04-14-2003,s
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AGENDA
Board of Trustees of the Employees' Pension Fund
Aprii 14, 2003 — 1:00 P.M.
1 - Call to Order
2- Approval of Minutes: 03/17/03
3- Request for acceptance into membership: Amy Mobley, Bennett Elbo, Edward
O'Neal, Jonathan Phillips, Bryan Elbell, Vance Peel, Marlene Torres, Judith
LaCosse, Rebecca Wikerson, Lana Beck, Brandi Portalatin, Thomas Jensen, Emilio
Maldonado, Aleix Wells, Matthew McCombs, Michelle Friedline, and Rafael Salazar
4- Regular Pension(s) to be granted: Francis Mays, Eddie Lloyd, Danny West, Robert
McKenna, and Jerry Lovett
5— Approve the contract with Northern Trust (lending agent) to provide securities
lending services for the Employee's Pension Plan.
6— Approve motion to give Margie Simmons, Jay Ravins and Steve Moskun the
authority to authorize the transfer of funds with Northern Trust, the plan custodian.
7 - Other Business
8 - Adjourn
Meeting Date: y " � � � �'3
TO:
FROM:
SUBJECT:
DATE:
Pension Trustees
Approved by Trustees:
CITY OF CLEARWATER
EMPLOYEES' PENSION PLAN/
PENSION ADVISORY COMMITTEE
Pension Advisory Committee
Recommendation for Acceptance into Pension Plan
March 13, 2003
3�
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
"tirst class risk". The employment of these indlvlduals brings the number of FTE's as oi this date to
1744.01 of 1844.9 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.
Name. Job. Class. 8 Dept./Div.
Amy Mobley, Police Communications Operator/Potice
Bennett Elbo, Traf(ic Operatlons Engineering/Engineering
Edward O'Neal, Solid Waste Worlcer, General Services/Solid Waste
Jonathan Phillips,Solid Waste Worker,General Services/Solid Waste
Bryan Elbell, Solid Waste Worker, General Services/Solid Waste
Vance Peel, Mechanic 11, General Services/Solid Waste
Marlene Torres, Custodial Worker, Gene�al Services/Solid Waste
Judith LaCosse, Staff Assistant, O(ficial Records 8 Legisletive Seroices
Rebecca Wilkerson, PersonneUPayroll Technician, Parks 8� Recreation
Lana Beck, TV Production Specialist, Public Communications
Brandi Portalatin, Parks Service Technician I/Parks & Recreation
Thomas Jensen, Senlor PlannedPlanning
Emflfo Maldonado, Solid Waste WorkedSolid Waste/General Services
Aleix Wells, Parics Service Technician I/Perks & Recreation
Matthow McCombs, Mechan(c II/Sol(d Waste/General Services
Michelle Friedline, Recreation Programmer/Parks 8 Recreation
Rafael Salazar, Police RecruiVPolice
Hire Date
8/10/02
2/3/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/24/03
2/24/03
2/24/03
2/24�03
2/24/03
12/16/02
Pension Elig.
Date
12/13/02 '
2/3/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/10/03
2/24/03
2/24/03
2/24/03
2/24/03
2/24/03
12/16/02
• originally hired as part-time on 8/10/02; status changed to full-time and pension eligible as of 12/13/02
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SUBJECi'/RECOMMENDATION:
Trustees of the
Employees' Pension Plan
Agenda Cover
Meinorandum
Final Agenda Item # �
Meeting Date; 4/14/03
Francis Moys, Gas Department; Eddie Lloyd, Public Utilities Department; Danny West, Police
Deparfment; Robert McKenna, Fire Deparfment; and Jerry Lovett, Fire Department, be granted
regular pensions under Section(s) 2.393 and 2,397 of the Employees' Pension Plan as approved by
the Pension Advisory Committee.
❑ and that the appropriate officials be authorized io execute same.
SUMMARY:
Francis Mays, Gas Specialist, Gas Department, was employed by the City on November 19, 1969,
and his pension service credit is effective on May 19, 1970, His pension will be effective March l,
2003,
Based on an average salary of approximately S43,992 per year over the past five years, the formula
for computing reguiar pensions, and Mr, Mays' selection of the 50% Joint & Survivor Annuity, this
pension will approximate $41,064 annuaily,
Eddie Lloyd, Pubiic Utilities Technician I1, Public Utilities Deportment, was employed by the City on
October 14, 1971, and his pension service credit is effective on Aprii 14, 1972, His pension will be
effective March 1, 2003.
