06/13/2013 PENSION ADVISORY COMMITTEE MEETING MINUTES
CITY OF CLEARWATER
June 13, 2013
Awaiting approval exhibit
Present: Chair Nathan Hightower, Vice-Chair Tom Jensen, Committee
Member/Councilmember Paul Gibson, Committee Member Brian De Witt, Committee
Member/Councilmember Bill Jonson, Committee Member Daniel Slaughter, and
Committee Member/Councilmember Doreen Hock-DiPolito
Also present: Adam Levinson - Attorney for the Committee, Joe Roseto — Human
Resources Director, Patricia O. Sullivan - Board Reporter
1. Call to Order
The Chair called the meeting to order at 9:00 a.m.
2. Approval of Minutes
Member De Witt moved to continue Approval of the Minutes of the May 9, 2013,
meeting to July 11, 2013. The motion was duly seconded and carried unanimously.
3. Employees to be Heard: None.
4. Review and Action on Employee Requests for Regular Pension
4.1 Recommend approval of the following request of employees Mark Sena, Police
Department; Norma Matthews, Parks and Recreation Department; Holly
Ausanio, Library Department, and John Nuebel, Public Utilities for a regular
pension as provided by Sections 2.416 and 2.424 of the Employees Pension
Plan.
Mark Sena, Police Officer, Police Department, was employed by the City on
August 15, 1988 and his pension service credit is effective on that date. His
pension will be effective July 1, 2013. Based on an average salary of
approximately $80,503.51 per year over the past five years, the formula for
computing regular pensions and Mr. Sena's selection of the 100% Joint and
Survivor, this pension will approximate $53,481.12 annually.
Norma Matthews, Accounting Technician, Parks and Recreation Department,
was employed by the City on September 21, 1992 and her pension service credit
is effective on that date. Her pension will be effective July 1, 2013. Based on an
average salary of approximately $36,469.29 per year over the past five years,
the formula for computing regular pensions and Ms. Matthews' selection of the
Life Annuity, this pension will approximate $23,421.12 annually.
Pension Advisory Committee 6/13/2013 1
Holly Ausanio, Administrative Assistant, Library Department, was employed by
the City on February 10, 1986 and her pension service credit is effective on that
date. Her pension will be effective July 1, 2013. Based on an average salary of
approximately $55,313.39 per year over the past five years, the formula for
computing regular pensions and Ms. Ausanio's selection of the Life Annuity, this
pension will approximate $45,452.88 annually.
John Nuebel, Wastewater Treatment Plant Operator A, Public Utilities, was
employed by the City on October 26, 1987 and his pension service credit is
effective on that date. His pension will be effective June 1, 2013. Based on an
average salary of approximately $75,519.59 per year over the past five years,
the formula for computing regular pensions and Mr. Nuebel's selection of the
Joint and Survivor Annuity, this pension will approximate $53,160.00 annually.
Stephanie Stefanelli, Parking Manager, Engineering Department, was employed
by the City on November 16, 1992 and her pension service credit is effective on
that date. Her pension will be effective August 1, 2013. Based on an average
salary of approximately $45,592.29 per year over the past five years, the formula
for computing regular pensions and Ms. Stefanelli's selection of the 10 Year
Certain and Life Annuity, this pension will approximate $22,903.68 annually.
Section 2.416 provides for normal retirement eligibility for non-hazardous duty
employees hired prior to the effective date of this reinstatement (1/1/13), a
member shall be eligible for retirement following the earlier of the date on which
a participant has reached the age of 55 years and completed twenty (20) years
of credited service; the date on which a participant has reached age sixty five
(65) years and completed ten (10) years of credited service; or the date on which
a member has completed thirty (30) years of service regardless of age. For non-
hazardous duty employees hired on or after the effective date of this
restatement, a member shall be eligible for retirement following the earlier of the
date on which a participant has reached the age of sixty (60) years and
completed twenty five (25) years of credited service; or the date on which a
participant has reached the age of sixty five (65) years and completed ten (10)
years of credited service. Ms. Matthews, Ms. Ausanio, Mr. Nuebel, and Ms.
