11/14/2002 (2)
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PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
'November 14, 2002
, Present: Whitney Gray
John Lee,
John Schmalzbauer
Tom Jensen
Hoyt P. Hamilton
, Frank Hibbard
,.' Empty seat
,Also Present: . Richard Ebelke
Cynthia Bender
Debbie Ford
Patricia O. Sullivan
Acting Chair/Commissioner
Committee Member
Committee Member
Committee Member
Committee Member/Commissioner
Committee Member/Commissioner
Committee Member
Assistant Human Resources Director
Human Resources Manager
Human Resources Analyst
Board Reporter
, '
The Chair called the'meeting to order at 9:03 a.m. at City Hall.
To provide continuity for research, Items ~re In agenda order although not
necessarily discussed In that order.
, ITEM #2 - Selection of Chair & Vice-Chair (Tabled)
ITEM #3 - Aporoval of Minutes
In reference to the October 10, 2002, minutes, it was stated the third paragraph on page
four should read, "It was requested staff update the committee regarding the Integrated
'Disability Management study." '
, Member Jensen moved to approve the minutes of the regular meeting of October 10,
2002, as amended. The motion was duly seconded and carried unanimously.
ITEM #4 - Emplovees to be Heard ~ None
ITEM #5 ...: 'Action Items
a) Review and Action on Employee Requests for Years of Service Pensi,ons.
'1. Marvin L. Green - Pollee Officer, Police Department
2. Dale A. Hoffman - Fire Lieutenant, Fire Department
. > , "
, Member Jensen moved to approve Years of Service Pension!? for Marvin L. Green and
Dale A: Hoffman. The motion was duly .seconded arid carried unanimously.
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, ~ b) Review and Action of Employee Requests to Vest Pensions
1. Lee Achterhof - Marine Recreation Program Supervisor, Marina
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Lee Achterhof has resigned his position after being employed by the City for more than
10 years. He will qualify to receive his reduced pension beginning March 1, 2012.
2. Douglas ~. Pope - Public Utilities Supel visor, Public Utilities
Douglas R. Pope has resigned his position after being employed by the City for more
than 19 years. He will qualify to receive his reduced pension beginning November 1, 2006.
Member Lee moved to approve the requests by Lee Achterhof and Douglas R. Pope to
. vest their Pensions. The motion was duly seconded and carried unanimously.
,
b) Approval of New Hires as Plan Members.
As of November 7.2002, the City had 1730:47 FTEs out of 1844.9 budgeted positions.
Elaine Lewis originally was employed as part-time; transferred to full-time and pension eligible '
as of October 7, 2002.
Member Jensen moved to accept the following employees into membership In the
Pension Plan:
Date of Pension
Emplovment EliQ. Date
Debra Lagroix, Staff Assistant Public Utilities 09/23/02
Frederick Broda, Parking Technician Engineering 10/07/02
Heather Faessler, Engineering Specialist Engineering 10/07/02
John Rlst, Systems Analyst Official Records/Leg Svcs 10/07/02
Rosemarie Alfaro, Administrative Analyst Official Records/Leg Svcs 10/21/02
Darlene Ruud, Accounting Technician Planning & Dev. Services 10/21/02
Deborah Moore, Accounting Technician Public Utilities 10/21/02
Tyrone Austin, WWTP Operator Trainee Public Utilities 10/21/02
Jonathan Hunter, WWTP Operator Trainee Public Utilities 10/21/02
Elaine Lewis. Fire Public Educa/lnfo Spec. Fire Department 03/01/99
Alexander Lane, Public Utilities Technician I Public Utilities 11/04/02
Jayme Weaver, Public Utilities Technician I Public Utilities 11/04/02
Roger Lane, Life Hazard Safety Inspector Fire Department 11/04/02
. James Beattie, Mechanic II Solid Waste/General Svcs 11/04/02
Douglas Ball, Mechanic II , Solid Waste/GeneralSvcs 11/04/02
Bruno Balermann. Polfce Cadet , Police Department 11/04/02
Thomas Cleator" Tradesworker I Solid Waste/General Svcs 11/04/02
Lafayette Gillette. ,Parks Service Tech I Parks & Recreation 11/04/02
Angel Haines, Senior Staff Assistant Planning & Dev. Services 10/29/02,
.. The motion was duly seconded and carried unanimously.
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ITEM #6 - Pendinq/New Business
a) Contract with Northern Trust for Custodial Service
At the Trustee's direction, staff went out with a RFQ (Request For Qualifications) for
custodial services. Ten financial institutions responded positively to the RFQ: 1) Bank of New
York; 2) Citibank; 3) JP Morgan/Chase; 4) Merrill Lynch; 5) Northern Trust; 6) Salem Trust; 7)
State Street Bank & Trust; 8) South Trust; 9) Wachovia; and 10) Wells Fargo Bank.
