A Revealing History of Our Seriously Underfunded Police Pension Plan

This article is the first and longest article in a three part series of articles I intend to publish on our underfunded police pension plan.  The second article that I have already written involves a funding issue created by the LOPFI retirement system that is currently being withheld from publication due to our participation in other issues and the third article involves an assessment of what our pension fund needs to do to ensure its survivability.  These later articles will be posted on this website as it is determined that they are warranted.

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In this article, I have completely rewritten my previous article on this topic which was published based only on the information provided in the old commentary to the 1947 Arkansas Statutes Annotated (Yes, I have a complete copy of those old laws).  Since that time, I have conducted extensive additional research through the Secretary of State’s Office and utilized various computer resources to determine the following chronology of events concerning the Little Rock Police Pension Fund, some of which were unknown to me when writing my previous article.  I also provide links in this article to the appropriate Acts that created our pension fund and amended its various provisions as well as other associated and relevant information concerning our pension fund for our membership’s study and review.  The links provided to Acts in the main text of this article are to copies of the Acts as contained in the “Act Books” at the Secretary of State’s Office.  I have highlighted the Act Number in each to facilitate your review as those Acts are continuously presented in the “Act Books.”  If you wish to see the actual Acts as they originally appeared, scroll down to the end of this article were you will find links contained in the table to those documents as well.

 

1921
Act 343 of 1921 —This Act established the first Little Rock Police Pension Fund State law as approved at the Arkansas State Legislature on March 21, 1921, and took effect of June 1, 1921.  It should also be noted that approximately one week later, Act 491 of 1921 also established the first Little Rock Fire Pension Fund State law as approved on March 26, 1921, that took effect on the same date as the Police pension fund law.  To satisfy the curiosity of our membership, I have included links to both Acts in this article.

Among other things, § 1 of the police pension law established that “in those cities of the State having a population of not less than 40,000 nor more than 150,000 inhabitants, which have a paid police department” shall annually levy a “tax of one-sixth of a mill on the dollar of all taxable property in those cities” to go into the police pension fund.  It should be noted that the tax provided in § 1 required no vote of the citizens and was simply imposed upon them with the passage of that Act.  Under § 11, a pension benefit to all members of the fund with twenty years service at half their annual salary was provided with a widow’s benefit of fifteen dollars ($15) per month and a child’s benefit of six dollars ($6) per month under § 9; however, the benefit of half salary was later removed and was replaced with a set amount in future enactments of this law.  Of course, the only city in the State with a population over 40,000 at that time was the City of Little Rock.

The only other funds available to the pension fund, other than those provided under § 1, were contained in §§ 4 and 5 of that Act and involved the payment to the fund for any “rewards” and the payment of any fines imposed upon “any member of the police department force, by way of discipline” to be paid into the pension fund.  To the best of my knowledge, the later requirement was never met by the City of Little Rock until the Police Pension Fund filed suit against the City to force such payment in 1987.

The reason for the creation of the Little Rock Police Pension Fund or the subsequent Fire Pension Fund is anyone’s guess, as I have not researched the Arkansas Gazette archives or any other sources to try and determine an answer to that question; however, I believe the reason was possibly because the population of the City of Little Rock had almost doubled from 1900 when that population was 38,307 to 1920 when it was 65,142 and the City was having trouble retaining and recruiting their officers and firefighters without any retirement benefits due to the competing offers of private employment from the many businesses that accompanied such dramatic population growth.

In an attempt to partially rectify some of those problems, the City of Little Rock established police and firefighter pension funds that allowed either department member who, among other things, had reached twenty years of service to retire at half their previous salary with certain measures built into each plan to pay for the plans from sources other than the City’s budget.  Before that time, there were no State laws providing any police or fire pension plans and, after the enactment of the police and firefighter’s pension laws, the City actually had to pay no retirement benefits to its new police officers or firefighters for at least twenty (20) years or until 1941 — a date that will later stand out in significance.

Constitutional Amendment 14 — Also of interest and relevance during that time period, was the fact that the citizens of Arkansas passed the shortest Constitutional Amendment we have as Ark. Const. Amendment 14 in 1921 to prevent the legislature from enacting any “local or special” legislation as indicated in this article from the New York Times quoting the Arkansas Gazette from April 2, 1921; however, that fact still did not prevent the City of Little Rock from continuing to enact its own “local or special” legislation at the Arkansas Legislature because they probably knew the stringent burden of proof imposed by the courts when attacking the constitutionality of legislative acts would likely negate any possibility of success in such litigation and, without a Constitutional challenge through the courts, those laws would remain in effect.

 

1929
Act 126 of 1929 — With this Act, the City completely rewrote the previous police pension law and this time provided that it pertained only to cities with a population of not less than 50,000 inhabitants that has a paid police department. Again, the only city in Arkansas that met those requirements was the City of Little Rock.