Stefanelli have met the non-hazardous duty criteria.
Section 2.416 provides for normal retirement eligibility for hazardous duty
employees, a member shall be eligible for retirement following the earlier of the
date on which the participant has completed twenty (20) years of credited
service regardless of age, or the date on which the participant has reached fifty
five (55) years and completed ten (10) years of credited service. Mr. Sena
meets the hazardous duty criteria.
Pension Advisory Committee 6/13/2013 2
Member Slaughter moved to approve Item 4.1. The motion was duly seconded and
carried unanimously.
5. Review and Action on Employee Requests to Vest Pensions
5.1 Recommend approval of the request of employee Cindy Ready of the Finance
Department to vest her pension as provided by Section 2.419 of the Employees
Pension Plan.
Cindy Ready, Accountant, Finance Department, was employed by the City on
September 9, 2002, and began participating in the Pension Plan on that date.
Ms. Ready will terminate from City employment on June 14, 2013.
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 2.416 provides for normal retirement eligibility for non-hazardous duty
employees hired prior to the effective date of this reinstatement (1/1/13), a
member shall be eligible for retirement following the earlier of the date on which
a participant has reached the age of 55 years and completed twenty (20) years
of credited service; the date on which a participant has reached age sixty five
(65) years and completed ten (10) years of credited service; or the date on which
a member has completed thirty (30) years of service regardless of age. For non-
hazardous duty employees hired on or after the effective date of this
restatement, a member shall be eligible for retirement following the earlier of the
date on which a participant has reached the age of sixty (60) years and
completed twenty five (25) years of credited service; or the date on which a
participant has reached the age of sixty five (65) years and completed ten (10)
years of credited service. Ms. Ready meets the non-hazardous duty criteria.
Member Jensen moved to approve Item 5.1. The motion was duly seconded and
carried unanimously.
6. Approval of New Hires as Plan Members:
6.1 Recommend approval of the new hires for acceptance into the Pension Plan as
listed.
Pension Name, Job. Class, & Dept./Div Hire Date Elig. Date
Pension Advisory Committee 6/13/2013 3
Kristina Cook, Accounting Clerk, Finance Department 05/06/2013 05/06/2013
Peter Chaplinsky, PS Tech I, Parks and Rec. Dept. 05/06/2013 05/06/2013
TaSheena Spearman, Eng Spec I, Eng/Stormwtr Dept. 05/13/2013 05/13/2013
Andrew Hayslip, Planner II, Planning/Development Dep.05/18/2013 05/18/2013
Randy O'Kelley, Bldg Const Insp, Planning/Dev. Dept. 05/20/2013 05/20/2013
James Benwell, Drafting/Mapping Tech., Eng Dept. 05/20/2013 05/20/2013
Member De Witt moved to approve Item 6.1. The motion was duly seconded and
carried unanimously.
7. Pending/New Business
7.1 Preliminary Disability Hearing for Kris Wise.
Human Resources Director Joe Roseto said staff had distributed all documentation,
including the IME (Independent Medical Exam) and interrogatories regarding today's
preliminary disability hearing for Kris Wise. He reviewed procedures and Code
requirements; none of the exclusions applies. All documents indicate the injury
occurred on the job. Mr. Wise submitted documentation from two physicians indicating
his disability is total and permanent; the IME indicates the disability is not permanent
and anticipates Mr. Wise's full recovery. Mr. Wise currently is on light duty and is not
performing his normal job responsibilities. As long as Mr. Wise is on paid status, he will
continue to accumulate days toward his retirement/disability benefit. Attorney for the
Committee Adam Levinson reviewed Florida Statutes 175 and 185.
Member Jonson moved to accept into evidence the entire file, inclusive of the personnel
file, interrogatories, medical records, and the IME. The motion was duly seconded and
carried unanimously.
