03/14/2002 (2)
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PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
March 14, 2002
ITEM #2 - ApDroval of Minutes
Chair
Vice Chair/Commissioner
Committee Member
Committee Member
I:'
, '
Committee Member/Commissioner
Committee Member/Commissioner
Committee Member
Human Resources Director
Pension Advisory Committee Attorney
Finance Director'
Human Resources Analyst
Board Reporter
." The ~hair called the meeting to order at 9:0~ a,01.at City Hall.
To provide continuity for research. items are in agenda order although not
, necessarily discussed in that order.
., '
Present:
Dick Fitzgerald
Whitney, Gray
John Schmalzbauer
Tom Jensen
Absent:
Ed Hart
Bill Jonson'
. John Lee.
Two typos were noted in the February 14, 2002 minutes.
Member Gray moved to approve the minu'tes of the regular meeting of February 14,
2002, as recorded and submitted in written summation to each board member. The motion
was duly seconded and carried unanimously.
ITEM #3 - Emolovees to be Heard - None.
a) ,Review and Action on Employee Requests for Years of Service Pension
11 Charles J. Dunn, Jr. - Police Officer, Pollee Department
2) Charles S. Flowers - Fire Deputy Chief, Fire Department
3) Thomas H; Walbolt -' Recreation Supervisor,' Parks &. Recreation Department'
4) Patricia R. Buzal, - Senior Accountant, Finance
1
, 03/14/02
Also Present: PaulO' Rourke
Lee Dehner
Margie Simmons
Deb Ford
Patricia O. Sullivan
, ITEM #4 ~ Action Items
mpac0302
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Member Jensen moved to approve Years of Service Pensions for Charles J. Dunn,
Jr", Charles S, Flowers, Thomas H. Walbolt,and Patricia R. Buzek. The motion was duly
seconded and carried unanimously. '
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b) Review and Action on Employee Requests to Vest Pensions
1) Carla Collins - Police Service Technician, Police Department
Carla Collins has resigned her position after being employed by the City for more
than 15 years and will qualify to receive a reduced pension beginning May 1, 2011,
, Member Schmalzbauer moved to approve the request by Cf3rla Collins to vest ,her
pension, The motion was duly seconded and carried unanimously.
c) Approval of New Hires as Pension Plan Members
<, ,As of March 7, 2002, the City had 1710,15 FTEs out of 1834.7 budgeted
positions. L:ance Kielich originally was hired as permanent part~time; changed to full-time
and pension eligible as of February 11, 2002. Robert Russell originally was hired as
permanent part-time; changed to ful!-time and pension eligible as of January 26, 2002.
Member Jensen moved to acc,ept these employees into membership in the Pension '
Plan:
Date of Pension
Emplovment Elio, Date
Kim Peterson, Field Service Rep, Customer Service
Raymond Galluccio, Maint. Worker II Police Department
Melanie Kindred, Police Information Tech. Police Department
Lance Kielich, Equipment Operator III Public Services
Edward Lear, Solid Waste Worker Solid Waste
Robert Russell, Marine Facility Operator Marine & Aviation
Ronald Francis, Network Support Tech. II Information Technology
01/28/02
02/11/02
02/11/02
03/24/01
02/11/02
03/21/84
02/15/02
01/28/02
02/11/02
02/11/02
02/11/02
02/11/02
01/26/02
02/25/02
ITEM #5 - Pendinot Business
, '
a) E~win Feldhaus - Set Hearing Dat~ for Non-job-connected Disability Pension Request
Consensus was to schedule a hearing for Edwin Feldhaus' request for a non-job-
. ' connected disability pension on April 11, 2002,
mpac0302
03/14/02
2
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bl PriceWaterhouse Coopers Contract
, On ,August 13, 2001, the Pension Trustees approved the FY (fiscal year) Pension
Plan budget to Include $30,000 for pension actuary and consulting services related to
potential changes to the Pension Plan. The PriceWaterhouse Coopers, LLP, contract needs'
to be increased by $30,000, from $94,000 ~o $124,000, to conduct actuarial analyses on
the costs of potential Pension Plan changes: 1) DROP (Deferred Retirement Option Plan); 2)
"opt in" option for excluded employees; 3) purchase of prior government service credit; 4)
designation of beneficiary and joint pensioner option: 51 normal retirement conversion
benefit; 6) disability presumption for "extra duty" assignments; 7) reemployment option: 8)
increase of cost of living adjustment from 1.5% to 3%; 9) increase to benefit formula
multiplier from 2.75% to 3,5%: 10) average final compensation from average salary of 5
best years of last 10 to three best years of credited service; and 11) formal actuarial
impact statement, which must be prepared for the State prior to implementation of any
changes.
, ,
Human Resources Director Paul O'Rourke reviewed the approval schedule necessary
, for the issue to appear on the November 2002 ballot as a referendum item; Some items
may ba controversial and not considered this year. The City Commission will determine if
items are listed together or separately. It was indicated Items #8, #9, and #10 will be the
most expensive to fund. The actuary will determine actual costs, Necessary'funds were
earmarked for Pension Plan changes and are available '
Memher Gray moved to recommend the Pension Trustees approve an increase in the
amount authorized to be spent with PriceWaterhouse Coopers, LLP for actuary and other
related pension consulting services related to potential changes in the Pension Plan by
$30,000 for a total cost not to exceed $124,000 for the three-year period ending
December 31, 2004. The motion was duly seconded and carried unanimously.
