10/14/1996 (2)
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PENSION
. (TRUSTEES)
Board of Trustees of the Employees'
Pension Fund
. Minutes
Date
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ACTION AGENDA
. Board of Trustees of the Employees' Pension Fund
, October 14, 1996
1. Call to order 1. 1 :20 p.m.
2. Approval of Minutes 2. Approved as submitted.
of 9/30/96
3. Ratify timing of City's contribution 3. Ratified.
into the pension plan which is to
make contributions throughout the
first 6 months of its fiscal year for
the plan year that ends within that
fiscal year
4. (Cont. at 9/16/96) Recommended 4. Approved.
budget for Fiscal Year 1996-97 for
City of Clearwater Employees
Pension Plan; authorize
expenditure of funds for travel,
printing & binding, memberships,
f~ and training in amounts not to
'II exceed $2,300, $400, $3,000 and
$250 respectively
5. Other Business: 5. None.
6. Adjournment: 6. 1 :41 p.m.
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TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
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October 14, 1996
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The City Commission, meeting as the Board of Trustees of the Employees' Pension
Fund, met in regular session at City Hall, Monday, October 14, 1996 at 1 :20 P.M., with
the following members present:
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Rita Garvey
J. B. Johnson
Robert Clark
Ed Hooper
Karen Seel
Chairperson
Trustee
Trustee
Trustee
Trustee
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Also Present were:
Elizabeth M. Deptula
Pamela K. Akin
Cynthia E. Goudeau
City Manager
City Attorney
City Clerk
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ITEM #2 ~ Minutes:
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Trustee Hooper moved to approve the minutes of the September 30, 1996,
meeting. The motion was duly seconded and carried unanimously.
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ITEM #3 - Ratify timing of City' s contribution into the pension plan which is to mals~
contributions throughout the first 6 months of its fiscal year for the plan year that ends
within that fiscal year
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Each plan year for the Employees' Pension Plan begins January 1 and ends
December 31. After the end of each plan year, staff compiles data on investment activity,
pension benefits, employee salary and statistics, and financial position and submits such
data to the actuary, in February, for calculation of the required contribution. In April, the
actuary completes the calculation which is required by Florida Statutes for the current plan
year. As the City contribution is paid in October through March rather than the previous
January through December, the required calculation includes 7% interest.
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The employee contribution rate, set by ordinance at 8 % of payroll, is deducted from
employee paychecks ~hroughout the plan year. The ordinance specifies the City
contribution be the difference between the actuary calculated required contribution less the
employee share, but not less than 7% of payroll (6% for plan year 1996). If the required
contribution is greater than 15% of payroll (8% from employees and 7% from City) (14%
for plan year 1996), the additional contribution may be deducted from any available credit
balance. If the required contribution is less than 1 5 % of payroll, the excess will be added
to the available credit balance.
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mPF10.96
1
10/14/96
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If no credit balance is available, amounts due above the City's required 7%
contribution (6% for plan year 1996) will need to be Included In the City's contribution. As
the City's required contribution is not known until April or May of the current plan year, it
is difficult to budget for unexpected increases if the contribution is made in January
through December.
The current process provides the City with information regarding the required
contribution prior to the budget process, allowing the City to make educated decisions
regarding the amount to be contributed and to make plans to pay the required contribution.
Advantages of the City making its contribution sooner (January through December
of the Plan Year): 1} the City's minimum required contribution would be reduced by the
7% interest currently included in the required contribution amount. As the City must
contribute at least 7% of payroll (6% in plan year 1996), this advantage is not very
valuable and likely would result in reducing the credit balance at a slower rate or increasing
the credit balance, depending on the size of the City's statutory contribution. If the
contribution rate exceeds 7% after the credit balance is depleted, this method would
reduce the City's contribution; 2} the City's contribution would be in the Plan and invested
sooner. The Plan's investment experience during the past several years has been excellent
and this could increase the Plan's funded status. The plan's investments occasionally have
not earned 7%, therefore, the plan could be in worse shape.
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Disadvantages of the City making its contribution sooner (January through
December of the Plan Year): 1) the City would need to "double up" on Pension Plan
contributions during one fiscal year or phase in the change over several years by another
method; 2) the Cityts operating funds would have to transfer interest earning funds to the
Pension Plan earlier, which would reduce interest earnings revenue in each operating fund.
Operating funds may not have reduced pension funding costs due to the 7 % payroll
requirement; 3) the City would need actuarial valuation results sooner which would result in
problems and the need to change a procedure that now works well.
The current practice allows informed decisions regarding the size of the City's
contribution and allows adequate time to plan for and budget any increases in required
contributions.
Finance Director Margie Simmons explained the methods of determining the amount
of money the. City must contribute each year and illustrated why the current method is
preferred. She said the current plan Is healthy and investments are doing well.
Trustee Hooper moved to ratify the timing of the City's contribution into the pension
plan which is to make contributions throughout the first 6 months of its fiscal year for the
plan year that ends within that fiscal year. The motion was duly seconded and carried
unanimously.
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10/14/96
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ITEM #4 - ICont. at 9/16/96l Recommended budget for Fiscal Year 1996-97 for City of
Clearwater Employees Pension Plan; authorize expenditure of funds for travel, printing &
binding, memberships, and training In amounts not to exceed $2,300, $400, $3,000 and
$250 respectively
Previously, all expenditures required Trustee approval regardless of the amount.
Staff recommends adoption of an Employee Pension Plan budget that allows expenditures
within limited budget categories with appropriate management review. The Trustee still
would need to approve all other expenditures.
Travel Expenses and Training is for PIC (Pension Investment Committee) members to
attend the Callan Institute, visit the Pension Plan's Performance Measurement Firm, Callan,
and visit one of the City's money manager during the same trip. Printing and Binding is for
the distribution of annual information to Pension Plan members. Membership Is in the
"Association of Confederation Life Contract Holder," an organization addressing the
problem "Guaranteed Investment Contracts" the City owns. The biggest budget change is
the addition of a Pension Administrator.
Deputy City Manager Kathy Rice said the consortium, It Association of Confederation
Life Contract Holder," is trying to resolve the "Guaranteed Investment Contracts" the City
owns. In response to a question, Ms. Rice said the City formerly administered the Pension
Plan but it now is more complicated. An RFP (Request for Proposals) has been distributed
for a third party administrator.
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Trustee Clark moved to approved the recommended budget for the City of
Clearwater Employees Pension Plan and to authorize expenditure of funds for travel,
printing & binding, memberships, and trainIng in amounts not to exceed $2,300, $400,
$3,000 and $250 respectively. The motion was duly seconded and carried unanimously.
ITEM #5 - Other Business: - None.
ITEM #6 - Adiournment:
The meeting adjourned at 1 :41 p.m.
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ATTEST: 0.,u .' G. !':iv.r;;;" '" "'--
-UCitY Clerk
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