My Observations of the September 8th Police Pension Board Meeting

In my opinion, the most important topic of discussion at our last Pension Board meeting was a problem that was inadvertently created by an August 3^rd email sent to all police pension board members by City Treasurer Sara Lenehan who is also the Treasurer of our pension board.  That email stated her intent to refuse the payment of any funds to advertise our half cent sales tax proposal that had previously been approved by our Pension Board and by our pension fund attorney, until she received yet another opinion on that matter from the City Attorney.  The reason I say that the problem was “inadvertently created” is because I do not believe that even Ms. Lenehan was aware that her email would create a problem that would NOT involve her simple refusal to honor that particular expenditure but would involve a much more far reaching issue that forms the basis of my concern in this matter.

Unfortunately, in the past two pension board meetings, that matter has not been resolved or, in my opinion, even adequately discussed because our Pension Board seems content to simply await the results of the City Attorney’s opinion on this matter that is now legally moot.  I believe the reason for their contented approach is due primarily to my past failure to properly explain my concerns.  For that failure, I apologize to our membership and, because I write much better than I speak which really isn’t saying much about either ability, I shall now attempt to better explain my concerns for the review of my fellow pension board members as well as the review of our pension membership.  While the following hypothetical example in explanation of that issue may appear to be an overly simplistic approach, I believe it is necessary to properly explain my concerns in this matter.

Let’s say that a young married couple opens a joint checking account at a local bank where they deposit their monthly paychecks.  After building up a considerable reserve in that account, they go to a store and decide to purchase a new television for their mutual enjoyment.  To make absolutely certain they have enough funds in their bank account for that purchase, they first call that bank to explain their desire to purchase a new television and request to know the exact balance contained in their account.  The bank teller informs them that, while there are certainly enough funds in the account to cover that purchase, the bank will not honor any check they may write to that store because the bank does not believe the purchase of a new television is an appropriate use of their funds.  What could the young couple do about that problem?

In the above case, the bank’s stated refusal to honor the young couple’s decision to purchase a new television may have actually been made by the bank in their sincere belief that it was in the young couple’s best interest and that fact alone would certainly not prevent the young couple from continuing to bank at that institution.  However, while that young couple could obviously live without a new television, they may decide that the problem created by the bank’s interference in that decision has much more far reaching implications than their simple refusal to allow the purchase of that television.  In that instance, they may decide that, because of their inability to determine just when or what the bank may determine to be an appropriate disbursement of their funds, they must now change banks to find one where such decisions are truly theirs alone to make.  It is my belief that this example accurately depicts the very same problem our pension board now faces as a result of Ms. Lenehan’s August 3^rd email.

Just as the young couple in that example could easily survive without a new television, our pension fund can also easily survive without the funds our pension board attempted to reserve for the purchase of advertising, especially when one considers the fact that we never intended to actually spend any such funds in the first place.  However, just like the example above, our fund may now also consider the much more far reaching implications of the City Treasurer’s interference with that decision because we cannot know just when or what may trigger a similar response in the future and it does not appear to be advisable that we simply ignore that fact or hope that such circumstances will not reoccur when she also controls the issuance of our pension benefit checks.

While some have tried to convince me that those are dissimilar issues, they do not appear to be dissimilar at all to me and no one has been able to explain their logic or provide any valid reasons that would lead to such a belief.  Both instances involve the disbursement of our pension funds from the same account that currently appears to be only under the ultimate control of the City Treasurer and the City Attorney rather than our pension board.  Under those circumstances, if the City Treasurer should decide to withhold all or any portion of our pension benefits at any time in the future for whatever reasons, she could again ask for a City Attorney’s opinion on that decision and our fund members would have to rely only upon whatever benefits she may provide, if any, until the City Attorney makes his decision or until the Pension Board obtains a court order either of which could take months or perhaps years to achieve.  I for one believe that either proposition is untenable and that is exactly the cause of my serious concern in this matter.

In an effort to resolve that matter, I examined the provisions of Arkansas pension law found at A.C.A. § 24-11-410(c) that states, in pertinent part:

(c)(1) In those policemen’s pension and relief funds in which assets exceed one hundred thousand dollars ($100,000), the board may employ:

(B) A trustee or custodian to hold the assets.

In the very next section of that law entitled “Payments,” I found subsection (c) of A.C.A. § 24-11-411 to state:

(c) In a policemen’s pension and relief fund in which the board has employed a trustee or custodian under § 24-11-410(c) to hold the assets, the trustee or custodian may pay benefits to persons and beneficiaries entitled to benefits under the fund as directed by the board.  [Emphasis added]

After my examination of those sections of Arkansas pension law on the day before our pension board meeting, I called the State PRB Executive Director David Clark and asked him if my interpretation of those sections of law was correct in that they appeared to give our Board the authority to simply remove the City Treasurer from her duty to pay anything from our pension fund as well as negate the requirement to have the City Manager sign our checks by the simple appointment of a “custodian” for that account and he replied that my interpretation was correct.  I then called a Trust Officer with the Metropolitan National Bank, where our administrative checking account is currently located, and requested information on their provision of such “custodial services” for that account.  I was told that a fee of “forty-five basis points” would be assessed by the Bank to provide those services, which meant a fee of $58 per month based on the then current monthly balance in our account, but he also stressed that such fees and the other terms of such services were negotiable and they would be happy to enter into negotiation of that amount and those terms should our fund chose to seek such services.

Being very pleased that I had possibly found a solution to my concerns that would eliminate the possibility of any future interference by City officials in the disbursement of our pension funds just a few hours before our next pension board meeting, I decided that rather than try to call the other four elected members of our pension board individually to explain my proposed solution to each of them that evening, I would just wait until the next morning and explain it to all of them at once during our board meeting and simply made a few notes on my agenda so that I would not forget what I needed to say during that meeting.

During the next day’s pension board meeting, I officiated at that meeting because our Chairman was busy gathering last minute support for the City’s sales tax initiative.  When this issue came up on our agenda, our Board first listened to our attorney who claimed he had no further information to report on that matter and then I attempted to explain my findings.  After that attempt, I made a motion that I and any other member of our Board be authorized to conduct negotiations with Metropolitan National Bank to establish such a custodial agreement and report the results of those negotiations back to our Board during our next Pension Board meeting for their final determination.  While my motion was seconded by Mr. Don Wood, it soon became apparent during the subsequent discussion of that motion that there was no further support for that idea from the other Board members so, in utter frustration and disbelief, I then withdrew my motion and proceeded onto other pension business until our adjournment.

Finally, as I implied at the beginning of this article, I believe the lack of support for my motion was, perhaps, due only to my inability to properly explain my concerns about this matter to my fellow pension board members.  Now, it is my hope that I have better explained those concerns for the review and consideration of my fellow board members as well as our membership.  While some may chose to ignore those concerns as the ramblings of one who clearly distrusts city government, they may now do so at their own peril because I have at least now voiced those concerns for your review.

NOTE: You can listen to the first 30 minutes of the pension meeting audio to determine for yourself exactly what happened in that matter.  The City’s audio of that meeting begins just after this issue came up on our Agenda because the audio recorder was started late.

Listen to the audio of the September Police Pension Board Meeting HERE

View the City Treasurer’s email to the Police Pension Board members HERE

View the two sections of Arkansas Pension Law mentioned above HERE