Based on an average salary of approximately S35,434 per year over the past five years, the formula
for computing regular pensions, and Mr, Lloyd's selection of the Joint & Survivor Annuity, this pension
will approximate $30,173 annually.
Danny West, Police Sergeont, Police Department, was empioyed by the City on May 16, 1983, and
his pension service credit is effective on that date. His pension will be effective April 1, 2003.
Based on an average salary of approximately S65,071 per year over the past five years, the formula
for computing regular pensions, and Mr. West's selection of the 1 QO�o !oint & Survivor Annuity, this
pension will approximate $35,001 annualiy.
Reviewed by: Orig(nating Dept: Cosfs
Legal �q Info Tech Nq Debble Ford/Huma Total
Resources
Budget NA Pubiic NA User Dept. Funding Source:
Works
Purchasfng NA DCM/ ��A���' Current Fiscai Yeor
Improvoment
ACM
Risk Mgmt NA Other NA ANachme�ts ��'{O'�"9
orr,�.
Appropriafion Cods:
SubmiHed by: ❑ None
Ci Ma� er
Printed on recvcled ooper Rev.
2/98
Regular Pensions
Page 2
April 14, 2003
Robert McKenna, Firefighter, Fire Depa�tment, was employeo by the City on October 1 l, 1976,
and his pension service credit is effective on that date, His pension will be effective March l,
2003.
Based on an average salary of approximately 544,865 per year over the past �ive years, the
formu�a for computing regular pensions, and Mr. McKenna's selection of the Joint & Life
Annuity, this pension will approximate S32,493 annually.
Jerry Lovett, Firefighter, Fire Deportment, was employed by the City on January 10, 1983, and
his pension service credit is effective on that date. His pension will be effective March 1, 2003.
Based on an average salary of approximately 545,527 per year over the past five years, the
formula for computing regular pensions, and Mr. Lovett's selection of the 66 2/3% Joint &
Survivor Annuity, this pension will approximate S25,541 annually,
These pensions were approved by the Pension Advisory Committee on March 13, 2003.
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 thirty years of credited
service, or has reached age 65 and cornpieted ten years of credited service. Section 2.393
also (p) provides for normal retirement eligibility when a participant has compieted twenty
years of credited servic� in a type of employment described as "hazardous duty" and further
specifically defines servi��e as a Police Sergeant and Firefighter as meeting the hazardous duty
criteria. Mr. Mays and Mr. Lloyd qualify under the 30 years of service criteria. Mr. McKenna
and Mr. Lovett qualify under the hazardous duty criterla.
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SUBJECT/RECOMMENDATION:
Employee's Pension Plan
Trustee's
Agenda Cover Mernorandum
Worksession Item #;
Final Agenda Item #
Meeting Date:
S
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Approve the contract with Northern Trust (lending agent) to provide securities lending services for the
Employee's Pension Plan,
� and that lhe appropriate ofiicials be authorized to execute same.
SUMMARY:
• Securities lending is the process where the owner of a security (stock or bonds) loans the security to a
third party. The borrower benefits because they get the use of the security. The owner of the security
benefits through extra income. The lender/owner of the security retains all the economic benefits of
the security except proxy voting.
• Securities lending has a long history and very definitive regulations. For example, statutes give the
lender the right to recall a security at anytime. There are regulations that govern the behavior of all
parties involved.
• Securities lending is transparent to our money manager and will have no effect on them or their
decision to buy or sell a security.
• Organizations borrow securities for three main reasons:
1. To cover a settlement failure
2. To cover a short trading position
3. In a proxy fight
• When securities are loaned the borrower provides collateral to the lending agent with a value of 102%
of the market value of the security being loaned. On a daily basis the collateral is market to the market
value of the security being loaned and adjusted if needed. The vast majority of the time the collateral is
in cash.
• The lending agent (Northern Trust) invests the collateral at a rate higher than they are paying the
borrower. The additional earnings are split 70% Clearwater 30% Northern Trust.
Reviewed by:
Legal LD
Budget N/A
Purch N/A
Risk Mgmt N/A
Info Srvc WA
Public Works N/A
DCM/ACM
Other
Submitted by:
City Manager
Printed on recycled paper
2/98
Originating De t:
Finance ..� SMoskun
User Dept.