This Act maintained the same benefits to fund members and funding sources as the previous Act however, this Act also contained the first authorization for the collection of “ten (10%) per centum of all fines and forfeitures collected by the police department for violation of city ordinances.”  However, that later provision was removed from subsequent revisions of the pension law.

One interesting provision contained in Section 21 of that Act was that, if any other city may reach a population of 50,000 inhabitants with a paid police department, they too would be included under this Act but only after affording their citizens the right to vote on that issue.  No such provision for Little Rock’s voters was provided and the law simply imposed that funding requirement on the citizens of Little Rock.

This Act was later modified by Act 210 of 1937 that contains one somewhat humorous provision, at least to me, that I have been unable to grasp.  Section 3 of that Act amends Section 8 of Act 126 of 1929 by including the following language:

Provided that, no member of the Police Department retired and pensioned under the provisions of this act shall die while so retired and pensioned, leaving a widow or children or widowed mother surviving, shall be entitled to a pension under the provision of Section 8 of this act.  [Emphasis added]

What does that language mean to you?  Does it mean that a retired officer must outlive his wife, children, and mother?  Does it mean that if a retired officer does die before his wife, children, or mother that the pension fund will stop paying him pension benefits that he would otherwise receive after his death?  I am certain there must be a simple and logical answer but I cannot ascertain what that answer would be at this time.  I suppose the reason for this is my stupidity or because I have read and reviewed too many of these Acts to understand what this particular section is referring too.

 

1937
Act 250 of 1937 — It became apparent to the Arkansas Legislature that providing pension benefits to the other police officers around our state was necessary and the first police pension law for all other cities with over 16,000 inhabitants, other than Little Rock, was created by the passage of this Act that provided the below list of funding sources for the pension plans:

• All forfeitures and fines imposed from time to time upon any member of the Police Department by way of discipline;
• All money given or donated to such fund;
• All money deducted from the salary of any member of the police department on account of absence or loss of time;
• One-half of all rewards for any purpose;
• Ten (10%) per centum of all fines and forfeitures collected by the Police Department of such city for violation of city ordinances; and
• 1 (1%) per centum of the monthly salary of each member of the Police Department, to be deducted each month by the city and immediately paid to the Board of Trustees of the Policemen’s Pension and Relief Fund.

During the very next legislative session, the legislature modified the statute on funds to be added to police pension plans by the passage of Act 11 of 1939 to include the collection of fines and forfeitures involving “State laws” and eliminated the third funding source.  The importance of that funding requirement was also established in the Emergency Clause contained in Act 11 of 1939 that stated:

Because of the fact that there are needy members of the Police Departments of the Cities of this State who are entitled to receive pensions under Act 250 of the Acts of the General Assembly of 1937, and funds provided to pay such pensions are insufficient, resulting in deprivation to those entitled to relief, an emergency is hereby declared to exist, and this act being necessary for the preservation of the public peace, health and safety, shall take effect and be in force from and after its passage. [Emphasis added]

The benefits paid to retired members under this State plan included the payment of “half pay” after twenty (20) years of service with a widow’s benefit of fifty dollars ($50) per month and a child benefit of ten dollars ($10) per month.

While you may think that Act 250 of 1937 may provide additional funding and benefits to the City of Little Rock for our police pension plan, you would be mistaken because the City of Little Rock sought and obtained an exemption from the provisions of that Act, later codified as A.S.A. § 19-1820 and now codified as A.C.A. § 24-11-401, because they had already obtained the passage at the State Legislature of their very own “local and special” State legislation governing police pension plans in the City of Little Rock; however, the City of Little Rock would later become subject to this Act as explained later in this article.

 

1939
Act 25 of 1939 — With this Act, the City of Little Rock again completely rewrote their pension law making it applicable only to cities with a population of 50,000 inhabitants and a paid police department in excess of forty (40) policemen which again only applied to the City of Little Rock.  They also withdrew from the position of requiring their citizens to fund the police pension plan and instituted a method whereby their citizens could vote on increasing the tax millage from one-sixth of a mill to a full mill on the dollar.  It is also notable that the benefits due each retired member of the fund were changed under this Act from the previous half salary to a set figure of fifty dollars ($50) per month regardless of rank or salary after twenty (20) years service with a widow’s benefit of thirty-five dollars ($35) per month and a child benefit of ten dollars ($10) per month.  This Act required, for the first time, a contribution of one percent (1%) of the active duty officer’s salaries to the pension fund and removed the prior funding requirement for the ten percent (10%) of fines and forfeitures collected from the courts by the city.  While the measure concerning the millage increase was enacted by the voters of the City of Little Rock, this Act was later declared unconstitutional by the Arkansas Supreme Court as outlined below.

