10/12/2000 (2)
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,PensionAdvis~ry Co~mittee
Minutes
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,PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
October 12,' 2000
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Present:
, J. B. Johnson
Pat Greer
Ed Hart
John Schmalzbauer
John Lee
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Absent:
Brian Aungst
Dick Fitzgerald
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Also Present:
Paul O'Rourke
Margie Simmons
Scott Christiansen
Debbie Ford
Brenda Moses
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Vice Chair/Commissioner - departed 9:36 a.m.
Committee Member - arrived 9:04 a.m.
Committee Member/Commissioner
Committee Member
Committee Member
Chair/Mayor
Committee Member
Human Resources Administrator
Financial Services Administrator
Pension Advisory Committee Attorney
Human Resources Analyst
Board Reporter
The Vice Chair called the meeting to order at 9:00 a'.m. at City Hall.
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To provide continuity for research, items aro in agenda order although not necessarily
discussed in that order. .
Member Lee moved to approve the minutes of the regular meeting of September 14,
2000, as submitted in written summation to each board member: The motion was duty
seconded and carried unanimously.
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ITEM 2 M Aooroval of Minutes
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ITEM 3 - Emolovees to be Heard - None.
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ITEM 4 - Action Items
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a) Review and Action on Employee Request for Years of Service Pension
1. Donn Githens, Police Officer - Police Department
2. Patrick Adamson, Police Officer, Police Department
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Member Hart moved to approve the request by Donn Githens and Patrick Adamson
for a Vears of Service Pension. The motion was duly seconded 'and carried unanimously.
b) Review and Action on Employee Requests to Vest Pensions
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1. Dolores Hofer, Gas Department
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~ Member Hart moved to approve the request by Dolores Hofer to vest her Pension.
, ,I The motion was duly seconded' and carried unanimously.
c) Approval of New Hires as Pension Plan Members
As of October 4, 2000, the City had 1684.2 FTEs and 1,795.6 budgeted positions.
, Member Lee moved to accept the following employees into membership in the
Pension Plan:
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Date of Pension
Emolovment EliQ. Date
Jennifer Howard, Library Assistant
Scott McGrail, Sr. Marine Lifeguard
Richard Martin, Dev. Review Tech. ,
" Patricia Rooks, Police Info. Tech. "
Brian Craig, Recreation Supervisor
Ronald Ricc, Survey Assistant I
Joseph Smith, Lead Parking Attendant
Christine Parker, Police Svc. Tech. I
Paul Burger, Gas Tech. ,
Library
Marine
Plan./Dev Servo
Police
Parks & Rec.
Public Works
Public Works
Police
Gas
05/31/94
09/11/00
09/18/00
09/25/00
09/23/00
09/25/00
08/28/00
09/25/00
09/25/00
08/26/00~
09/11/00
09/18/00
09/25/00
09/23/00
09/25/00
09/23/00 ·
09/25/00
09/25/00
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· Originally hired as part.time; status changed to full.time and pension eligible as of 08/26/00
.. .Originally hired as part-time; status changed to full.time and pension eHgible as of 09/23/00
The motion was duly seconded and carried unanimously.
Mr. Christiansen said the interrogatories were sent to Unda Konga and once they
are returned, the process can continue to move forward with respect to her disability claim.
Interrogatories have been received from Neil Arfmann. Mr. O'Rourke explained that these
two employees are injured Police Officers filing for disability pensions. Both claims are
considered work-related. It was requested that staff review the data provided regarding
the number of FTEs. Mr. 0' Rourke said that reconciling new hires and terminated
employees has been difficult as different dates were used to balance the numbers. In the
future, dates of payroll periods will be used for more accurate accounting.
ITEM 5 - PendinQ/New Business
B. Request of Police Chief Sid Klein and Deputy Chief Bill Baird to Join Pension Plan
Human Resources Administrator Paul O'Rourke said as Attorney Steve Cypen of
Cypen & Cypen was unable to attend today's meeting, this item will be postponed to a
, future meeting in November or December. All parties have been notified. In response to a
question, Mr. O'Rourke said Mr. Dehner also will render an opinion on Fire
Marshall/Emergency Management Coordinator Randy Hinder's request for eligibility into the
supplemental pension plan, as he is not in the General Employees Pension fund. Pension
Advisory Board Attorney Scott Christiansen said the Pension Trustees Board makes the
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final declston regarding these pension ma'tters. Mr. Christiansen said general/y; there ara
no personal liability issues by the PAC (Pension Advisory Committee) or the Pension
Trustees Advisory Board on such matters.
