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rension A.dvisory. COID'm_ttee"
Minutes
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PENSION ADVISORY COMMITTEE. MEETING
, CITV OF CLEARWATER'
August 9, 2001
Presont:
Dick Fitzgerald
, Whitney Gray
. John Lee
Ed Hart
John Schmalzbauer
BlII Jonson
Tom Jensen
Also Present:, Paul O'Rourke
. Lee Dehner
Debbie Ford
Patricia 0; Sullivan
Chair
Vice Chair ICcmmissioner
Committee Member ,
Committee Member/Commissioner departed 10: 1 0 a.m:
Committee Mel"flber
Committee Member/Commissioner
Committee Member
Human Resources Administrator
Pension Advisory Committee Attorney
Human Resources Analyst
Board Reporter '
The Chair called th~ meeting to order at 9:00 a.m. at City Hall.
To provide continuity for'research, items are In agenda order although not
necessarily' discussed In that order.
ITEM #2 - Acoroval of Minutes.
ITEM #4 - Emclovees to be Heard - None.
ITEM #5 - Action Items
a) Review and Action on Employee Requests for Years of Service Pension
1. Alfred Harris Jr. - Solid Waste Equipment Operator, Solid Waste'
Member Lee moved to approve a Years of Service, Pension for Alfred Harris Jr. T,he
motion was duly'seconded and carried unanimously.
b) Revlow and Action on Employee Request to Vest Pension
1. Weltar L. Davis - Solid Waste Equipment Operator, Solid Waste
Walter L. Da~is has resigned his position after being employed by the City for mo're
than 19 years., He will qualify to receive his reduced pen'sion beginning May 1, 2003.
2. WIlliam Emmott - Police Service Technician, Police Department
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, t{lj~ Member Jensen moved to approve the minutes of the regular meeting of July 1 2,.
'dJJ~' , 2001, as recorded and submitted in written summation to each board member. The motion
was duly seconded and carried unanimously.
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__ . . William Emmott has resigned his position after being employed by the City for more
. than 14 years. He will qualify to receive his reduced pension beginning September 1,
2015.
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07/09/01
06/04/01
07/02/01
07/16/01
07/16/01
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, Member Jonson moved'to approve the requests by Walter L. Davis and William
Emmott to vest their Pension. The motion was duly seconded and carried unanimously.
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c) Approval of New Hires as Pension Plan Members
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As of August 2, 2001, the City had 1714.89 FTEs out of 1799.3 budgeted
positions. Teresa Scrima originally was hired as permanent part.time; promoted to full-time
and pension eligible as of July 16, 2001.
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Member Gray moved to acc'ept the following employees into membership in the
, Pension Plan: '
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Andrea Davis, Public Information Spec.
Matthew M~Lane, Police Recruit
Richard Ross, Public Utilities Tech I
Colleen Lau, Associate Customer Service
Miguel Barroso, Custodial Worker
Kelly Goolsby, Accounting Clerk
Scott Durivou, Police Recruit
Christopher Ziermann, Police Recruit
Brian Rogers, Police Recruit
Roger Culler, Parks Service Tech I
Teresa Scrima, Library Assistant
Craig Tower, Mechanic I
Leighton Wright, Accounting Clerk
Maureen Owens, Parks Service Tech I
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Date of ' Pension
Emolovment Eliq. Date
Gas 07/09/01
Police Department 06/04/01
Public Utilities 07/02/01
Customer Service 07/1.6/01
General Support Services 07/16/01
Finance 07/16/01
Police Department 07/16/01
Police, Department . 07/16/01
Police Department 07/16/01
Parks & Recreation 07/16/01
Library 1 2/06199
, General Support Services 07/16/01
Gas, 07/16/01
Parks & Recreation 07/16/01,
The motion was duly seconded and carried unanimously.
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ITEM #5 ~ Pendinq/New Business
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a) Selection of Member to Serve on Actuary Selection Committee
Assistant Finance Director Jay Ravins said staff has issued a RFP IRequest for
Proposals) for actua'ry services. The current contract with Steve Metz expires this year.
Mr. Metz has served as the Plan's actuary for more than '10 years. There is no requirement
to change actuaries. Mr. Ravins recommended bids be reviewed by a 5~member Actu'ary
Selection Committee, with two Finance employees, two Human Resources employees, and
a PAC (Pension Advisory Committee) appointed representative. After the bid review, the
committee will Interview finalists, probably in September.
