05/14/2012
TRUSTEES OF THE EMPLOYEES’ PENSION FUND MEETING MINUTES
CITY OF CLEARWATER
May 14, 2012
Present: Chair/Trustee George N. Cretekos, Trustee Paul Gibson, Trustee
Doreen Hock-DiPolito, Trustee Bill Jonson, and Trustee Jay E.
Polglaze.
Also Present: William B. Horne II - City Manager, Jill S. Silverboard - Assistant City
Manager, Rod Irwin - Assistant City Manager, Pamela K. Akin - City
Attorney, Rosemarie Call - City Clerk, and Nicole Sprague - Official
Records and Legislative Services Coordinator.
To provide continuity for research, items are in agenda order although not
necessarily discussed in that order.
1. Call to Order - Chair George N. Cretekos
The meeting was called to order at 2:10 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the April 16, 2012 Pension Trustees meeting as submitted in written
summation by the City Clerk.
Trustee Bill Jonson moved to approve the minutes of the April 16, 2012 Pension Turstees
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 the request of employee Richard DeBord, Planning and Development Department;
Deborah Ford, Human Resources Department; Anna Fierstein, Human Resources Department;
Gary Coffey, Public Utilities Department; Robert Baxter, Public Utilities Department; and Diane
Manni, City Council Department, for a regular pension as provided by Sections 2.397 and 2.398
of the Employees’ Pension Plan.
Richard DeBord, Code Enforcement Inspector, Planning and Development Services
Department , was employed by the City on September 28, 1987, and his pension service credit
is effective on that date. His pension will be effective June 1, 2012. Based on an average salary
of approximately $50,727 per year over the past five years, the formula for computing regular
pensions, and Mr. DeBord’s selection of the 100% Joint and Survivor Annuity, this pension will
approximate $33,763 annually.
1
Pension Trustees 2012-05-14
Deborah L. Ford, Human Resources Analyst, Human Resources Department , was employed
by the City on May 13, 1985, and her pension service credit is effective on that date. Her
pension will be effective Junel 1, 2012. Based on an average salary of approximately $55,650
per year over the past five years, the formula for computing regular pensions, and Ms. Ford’s
selection of the 100% Joint and Survivor Annuity, this pension will approximate $40,898
annually.
Anna Fierstein, Senior Human Resources Analyst, Human Resources Department , was
employed by the City on November 29, 1982, and her pension service credit is effective on that
date. Her pension will be effective June 1, 2012. Based on an average salary of approximately
$60,148 per year over the past five years, the formula for computing regular pensions, and Ms.
Fierstein’s selection of the 100% Joint and Survivor Annuity, this pension will approximate
$47,656 annually.
Gary Coffey, Utilities Mechanic Supervisor II, Public Utilities Department , was employed by the
City on June 9 1986, and his pension service credit is effective on that date. His pension will be
effective July 1, 2012. Based on an average salary of approximately $64,079 per year over the
past five years, the formula for computing regular pensions, and Mr. Coffey’s selection of the
50% Joint and Survivor Annuity, this pension will approximate $47,502 annually.
Robert Baxter, Utilities Mechanic, Public Utilities Department , was employed by the City on July
8, 1985, and his pension service credit is effective on that date. His pension will be effective
June 1, 2012. Based on an average salary of approximately $47,099 per year over the past five
years, the formula for computing regular pensions, and Mr. Baxter’s selection of the Joint and
Survivor Annuity, this pension will approximate $34,838 annually.
Diane Manni, Executive Assistant, City Council Department , was employed by the City on
October 13, 1997, and her pension service credit is effective on that date. Her pension will be
effective June 1, 2012. Based on an average salary of approximately $42,068 per year over the
past five years, the formula for computing regular pensions, and Ms. Manni’s selection of
the Joint and Survivor Annuity, this pension will approximate $16,929 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. DeBord, Ms. Ford, Ms.
Fierstein, Mr. Coffey, and Mr. Baxter qualify under the age 55 and twenty years of service
criteria. Ms. Manni qualifies under the age 65 and 10 years of service criteria.
Trustee Doreen Hock-Dipolito moved to approve the request of employee Richard DeBord,
Planning and Development Department; Deborah Ford, Human Resources Department; Anna
Fierstein, Human Resources Department; Gary Coffey, Public Utilities Department; Robert
Baxter, Public Utilities Department; and Diane Manni, City Council Department, for a regular
pension as provided by Sections 2.397 and 2.398 of the Employees’ Pension Plan. The motion
was duly seconded and carried unanimously.
3.2 Approve the request of employee Kristin Hoekstra, Fire Department, and Janet Harrison, Parks
and Recreation Department, to vest their pensions as provided by Section 2.397 of the
Employees’ Pension Plan.