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b. Contract with Putnam Investments and Invesco Global Asset Management
Cash and Investment Manager Steve Moskun said the Pension Trustees previously
authorized Callan and Associates to conduct a search for a non-U.S. equity manager.
Callan recommended to the Investmont Committee the following equity managers: Capital
Guardian Trust Company; Invesco Global Asset Management IN.A.L Inc., Putnam
Investments; Sit/Kim International Investment Associates, Inc., Dresdner RCM Global
Investors, LLC, and Lazard Asset Management. After reviewing information provided on
these managers, the Investment Committee ranked the managers and conducted interviews
with the top four. The Investment Committee recommends to the Trustees that they add 2
non-U.S. equity managers, Invesco and Putnam; to the Employee's Pension Plan. Invesco
is a value-oriented non-U.S. equity manager and Putnam is a growth-oriented non-U.S.
equity manager. By adding non.U.S. equities to the portfolio, the Trustees are reducing the
level of risk in it. By further diversifying between growth and value non-U.S. equities, the
risk level is further reduced. The Investment Committee recommends that each manager
be funded with' up to $ 25 million for a total non-U.S. equity funding of up to $50 million,
which represents slightly less than 10% of the current portfolio. The ordinance and
investment policy allows for a 10% funding (at cost) in non~U.S. investments. The funds
will be taken from growth-style domestic equity managers. Invesco's management fee is
.6 of 1 % or $150,000 on $25 million per year. Putnam's management fee is .8 of 1 % or
(:;~:;~ $200;000 on $25 million per year.
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Member Greer moved to approve the contracts with Putnam Investments and
Invesco Global Asset Management (N.A.), Inc.; as non.U.S. equity managers for the
Employee;s Pension Plan. The motion was duly seconded and carried unanimously.
c. Rate Increase from Christiansen & Dehner
Mr. O'Rourke said as the City's Pension attorneys; Christiansen & Dehner, P.A.
have not increased their rates for some time, staff recommends approval of their request to
increase rates effective January 1, 2001, to $ 210 per hour. He said the increased fee is
slightly below the norm for pension attorneys. Mr. Christiansen said he felt the fees are
inevitable due to the cost of living increases and operating costs. His firm is only charging
half of its hourly rate for travel time. Many other firms charge their full rate for travel time
because they are losing business that could be spent servicing clients. It was requested
that consideration be given to moving the Pension Trustees meeting ahead of the eRA
(Community Redevelopment Agency) on the Commission's agenda.
Member Lee moved to approve the rate increase request from Christiansen &
Dehner to $ 210 per hour and $105 per hour for travel time respectively effective January
1, 2001. The motion was duly seconded. Upon the vote being taken, Vice Chair Johnson
and Members Hart; Greer, and Lee voted "aye"; Member Schmalzbauer voted "nay". '
Motion carried.
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',J d. Part.time to Full-time Buy Back Reguests
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Mr. O'Rourke said the PAC had requested that staff poll employees to determine if
those employees who were originally employed by the City'Bs permanent part-time
emplovees but that had worked full-time are eligible for pension participation. The CW A
Collective Bargaining Agreement that expired in 1977 stipulated that part-time employees
who worked full-time hours should be granted full-time benefits. The legal Department has
determined that from a statutory perspective, the City is only obligated for a period of five
years after expiration of that CW A contract. The City is not reimbursing the medical costs
that those employees would have received under full-time status, however, as those
employees .were not properly classified, they should be given the opportunity for inclusion
in the Pension Plan. It was remarked that interpreting such matters that date back twenty
years sets a bad precedent. Mr. O'Rourke said the City is not legally obligated to allow
these employees into the Pension Plan, but rather feels this action corrects a wrong. Staff
does not anticipate future requests. Five of 19 employees have asl<ed that they be allowed
to receive service credit for their respective employment periods. Mr. O'Rourke said not
since 1995 ,has, there been a reoccurrence of using part*time employees on a full-time
basis. Mr. Chri~tiansen said that this technically is not a "buy back". Human Resources is
simply reclassifying specific employees as full-time employees during the specific periOds
that they worked full-time. Five' employees being reclassified would be eligible for the
Employee's Pension Plan upon contributing the required contributions plus 5 % interest.
