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09/20/2010 TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING MINUTES CITY OF CLEARWATER September 20, 2010 Present: Chair/Trustee Frank Hibbard, Trustee George N. Cretekos, Trustee John Doran, Trustee Paul Gibson, and Trustee Bill Jonson. Also William B. Horne II - City Manager, Jill S. Silverboard - Assistant City present: Manager, Rod Irwin - Assistant City Manager, Pamela K. Akin - City Attorney, Rosemarie Call - City Clerk, and Cynthia E. Goudeau - Deputy City Clerk. To provide continuity for research, items are in agenda order and not necessarily discussed in that order. 1. Call to Order The meeting was called to order at 9:37 a.m. at City Hall. 2. Approval of Minutes 2.1 Approve the minutes of the August 16, 2010 Pension Trustees Meeting as submitted in written summation by the City Clerk. Trustee Bill Jonson moved to approve the minutes of the August 16, 2010 Pension Trustees Meeting as submitted in written summation by the City Clerk. The motion was duly seconded and carried unanimously. 3. Pension Trustee Items 3.1 Approve a contract with Riverbridge Partners as a small cap growth manager for the Employees Pension Plan and authorize the appropriate officials to execute the same. Staff received notice in mid July that the Pension Plan's current small cap growth manager, Lee Munder, was terminating the product in which a portion of the Pension Plan assets were invested. Staff directed Cap Trust, the Pension Plan's consultant, to start a small cap growth manager search. Cap Trust had recently completed a small cap growth manager search for another client and was able to present a list of well-qualified candidates in a short amount of time. Those firms Pension Trustees 2010-09-20 1 were: Eagle Asset Management, Riverbridge Partners, Cortina Asset Management and Lee Munder. The product Lee Munder offered in the search is different from the pension plan's current investment product. Staff worked with Cap Trust and decided to interview the following firms: Eagle Asset Management, Riverbridge Partners and Lee Munder Based on the interviews and other due diligence, the Pension Investment Committee recommends the hiring of Riverbridge Partners as the Pension Plan's small cap growth manager. The fee Riverbridge charges is 0.90% (90 basis points) which represents a special fee Cap Trust negotiated with Riverbridge, as opposed to their standard fee of 1% (100 basis points). This fee is lower than the average fee comparable managers charge. Staff will work with Northern Trust, the Pension Plan's custodian, to facilitate the transfer of assets from Lee Munder to Riverbridge. It should be noted that during July, staff began the process of rebalancing the portfolio in accordance with the approved assets allocation study results. As part of that rebalancing, more than half of the assets under Lee Munder's management were moved to ING, our large cap growth manager. This limited our exposure to the Lee Munder product during the time when they are moving toward closing the product. Trustee George N. Cretekos moved to approve a contract with Riverbridge Partners as a small cap growth manager for the Employees Pension Plan and authorize the appropriate officials to execute the same. The motion was duly seconded and carried unanimously. 3.2 Approve the termination of Lee Munder as the Pension Plans small cap growth manager and authorize the appropriate officials to execute the same. Staff received notice in mid July that the pension plan's current small cap growth manager, Lee Munder, was terminating the product in which a portion of the Pension Plan assets were invested. Staff and Cap Trust, the Pension Plan's consultant, felt it is was more appropriate for another manager to manage this asset class. Staff and Cap Trust are recommending the hiring of Riverbridge to manage these assets under another agenda item It should be noted that during July, staff began the process of rebalancing the portfolio in accordance with the approved assets allocation study results. As part of that rebalancing, more than half of the assets under Lee Munder's management were moved to ING, the pension plan's large cap growth manager. This limited the plan's exposure to the Lee Munder product during the time it was being closed. If the trustees approve these actions, the assets will be removed from Lee Munder to Riverbridge Partners. Northern Trust, the pension plan's custodian, will help facilitate the transfer. Trustee John Doran moved to approve the termination of Lee Munder as the Pension Plans small cap growth manager and authorize the appropriate officials to execute the same. The motion was duly seconded and carried unanimously. Pension Trustees 2010-09-20 2 3.3 Accept new hires into Pension Plan as listed. Pension Name, Job. Class, & Dept./Div. Hire Date Pension Elig. Date Gervis Ochoa, Administrative Analyst/Public Utilities 6/21/10 6/21/10 Jeremy Kotter, Solid Waste Wkr./Sol. Waste-Gen. Ser. 2/15/10 7/17/10* Robert Bostick, Solid Waste Wkr./Sol. Waste-Gen. Ser. 3/4/10 7/17/10** Michael Finocchio, WWTP Oper. Trainee/Public Utilities 5/24/10 7/17/10*** Sean Witherspoon, Electronics Technician/Engineering 7/19/10 7/19/10 *originally hired as temporary on 2/15/10; status changed to permanent and pension eligible as of 7/17/10 **originally hired as temporary on 3/4/10; status changed to permanent and pension eligible as of 7/17/10 ***originally hired as temporary on 5/24/10; status changed to permanent and pension eligible as of 7/17/10 Trustee Paul Gibson moved to approve accept the employees listed into the City of Clearwater's Employees' Pension Plan as approved by the Pension Advisory Committee. The motion was duly seconded and carried unanimously. 