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, Mr. Ravins said historically, the unions have not been represented on,the actuary
review committee. It was recommended the committee have union representation. Human
Resources Administrator PaulO' Rourke recommended the committee have no more than
five members due to scheduling difficulties. It was noted many had disagreed with past
actuarial computations. Mr. Ravins reviewed actuary' functions. External auditors evaluate
actuarial reserves to be certain they are adequate. Annually, the actuary calculates the
amount of contributions necessary for the Plan to meet future obligations. He said Finance
staff prefers conservative financial advice, not based on political pressure. In response to a
question, he said 'the actuary recommends assumptions used for Plan computations. A
review of the assumptions was recommended. Mr" Ravins said the PAC could review and
the' Pension Trustees approve new assumptions, but such action rarely occurs. Additional
information was requested regarding the $21-million reduction in the Plan's value and the
$352,000 increase in expenses.
Concern was expressed the same staff members seem to decide many issues. It
was questioned if the PAC has the authority to determine committee membership. Mr.
O'Rourke said the Finance Department welcomes suggestions. Concern was expressed
labor has no representation on the management of its Pension Plan as committee
'membership consists solely of upper management. It was felt increasing the committee's
size would allow labor input and benefit staff by educating labor members. Mr. Ravins said
accommodating seven members would be difficult. '
Discussion ensued regarding representation on the Actuary Selection Committee.
Concern was expressed it may be difficult if a PAC appointee, as a union member, felt
obligated to represent more than one interest. Pension Advisory Committee Attorney Lee
Dehner said qommittee meetings would have to be noticed if more than one PAC member
serves. 'It was suggested the Chair represent the PAC on 'the Committee, while the unions
appoint three committee members to represent: 1) the fire unions; 2) the police unions; and
3) the CWA (Communication Workers of America) union.
Member Gray moved for the PAC to recommend that the Actuary Selection
Committee be expanded to eight members consisting of four staff representatives, a fire
, '
union representative, a police union representative, a CWA representative, and the PAC
Chair as a PAC representative. The motion was duly seconded and carried unanimously.
b) Letter from Bernard McKenna r8 Retiree Concern
In his October 16, 2000, and July 12, 2001 letters to the City Manager, City retiree
Bernard J. McKenna requested his pension benefit be recalculated to reflect the increased
benefit adopted after his May 1992 retirement. Mr. O'Rourke reviewed the request and
Indicated the subject benefit resulted from collective bargaining'and did not cover previous
retirees. The unions lowered their demands In 1999 to provide a cost of living increase for
all Plan members, including those who previously retired. The next opportunity to change
the Plan is by referendum in' March 2002.
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Consensus was for staff to respond to Mr. McKenna, explaining the enhanced
multiplier does not affect his pension benefit.
c} Pension' Budget
The FY (fiscal year) 2001/02 budget ,includes a line item for medical services
authorized by the PAC (Pension Advisory Board!. Previously, the Pension Plan reimbursed
the General Fund for its payment for medical exams. Consultant projects include: 1)
$10,000 - Pension Analysis Update; 21 $10,000 - DROP Modeling/Assessment; and 3)
$10,000 -Retiree Health Subsidy Assessment. Travel covers costs related to Pension
Investment Committee member attendance at the training seminar and visit to Callan, the
Plan's performance measurement firm. As staff due diligence trips will not be repeated
next year, related costs are not included. Printing and Binding expenses cover statutorily
. required annual information distrjbution to Plan members. Training is statutorily mandated.
A RFP (Request for Proposals) has been released for the actuary contract. An increase in
miscellaneous consulting fees is anticipated. Increases to legal expenses reflect actual
costs.
Funding for the Integ~ated Disability Management project is $9,000 for Phase One'
and $10,000 for Phase Two. Money Manager, Safekeeping Service, and annual actuary
report fees are set by Trustee' approved contracts and are not included in this
administrative budget. Reimbursement to the General Fund and Central Insurance Fund .
covers oversight costs and is recognized as revenue to the General Fund. Central
Insurance Fund reimbursements have been updated to more accurately reflect costs,
increasing reimbursements to $80,448: 1) $24,288 - Finance; 2) $13,980 - payroll; and
3) $41,180 - Human Resources. The reimbursement rate is $20,630 to the Central
Insurance Fund and $59,818 to the General Fund. Medical exam costs will be charged
directly to the Pension Plan and no longer reimbursed to the General Fund.
Cash & Investments Manager Steve Moskun said during the recent market
turndown, the Pension fund has performed better than benchmarks. . During the quarter
ending June 30, 2001, the Pension fund's value increased by 4.34%. The value of tl1e
fund decreased by 2.9% during the fist half of the fiscal year.