The Arkansas Supreme Court decision in Adamson v. City of Little Rock, 199 Ark. 435, 134 S.W. 2d 558, (1939) that was handed down on December 4, 1939, held Act 25 of 1935 to be unconstitutional because, as explained in Attorney General’s Opinion No. 2003-036:

In Adamson, a taxpayer brought a legal action to enjoin the extension and collection of a five-eights of a mill property tax for the use of the City’s Firemen’s Pension and Relief Fund and a one-mill tax for the benefit of the City’s Policemen’s Pension and Relief Fund.  The local electors had approved the levies at the general city election under the authority of state statutes.  The taxpayer alleged that article 12, § 4 prevented the levy because the City of Little Rock had already voted the full five mills authorized by article 12, § 4, and did not propose to displace any exiting portion of the five mills with the new one and five-eights mills levied by the electors.

The Arkansas Supreme Court reluctantly agreed, stating:

It is with profound regret that we reach the conclusion that the objection is well taken.  The wisdom and the necessity of offering inducements to worthy men, brave and true, to enter and to continue in these hazardous callings, is obvious.  No city under modern conditions can operate without both a fire and a police department; but relief to these employees of the city must be afforded in a manner authorized by the Constitution.

Thus, the City of Little Rock was caught with their hand in the proverbial “cookie jar” of taxpayer funds in violation of the Arkansas Constitution by a taxpayer who took that case to court.

 

1940
Constitutional Amendment 31 — While the above Arkansas Supreme Court ruling was undoubtedly a blow to the City of Little Rock, it was not an insurmountable blow as “Night Police Chief R. L. Allen of Little Rock” submitted a petition containing 17,700 signatures for a Constitutional Amendment dealing with that matter to the Secretary of State on July 2, 1940 (Arkansas Gazette, July 3, 1940, p. 13, col. 1).  Consequently, Amendment number 31 to the Arkansas State Constitution was passed and adopted after an election and vote by the citizens of the State of Arkansas on November 5, 1940, that read:

After consent of the majority of those voting on the question at any general or special election in cities of the first or second class, the cities may annually thereafter, levy a tax on the assessed value of real and personal property, not to exceed two mills on the dollar, from which there shall be created a Fund to pay Retirement Salaries and pensions to policemen and firemen theretofore or thereafter earned, and pensions to the widows and minor children of such, as may be provided by law. The annual levy for the Policeman’s Retirement Salary and Pension Fund shall not exceed one mill on the dollar, and the annual levy for the Fireman’s Retirement Salary and Pension Funds, shall not exceed one mill on the dollar. The manner of such levy of the tax, and the eligibility for the retirement salaries and pensions, the several amounts thereof and when payable, shall be such as may be provided by law.

 

 

1941
Act 16 of 1941 — After the passage of the above Constitutional amendment, the Arkansas Legislature passed Act 16 of 1941, later codified as A.S.A. § 19-1707 and then as A.C.A. § 24-11-404, that provides for the assessment of a one (1) mil property tax to be paid to the city policeman’s pension fund after obtaining a vote of the city’s citizens.  That Act also required, under § 3 later codified as A.S.A. § 19-1709 and repealed by Act 900 of 1985, that police pension boards submit to the City an estimate certifying the amount required to pay the next year’s pension benefits and for that City to “levy against the real and personal property of such city sufficient to raise and provide the sum of money estimated and certified by the Board of Trustees.”

For the City of Little Rock, the requirement of voter approval was apparently fulfilled on April 1, 1941, by voter approval of Little Rock City Ordnance No. 6,175 and this is the date I earlier suggested would stand out in significance.  The significance is that 1941 is exactly 20 years after 1921 and represents the first date that pension benefits would have to be paid by the City of Little Rock and, with that State legislation then in place, the City had the funds to pay those benefits to their retired officers and firefighters at the taxpayers’ expense without any resultant cost from their City budget.  Unfortunately, while the vote of the City’s citizens on City Ordinance No. 6,175 did provide much needed assistance to our pension plan at that time from the taxpayers of Little Rock, it also provided the City with an excuse they would use to prevent their paying the full requirements of the law to our pension fund by obtaining an exclusion from paying the ten percent (10%) of fines and forfeitures obtained from courts at a future date as explained later in this article.

Act 67 of 1941 — This Act allowed the City of Little Rock to again obtain the passage of their “special or local” legislation and again completely rewrite the Little Rock police pension law that included the one percent (1%) of salary contribution by the officers and the removal of the previous requirement for the city to pay ten percent (10%) of all fines and forfeitures to our pension fund as previously outlined in unconstitutional Act 25 of 1939.  This new Act also removed from our fund the previous authorization for our fund’s collection of “fines and forfeitures” deducted from the pay of any active duty officer by way of discipline.  Also, the Act only pertained to Cities having a “population of 75,000 and a paid police department in excess of 60 policemen” and was codified as A.S.A. 19-1901 et seq.  Of course, the only city in Arkansas who met those requirements was the City of Little Rock.