2
Pension Trustees 2012-05-14
Kristin Hoekstra, Firefighter, Fire Department, was employed by the City on May 7, 2001, and
began participating in the Pension Plan on that date. Ms. Hoekstra terminated from City
employment on March 23, 2012
Janet Harrison, Recreation Specialist, Parks and Recreation Department, was employed by the
City on March 3, 1986, and began participating in the Pension Plan on that date. Ms. Harrison
terminated from City employment on March 14, 2012
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. Section 2.397 also 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 Firefighter as meeting the hazardous duty criteria. Ms. Hoekstra would have
completed at least 20 years of service on May 7, 2021. Her pension will be effective June 1,
2021. Ms. Harrison would have completed at least 20 years of service and reached age 55 on
December 11, 2014. Her pension will be effective January 1, 2015.
Trustee Bill Jonson moved to approve the request of employee Kristin Hoekstra, Fire Department, and
Janet Harrison, Parks and Recreation Department, to vest their pensions as provided by Section 2.397
of the Employees’ Pension Plan. The motion was duly seconded and carried unanimously.
3.3 Accept the Actuary's Report for the Employees' Pension Plan for the plan year beginning
January 1, 2012.
Per the actuary report dated January 1, 2012, a minimum City employer contribution of $20.9
million, or 27.97% of covered payroll, is required for fiscal year 2013. This is an increase of $2.0
million over the fiscal 2012 required contribution of $18.9 million, or 24.69% of covered payroll.
The increase in the required contribution is primarily due to investment returns for calendar
2011 of negative 0.32% versus the plan's assumed rate of 7.5%. The underperformance in
calendar 2011 reduced the actuarial return (based on actuarial value of assets smoothed over 5
years) to 4.46%, versus 5.98% for the previous year.
The increase in the required contribution due to underperformance of investments was partially
offset by salary increases of 2.56% versus the assumed rate of 6.00% for calendar 2011.
The plan's credit balance, which reflects actual contributions in excess of actuarially required
contributions for prior years, decreased from $7.1 million to $6.6 million during calendar 2011.
This $0.5 million decrease was the result of applying the actuarially required employer
contribution rate (24.69% of payroll) to a declining payroll due to budget cuts.
The Plan's funded ratio is 97.4% versus 97.2% for the prior year. For comparability to other
plans, the actuary notes in the report that the current funded ratio is 94.5% based on the more
3
Pension Trustees 2012-05-14
commonly used Entry Age funding method.
The Actuarial Value of Assets exceeds the Market Value of Assets by $7.4 million as of January
1, 2012. If Market Value had been the valuation basis, the required contribution rate would have
been 29.28%. In the absence of other gains, losses, or pension plan changes, the City's
required contribution should approximate the 29% level over the next several years.
The actuary is recommending one change in an actuarial assumption. The change is to revise
the mortality assumption to include a margin for future mortality improvements, consistent with a
recent revision to an Actuarial Standard of Practice.
In response to questions, Finance Director Jay Ravins said all the investment managers have been
reviewed in detail and staff is comfortable with the current managers and asset allocations. Gabriel,
Roeder, Smith and Co. representative Stephen Palmquist said the city’s required contribution for next
fiscal year will be about $2 million more than it was for this fiscal year due to the fact that the
investment return of the pension fund was less than the actuarial assumption. This is the fifth year that
the number of active members has decreased. The City’s 97% funded ratio is very strong compared to
other plans. The average funded ratio for other municipal plans is 70%. Mr. Palmquist said the
information provided does not reflect the proposed changes that would be made to the pension fund
next year if the referendum passes in November.
Trustee Hock-Dipolito moved to accept the Actuary's Report for the Employees' Pension Plan for the
plan year beginning January 1, 2012. The motion was duly seconded and carried unanimously.
3.4 Determine Trustees' total expected rate of return for the pension plan's investments for the
current year, for each of the next several years, and for the long term thereafter.
Florida Statutes 112.661 (9) requires an annual determination of expected investment rates of
return be filed with the Florida Department of Management Services, with the plan's sponsor,
and with the consulting actuary.
Compliance with this requirement has been previously assumed via the Trustees' acceptance of
the annual actuary report and related investment rate of return assumption. However the State
is requiring a separate determination be agreed upon by the Trustees.
Staff is recommending the current plan investment rate of return assumption of 7.5% as the
expected annual rate of return for the current year, for each of the next several years, and for
the long term thereafter.
In response to a question, Finance Director Jay Ravins said the state wants these figures updated
annually so setting a long term rate of return can be updated in the future.
Trustee Bill Jonson moved approve a 7.5% total expected rate of return for the pension plan's
investments for the current year, for each of the next several years, and for the long term thereafter.
The motion was duly seconded and carried unanimously.
3.5 No Item.
4. Other Business – None.
4
Pension Trustees 2012-05-14
5. Adjourn
The meeting was adjourned at 3:10 p.m. p e4f.)r,e n cr e. f
Chair
Employees' Pension Plan Trustees
Attest
_ L I A ./: etie _ ►,. OF 7//8/1„
City Clerk �,�'�,'+
` !
I '`
=z-
., 4 TES
5
Pension Trustees 2012-05-14