. In response to a question, Mr. Moskun said changes to the way medical exams are
paid streamlined the process. Mr. 0' Rourke said staff is working to coordinate annual
Police and Fire department physicals to establish baselines for new hires related to
exposlire to illnesses such as Hepatitis A, B, and C, tuberculosis, and meningitis. In
're'sponse to a question regarding updating the Pension Plan analysis, Mr. 0' Rourke said
staff compares baselines with 10 similar labor markets and recommends adjustments.
, According to State law, during bargaining, the City is required to provide all requested '
information. Mr. fv'!oskum reviewed which positions. receive Pension Plan reimbursement to
.cover oversight costs.
,Mr. O'Rourke said staff is working on a referendum issue to allow employees to
choose a benefit option at vesting, to avoid beneficiary problems that can occur following
~n untimely death.
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Me'11ber Jonson moved,for the PAC to recommend approval of the proposed FY"
'2001102 bUdget. The motion was duly seconded and carried unanimously.
d) Integrated Disability Management Presentation
Mr. O'Rourke reviewed integrated disability management. The goal of integrated
disability management is to coordinate occupational disability, non-occupational disability,
and other related programs, including group health, health promotion, and EAPs (employee
,assistance programs), to reduce costs, enhance productivity, improve workforce health,
, and increase customer satisfaction.'
Workers' Compensation paysfor medical treatment and 662/3% of lost wages
arising from on-the~job injury or disease. Regarding non-occupational sickness and
disability,' sick pay provides 100% salary continuance during short periods of time. STD
(Short-Term Disability) benefits pay 66 2/3% of wages during brief periods of one to 26
w(3eks. L TO (Long~ Term D~sability) benefits partially replace income for years, typically
until death, following a disabling illness or injury. Direct costs related to worker disability
are Workers' Compensation, Sick leave prty, STO, L TO, and medical costs. Indirect
expenses relate to overtime, replacement workers, job accommodations,
turnover/operational instability, training, and morale issues. Based on information from
1999 -,WBGH (Watson Wyatt Worldwide & Washington Business Group on Health), while
the average direct cost of disability is 6.3% of payroll, the average indirect cost is an
additional 8% 'of payroll. For the City, these costs total $8.75-million, 14% of payroll. '
The City has no overarching plan or policy design for disability management and no
centralized management of job-connected and non-job connected disability cases and
regulations related to Workers' Compensation, ADA (Americans with Disabilities Act), and
FMLA (Family Medical Leave Act). The number of "light duty" cases has increased and the
workforce is aging.
Non-vested employees have no employer-provided STO or L TO coverage for non-job
connected disability. Morale and productivity are issues of concern as disabilities impact
staffing levels" competence, and the budget. The City lacks integrated data collection,
evaluation, and outcome measurement systems. WBGH identifies factors which increase
disability costs in order of importance: ,1) poor plan design; 2) lack of supervisory
involvement in RTW (Return to Work); 3) sick leave abuse; 4) job dissatisfaction; 5,)
preventable health problems; 61 inadequate provider involvement for non-job connected
RTW; and 7) poor performance.
According to WBGH, national disability management activities, in order of
popularity, are: 1) transitional RTW; 2), prevention; 3) health intervention; 4) case
management; 5) IMEs (Independent Medical Exams); 6) medical pro~lder education; 7) PTO
(paid time off); 8) involved supervision; 91 work/family programs; and 10) vendor '
performance standards. Among organizations which use Integrated Disability Management,
San Bernadino County, California, saved $434/participant from 1998 to 1999, reduced lost
days by 6.8 days percase for a return on investment of $1.60 to $1.00. At Owens-
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Corning, disability rates decreased by 48% over 4 years and withi'n ,5 years, related costs
decreased from $25-million to $ 1 4Mmillion annually. Other firms nationwide have reported
similar savings.' '
, To'reduce the number of disability pensions awarded and to assign disabled,
employees to alternative positions, the ordinance related to disability pensions was
changed. The current ordinance states, "A participant shall be considered disabled for
purposes of the Plan if . . , (he/she is) 'unable to perform any useful, meaningful, 'and
necessary work for the employer in an available position for which the participant is
reasonably qualified or . . . may be reasonably trained to perform." The ordinance
requires alternate placement with no loss of pay. The number of job-connected
'disabilities granted was reduced from 51 in the 5 years before the change to 3 during
,the 5 years following the change. The number of non-job connected disabilities
'granted was reduced from 16 in the 5 years before the change to 9 during the 5 years
following the change. Problems related to the ordinance include significantly higher
costs to' the City and increased attitude difficulties related ,to ability vs. the desire to
carry out a job. M.orale is undermined when salaries do not match skill and effort. In
addition, the Pension ordinance disability provision requiring the placement of disabled
workers in other positions has significantly increas~d
Implementing disability management: 1) Stage 1 - Assessment - 6 - 12 months
- prepare for disability management; 2) Stage 2 - lm'plementation - 1 2 - 24 months ~
implement disability management program; and 3) Stage 3 - Sustain & Evaluate -
ongo~ng - ensure ongoing commitment to disability management.
