03/13/2003 (2)
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'.. Pension Advisory Com,mittee
Minutes,
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Acting Chair/Commissioner
Committee Member
Committee Member
Committee Member/Commissioner
Committee Member/Commissioner - departed 11:44 a.m.
Committee Member
Committee Member
PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
March 13, 2003
Present: Whitney Gray
John Lee
Tom Jensen
HOyt P. Hamilton
Frank Hibbard
Nathan Hightower
John Schmalzbauer
Also Present: Joe Roseto
Margie Simmons
Debbie Ford
Brenda Moses
Human Resources Director
Finance Director
Human Resources Analyst
Board Reporter
The Acting Chair called the 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 ~ Selection of Chair and Vice Chair
It was remarked t~at at the April meeting, the Commission may change the appointment
of Commissioners serving on various boards. As the representation on the PAC (Pension
Advisory Committee) also could change, it was suggested that members might want to consider
postponing the sel~ction of Chair and Vice-Chair to the next meeting. .
Consensus was to postpone the selection of Chair afld Vice Chair to the next meeting.:
Item #3 - Approval of Minutes of February 13. 2003
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Member Hibbard moved to approve the minutes of the regular meeting of February 13.
2003, as recorded and submitted in written summation to each board member. 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 Pensions:
1. FranCis K. Mays, Gas Department
2. Eddie Lloyd, Public Utilities ..
.3. Danny West. Police Department
4. Robert McKenna, Fire Department-
S. Jerry Lovett. Fire Department
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Member Schmalzbauer moved to approve Years of Service Pension for Francis K.
Mays, Eddie Lloyd, Danny West, Robert McKenna, and Jerry Lovett. The motion was duly
seconded and carried unanimously.
b. Approval of New Hires as Plan Members:
As of February 27, 2003, the City had 1744.01 FTEs out of 1844.9 budgeted positions.
Member Hibbard moved to accept the following employees into membership in the
Pension Plan:
Pension Elig.
Name. Job. Class. & Dept.lDiv.
Hire Date
Date
Amy Mobley, Police Communications Op/Police 8/10/02
Bel"Jnett Elbo, Traffic Op Engineer/Engineering 2/3/03
Edward O'Neal, Solid Waste Worker/Solid Waste/Gen Svcs 2/10/03
Jonathan Phillips, Solid Waste Worker/Solid Waste/Gen Svcs 2/10/03
Bryan Elbell. Solid Waste Worker/Solid Waste/Gen Svcs 2/10/03
Vance Peel, Mechanic II/Solid Waste/Gen Svcs 2/10/03
Marlene Torres, Custodial Worker/Solid Waste/G'en Svcs 2/10/03
Judith LaCosse, Staff AssUOfficial Records & Legis Svcs 2/10/03
Rebecca Wilkerson, Personnel/Payroll Tech/Parks & Rec . 2/10/03
Lana Beck, TV Production SpecialisUPublic Communications 2/10/03
Brandi Portalatin, Parks Svc Tech/Parks & Recreation 2/10/03
Thomas Jensen. Senior Planner/Planning 2/24/03
Emilio Maldonado. Solid Waste Worker/Solid Waste/Gen Svcs2/24/03
Alexis Wells, Parks Svcs Tech IIParks & Rec 2/24/03
Matthew McCombs, Mechanic II/Solid Waste/Gen Svcs 2/24/03
Michelle Friedline, Rec Programmer/Parks & Rec 2/24/03
Rafael Salazar, Police RecruiUPolice 12/16/02
12/13/02 ·
2/3/03
2/10/03
2/10/03
2/1 0/03
211 0/03
2/1 0/03
2110/03
2110/03
2/10/03
2/10103
2124/03
2/24/03
2124/03
2/24/03
2/24/03
12/16/02
· Originally hired as part-time on 8/10/02; status changed to full-time and pension eligible as of
12/3/02.
The motion was duly seconded and carried unanimously.
Item #6 - Pendina/New Business:
(Items #6(b) a'nd 6(e) were discussed prior to recessing at 9: 19 a.m.)
a. Discussion of Pension Changes
Consensus was to postpone discussion of Item #6{a) until the next meeting.
b. Ownership Change of EPW Investment Management, Inc.
'EPW Investment Management is a wholly owned subsidiary of United Financial Holding.
United Financial Holdings is merging with Synovus Financial Corporation.
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. The City's contract with EPW Investment Management provides that the City must
approve the assignment of the contract.
EPW is a fixed income manager who manages a portfolio of Treasuries for the plan.
EPW also provides equity investment advice to the plan.
For the year ending December 31, 2002, EPW was ranked in the top 9th percentile. For
the last 5 years they were ranked in the top 33rd percentile.
There will be no changes at EPW Investment Management.
The Pension Investment Advisory Committee recommends approval of the change.
