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06/01/1999 (2) . . .' . .~ :.'. . ,! ~ t. \. ' . "'. :.. ~., . ' '.... . '~ '. I , .' . ,,;!'. l." . .':.,. . " 'P. ., ..' ~... . . ,. . c, ' lP:'~>'.':;::L"~:""c.::;.i""" d "'.'0 ,c .' . ,~ " J .'. L, , '. C U.l '" ~:':; '. ,", , . . ~. . . ~;. . lJ'" ': . , ./'-, .' . , . i ','"' .,' . ' J. ~ . , ; j . 'PENSION . . .. (TRUSTEES) Boa~d of Trustees of the Employees' Pension Fund Minutes .\: I '. '>~ . '" ' . '. . . . i'. ,~ ~;':: : :~ I . . " I c Y;,' { ,::' ',., 4 ~~. {;'" . Date ...Iun~ I} ;~ .' ~:: '., . ~:.. , '.', , ' c .., " c ~;::J .' . L ll" . '>"1 . +. . f" ~:'>;': l !T. . 'J , " s9 ... l. j : ,c ,h t, , c' i,;i~'A:~;:;"::'~\;:;\':;; . . . , " ,', 'H ~'.,. J:' "I' . v:\'::"', ,<'.~ ',_J ! : ~ " , ~'. ., ~ ',' c' . " \:: '," " ~'. ' . ' , " j-:....."\ \:.J, " ,,' '.. o ,:..' , , ' .. ' . : , ~::. . ti .' "~.: .'.... ~ "., '\" c.~ .' ", " ACTION AGENDA Board of Trustees of the Employees' Pension Fund June 1, 1999 . 1. Call to Order M 9:24 a.m. 2. Approval of Minutes: 6/3/99 w Approved as sub,mitted. 3. (Cant. from 6/3/99) Request to buy back previous pension service credit: Leonard . Marotta - Approved. ** 4. '(Cant. from 6/3/99) Request to buy back previous pension service credit: David Krieger - Approved. ** ,5. Other Business - see minutes 6. Adjourn - 10:23 a.m. **' These items had the action rescinded at the special Trustees meeting of 6/7/99 , , , :" ~ . " .'; ~ . . .,".. . '. . ~ I . I ,-. . , , . \ " ~'\.;. e'le ~ TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING CITY OF CLEARWATER June 1, ,1999 Present: Brian J. Aungst Ed Hooper J. B. Johnson Robert Clark Ed Hart Chair Vice-Chair /Trustee Trustee Trustee Trustee Also Present: Michael J. Roberto Pamela K. Akin Paul O'Rourke Scott' Christiansen Cynthia E. Goudeau Patricia O. Sullivan City Manager City Attorney Human Resources Administrator Pension Fund Attorney City Clerk Board Reporter The Chair called the meeting to order at 9:24a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. ITEM #2 - Approval of Minutes: o Trustee Hooper moved to approve the minutes of the May 3, 1999, meeting, as recorded and submitted in written summation by the City Clerk to each Trustee. The , motion was duly seconded and carried unanimously. ITEM #3 - Reauest to buy back previous pension service credit: Leonard Marotta On August 26, 1979, the City employed Leonard Marotta as a Police Officer. Upon his resignation on August 26, 1982, he withdrew his $3,890.97 pension contribution. Under the appropriate Civil Service Rule, Mr. Marotta requested to withdraw his resignation. Although the request occurred 19 days beyond the 6-month deadline, the City Manager approved the withdrawal.ol resignation. Upon his return to work as a Police Officer on April 25, 1983, Mr. Marotta's seniority date was adjusted by 241 days, the number of days he was gone, following the procedure for employees who withdraw resignations. He also was credited all benefits, including sick leave and vacation. The Police Chief had advised him his request to pay back his withdrawn Plan funds had been denied. In 1996, the City advised Mr. Marotta he could buy back his pension service at an actuarial amount greater than $65,000. On March 11, 1999, Mr. Marotta requested the PAC (Pension Advisory Committee) allow him to buy back the 3 years. After discussion, the PAC recommended Mr. Marotta be approved to buy back his years of service plus 5% annual interBston the $3,890.97 from his departure date in 1982 until now. The PAC felt " - "'\ \.J mpf06a99 1 06/01/99 ITEM #4 - Reauest to buy back previous pension service credit: DJVid Kriecer ~ this action corrects a previous inequity caused by an arbitrary decision. This matter was forwarded to the Pension Trustees for consideration. AND The City employed David Krieger AS a Police Officer on September 3, 1968. Mr. Krieger resigned on August 11, 1972, after being denied a leave of absence to attend school. He withdrew $1,292.62, his $1,615.78 contribution less a 20% administrative fee. Due to a hiring freeze, Mr. Krieger's return to the City upon completion of his education was delayed until March 28, 1 977, when he returned to work as Police Officer and was admitted to the Pension Plan effective on that date. His request to buy back his pension service was denied. In 1996, the City advised Mr. Krieger he could buy back his pension service at a actuarial amount greater than $76,000. On April 8, 1999, the PAC recommended approval of Mr. Krieger's request to buy back his years of service plus 5% annual interest for a total of $4,927.91. This matter was forwarded to the Pension Trustees for consideration. ,~ ,J Pension Trustee Counsel Scott Christiansen said he had reviewed the current Pension Plan and the one in effect prior to January 1, 1996. As the prior plan did not mention buybacks, no provision for buybacks existed prior to 1996. Beginning in 1991, the PAC had approved some buybacks under conditions such as readmittance following termination, etc., although Mr. Christiansen could not identify the authority by which those decisions had been made. Mr. Christiansen said according to the current Pension Plan, participants can buy back their time within two years of their return to the City for the greater rate: 1) the amount of the withdrawal plus 5 % interest or 2) the actuarial cost of restoring the participant's prior credit of service. The actuarial amount most often is more expensive. According to the plan, today's requests by Leonard Marotti::1 and David Krieger are not within 2 years of their return to the City. Both returned prior to 1996 when no buyback provision existed. Mr. Christiansen recommended the Trustees deny the PAC's recommendation as neither request meets the provisions of the plan. If the PAC and Trustees want to change buyback related rules, he recommended a study first identify the long-term affects of those changes on the Plan. He