This Act originally provided a pension benefit to retired members of seventy-five dollars ($75) per month after twenty years of service with a widow’s benefit of fifty dollars ($50) per month and a child benefit of ten dollars ($10) per month and was amended by Act 226 of 1947 to provide a longevity bonus of five dollars ($5) per month for each year over twenty years that an officer continued working for the police department.  Then, Act 281 of 1953 amended that original Act again to provide members one hundred and twenty-five dollars ($125) per month after twenty years of service with a widow’s benefit of seventy-five dollars ($75) per month and a child’s benefit of fifteen dollars ($15) per month while also increasing the contribution from the active duty officers to the pension fund to two percent (2%) of salary.

As a side note to the above Little Rock Police Pension laws, two Arkansas Supreme Court decisions provide interesting reading regarding those Acts.  The first is the case of a group of former policemen of the City of Little Rock, then retired, who sued the trustees of the Little Rock Policemen’s Pension Relief Fund in 1954 alleging that they should be paid the increased benefit amounts contained in the 1947 and 1953 Acts in Cross v. Gram, 272 S.W.2d 682 (1954).  While the retired officers lost that case, the amounts of the monthly pension benefits they received, contained therein and in the appropriate Acts, was a fixed payment for all officers of $75 per month in 1941 that was increased to $125 per month in 1953 after twenty (20) years of service regardless of rank or the amount of salary paid prior to retirement.  While those amounts seem insignificant by today’s standards, try to imagine how you would feel if, just a few years after your retirement, the City raised retired officer benefits by almost 50% but you were ineligible to receive them.

The second Supreme Court case involved a widow of a retired officer who married her husband after his retirement in 1954 and the pension board denied her a widow’s pension after his death.  She ultimately lost the case of Kerr v. Murphy, 484 S.W.2d 684 (1972) but the interesting thing to me in this case was how very important the wording of a particular Act is because, had the Act he retired under been written like the others, she would have received her pension of $125 per month.

 

1959
Act 206 of 1959 — For whatever reasons, the Arkansas State Legislature ended the twenty-two (22) year exemption for the City of Little Rock from participation in the primary police pension laws of the State contained under Act 250 of 1937 by the passage of Act 206 of 1959 that stated, in part:

 From and after the effective date of this act policemen’s pension and relief funds that have been established in cities of seventy-five thousand population or over, shall be assessed, collected, administered and benefits paid in accordance with the provisions of Act No. 250 of the Acts of the General Assembly of the State of Arkansas of 1937, and all Acts amendatory thereto.  Provided, however, that nothing herein shall alter, amend or change, increase or diminish, any retirement benefits being paid to any retired policemen, or to the widow or dependents of any deceased policeman, at the time this act goes into effect. [Emphasis added]

With the passage of this Act, the retirement benefits paid to members of our fund were again set at half their final salary after twenty (20) years of service plus the five dollar ($5) per month longevity bonus for service above twenty-five years with a widow’s benefit of seventy-five dollars ($75) and a child benefit of twenty dollars ($20) per month.  It should also be noted that Act 206 of 1959 also provided that nothing contained in that Act shall “increase of diminish” any retirement benefits received upon the passage of that Act.  Also, due to the amendment of Act 250 of 1937 by Act 86 of 1953 an increase of one half a percent (½%) to the two percent (2%) already withheld from the salaries of our active duty police officers to our pension fund was imposed and Act 415 of 1957 added the requirement for “all money deducted from the salary of any member of the police department on account of absence or loss of time” that had been previously excluded by Act 67 of 1941 was reinstituted.  While Act 250 of 1937 is the basis of our current police pension law and has undergone numerous Amendments in the legislature, I only present these two Amendments now to show our membership the status of that Act after our fund became subject to its contents in 1959.

Thus, for the first 38 years since the first Little Rock police pension law and for 22 years after the State required other Cities to provide financial assistance to their police pension funds, the City of Little Rock was free to establish anything they wished with regard to their police pension fund under their “local or special” legislation that created two pension plans for police officers in Arkansas between 1937 and 1959 with one applying only to the City of Little Rock and the other applying to every other City in our State. 

Although I have no official records from the late 1950’s to prove it, given the City’s past predilection to get out of paying our pension plan any necessary funds, I would bet that by 1959 the amount of funds the City received from the one mil property tax assessment was predicted by the City to no longer meet the needs of our pension fund in the near future so the City believed it more advantageous to go under the State’s primary police pension laws because that would provide the City with a better excuse for not having to pay our total pension benefit amount for years to come.

