06/07/1999 - Special
~'., . 'J , ','. ,
.~ .' .
~1.!{~:'~7:~~\.',i\,~);,,:(,!'.;:"':>~;::i~/r~,~:,:,\>/j,<::t,:'~;.:-:,.. ";','
, {
~. .' '.
., - , .!
'. ~'i .~:. ,,'
> :: .:>
',l . I
"
.'0 '
, ',- I
^
,.... ,
,>'.: '
"
.. ,
"
;:: t.'
"
K\':':.,:" '
~. ,
- ~.I .
"
.'
. I
j':" , " .'
~, ~ ..
: ~. j
. .;
.'. .
!:" : ~ " .
" '
't,,: .
"
1"'.
I" >
. ,.' ,
. PENSION
(TRUSTEES)
, '~oard of Trustees of the Employees'
Pension Fund'
Minutes
;: ,~. I
;', J
t :', .
,>:..,-
'::~~" j
j,. ~ ,
',0'
J.: ~.
" p
t~<: i': ~ ~~: I": ...
~~.~' ~', '. "'. :", .
."L'~" ,..' .' '" '.
1',", : . ,
'{ ~.. (< ,'.
.\.... ,
E::.. '.I.:' . ~.
.p," .
(,,"'"
~~'.. "', .
t'. '.
.. . Date.J-LmC 71 I'1Qq
j,', ,
'i:::' ", '
,;. .
;~' ,,' >
:/,:-:, , ;.
. "
, ,
>,
(, :
, .
..' I p
; "
"
" "\
...-' '
" "I~
, ! '.
"
, "
"
'! '
. \
&0-
,',
,.
~.,.
, ,po. .,;;. ( ~ . 0 ~. " !.' .. ." ,
, '
:;:". I
.
o
'0
TRUSTEES OF THE EMPLOYEES' PENSION FUND SPECIAL MEETING
CITY OF CLEARWATER
June 7, 1999
r
I
r
"
I
,
(
I
Present:
Brian J. Aungst
Ed Hooper
J. B. Johnson .
Robert Clark
Ed Hart
Chair
Vice~ChairlTrustee
Trustee
Trustee
Trustee
Also Present;, Michael J. Roberto
Rick Hedrick
Pamela K. Akin
Rick Ebelke
Debbie Ford
Cynthia E. Goudeau
Patricia O. Sullivan
City Manager - arrived 3:36 p.m.
Assistant City Manager
City Attorney
Human Resources Manager
Administrative Analyst
City Clerk
Board Reporter
The Chair called the meeting to order at 3:30 p.m. at City Hall.
Deputy City Manager Rick Hedrick said the Pension Trustees June 1, 1999,
approval of buybacks for Messrs. Marotta and Krieger in amounts not providfld in Pension
Plan rules has raised questions regarding the legality of that decision. The Trustees'
attorney could not be present today. On June 1, 1999, he had recommended against the
action.
In response to a concern, the City Attorney indicated staff, as directed by the
Trustees, is preparing a study to assess future requests by comparing Plan impacts of
buybacks at the actuarial equivalents versus an interest computation.
Trustee Hart moved to rescind approval of the buybacks for Messrs. Marotta and
Krieger and to complete the study. There was no second
In response to a question regarding how today' 5 action could affect cases involving
Messrs. Donagan and Harper and Ms. Maroon, the City Attorney said each case has factual
differences. Ms. Maroon's settlement was determined by litigation. Mr. Harper's
settlement was based on his erroneous exclusion from participation and is consistent with
the IRS' correction rules. She expressed concern that Mr. Donagan's case involves a
different set of circumstances as he has retired. She expressed concern it would be
difficult to try and alter benefits after the fact.
In response to a question, Administrative Analyst Debbie Ford said staff has
identified 200 employees whose hire dates differ from their pension dates. The exact
number who may qualify for buybacks has not been determined. Human Resources
Manager Rick Ebelke said 18 employees responded in 1 996 to buyback opportunities at the
actuarial equivalent rate or payback of pension contributions plus 5%, whichever is higher.
Some employees did not respond after being advised of the actuarial equivalents. More
mpf06b99
1
06/07/99
. ...:.,.', '.' . ~" .. : r _ . ..... .' . ,:.".
It was stated the PAC's approval of buybacks at the lower amount was based on
information provided the committee at that time. Concern was expressed the Trustees and
PAC had not been advised the decision violated the law.
''1
employees may be interested in buybacks at the lower rate. A memorandum has been sfmt
to departments regarding the study requested by the Pension Trustees. Employees
interested in applying for buybacks at the lower rate have a deadline of June 30, 1999.
Andra Dreyfus, representative for Messrs. Marotta and Kreiger, said both have taken
actions based on the June 1, 1999, vote. Mr. Krieger has repaid his contribution to the
Plan. Mr. Marotta has ordered the sale of securities to repay his contribution. 80th are
planning to retire within the year.
The City Manager suggested the Pension Trustees gather information on the impact
of buybacks using both computations, then decide if the plan should be changed to
accommodate that benefit. Changes to the plan must be approved by the unions,
employees, and citize, s in a referendum. He estimated results of the study could be
presented by September. Ms. Dreyfus said changing the status or her clients is unfair as
the case has been ongoing since April.
._)
In response to a statement, the City Attorney stated Assistant City Attorney Leslie
Dougall-Sides had provided the PAC IPension Advisory Committe'3) the same opinion as Mr.
Christiansen that allowing the 5 % buyback was not provided in the plan. The City
. Attorney said new cases no longer have distinguishing factors such as those related to Ms.