Member Hamilton moved to approve the change in ownership of EPW Investment
Management, Inc. The motion was duly seconded and carried unanimously.
c. Fixed Income Manager Search
For the year ending December 31, 2002, the Employees Pension Plan had a rate of
return of (8.75)0/0 V.S. the benchmark of.(8.86)0/0.
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While the plan's return beat the customized benchmark last year, two of three fixed
income managers (Vanderbilt Capital Advisors and Sirach Capital Advisors) performed near the
bottom of their peer group for the last two years.
Vanderbilt Capital Advisors attributes their poor relative performance to their belief that
the corporate bond sector will out perform all other fixed income sectors. They believe that they
were early and time will prove them right. For the last two years Vanderbilt performed at the
90th and 96th percentile. (1 st percentile is the best and 100th percentile is ~orst performers.)
Sirach Capital Advisors has had some personnel problems. They have made changes,
however their performance has not improved. For the last two years they performed at.the 99th
and 98th percentile.
. The plan's consultants also are recommending that the City move some of the plan's
assets from Treasuries to other fixed income securities. It is their belief the US Treasuries have
seen their run and Treasuries will lag other fixed income sectors in performance.
The Pension Investment Committee unanimously recommends an additional"fixed
income" style manager.
The additional fixed income manager is th.e first step to reduce funding and/or terminate
one or both of the 'under performing managers.
Callan's fee for the search will be $25,000. This fee will be paid by directing investment
trades through a selected broker and will not be' an additional direct expense of the pension
plan.
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The Investment Committee will come back to the Trustees in late summer or early fall
with the results of the search for approval.
The cost of committee member travel to investigate/research the top ranked firm(s) is
estimated at $4,000. The actual amount will be affected by the location of the investment
manager(s) and the number that needs to be researched.
In response to a question. Cash & Investments Manager Steve Moskun said fund
managers are instructed to execute the best possible trade and to use the Bank of New York if
possible to minimize trade commissions. For those trades executed through the Bank of
America. a portion of every commission received by a fund manager goes into an account for
the City at the Bank of New York. Callan & Associates is paid annual fees to perform fund.
manager searches out of that account instead of from the pension plan. Unused monies
remain in the account for payment of future fees.
In response to a question. Finance Director Margie Simmons said the process to search
for an additional "fixed income" style manager takes time because it involves a search by Callan
& Associates. . Once the search is complete, staff brings forth the request to the PAC for a
recommendation to the Pension Trustees. She said it is possible that the City would have four
fund managers for a time until their performance indicates which three should be retained.
In response to a question, Mr. Moskun said Callan & Associates' database includes
approximately 3,000 fixed income style managers. They perform a search based on
performance and other criteria required by the City such as proven history, minimal volatility,
etc. Once staff rates the perspective firms, they meet with Callan & Associates to develop a
short list of potential fund managers. Mr. Moskun said Callan & Associates works with these
manager daily, has a relationship with the firms, and can provide information regarding pending
personnel changes, perceived changes, etc. that could affect the City's decision in selecting a
fund manager. Firms on the short list are interviewed and the City interviews the top three.
Staff expedites the process as much as soon as possible.
It was remarked that John Willoughby, fixed income manager, serves two roles: 1) He
serves as ~m advisor, and 2) he manages a fixed income portfolio. In a previous meeting, Lee
Dehner, the PAC Attorney, had indicated that Mr. Willoughby does not meet the definition of a
consultant. Concern had been expressed that his participation in searches for new fund
managers should be limited because of his dual role. In response to a question. Mr. Moskun
said Bill Badger of Callan & Associates had made the recommendation that the City move
some of the plan's assets from Treasuries to other fixed income securities. When asked his
opinion, Mr. Willoughby concurred that although he is the manager of the Treasuries fund,
funds should be moved from Treasuries .due to current economic conditions.
The meeting recessed from 9: 19 to 11 :43 a.m. for a joint meeting of the Pension
Trustees and Pension Advisory ,Committee to discuss pension attorney proposals.
Member Hibbard moved to recommend that the City Commission authorize staff to
conduct a search for a "fixed income" style manager for the Employees Pension Fund,
authorize Callan & Associates to assist with the search for a fee of $25,000, authorize the cost
of the search, including staff travel of approximately $4,000, to be paid from the pension fund.
The motion was duly seconded.
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In response to a question, Mr. Moskun said staff becomes concerned when
management companies change personnel. Ms. Simmons said before a relationship with a
management company can be severed, the request to do so must be brought before the PAC
'and receive final approval from the Tr~stees.'
Upon the vote being taken, Members Hamilton. Jensen, Lee, Hightower, and
~chmalzbauer, and Acting Chair Gray voted "aye". Member Hibbard was absent. Motion
carried.
Item #7 - Director's Reports - None.
Item #8 - Committee Members to be Heard - None.
Item #9 - Adiournment
The meeting adjourned at 11 :46 a.m.
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Attest:
~i!:Yl1l/ d(J~ .
Board Reporter
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Pension Advis,ory 2003-0313
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Acting
Pan~io~^~viBory Committee
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3/13/03