While you may believe that Act 206 of 1959 finally got our pension plan the funds provided to other cities in our State, again you would be mistaken because the third sentence in Act No. 206 of 1959, that was codified as A.S.A. § 19-1802.1 and later as A.C.A. § 24-11-414, excluded any city with a “property evaluation in excess of eighty million dollars ($80,000,000.00)” from having to contribute the ten percent (10%) of fines and forfeitures from their courts to the police pension fund.  Can you guess what single city in Arkansas had a property evaluation over that amount?  If you guessed “Little Rock,” you were correct and that exclusion lasted another twenty-eight (28) years until that section of law was finally repealed by Act 690 of 1987 after our police pension fund was determined to be underfunded by the Arkansas Pension Review Board in that same year in the amount of $1.4 million per year.

The true reasons for that exclusion by the Arkansas Legislature in 1959 are debatable; however, the Arkansas Supreme Court would later rule that “We agree with the city’s argument that the general assembly could have concluded that a city or cities with the highest amount or amounts of taxable property could contribute enough from that source to make contribution from municipal fines unnecessary.”  Thus, that bit of speculation on the part of the Supreme Court was used to overturn our claim of “local or special” legislation.  However, I believe that a more probable and equally viable speculation would be that the City had to pay nothing from their budget into the police pension plan at that time and did not wish to have the 10% deduction of court “fines and forfeitures” they received from the courts taken out of the City’s budget.  To obtain the City of Little Rock’s final acceptance of the primary police pension law, the Legislature bought the City’s claim and ignored the mandatory language contained in Act 16 of 1941 § 4 that stated, “[t]he funds provided for herein [the 1 mill property tax authorization] shall be supplemental, and in addition, to any funds provided” to the police pension fund that it had earlier determined to be integral to the proper funding of all other police pension plans across our State.  Thus, the legislature added to the list of “local or special” legislation for the City of Little Rock although the Arkansas Supreme Court did not later recognize that fact.  In retrospect, it now seems obvious since we have been designated a “projected insolvent fund” that the Supreme Court’s decision in that matter was improperly speculative.

 

1977
Act 745 of 1977 — In an apparent attempt to provide some additional funding for the States local police pension funds, this Act authorized local police pension funds to collect ALL proceeds from the sale of confiscated goods to be placed into their police pension funds.  While the City of Little Rock has basically honored this law, they currently exclude from such sales any proceeds from the sale of handguns and instead melt them all down and provide only the scrap metal value to our pension fund.  Whether anyone may personally believe such process is justified to prevent the return of such handguns to the legal market, the removal of such handguns from legitimate sale by the City does not appear to be an option for the City’s determination alone and no one, including the Little Rock Police Department, can cite any law that authorizes such destruction rather than sale.  Admittedly, the proceeds derived from such sale of handguns are seemingly insignificant; however, any amount illegally denied a seriously underfunded police pension fund would appear to be in error.

 

1981
Act 364 of 1981 —The State Legislature passed this Act that created the current Arkansas Local Police and Fire Retirement System (LOPFI) that became operative on January 1, 1983, and made our local police pension fund a “dying fund” in 1983 without providing sufficient funds to ensure the survival of the local police and fire pension funds.  More information on this particular topic will be provided in a future article posted on this website.

Act 486 of 1981 — After it had already been determined that our pension fund was a “dying fund” due to the creation of the above LOPFI system in 1981, the City began remitting an amount matching our police officer’s contributions to our pension fund with the passage of Act 486 of 1981, codified as A.S.A.§ 19-1802 and later as A.C.A. § 24-11-413, that required cities having a local police pension fund to remit a matching contribution to the officer’s contributions to such funds of “not less than” three percent (3%) in 1982, four percent (4%) in 1983, five percent (5%) in 1984 and then finally the current six percent (6%) in 1985 with a caveat that the amount contributed by the cities would not exceed the amount contributed by the officers.  While this may appear to represent the first expense to the City for old pension benefits, that amount could do nothing but decrease in the years to come, due to the fact that our pension plan was now closed to any new members, and that fact was well known to the City of Little Rock.  Of course, even that requirement was phased in to lessen the impact on such contributing cities over the next five (5) years.

 

1983
Act 381 of 1983 — This Act created the Arkansas Fire and Police Pension Review Board (PRB) and required all old local police and fire pension funds to be placed under their supervision to ensure the actuarial soundness of the old local pension plans and to oversee requests for benefit increases for those local plans under the Executive Director of the LOPFI-PRB.