Finence � �
Attachments
❑ None
Costs
Total None
Current
FY
Aoorouriatlon Code:
Funding Source:
CI
OP
Other
Rev.
• The following are the steps involved in securities lending between the lending agent, (Northern Trust)
and the securities bower. These steps are listed in order of occurrence.
1. A loan is initiated
2. Terms are negotiated; interest rate the borrower will receive for the collateral
3. Lending Agent receives the collateral
a. 95% time in cash
b. 102% of the market value of the security being lent
4. Security it transferred to the borrower
5. Daily mark to market on the collateral, constant 102% value
6. The security is returned to the Lending Agent
7. The collateral is returned to the borrower
• With securities lending we have three types of risk.
Borrower Default - The borrower fails to return the security on demand because of financial
difficulty or bankruptcy. Our protection is the collateral of 102% and Northern Trust will hold us
harmless in the case of a borrower default.
Operational Risk — Northern Trust fails to mark the collateral to 102% on a daily basis or fails to
collect income due. Northern Trust will hold us harmless in these cases.
Collateral Investment Risk -- Failure to earn sufficient earnings on the collateral to cover the interest
earned by the borrower. We will invest the collateral through Northern Trust in specific
investment options provided by Northern Trust. When the terms of a security loan are being
negotiated by Northern Trust they will know where the collateral is being invested and at what
rate the collateral will earn,
• As part of the custodian RFQ process we asked the three finalists to provide us an estimate of what our
portfolio (our share of the earnings) would have earned over the past year.
Northern Trust $132t410
State Street $68,500
Bank of New York $83,354
• In addition to the above earnings, Northern Trust will reduce the custodial fee by $25,000, if securities
lending is approved.
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SUBJECT/RECOMMENDATION:
Employee's Pension Plan
Trustee's
Agenda Cover Memorandum
Worksession ltem #:
Final Agenda flem #
C�
Meeiing Date: i-� � r.� - r_ ��,
Designate Margie Simmons, Jay Ravins, and Steven Moskun as having the ability to authorize the
transfer of funds by Northern Trust, the plan custodian,
� and that the appropriate o�cials be authorized to execute same.
SUMMARY:
• Northern Trust, the plan custodian, has requested that the Trustees designate individuals who have
the ability to authorize Northern Trust to transfer funds.
• The transfer of funds occurs when managers are hired or terminated, the portfolio is being
rebalanced or when funds are needed to pay obligatio�s of the plan.
• As an internal control function, two of the three individuals wiil have to approve a transfer.
• The transfer of plan assets to Northern Trust occurred on March 3"�.
Rev(ewed by: Orlginating Dept: Costs
Legal �p Info Snrc �p Finance SMoskun Total None
Budget /�J t� Public Works N/p User Dept. Funding Source:
Purch WA DCM/ACM Flnance �' Current CI
FY
Risk WA Other Attachmertts �P
Mgmt
Other
Subm(tted by:
City Manayer 0 None A ro riation Code:
fiev. 2/98
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99w�h�E��
SUBJECT/RECOMMENDATION:
Employee's Pension Plan
Trustee's
Agenda Cover Memorandum
Worksession Item #:
Final Agenda {tem #
Meeting Date:
Approve motion to give Margie Simmons, Jay Ravins ,and Steven Moskun the authority to authorize
the transfer of funds with Northern Trust, the plan custodian,
� and that the appropriate of(icials be authorized to execute same.
SUMMARY:
• Northern Trust, the plan custodian, has requested that the Trustees authorize by motion individuals
who have the authority to transfer funds with Northern Trust.
• The transfer of funds would occur when new managers are being hired, manager terminations,
rebalancing the portfolio or when funds are need to pay obligations of the plan.
• As an internal contro{ function, two of the three individuals wi11 have to approve a transfer.
• The transfer of plan assets to Northern Trust occurred on March 3�d
Reviewed by: Originating Dept: Costs
Legal �p Info Srvc wq Finance SMoskun Total None
Budget Publfc Works WA User Dept. Fundlnq Source:
Purch WA DCM/ACM Ftnance �, � Current CI
FY
Risk N/A Other Attschments OP
M�mt
Other
Submittsd by:
City Manager � No�e A �o rlatlon Code:
Rev. ?/98
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