07-15-2002AGENDA
PENSION
TRUSTEES
ACTION AGENDA
Board of Trustees of the Employees' Pension Fund
July 15, 2002 - 9:00 a.m.
Call to Order - 9:05 a.m.
2. Approval of Minutes: 06/17/02 - Approved
3. Request for acceptance into membership: Delaney Mulholland, Joanne
Anne Fetuuaho, Itay Seigel, Theresa Irby, Jim Halios, Joey Sprecher,
Juan Santos, Brent Peters, Alex Rakita, Simon George, Christopher
Holcomb, John Klinefelter, Anthony Gomillion, Kevin White. - Approved
4. Regular Pension to be granted: Benjamin Sturgis - Approved
5. Pension to be vested: Donald Beckman - Approved
Bunton, Mary
Debey David,
Vamis, Daniel
6. Authorize staff to conduct a search for a "small capitalization value equity" style
manager for the Employees Pension Fund, authorize Callan & Associates to assist with
the search, authorize the cost of the search, including staff travel of approximately
$3,500 and Callan's fee of $25,000 to be paid from the pension fund. - Approved
7. Approve an increase in the amoun
PriceWaterhouseCoopers, LLP for actuary
services by $20,000 for a not-to-exceed cost
ending December 31, 2004. - Approved
t authorized to be spent with
and other related pension consulting
of $144,000 for the three-year period
8. Other Business - None
9. Adjourn - 9:17 a.m.
07-15-02 Pension Agenda
71?' 3
Meeting Date: _ _ j ? ,
Approved by Trustees:
CITY OF CLEARWATER
EMPLOYEES' PENSION PLAN/
PENSION ADVISORY COMMITTEE
TO: Pension Trustees
FROM: Pension Advisory Committee
SUBJECT: Recommendation for Acceptance into Pension Plan
DATE: June 13, 2002
As Trustees of the City of Clearwater Employees' Pension Fund, you are hereby notified that the
employee(s) listed below have been duly examined by a local physician and each has been designated as a
"first class risk". The employment of these individuals brings the number of FTE's as of this date to
1709.35 of 1834.7 budgeted positions (including the City Commission).
These employees are eligible for pension membership as noted in the Pension Eligibility Date column
below, and it is the recommendation of the Pension Advisory Committee that they be accepted into
membership.
Pension Elig.
Name. Job. Class, & Dept./Div. Hire Date Date
Delaney Mulholland, Gas Technician 1/Gas 4/29/02 4/29/02
Joanne Bunton, Library Assistant/Library 4/23/01 4/29/02
Mary Anne Fetuuaho, Library Assistant/Library 7/30/01 4/20/02 "
Itay Seigel, Utilities Chemist/Public Utilities 5/6/02 5/6/02
Theresa Irby, Police Communications Operator Trainee/ Police 5/6/02 5/6/02
Jim Hatios, Recreation Program Support Techn./Parks & Recreation 5/6/02 5/6/02
Joey Sprecher, Accounting Clerk/Gas 5/20/02 5/20/02
Debey David, Police Communications Operator/Police 5/6/02 5/6/02
Juan Santos, TV Production Specialist/Public Communications 5/20/02 5/20/02
Brent Peters, Systems Programmer/Information Technology 5/20/02 5/20/02
Alex Rakita, Solid Waste Worker/Solid Waste 5/20/02 5/20/02
Simon George, Electro-Mechanical TechJPublic Utilities 5/20/02 5/20/02
Christopher Varnis, Maintenance Worker II/Building & Maintenance 5/18/02 5/18/02
Daniel Holcomb, Solid Waste Worker/Solid Waste 5120102 5/20/02
John Klinefelter, Firefighter/Fire 6/3/02 6/3/02
Anthony Gomillion, Firefighter/Fire 6/3/02 6/3/02
Kevin White, Firefighter/Fire 6/3/02 6/3/02
originally hired as permanent-part-time; promoted to full-time and pension eligible as of 4/29/02
•' originally hired as permanent part-time; status changed to full-time and pension eligible as of 4/20/02
IAVM, C?m
P nsion A oryo itte air
' f= Trustees of the
_ o Final Agenda Item #
Employees' Pension Plan 7/15/02
Agenda Cover Meeting Date:
Memorandum
SUBJECT/RECOMMENDATION:
Benjamin Stugis, Police Department: be granted a regular pension under Section(s) 2.393 and 2.397
of the Employees' Pension Plan as approved by the Pension Advisory Committee.
? and That the aopropriate officials be authorized to execute same.
SUMMARY:
Benjamin Sturgis, Police Officer, Police Department, was employed by the City on March 27, 1974,
and his pension service credit is effective on October 7, 1974. His pension will be effective June 1,
2002.