 

1985
Act 390 of 1985 — It is perhaps ironic to note that after our plan had become a “dying plan” due to the creation of the State LOPFI retirement system that required all newly hired officers to be members of that new pension system beginning in 1983 and significant damage had been done to our underfunded plan prior to that enactment, our pension Board was finally allowed to increase its police membership from one (1) police member to three (3) police members in 1985 due to the enactment of Act 390 of 1985 and our Board now consists of five (5) police members today.  Thus, before 1985, the City controlled our police pension board but now has allowed our police officers to control it because the City must have figured our pension fund no longer represented a threat to their city budget and they could continue to cause damage to and delay any course of action by our fund through their statutorily required ex officio Chairmanship and Treasurer ship of our police pension board.

 

1987
Act 690 of 1987 — The passage of this Act at the Arkansas Legislature finally ended the twenty-eight (28) year exemption of the City of Little Rock from the payment of the 10% of court fines and forfeitures that had long been in effect for other police pension funds around the State.  That exemption cost our pension fund many millions of dollars in lost revenue over those twenty-eight years that other police pension funds across our State were able to obtain.

Also in 1987, shortly after the City of Little Rock’s exclusion from having to pay the 10% of court fines and forfeitures was repealed by the above Act and after the police pension Board members began to control our pension Board, the Board of Trustees of the Little Rock Pension Fund filed suit against the City of Little Rock alleging that the City owed our Pension Fund 10% of the fines and forfeitures for the years 1983, 1984, and 1985 due to the passage of Act 486 of 1981 that seemed to require the City to pay our fund those court fees and because the City owed our fund for the disciplinary suspensions of its officers that they had never paid until our pension fund went to court.

 

1988
The above lawsuit against the City of Little Rock made it to the Arkansas Supreme Court in the 1988 case of Board of Trustees v. City of Little Rock, 295 Ark. 585, 750 S.W.2d 950 (1988) and the high court ruled against the Little Rock Police Pension Fund in what can only be described as an obvious disregard of Arkansas law.  In that decision, the court ruled against our claim that this section of code constituted a violation of Amendment 14 to the Arkansas Constitution by stating:

Classification among geographical or political subdivisions is permitted if the general assembly could have had a rational basis for it, and the fact that the classification includes only one city does not necessarily mean that it is ‘local’ in the constitutional sense. [Citations omitted and Emphasis added]. 

Thus, the high court ruled on this issue not on the basis of any facts, but purely on the speculative argument by the City “that the general assembly could have concluded that a city or cities with the highest amount or amounts of taxable property could contribute enough from that source to make contribution from municipal fines unnecessary” without hearing any contradictory evidence from our fund’s witnesses. 

However, the dissent filed in that case by Supreme Court Justices John Purtle and Darrell Hickman offer very compelling evidence of the City of Little Rock’s persistence in not funding its police pension fund and that case can be read in its entirety HERE (Scroll down to Justice Purtle’s dissent immediately following § 4 of the opinion).  However, I feel compelled to copy just a very small portion of Justice Purtle’s negative comments about the City of Little Rock below:

It became apparent to the General Assembly that the city of Little Rock was not, under any circumstances, going to comply with the 1981 act [that eliminated the exemption], even though the city had to be aware of the serious financial plight of the policemen’s pension fund.  In obvious disgust with Little Rock’s continued defiance of the law and neglect and abuse of the retirement benefits for its policemen, the General Assembly enacted Act 690 of 1987.  This act states: “The third sentence of Section 2 of Act 206 of 1959 as amended, the same being Arkansas Statutes 19-1802.1, is hereby repealed.”  There is now no escape from its legal and moral obligations because the third sentence of Act 206 was Little Rock’s own special exemption from fully and fairly contributing to the policemen’s retirement fund.  Although this exemption had been at least impliedly repealed in 1981, it cannot now even arguably be said that the exemption still exists.

Unfortunately the pension plan has deteriorated to such an extent that the plan will not be adequately funded for several years.  Hopefully the fund will be able to provide all of the benefits which will be required.  However, this would currently not be a problem had the city simply complied with the 1981 act as was intended.  All other cities having such a plan complied.

The city of Little Rock has since 1959 not been paying ten percent of the fines and forfeitures collected.  Now the policemen’s pension fund needs an additional $1.4 million per year to meet adequate funding requirements established by state standards.  The plan is primarily underfunded because special and local legislation has exempted the city of Little Rock from paying the ten percent (10%) of fines and forfeitures which all other cities have been required to pay.