Discussion ensued with comments that the IME said Mr. Wise lacked sufficient
treatment and concerns that the IME doctor opined that Mr. Wise is not totally disabled
because he is doing light duty. It was stated light duty bears no resemblance to a
Police Officer's job duties, which require life and death decisions under stressful
conditions. It was stated all Police Officers must be capable of handling all
assignments. Concerns were expressed that Mr. Wise's condition and firearms do not
mix and he never will improve sufficiently to participate in a fire fight.
Mr. Roseto said the PAC (Pension Advisory Committee) has a fiduciary responsibility to
the Pension Plan; disability is a lifetime benefit but requires recipients to provide annual
verification. He reviewed IME comments related to Mr. Wise's ability to use a firearm.
The IME states Mr. Wise is improving over time but has not reached maximum
improvement. Mr. Roseto said treatment is available but the City cannot compel Mr.
Wise to be treated. Attorney Levinson reviewed IME treatment recommendations.
Pension Advisory Committee 6/13/2013 4
Reassurance was requested that the City will continue to employ Mr. Wise in a light
duty position even though the City does not have light duty positions. Mr. Roseto said
the City does not have that ability but it is required to continue employing Mr. Wise as a
Police Officer even if he is not performing Police Officer duties. The Police Chief is
willing to continue Mr. Wise's light duty status. Assurance was requested that the City
will pay for treatment outlined in the IME. Mr. Roseto will verify City responsibility.
Attorney Levinson reviewed the Committee's role. It was suggested a medical doctor
may need to testify if a hearing is scheduled. Attorney Levinson said due to scheduling
difficulties, it may be preferable to have a medical doctor deposed.
Member De Witt moved that Kris Wise is eligible for a disability pension as he is
disabled due to a job-connected sickness or injury, such disability is likely to be
continuous and permanent from a cause other than those listed as general disability
exclusions, and such disability renders the participant unable to perform the duties of a
Police Officer. The motion was duly seconded.
Kris Wise reviewed the incident that precipitated his condition. He said the last two
fitness for duty reviews had not cleared him for service. He discussed his treatments
and reported he discontinued treatment when his provider and he concluded that further
treatment would not be beneficial. He said while the IME concluded his symptoms had
improved, improvement occurred after he no longer was exposed to stresses
associated with Police Officer duties. He said he cannot do the job he was hired to do
and never wants to fire a weapon at anyone again. He expressed concern he could
endanger other officers and citizens if he returns to duty.
Attorney Levinson noted the IME concluded that Mr. Wise was cooperative and not
malingering. Mr. Wise has no prior history of a similar condition.
It was stated that Mr. Wise had sacrificed for the City and would be unable to avoid
external triggers if he returns to duty as a Police Officer.
Upon the vote being taken, Members De Witt, Slaughter, and Hock DiPolito voted "Aye";
Members Jensen, Gibson, Jonson, and Chair Hightower voted "Nay." Motion failed.
Member Jonson moved to schedule a hearing to consider Kris Wise's application for a
job-connected disability pension. The motion was duly seconded and carried
unanimously.
8. Director's Report
See: Exhibit June 5, 2013 Memorandum.
Pension Advisory Committee 6/13/2013 5
Attorney for the Committee Adam Levinson reviewed pension disclosure amendments
to chapter 112 (SB 534) as outlined in his June 5, 2013, memorandum. Meeting new
requirements will be time intensive and increase actuarial costs. When abiding by the
requirement for a 2% lower investment assumption, he recommended the City also
submit a 2% higher investment assumption to provide prospective. The portfolio and
investment report must be posted on the City's website; the Department of Retirement
will provide guidance on the proper presentation of that information.
Finance Director Jay Ravins said the City is using the generational mortality table
required. Discussion ensued regarding past changes to the mortality tables and
difficulties associated with using information from the City's fiscal year and calendar
year budgets to develop one report.
Concern was expressed that two- thirds of the legislature had not approved the
amendments as required by Statute when unfunded mandates are adopted. The
Governor did not veto the legislation. Attorney Levinson said there is no pending
litigation regarding that issue.
