was appointed by Hutchinson to a six-year term in 2015. Douthit said in an interview that he has "no marching orders" and "no agenda" for serving on the retirement system's board.
"I am just holding my breath until the [system's board meets in November] to see if there is unfunded liability for APERS," Douthit said, adding that would be his primary concern.
In August, an actuary told the system's trustees that its unfunded liabilities totaled $2.39 billion as of June 30 with a projected payoff period of 24 years, a decline from 26 years the year before. Unfunded liabilities are the amount by which a system's liabilities exceed an actuarial value of its assets. Actuaries often compare the projected payoff period to a mortgage on a home.
At that meeting, board Chairwoman Candace Franks, who also is the state's bank commissioner, said the board's aim is to reduce the system's unfunded liabilities.
The system's options to reduce them include increasing the rate charged to state and local governments; increasing the rate paid by working members; reducing the cost of retirement benefits; and counting on strong investment returns.
In this year's regular legislative session, a bill that would have allowed the trustees to set the annual cost-of-living adjustment in retiree benefits up to a 3% simple rate failed to clear the Legislature's Joint Committee on Public Retirement and Social Security Programs. State law now dictates a compounded 3% cost-of-living increase each year.
Retirees from all state retirement systems, fearful of what might be approved, packed the meetings of the legislative committee during the regular session.
In an effort to develop a consensus about future changes, the retirement committee has held meetings around the state since the session to educate members about each agency's financial condition and allow system directors to explain whether changes are needed. The next meeting is set for at 5 p.m. Nov. 5 at the Benton Event Center.
Under state law, the Public Employees Retirement System's trustees include six members appointed by the governor -- three who are state employees and three who are not -- as well as members appointed by the secretary of the Department of Finance and Administration, the state treasurer and state auditor, according to the system's website.
Besides Douthit, who is a state employee representative, the board includes Franks and Department of Labor and Licensing Secretary Darryl Bassett, who also are state employee representatives; Sebastian County Judge David Hudson, who is a county employee representative; and Gary Carnahan of Hot Springs and Van Buren Mayor Joe Hurst, municipal employee representatives.
Rounding out the board are finance department Secretary Larry Walther; state Treasurer Dennis Milligan, a Republican from Benton; and state Auditor Andrea Lea, a Republican from Russellville.
John Bridges, executive director of the Arkansas State Employees Association, said in an interview that the association and its members would like to see legislation to elect working and retired system members to the retirement board to provide them more representation.
"Right now, it is just a concept," Bridges said.
Sen. Bill Sample, R-Hot Springs, and Rep. Les Warren, R-Hot Springs, co-chairmen of the retirement committee, said they haven't determined how many elected system members they would like to propose adding to the current board.
Asked what he thinks about making those changes, Hutchinson said in a written statement, "The current appointment process has worked well for decades and I am satisfied that changes are not necessary."
Warren said lawmakers plan to have some meetings with retirement system directors after the meeting in Benton, and they would try to develop a legislative agenda for the 2021 regular session, "so there are no surprises. We'll have a united front instead of a divided front, like we had this last time."
Metro on 10/24/2019