 

 

1989
Act 187 of 1989 — The City of Little Rock has long maintained that the only thing it owes our pension fund are the amounts designated under both A.S.A. § 19-1802 and later A.C.A. § 24-11-413 that lists the sources of funds going into our police pension fund.  However, the State’s local police pension law was never intended as a State takeover of the City’s employment contracts, such as today’s LOPFI system which has a built in method of collecting much more than the previously required six percent of salary from employees, but was only intended to assist Cities with obtaining the necessary funds to honor some of the terms of those contracts and not all of those terms.  Thus, the legislature left some of the funding for those contracts up to the individual Cities who originally created them which is only fair given the fact that only those Cities received the benefit from the services of their former employees.  Still, the legislature realized that certain cities were not paying their contracted amounts and consequently passed Act 187 of 1989 to further emphasize that point by modifying § 24-11-413 by adding a new subsection (c) that states:

(c) The contributions by cities and towns shall not exceed the amount contributed by the police officers except where authorized by appropriation of the city’s or town’s governing body. [Emphasis added]

Despite the above emphasized subsection of Arkansas law, the City of Little Rock has NEVER authorized ANY additional appropriation to its seriously underfunded police pension plan during all the years of its existence, has constantly refused to pay even the amount it was required to pay under law, and has used its influence at the Arkansas Legislature to deny our pension fund those same funds that were paid by other Cities to their police pension funds with great efficiency.

It should also be noted that a review of the current provisions contained in § 24-11-413 does not indicate any subsection (c).  I brought this fact, as well as another omission contained in the same section of code, to the attention of the Arkansas Code Revision Commission who thanked me for pointing out this unknown fact and stated that both omissions were created by the publisher and would be corrected in the 2011 publication of the Arkansas Code.

 

1991
City Resolution #8151 — Less than two (2) years after the above enactment, the issue of providing adequate funding for our police pension fund was brought to the attention of the Little Rock City Board of Directors in 1991 in an effort to obtain additional funding for our police pension fund that had, by that time, become $2.5 million underfunded. While the City Board did not provide any additional funding to our pension fund at that time, they did pass Resolution #8151 that, among other things, stated in § 2 of that Resolution:

That the Board of Directors intends to make available any funds needed to enable the Fund to meet its benefit obligations should the Fund be unable to do so by appropriation in the annual budget for the City of Little Rock Arkansas or by supplemental appropriation if necessary.

While the above language contained in that Resolution may have been somewhat comforting to our membership in 1991, in the twenty (20) years since that Resolution there has been no “appropriation” of any city funds to assist our pension fund in meeting our benefit obligations thus we continue to be seriously underfunded and have gone from being $2.5 million underfunded in 1991 to over $76.8 million today, as well as now being classified as a “projected insolvent fund” by the Arkansas Pension Review Board.

 

2009
PRB Designation of Projected Insolvent Fund — On December 10, 2009, in a letter from the Executive Director of the Arkansas Pension Review Board, our police pension fund was declared to be a “projected insolvent fund” with an unfunded actuarial accrued liability of $76,803,503 in accordance with the provisions found in A.C.A. § 24-11-208.  While that letter proclaimed us to be a “projected insolvent fund,” the letter was never received by our police pension board because the City of Little Rock claimed they never received it.  While that claim may be true, the PRB had sent several other such notifications to other pension boards around our State who did receive them.  Instead, our Police Pension Board member Lee Harrod noticed the fund’s designation over six (6) months later buried in a report from the PRB and, after making inquiry concerning that matter to the PRB, we subsequently received the letter and brought this issue before our Board in the July 2010 pension board meeting and later obtained a new procedure at the PRB requiring that such letters be sent through certified mail.

During subsequent police pension board meetings on the topic of our underfunded liability, the PRB Actuary recently told our police pension board that it would take an infusion of approximately $750,000 to $800,000 per year to bring our fund back to an actuarial sound position.  While that figure represents an improvement in our police pension funds condition of approximately $600,000 per year from the $1.4 million per year the PRB claimed we needed in 1987 due only to the excellent investments and efforts by our past pension board members, the sad reality is that these amounts of underfunding can no longer be ignored by the City of Little Rock.

 

Conclusion
What all the above information clearly depicts is that, for the first sixty-two (62) years since the beginning of the Little Rock Police Pension fund in 1921 until 1983 after our pension plan became a “dying plan” and was unable to accept new members, the City of Little Rock did not pay anything to our fund other than those amounts authorized under State law and some of the City’s exemptions from State law appear to be in violation of the 14^th Amendment to the Arkansas State Constitution.  Even when the law appears to be clear, the City’s constant refusal to pay our fund those amounts required under law until we force their compliance through court action, speaks volumes about the City’s intentions with regard to our pension fund.  Since 1983, the City has made empty promises to fund our plan and has fought every attempt by our pension Board to obtain any increase in funding necessary for our fund and is even, once again, refusing to pay the total amounts required by law for the probation fees owed our fund as outlined in Attorney General’s Opinion No. 2008-151 and seems quite willing to await court action by our fund to force their full payment of that amount.  For those reasons, there is little wonder that the amounts authorized for collection by our fund under both A.S.A. § 19-1802 and A.C.A. § 24-11-413 have NEVER been sufficient to pay the long-term benefits of our pension fund’s membership.