recommended the Trustee's decision be in accordance with the plan. Concern was expressed several buy backs that did not meet the provisions of the plan had been approved. Mr. Christiansen said Jeff Harper's case differs significantly from today's requests, as the original denial of Mr. Harper's participation in the plan had been arbitrary. He felt approval of Mr. Harper's buyback, which was net based on actuarial costs, was appropriate as it had corrected an error. Mr. Christiansen recommended the board reevaluate Kenneth Donagan's buyback. Although I~gal impediments may prevent the City from changing that decision, he said it is important to follow the plan provisions. , '-....J mpf06a99 2 06/01/99 Trustee Hooper moved to allow Leonard Marotta, Police Officer, Police Department to buy back his previous pension service credit as approved by the Pension Advisory Committee and that the appropriato officials be authorized to execute same. The motion was duly seconded. Trustees Johnson, Hooper and Clark voted" Aye"; Trustee Hart and Chair Aungst voted "Nay." Motion carried. ,., In response to a question, Steve Metz, the plan's actuary, said approval of Mr. Harper's case had no material impact on the Plan due to the plan's size. The difference between the amount Mr. Harper paid back and the actuarial cost of restoring his prior credit of service will have to be restored. Approval of his case avoided problems with the IRS related to his previous arbitrary exclusion from the plan. In response to a question, Mr. Christiansen said the PAC had made its decision regarding today's cases before his service to the boards began. It was stated David Krieger had been denied a leave of absence to attend school and remain in the Pension Plan. Hum;]n Resources Administrator Paul O'Rourke said City records do not include that information. Mr. Krieger was not reinstated until almost 4.5 years after his resignation. Andra Dreyfus, representative for Mr. Krieger, said he had made every effort to buy back his prior credit of service. Concern was expressed approval of today's request will open "Pandora's boxll. The Trustees responsibility for the soundness of the plan even though members may wish to help individuals was noted. C) It was stated employees had been given an opportunity in 1996 to buy back credit for their prior service. Due to the actuarial costs to restore that service, no employee pursued this opportunity. Concern was expressed the plan could be jeopardized if all similar requests are approved. The number of possible requests is unknown. In response to a question, Mr. Christiansen said while the City may be prevented legally from changing its decision regarding Mr. Donagan, the Trustees should not continue making wrong decisions. He said because the actuarial amount is expensive does not make it unfair. In response to a question related to a buyback action that or.curred approximately 20 years ago, the City Attorney said It was too late to review that issue. It was recommended Mr. Marotta's and Mr. Krieger's cases be sent back to the committee for reconsideration. Trustee Clark moved to allow David Krieger, Police Officer, Police Department to buy back his previous pension service credit as approved by the Pension Advisory Committee and that the appropriate officials be authorized to execute same. The motion was duly seconded. Trustees Johnson, Hooper, and Clark and Chair Aungst voted "Aye"; Trustee Hart voted "Nay.'~ Motion carried. NOTE: the above two motions had the action rescinded at the special Trustees meeting of 617/99 ITEM #5 - Other Business It was recommended faults in the Plan be corrected immediately so no additional cases are brought forward. Concern was expressed the approvals directly violate the law and ignore the plan's language. Mr. Christiansen recommended a study be done to ,-.J mpf06a99 3 06/01/99 " ) '.1 AIll determine the costs associated with allowing buybacks for the return of contribution plus I, ,,,,J 6% rather than basing them on actuarial costs. He said if the Board of Trustees wants to interpret the plan that way, the plan needs to be amended. ... \._) Trustee Hooper moved to approve a study of the Pension Plan to determine the costs of changing current buyback rules. The motion was duly seconded and carried unanimouoly. In response to a question, Mr. Christiansen said the Trustees could be sued for not following their fiduciary responsibility to the Plan. The City Attorney indicated counsel had directed the action taken regarding Mr. Harper. Concern was expressed today's approvals will establish a precedent and cost the plan more than $100,000. Mr. Christiansen stated an annual actuarial report is forwarded to the State Division of Retirement to verify the plan's provisions are properly valued. He expressed concern the State will oppose a change that provides benefits not covered by actuarial funding. He expressed grave concerns regarding the long-term implications of today's actions. In response to a question, Mr. Christiansen agreed with actions taken in 1996 to advise employees of their ability to buy back credit for prior service. Concern was . expressed the difference between the buyback amounts approved and the actuarial costs of the prior service must come from somewhere to protect the integrity of the fund. In response to a question, the City Attorney said Pension changes must be approved by referendum. In response to a question, Mr. O'Rourke said he will survey staff to determine who would be interested in buying back prior service at the lower rate. Mr. Metz said the study could be presented to the PAC in July and the Pension Trustees in August. In response to a question, Mr. Christiansen said the Trustees will need to consider future requests under the same policies as followed for today's approvals. ITEM #6 - Adiournment The meeting adjourned at 10:23 a.m. ~/A-' ATTEST: C~F IL...Q.~ ~VU City Clerk mpf06a99 4 06/01/99 '.. ~ .