Based on an average salary of approximately $54,526 per year over the past five years, the formula
for computing regular pensions, and Mr. Sturgis' selection of the 100° Joint & Survivor Annuity, this
pension will approximate $40,493 annually.
This pension was approved by the Pension Advisory Committee on June 13, 2002. Section 2.393 (p)
provides for normal retirement eligibility when a participant has completed twenty years of credited
service in a type of employment described as "hazardous duty" and further specifically defines
service as a Police Officer as meeting the hazardous duty criteria. Mr. Sturgis qualifies under the
hazardous duty criteria.
Reviewed by: Originating Dept: Costs
Legal NA Info Tech NA Debbie Ford/Human Total
Resources
Budget NA Public Works NA User Dept. Funding Source:
Purchosin NA DCM/ACM captor Current Fiscal Year
g improvement
Risk NA Other NA Attachments Operating
Mg
mt
t'1 Orr„
Appropriation Code:
Submitted by: ? None
City Manager
Printed on recycled paper Rev.
2/98
UATEO??
AIM. SUBJECT/RECOMMENDATION:
Trustees of the Final Agenda Item #
Employees' Pension Plan 7/15/02
Meeting Date:
Agenda Cover
Memorandum
Donald Beckman, Solid Waste/General Services Department, be allowed to vest his pension under
Section(s) 2.397 and 2.398 of the Employees' Pension Plan as approved by the Pension Advisory
Committee.
? and that the appropriate officials be authorized to execute same.
SUMMARY:
Donald Beckman, Air Conditioning Technician, Solid Waste/General Services Department, was
employed by the City on January 6, 1986. Mr. Beckman terminated from City employment on May
31, 2002.
The Employees' Pension Plan provides that should an employee cease to be an employee of the City
of Clearwater after completing ten or more years of creditable service (pension participation), then
such employee shall acquire a vested interest in the retirement benefits. Vested pension payments
commence on the first of the month following the month in which the employee normally would
have been eligible for retirement.
Section 2.393 (p) provides for normal retirement eligibility when a participant has reached age 55
and completed twenty years of credited service, has completed 30 years of credited service, or has
reached age 65 and completed ten years of credited service. Mr. Beckman would have completed
twenty years of service and reached age 55 on January 6, 2006. His pension will be effective
February 1, 2006. This pension was approved by the Pension Advisory Committee on June 13, 2002.
Reviewed by: Originating Dept: Costs
Legal NA Info Tech NA Debbie Ford/Human Total
Resources
Budget NA Public Works NA User Dept. Funding Source:
Purchasin NA DCM/ACM Captal Current Fiscal Year
9 Improvomonl
Risk NA Other NA Attachments operating
Mg
mt
Other
r
r Appropriation Code:
Submitted by: 0 None
CI Manager
Prin}ad nn racve lad nnnar 0-
2/98 -
EAL"• ?.
Employee's Pension Plan
Trustee's
Agenda Cover Memorandum
Worksession Item #:
Final Agenda Item #
Meeting Date:
SUBJECT/RECOMMENDATION:
Authorize staff to conduct a search for a "small capitalization value equity" style manager for the
Employees Pension Fund, authorize Callan & Associates to assist with the search, authorize the cost
of the search, including staff travel of approximately $3,500 and Callan's fee of $25,000 to be paid
from the pension fund,
0 and that the appropriate officials be authorized to execute same.
SUMMARY:
For the 12 month period ending March 31, 2002, the Employees Pension Plan had a rate of return of
2.14% Vs a custom benchmark of 2.08%.
On the equity side, common stocks are defined by the market size of a company into three main
categories. The market size being defined as the numbeps of shares of common stock multiplied by
the market price per share. Generally defined large capitalization (cap) stocks are those with a market
value of $15 billion and higher. Mid cap stocks with a value of $1 to $15 billion. Small cap stock has a
market value under $1 billion.
Over time the sector with the highest historical rate of return is the small cap value sector. One of the
reasons for this is that these stocks are generally not followed or understood by "Wall Street". When
Wall Street starts to follow these stocks the value of the stock tends to increase. Most companies start
out as smaller companies and become larger. Finding these small cap companies requires more work
and research than finding larger companies and thus the fees tend to be higher. However in this case,
the higher fees result in a higher rate of return.
At March 31, 2002 the plan had investments with a market value of $443.8 million. Three breakdowns
of the investment styles are as follows:
Domestic Large Cap Value 23% Large Cap Stocks 42%
Domestic Large Cap Growth 11% Mid Cap Stocks 18%
Domestic Mid Cap Growth 18% Fixed Income 40%
International Large Value 4% Total 100%
International Large Growth 4%
Fixed Income 40% Value Stocks 27%
Total 100% Growth Stocks 33%
Fixed income 40%
Total 100%
Reviewed by: Originating Dept: ulryl j Costs
Legal N/A Info Srvc NSA SMoskun Finance Total 28,500
Budget , Public Works User Dept. Funding Source:
Purchasing `NSA DCM/ACM Finance Current FY 28,500 CI
Risk Mgmt N/A Other Attachments OP
Other 28,500
Submitted by: 646-07410-547200-585-000
City Manager Q4?y None Appropriation Code:646-07410-530100-585
• The cost of committee member travel to investigate/research the top ranked firm (s) is estimated at
$3,500. The actual amount will be affected by the location of the investment manager(s) and the
number of firms that need to be researched.