Disability management benefits include cost savings, a reduction in the number
and duration of employee absences, improved employee health and wellness, reduced
disability cases and costs, improved retention and productivity, enhanced customer
service, administrative simplification, and development of an integrated data system.
Integrated Disability Management provides a single system which integrates the: .
1) intake and notification process; 2) medical case management system; 3) RTW
progr,am; 4)' w/e, ADA and FMLA requirements; 5) data base; and 6) program/provider
evaluation system,
The Stage 1 Assessment will issue a final report to include: 1) executive
summary; 2} direct and indirect costs of disabilities; and 3) major findings with
opportunities and recommendations including an administration model, integrated
process maps, program' performance metrics, and supporting data.
Discussion ensued regarding FMLA. Mr. Dehner indicated employees are,
entitled 'to, 12 weeks of FMLA benefits each 1 imonths. Pension ordinance and FMLA
legislation obligate the City to find a similar position for an injured employee upon their
return. Mr. O'Rourke said Human Resources is ill-equipped to handle disability cases
and suggested it may be better for a third.party to provide integrated disability
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management..The Stage .1 assessment is budgeted for $19,000. Before proceeding
to Stage 2, the City will determine'if it had received value for its investment. Staff will
not recommend moving forward without" proof of legitimate benefits.
Mr. O'Rourke said the City had received three responses to staff's RFP. Two
firms were' not up to the task. Phase 1 will collect significant data. Staff will report
on the findings. The City will be self reliant after Stage 2 is implemented. In response.
to a question, Mr. O'Rourke said the City's liability for sick time is $5.6-million.
Pineilas County currently provides employees with time off, and does not differentiate
between sick and other time. That issue must be decided during collective bargaining.
He supported integrated disability management as the best way for the City to
coordinate information related to staff absences. Stage 1 will determine the cost of
fu~ther Stages.
Re. Police Chief Sid Klein
In his June 28, 2001 letter regarding the request to the City Attorney by Andra
T. Dreyfus, attorney for Police Chief Sid Klein, Stephen H. Cypen, of Cypen & Cypen,
opined that Chief Klein has no further administrative or other remedies concerning his
claim to be included in the CiW's Employee Pension Plan. Mr. Cypen recommended
the' Pension Trustees take no further steps in this matter. He.indicated the Sunshine
Law prohibits Trustees from participating in a "confidential pre-litigation mediation."
.#'-::> Chief Klein's window to appeal the last decision closed after 30 days. Mr.
\''''-'-'' O'Rourke has shared this information with Chief Klein and his attorney. Mr. Cypen
remains steadfast in his recommendation. Human Resources periodically reviews
options for e':(empted employees. Executives are included in the Pension Plans in
seven of 10 local governments. In response to the Chief's concerns .that most
jurisdictions do not exempt certain employees, staff will bring forward
recommendations regarding this issue.
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Catherine Slack
Mr. Dehner reported the PAC will consider Catherine Slack's disability pension
request, following City receipt of her IME.
'. . Tax Legislation'
. . Mr. Dehner reported recent federal tax legislation provides favorable benefits for
, " the accumulation of retirement funds by increasing the IRA contribution limit. He
reviewed changes to the tax consequences of roll overs and discussed portability
issues. He recommended expanding the Pension Plan to allow employees to purchase
prior service. He said buy back provisions will help recruitment, especially for those
with previous government or military experience. It was requested Mr. Dehner
mpac080 1
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The next' PAC meeting is scheduled for September)3'; .2001.
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di'stribute related 1~i1guage fr~m' other. plans.
" time period ,from 'differe'nt municipalities .
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ITEM'87
Committee Members to be Heard
ITEM 88'-' Adiournment
The meetIng adjourned at '11 :33 a.m.
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