3.4 Mark Carlson, Gregory Wolfe, Elaine Muldowney, Joseph Arrien, Muhammad Abdur-Rahim and Cynthia Goudeau be granted regular pensions under Sections 2.397 and 2.398 of the employee pension plan, as recommended by the Pension Advisory Committee. Mark Carlson, Construction Inspector II, Engineering Department , was employed by the City on January 26, 1981, and his pension service credit is effective on that date. His pension will be effective November 1, 2010. Based on an average salary of approximately $50,018 per year over the past five years, the formula for computing regular pensions, and Mr. Carlson's selection of the 100% Joint and Survivor Annuity, this pension will approximate $40,115 annually. Gregory Wolfe, Gas Technician III, Gas Department , was employed by the City on November 19, 1990, and his pension service credit is effective on that date. His pension will be effective December 1, 2010. Based on an average salary of approximately $47,159 per year over the past five years, the formula for computing regular pensions, and Mr. Wolfe's selection of the 75% Joint and Survivor Annuity, this pension will approximate $26,025 annually. Pension Trustees 2010-09-20 3 Elaine Muldowney, Customer Service Representative, Gas Department , was employed by the City on September 28, 1987, and her pension service credit is effective on that date. Her pension will be effective September 1, 2010. Based on an average salary of approximately $35,980 per year over the past five years, the formula for computing regular pensions, and Ms. Muldowney's selection of the 10- Year Certain and Life Annuity, this pension will approximate $24,779 annually. Joseph Arrien, Fleet Manager, Solid Waste/General Services Department , was employed by the City on October 4, 1982, and his pension service credit is effective on that date. His pension will be effective August 1, 2010. Based on an average salary of approximately $66,645 per year over the past five years, the formula for computing regular pensions, and Mr. Arrien's selection of the Life Annuity, this pension will approximate $58,547 annually. Muhammad Abdur-Rahim, Stormwater Maintenance Manager, Public Services Department, was employed by the City on March 20, 1974, and his pension service credit is effective on October 3, 1983. His pension will be effective November 1, 2010. Based on an average salary of approximately $70,564 per year over the past five years, the formula for computing regular pensions, and Mr. Abdur-Rahim's selection of the Joint & Survivor Annuity, this pension will approximate $52,475 annually. Cynthia Goudeau, City Clerk, Official Records and Legislative Services Department , was employed by the City on November 27, 1978, and her pension service credit is effective on October 1, 1979. Her pension will be effective October 1, 2010. Based on an average salary of approximately $96,259 per year over the past five years, the formula for computing regular pensions, and Ms. Goudeau's selection of the 50% Joint and Survivor Annuity, this pension will approximate $84,583 annually. Section 2.397 provides for normal retirement eligibility when a participant has completed thirty years of credited service, has reached age 55 and completed twenty years of credited service, or has reached age 65 and completed ten years of credited service. Mr. Carlson, Mr. Wolfe, Ms. Muldowney, Mr. Arrien and Mr. Abdur-Rahim qualify under the 20 years of service and at least age 55 criteria and Ms. Goudeau qualifies under this criteria and the 30 years of service criteria. Trustee Bill Jonson moved to grant Mark Carlson, Gregory Wolfe, Elaine Muldowney, Joseph Arrien, Muhammad Abdur-Rahim and Cynthia Goudeau regular pensions under Sections 2.397 and 2.398 of the employee pension plan, as recommended by the Pension Advisory Committee. The motion was duly seconded and carried unanimously. Pension Trustees 2010-09-20 4 3.5 Katrina Breedlove, Jim Sokal, Ami Beery and David Marshall be allowed to vest their pensions as provided by Section 2.397 of the Employees’ Pension Plan, as recommended by the Pension Advisory Committee. Katrina Breedlove, Senior Systems Programmer, Information Technology Department, was employed by the City on June 12, 2000, and began participating in the Pension Plan on that date. Ms. Breedlove terminated from City employment on July 2, 2010. Jim Sokal, Electronics Technician, Engineering Department, was employed by the City on January 8, 1996, and began participating in the Pension Plan on that date. Mr. Sokol terminated from City employment on July 2, 2010. Ami Beery, Customer Service Coordinator, Customer Service Department, was employed by the City on January 19, 1999, and began participating in the Pension Plan on that date. Ms. Beery terminated from City employment on August 6, 2010. David Marshall, Police Officer, Police Department, was employed by the City on June 9, 1997, and began participating in the Pension Plan on that date. Mr. Marshall terminated from City employment on July 15, 2010. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater or change status from full-time to part-time after completing ten or more years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Section 2.397 provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed 30 years of credited service, or has reached age 65 and completed ten years of credited service. Ms. Breedlove would have completed 20 years of service and reached age 55 on October 2, 2026. Her pension will be effective November 1, 2026. Mr. Sokal would have completed 10 years of service and reached age 65 on June 16, 2013. His pension will be effective July 1, 2013. Ms. Beery would have completed twenty years of service and reached age 55 on August 14, 2025. Her pension will be effective September 1, 2025. Section 2.393 also (p) provides for normal retirement eligibility when a participant has completed twenty years of credited service in a type of employment described as "hazardous duty" and further specifically defines service as a Police Officer as meeting the hazardous duty criteria. Mr. Marshall would have completed 20 years of service on June 9, 2017. His pension will be effective July 1, 2017. Trustee John Doran moved to allow Katrina Breedlove, Jim Sokal, Ami Beery and David Marshall to vest their pensions as provided by Section 2.397 of the Employees’ Pension Plan, as recommended by the Pension Advisory Committee. The motion was duly seconded and carried unanimously. Pension Trustees 2010-09-20 5 4. Other Business - None. 5. Adjourn The meeting was adjourned at 9:40 a.m. Chair Employee's Pension Plan Trustees Attest OFTNEA??? City Clerk ?• ?_ Pension Trustees 2010-09-20 6