• The Investment Committee and the plan's advisors recommend the addition of a "small cap value "
style manager to better diversify the investments. This diversification will reduce the risk to the pension
plan while increasing the probability of a higher rate of return.
• The City contracts with Callan & Associates to provide performance measurement and to provide
information on investment managers.
• Callan's fee for the search will be $25,000. By directing investment trades through a selected broker,
the Bank of New York, pays Callan's fees. Our money managers use this selected broker only if they
cannot get better execution someplace else.
• Staff will bring back the results of the small cap value manager search in the fall.
??,?SEAL"ti?T
I, IL
'?- ,
Employee's Pension Plan
Trustee's
Agenda Cover
Memorandum
`.%:-..session ITern #.
Finci Agenda item #
-;rI/
Meeting Date: 7/15/02
SUBJECT/RECOMMENDATION: Approve an increase in the alllollllt authori/Cd to he Spent With
1'ricC\Vatcr11ouSCCoopcrS, 1-1-13 for actuary and other related pension consulting SCrVICCS by ;20,000 fur a not to
exceed cost of `,14-4.01)0 for the three-year period ending Dece11lher 3 1. 2004,
z ana That the appropriate officals be authcnzed to exec-*e same.
SUMMARY:
• PricC\VaterhouSCCoopCrs is the Employees' Pension Plan actuary. A contract %%aS apj)I'0 eel un \o?emher 13,
2001 fur i thrcc-warconti'acl ending, 120) 1/04 for it not to exceed cost of $04,000. This contract included:
1/1/0? actual')' Rcpurt 511),000
1/1/03 Actucu'y Report $10,500
1/1/0-4 Aetual'y Rcpurt "Q0.000
Actuary ASSU111ption Sltuly $20,000
IMISccllaniouS Consulting, `1;15,500
I'otal $94,000
• Ill addition, a rcvie\\, has been underway looking at some potential changes to the pension plan. On March 18. 1
30.000 Increase to tilt' Collll',ICt WITS appr0VCd h)' the trustees for it new not to excccd 11111011111 of $124,000. This
1111101.1111 was to conduct an actuarial analysiS on the cost of the followinI-
I alternates:
. DCfClTCL1 Retirement Option (DROP)
"Upt in" option for excluded enlployeCS
?. Purchase of prior pvernmental service credit
4. Designation of beneficiary and joint pensioner option
5. Nol'lllal retirement conversion bellellt
6. Disability prCSU111pti0n for "extra duty" ISSignmcntS
7. Reemployment option
S. 111c1'caSC to cost of livinU adjustnlenl ( 1.517 to Vi )
9. Increase to benefit formula multiplier (2.75'7(: to 3.517o)
10. Average final compenSiltloll c?Ilctllatioll (Ilioll 5 to high 3)
"1'he $30.000 included it lor11ml inlpact statement for the State for any ch-mi-es implemented.
Reviewed by:
Legal N/A Info Srvc N/A
Budget Vv(\b Public Works
1'wctiming . N/A DCM/ACM
Risk Mgmr N/A Other
Submitted by:
City Manager
Originating Dept: Costs
M. Simmons v f%4 Finance Total 20,000
User Dept.
Finance Current FY 20,000
Attachments
9 None
Funding Source:
CI
OP
Other X
xiation Code:646-07410-530100-585
• All of the above chances were analyzed and :?nnual Costs were provided. ;after these costs \yerC provided.
additional services related to potential pli?n changes were necessary including:
• Preparatloll of Cxllll)Its fol' $ 2.960
presentation including
DROP, normal form of
retirement. etc., review of
pi-cscntation. attelldance at
5/17 Clllployee llleetim,
• Additional option (non- $ 1,=00
vested to leave contributions
ill plall)
• Revising alternate 10 to 4% $ 1,200
salary increases rather than
6 rT
Sub-'I'ota1 $ 5,560
• Analyze IllUltlple $ 4,500
colllhlnallons of alternatives
Total To Date $10.060
• These additional costs combined with any additional analysis reduired prior to the resolution of potential plan
changes will exhaust the amount already approved for nliscellaneuus consuftins over the three-year conu-act. This
agenda item requests'Ul additional $20,000 to cover the $10,060 above plus any additional services needed directly
related to potential plan changes.