,The amount owed by each employee as of October 31, 2000, is as follows: Birgit Dowd -
$1,219.34; Lawrence Dowd - $2,637.17; Mark Goheen - $1,072.87: Alphonso Hinson -
, $1,033.57; and Carol Harvey ~ $1,076.06. In response to a question, Mr. Christiansen
said anyone can file a lawsuit for any reason, but he did not feel the PAC had any liability
as Human Resources made this decision. His firm is merely applying the provisions of the
Pension Plan to those employees after reclassification.
Member Greer moved to approve the request that Birgitt Dowd, Lawrence Dowd,
Mark Goheen, Alphonso Hinson, and Carol Harvey be entitled to service credit and inclusion
in the Employee's Pension Plan upon payment of required contributions with 5 % interest.
The motion was duly seconded. Upon the vote being taken, Vice Chair 'Johnson and
Members Greer, Schmalzbauer, and Lee voted "aye"; Member Hart voted "nay". Motion
carried.
ITEM 6 - Director's Reports
Finance Director Margie Simmons said the City received the actuarial report for the
Employee's Pension Plan beginning January 1, 2000. The report indicates a City
contribution of $1,722,874 is required this year. However, the City Ordinance governing
the Pension Plan requires that the City contribute at least 7 % of the compensation of all
employees participating in the Plan (estimated at $3,565,618). The difference between the
required contribution of $3,565,618 and the actuarial determined contribution of
$1,722,874 will be added to the existing credit balance, currently at $12,442,498. The
low contribution requirement is primarily due to phasing in of prior asset gains and the
excellent investment returns realized in 2000. The Employee's Pension Plan experienced a
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~ fifth consecutive year of excellent Investment performance. The market value basis
'~ performance for the last five years (1995,1996,1997,1998, and 1999, respectively) has
been 23.36%, :14;80%, 17.49%,16.74%, and 18.61 %. The funded status of the' plan
decreased from 174% at January 1, 1999 to 162% at January 1, 2000, primarily due to
, the Plan amendment, which increased the Plan's actuarial accrued liabilities by nearly $63
million. This amendment added a 1.5% annual cost of living increase and additionar'normai
, retirement age of 65 with 10 years of service, plus additional eligibility and benefits for
Police and Firefighters as required by 1751185 legislation. Staff will provide a copy of the
final actuary report to the PAC after approval by the Pension Trustees. '
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Member Lee moved to accept the Actuary's Report for the Employee's Pension Plan
for the plan year beginning January 1, 2000. The motion was duly seconded and carried
unanimously. '
ITEM'7 - Committee Members to be,Heard
Member Hart expressed concern that Pension Trustees and PAC meetings are
scheduled the same day as Work Sessions rather than on Commission meeting days. He
feels more people would be aware of proceedings if scheduled on Commission meeting
days. Mr. ,O'Rourke said Commission agenda items require items be submitted by a
specific date. There also could be a conflict with the Pension attorneys' calendars. Staff
will research if the PAC and Pension Trustees meetings and/or the entire process can be
streamlined. Mr. Christiansen said as the Employee's Pension Plan provides that new
employees are allowed in the Plan as a condition of employment, it is merely a matter of
information whereby a formal approval by the PAC and the Trustees is given.
Member Schmalzbauer asked if PAC members unable to attend meetings could vote
via proxy. Mr. Christiansen said there'is some authority allowing members' attendance via
conference call, but proxy voting is not permitted under public records-type arrangements.
It was remarked members who know they will be unable to attend meetings could contact
the PAC Chair to request a deferral of an item. In some instances time is of the essence.
ITEM 8 - Adiournment
The meeting adjourned at 9:52 a.m.
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Pension Advisory Committee
Attest:
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Board Reporter
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