While the State Legislature may have some blame for allowing the “special or local” legislation that was determined to be unconstitutional by voter initiated Amendment 14 to the Arkansas State Constitution that resulted in the City of Little Rock’s exemption from State laws that would have benefited our police pension plan, the obvious influence exerted by the City of Little Rock at the State Legislature to obtain those exemptions is without question and the City’s long standing determination to ignore its requirement to properly fund its police pension plan is clear.  Therefore, the ultimate blame for the fact that our pension fund is and always has been seriously underfunded for all of its existence must fall squarely and only on the backs of the past leaders of city government at Little Rock City Hall.

Currently, our police pension board is again attempting to obtain financial assistance for our police pension fund from the present leaders of Little Rock city government who are not responsible for our past problems.  While I must admit that the above facts from the past ninety (90) years do not reflect very favorably upon the City of Little Rock as an employer and as the governing body of our State’s capital city that causes the dampening of our spirits in that effort, we are somewhat encouraged by the City assigning a member of their City Board of Directors to our Police Pension Fund Committee that will attempt to obtain a small portion of the upcoming sales tax initiative and other additional measures to improve the funding status of our police pension fund.  Only time will tell if those efforts will be successful; however, the placement of our funding issue as the last sentence on the last page of the City’s 62 page “Priority Needs” assessment for the upcoming Sales Tax initiative isn’t very encouraging to me but, at least, we are mentioned along with two other priorities also included in that last sentence.

Finally, if the City of Little Rock refuses or cannot find the additional funding for the proper support of our police pension fund in the very near future, the Little Rock Police Pension Fund will have little choice, in my opinion, other than to aggressively pursue legal action in Federal or State Court to enforce the terms of our employment contract with the City of Little Rock as the $76.8 million dollars our fund is currently underfunded is beyond the pale of responsible city government and there will be no hope of finally getting the City to honor its contract with our membership before our fund eventually runs out of money.

 

 

Event:	1947 A.S.A. §:	1987 A.C.A. §:	Legislative Act
LR’s 1st Police Pension Law (1921)			343 of 1921
LR’s 2nd Police Pension Law (1929)			126 of 1929
1937 Amendment to 1929 Act			210 of 1937
Other Cities 1937 Pension Law (not LR)	19-1820	24-11-401 et seq	250 of 1937
1939 Amendment to 1937 Act			11 of 1939
1953 Amendment to 1937 Act			86 of 1953
1957 Amendment to 1937 Act			415 of 1957
LR’s 3rd Pension Law (1939)			25 of 1939
Prop. Tax Assessment 1 mil(LR City Ordnance # 6,175.)	19-1707	24-11-404	16 of 1941
LR’s 4th Pension Law (1941)	19-1901 et seq		67 of 1941
1947 Amendment to 1941 Act			226 of 1947
1953 Amendment to 1941 Act			281 of 1953
LR subject to State Pension Law Act 250 of 1937	NA	24-11-401 et seq	206 of 1959
Officer Contribution paid to fund(Began at 1% to now 6%)	19-1802	24-11-413(a)(6)	25 of 1939 206 of 1959
LR exempted from paying 10% of fines and forfeitures to fund	19-1802.1	24-11-414	206 of 1959
Officer Absence or Loss of Time	19-1802	24-11-413(a)(3)	126 of 1929 206 of 1959
Officer Discipline paid to fund(Not paid by City until 1987)	19-1802	24-11-413(a)(1)	343 of 1921 206 of 1959
Sale of Confiscated Goods(City deducts value of handguns)	19-1802.2	24-11-415	745 of 1977
City Matching Contribution(1982=3% +1%@yr to 1985=6%)	19-1802	24-11-413(b)*	486 of 1981
New officers go to LOPFI(Starting Jan 1, 1983)	12-3801 et seq	24-10-101 et seq	364 of 1981
PRB Created			381 of 1983
Police membership on Board increased from 1-3 positions	19-1803	24-11-405	390 of 1985
Exemption of LR paying 10% of Fines & Forfeitures Repealed	19-1802.1	24-11-414	690 of 1987
Appropriation to pension fund authorized for Cities	NA	24-11-413(c)*	187 of 1989
1991 LR City Resolution # 8,151 concerning appropriation for police pension fund.	NA	NA	NA
PRB Projected Insolvent notification	NA	NA	NA
LR “Priority Needs” for Sales Tax	NA	NA	NA

*Mistaken codification by Publisher will be corrected by Code Revision Commission in 2011 printing.