To hasten the approval process, it was recommended related items be presented to
the City Commission in July, following approval by the Pension Trustees,
PAC (Pension Advisory Committee) Attorney Lee Dehner will submit separately for
approval ordinance language to implement items to comply with the Economic Growth and
Tax Relief Reconciliation Act of 2001. These changes are required by law and do no~ need
approval via referendum,
In response to a question, Mr. O'Rourke said the unions have been included in the
process since the first draft was provided in August 2001. Three meetings with the unions
havo occurred and three more are planned, Staff will not negotiate changes with the
unions until actuarial costs are determined. Mr, O'Rourke will report on union support for
, issues when t~e items are pre~ented to the PAC, Pension Trustees, and City Commission
for approval.
mpac0302
3
03/14/02
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Requ~st for $40,000 Additional for Christiansen & Dehner for Remainder of FY 2001/02,
The Pension Trustees approved 'a Pension Plan budget, which included an estimated
$50,000 for legal services. To date, $30,000 has been committed to Christiansen &
Dehner for legal services; Staff requests approval of an additional estimated $40,000 to
, Christiansen & Dehner for the remainder of FY (fiscal year) 2001/02 to cover: 1) increased
number of applications being processed, with 8 pending; 2) late receipt of bills for
expenses incurred in previous fiscal year with $5,777.71 bill for September 2001 paid in
October; 3) attorney attendance at six meetings at $1,000 each with staff and unions to
discuss proposed pension ,changes; and 4) disability medical expenses charged to legal
services with 8 pending cases, estimated at $1,000 each.
Mr. O'Rourke stated Christiansen & Dehner are billed and pay medical expenses
related to disability cases. The firm also coordinates medical appointments and gathers
documents necessary for presentation to the PAC, Additional funding for Christiansen &
Dehner to oversee the Investment Committee and $5,000 for reviewing contracts is not
part of this request. In response to a question, Mr, O'Rourke said costs for normal
representation by Christiansen & Dehner averages $30,000 annually, Each disability case'
costs more than $1,000 to process, The request also covers meeting costs related to
proposed Pension Plan changes, Mr. Dehner said added costs will cover work to restate
the Plan and disability work, which has increased from 2 or 3 cases last year, to 9 pending
ones. Mr. O'Rourke requested a cushion so that another request for additional funds will
not be necessary.
Finance Director Margie Simmons said without approval, staff cannot issue checks,
even to cover medical expenses, once the $30,000 budget is spent. Mr. O'Rourke said
currently, monthly legal expenses now average $5,500, In response to a question, Ms.
Simmons said approximately $6,000 of the other $20,000 approved by the Pension
Trustees was, used for legal services provided by Cypen & Cypen. The remainder has not
been spent and was not designated for Christiansen & Dehner. A new purchase order will
cover next year's expenses for Christiansen & Dehner, In response to a question, Ms.
Simmons anticipated the City will receive Christiansen & Dehner's bill for September's
services in October and will pay that bill from the next fiscal year budget.
Member Jensen moved to approve an expenditure in the estimated amount of
$40,000 to the law firm of Christiansen & Dehner for legal services for the remainder of FY
2001/02 budget, The motion was duly seconded and carried unanimously.
, '
Approval of Settlement Agreement with SunTrust
SunTrust, one of the Pension Plan's custodian banks, holds assets managed by 6 or
the Plan's 10 money managers, On May 31, 2001, the Pension Plan was funding a new
international manager with $20'million taken from other money managers. A SunTrust
employee incorrectly 'contacted money manager, Vanderbilt, and informed them to convort
$20-million from bonds into cash. Staff has no reason or logic as to why SunTrust notified
Vanderbilt, as Vanderbilt was not a party to this transaction, A,fter noticing the cash
mpac0302
4
03/14/02
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remained in their account following the transfer date, Vanderbilt notified the City about the
SunTrust directive. Staff .directed Vanderbilt to reinvest the funds into the appropriate
securities.
, .
"
, Plan performance measurement consultant Callan and Associates has estimated the
resulting damages to the plan. As interest rates moved significantly over the short period
of time, actual costs are difficult to calculate. Callan and Associates estimated a market
loss of $103,236.27 and transaction costs of $76,532.69 for a total estimated loss of
$179,768.96. SunTrust calculated the City's loss at $79.,445.03,
Staff has worked with SunTrust to resolve this problem without litigation. Due to,
the unique characteristics of the market at that time, staff feels $140,000, would be
reasonable compensation. SunTrust has offered $109,959. Considering costs associated
with litigation, staff recommends accepting the SunTrust offer.
In response to a question, Ms. Simmons said the exact size of the loss is difficult to
determine due to, a large number of variables, including,negotiations, which are required as
part of the ,bond purchase process. In response to a question, Cash & Investments
Manager Steve Moskun said this. represents a good faith settlement. SunTrust makes only,
a minor profit acting as the City's custodian bank. It was suggested the City threaten to
take its business to another bank. ,Concern was expressed SunTrust had made the error
and,was unwilling to make the plan whole. It was felt it is in the best interest of the Plan'
to accept the,settlemi:mt and avoid litigation costs.
')
: ' '
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, Member Jensen moved to recommend the Pension Trustees approve the settlement
agreement with SunTrust for damages in the ,,!mount of $109,959 to be paid by SunTrust
to the Employees' Pension Plan. The motion was duly seconded and carried unanimously.
ITEM #6 - Director;s Reports - None.
The next PAC meeting is scheduled for April 11, 2002.
ITEM #7 - Committee Members to be Heard - None.
ITEM #8 '. Adiournment
The meeting adjourned at 9:54 a.m.
Attest:
. (.;)'
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03/14/02