Maroon and Messrs. Harper and Donagan. She expressed concern the Trustees are
establishing a precedent. If the June 1, 1999, action is rescinded, it is possible those
affected will press their case in court. In response to a question, the City Attorney said the
Trustees action of June 1, 1999 is outside the plan. Concern was expressed the Trustees
could face a lawsuit by acting outside their fiduciary bounds. It was recommended the
Trustees decide what is best for the employees and plan after receipt of the study.
Trustee Hart moved to rescind the June 1, 1999, action and move forward with
study. There was no second.
In response to a question, the City Attorney said Mr. Christiansen is the Trustees
legal counsel. She did not know the Trustees exposure to lawsuits if they continue making
similar decisions or rescind the June 1, 1999, action.
John Lee, President of the IAFF union, said he had received many calls since the
June 1, 1999, decision. Union members have expressed concern regarding the plan's
solvency if a loophole is opened. He recommended a study be done. The City Manager
reviewed the sequential steps necessary to change the Plan.
Ms. Dreyfus said if there is no harm, there is no foul. Concern was expressed the
taxpayer will be harmed if funding to the Plan is increased based on this decision. The City
Manager said employees have expressed concern allowing this benefit will prevent another
benefit from occurring. Ms. Dreyfus expressed concern voters may not approve the
\
<J
mpf06b99
2
06/07/99
t.., '
')
~~)
.J
)i..~.J\...-c;...;:.,;.\.'.. .
referendum question to change the Plan. It was noted the Plan's funding levels are
excellent. It was felt this issue started when Jeff Harper's buyback for a non-actuarial
amount was approved. Concern was expressed the PAC had not had legal help when
reaching its decision. The City Attorney said reconsideration of the Donagan case should
not be eliminated as a possibillty.
Trustee Hart moved to rescind the June 1, 1999, action and move forward with
study. There was no second.
Concern was expressed Mr. Christiansen was not in attendance. The City Attorney
said Mr. Christiansen is prepared to attend all future regularly scheduled meetings.
Concern was expressed the Trustees will be exposed to litigation regardless of their
decision. The City Attorney said the impact of decisions similar to the one made on June
1, 1999, will not be known until the study is complete. In response to a question, she said
the :City must bargain that impact with the unions once the consequences are identified.
Mr. Lee questioned if a Pension Plan member could sue the Trustees for awarding
berefits the Plan cannot afford to pay. The City Attorney reviewed acts necessary before
Trvstee members can be held personally liable for decisions.
I
In response to a question, the City Attorney said Mr. Christiansen had advised the
Trustees that Plan language did not allow approval of buybacks at the lower rate of
interest. A plan participant is permitted to take legal action regarding that decision. Mr.
Lee expressed concern if decisions are made outside the Plan's guidelines, then the
guidelines have no value. It was noted if the Trustees rescind action related to Messrs.
Krieger and Marotta, the Trustees also could rescind decisions related to Messrs. Donagan
and Harper. The City Attorney said the Trustees could revisit the Donagan and Harper
cases although related facts differ greatly. Concern was expressed regarding harm to the
Plan if a large number of employees are provided the lower buyback rate.
Mr. Lee requested the Trustees reconsider their June 1, 1999, decision, review the
results of the study, and change the plan if that action is deemed appropriate.
Pat Greer, PAC member, suggested many of the 200 employees had worked part
time and did not qualify for buy backs. It was felt the cost to the Plan must be known
before a decision is made. The City Manager said the study could be completed by mid-
July with added staff time. It was noted, even with the study, the unions and voters must
approve any changes. Concern was expressed the June 1, 1999, decision could result in
potential group and individual exposure for Trustee members. In response to a question,
the City Attorney said a court would have to determine exposure.
Concern was expressed Messrs. Marotta and Krieger could retire before the study is
completed. The City Manager said the Trustees will have more information on June 17,
1999. It was questioned how the difference between the buyback amount approved June
1, 1999, and the actuarial equivalent would be covered. Concern was expressed a
dangerous precedent has been set without information regarding the long-term
mpf06b99
3
06/07/99
, ..
,',
,e <'-'
~!it:~\:,:, P : " ,
i~~~~:~;<;',':~"": >,',,:
, ,
, '
'.
".;
~l: . ,I .
..:..... ;. 1-
,',
~1{~> '
o ~ :
.',
"
'. .
"
"
, J.:
{'.'
}}",~
consequences to the Plan or taxpayers. Concern was expressed union suspicions will ,
increase if the Trustees do not follow established rules. It was felt the Trustees should
limit exposure rather than expand it. It was noted the PAC had reached its decision
without input from Mr. Christiansen and may change Its recommendation now that
additional information is available.
Trustee Hart moved to schedule a Special Pension Trustees meeting on June 1 7,
1999, at 5:00 p.m. The motion was duly seconded. Trustees Johnson and Hart and Chair
Aungst voted" Aye"; Trustees Clark and Hooper voted ItNay." Motion carried.
Trustee Hart moved to rescind the Trustees June 1, 1999, decision to permit
Messrs. Krieger and Marotta to buyback their pension time by repaying the amount they
had withdrawn plus 5 % interest and to readdress at the June 17, 1 999 special meeting.
The motion was duly seconded. Trustees Johnson, Hooper, and Hart and Chair Aungst
voted "Aye"; 'Trustee Clark voted 'Nay." Motion carried.
Tre meeting adjourned at 5:03 p.m.
.
..ATTEST:r~z JL.Do
'City tlerk
%4-~~
.J
. mpf06b99
4
06/07/99