City Council addresses unpaid debt on past pension plans

Arkansas Local Police and Fire Retirement Systems (LOPFI) answered questions at a meeting with El Dorado City Council members Thursday.

David Clark, executive director of Local Police and Fire Pension System, spoke with council members concerning questions about the city’s local plan for retired police and firefighters Thursday.

One major concern was $12 million in unfunded liability in the two local plans.

The local plans were set up by the city in the 1960s and ’70s for local firefighters and police officers. More was paid out of the old plan than was put into it and it soon accrued a large debt. Thirty retired police officers and 45 retired firefighters are still drawing from these pensions.

Mayor Frank Hash said the issue is affecting many small towns across the state, not just El Dorado.

Once the local plans began to have debt in the early 1980s, the state required the city move into LOPFI, which would manage all police and fire pension plans from that point forward with the understanding that the city would slowly pay off the accrued debt.

Since then, the city has made the required yearly payments to LOPFI but has not made strides in paying down the initial debt.

Several council members said they had no idea about the debt. It was brought to the finance committee’s attention after surplus funds from both the police and firefighter pension funds had been added back to the city’s general reserves several years in a row.

“When I got to really studying it at the end of the year, there was money left (in that budget) and it would just roll back into our reserve account,” said Ward 2 Councilman Vance Williamson. “If I am understanding this, this is like a credit card bill and we’re just paying the $10 monthly minimum payment.”

Ward 4 Councilwoman Diane Hammond asked Clark’s opinion on how best to tackle the debt.

After a couple of ideas were thrown around by the group, the council decided to make aggressive payments on the local firefighter pension plan, which had the least amount of debt. Once that is paid off, the city will begin paying off the debt on the local police pension plan.