Three financial institutions declined to submit, citing lIassets size too small," "services
requested can not be provided," and "can not meet minimum qualifications": 1) Deutsche Bank;
2) Mellon Trust; and 3) Sun Trust Bank
" FinanciallnsUtutions were ranked on criteria: 1) Qualifications and Experience; 2)
Settlement and Custody; 3) Systems & Technology; 4) Client Servicing; 5) Fees; 6) Securities
Lending (Review only); and 7) Performance Measure and Guideline Compliance (Review only).
, . Based on the above criteria, the top three financial institutions and their score are: 1)
Bank of New York (87); 2) State Street (87); and 3) Northern Trust (86).
Cash & Investments Manager Steve Moskun reviewed recent changes to the market
and indicated it has been difficult to determine the value of the Pension Plan's portfolio for
analysis. He said any of the top-rated financial institutions can provide that type of information
within five minutes. He said staff recommends Northern Trust as the institution is smaller than
the other two and more customer friendly. Staff feels more comfortable with Northern Trust's
staff, who they feel have more expertise. The firm's CEO met with staff, and personally
expressed their commitment. In response to a question, he said no published ranking exists.
Callan ranked the top three institutions within one point. A price war is underway, with Northern
Trust lowering their rate. .
Support was expressed for Northern Trust. In response to a question, Mr. Moskun said
staff would recommend Northern Trust even if the City does not participate in the institution's
securities lending services, which would lower costs an additional $25,000. The contract is
open'ended. At any time, the City can terminate the contract, which contains no provision to
raise fees', It was stated to avoid liability, compliance issues must be monitored, which Is not
being done currently.
Member Jensen moved to recommend approval of the contract with Northern Trust to
provide custodial services for the Employee's Pension. The motion was duly seconded and
carried unanimously.
b) Contract with Northern Trust for Securities Lending Services
" Securities lending Is the process where the owner of a security (stock or bonds) loans
the security to a third party. The borrower benefits because they get the use of the security.
The owner of the security benefits through extra Income. ' The lender/owner of the security
, retains all the economic benefits of the security except proxy voting.
mpac1102
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11/14/02
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Securities lending has a long history and very definitive regulations: For example,
statutes give the lender the right to recall a security at anytime. There are regulations that
govern the behavior of all parties Involved.
Securities lending is transparent to our money manager and will have no effect on them
or their decision to, buy or sell a security.
, The main reasons organizations, borrow securities are: 1) To cover a settlement failure;
2) To cover a short trading position; and 3) In a proxyfig~t.
When securitles are loaned, the borrower provIdes collateral to the lending agent with a
value of 102% of the market value of the security being loaned. On a daily basis the collateral
Is 102% of the market value of the security being loaned and adjusted if needed. The vast
majority of the time the collateral is in cash.
The lending agent (Northern Trust) invests the collateral at a rate higher than they are
, paying, the borrower. The additional earnings are split 70% Clearwater 30% Northern Trust.
Mr. Moskun said no plan sponsor has lost any money on securities lending. The
industry has produced one standard contract for securities lending services. Northern Trust will
absorb all risk. It was felt securities lending will provide an opportunity for Income.
Member Jensen moved to recommend approval of the contract with Northern Trust
(lending agent) to provide securities lending services for the Employeets Pension Plan. The
mo'tlon was duly seconded and carried unanimously.
ITEM #7 - Director's Reports
Human Resources Manager Cynthia Bender provided a project overview of 10M
'-(Integrated Disability Management). A draft of the Phase I assessment has been completed
and is being finalized. A team of key managers will review the assessment to determine which
recommendations should be Implemented. Phase II Implementation will begIn in January and is
planned for completion at the end of 2004~ A draft will be released once revisions are
completed.
Ms. Bender said the cost of sick leave increased by $1-million between 2000 and 2001.
In response to a question, she said staff may consider more effective ways to determine
ongoing disability claims, rather than self-evaluation. It was stated light duty employees need to
be provided useful and meaningful work. Concern was expressed "make work positions," over
extended periods of time, have significant finarcial costs and erode morale.
., Condern was expressed Human' Resources staff are not qualified to make medical
decisions. Ms. Bender said one recommendation is to hire a medical professional, such as a
nurse practitioner, to manage a total health management system. To avoid confusion, it was
recommended one department handle all disability-related issues. .
mpac1102
4
11/14/02,
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, , ' ITEM #8 - Committee Members to be Heard
, 'in reference to' Joseph Egg~r's suit against the City regarding the seventh seat on the'
PAC (Pension Advisory Committee). the Chair reported at the October 31. 2002 hearing., the'
judge decided the PAC is not a legal entity and could not be include"d in any suit rhe judge
'also dlsmlss,ed the suit but allowed it to be amended. M~anwhilet the PAC will contin,:,e to hear
cases. '
ITEM #9- Adlournment
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Attest: '.. '
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