9. Committee Members to be Heard
Member DeWitt said today is his last meeting and he enjoyed serving on the board and
getting to know the other members.
Members wished Member De Witt good luck with his future endeavors.
Chair Hightower said his vote to schedule a hearing for Mr. Wise's disability application
did not reflect his opinion on the case.
10. Adjourn
The meeting adjourned at 10:47 a.m.
Chair
Pension Advisory Com ittee
Pension Advisory Committee 6/13/2013 6
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KAUFMAN
JENSEN
L'EVIt SoN
MEMORANDUM
TO: ALL FLORIDA PENSION PLANS
FROM: KLAUSNER, KAUFMAN, JENSEN & LEVINSON
RE: IMPORTANT PENSION DISCLOSURE AMENDMENTS TO CHAPTER
112 (SB 534)
DATE: JUNE 5, 2013
During this. year's recently completed legislative session, the Legislature considered. but ultimately
failed to adopt any bills amending the Florida Retirement System ("FRS ") or municipal police and
fire pension plans under Chapters 175 and 185. One pension "disclosure" bill was adopted despite
the opposition of the League ofCities, labor and the Florida Public Pension Trustees Association.
Senate Bill 534 ("SB 534''), otherwise known as Chapter 2013 -100, Laws of Florida. applies -to all
local government plans in. Florida. SB- 534 was signed by the Governor last week. In many respects
SB 534 can be seen as building on prior legislation, SB 1128 from 2011, which required plans to
disclose the present value of plan benefits using the FRS 7.75% assumed rate of return. SB 1128 also
required the Division of retirement to create actuarial fact sheets for each local government defined
benefit plan to be posted on a governmental plan sponsor's website.
Compared to the original version of the bill, the final version SB 534 was paired down to incorporate
new Governmental Accounting Standards Board ("GAS B") standards 67 and 68. Nevertheless, SB
534 contains significant additional disclosure requirements and substantial noncompliance penalties.
The FRS is exempted from SB 534.
00045076.WPD;1
10059 Noon wEST I ST COURT. PLANTATION. FLORID ? ` 324
PHONE: (954) 916 -1202 • FAX: ( 954) 916-1232
www.rober[dkluusner.com
This memo is intended to highlight the primary provisions of SB 534, but is not exhaustive:
New actuarial and financial disclosure: SB 534 creates new disclosure requirements in
Section 112.664, Florida Statutes, to be electronically reported to the Department of
Management Services within 60 days after receipt of the certified actuarial report submitted
after the close of the plan year ending on or after June 30, 2014:
1) GASB 67/68: Section 112.664(1)(a) requires preparation of annual financial statements
in compliance with GASB 67 and 68, using RP -2000 Combined Healthy Participant
Mortality Tables, by gender, with generational projection by Scale AA;
2) 2% lower investment assumption: Section 112.664(1)(b) requires preparation of annual
financial statements using an assumed rate of return 200 basis points lower than the plan's
assumed rate of return/discount rate. Note that SB 1128's requirement from 2011 to disclose
the present value of plan benefits using the FRS 7.75% assumed rate of return has been
deleted.
The new lower 200 basis point reporting requirement should not be confused with the plan's
actual investment assumption, which serves as the basis for calculating the plan sponsor's
funding obligation. Many clients are considering supplementing the new required 200 basis
point calculation with yet another sensitivity disclosure using a 200 basis point higher figure
as well. For example, if a plan is currently using a 7.75% investment assumption a sensitivity
analysis could be performed showing the impact of both the 5.75% and 9.75% bookends
around the plan's actual investment assumption;
3) run out date: Section 112.664(1)(c) requires reporting of the fictitious "run out date" for
how long the current market value of assets can sustain the payment of expected retirement
benefits based on items 1) and 2) above. Note that this projection ignores employer
contributions, member contributions, assumed investment earnings and the receipt of
premium taxes. Some have analogized this calculation to asking a doctor what your life
expectancy would be, assuming that you stopped eating and breathing;
4) alternative contributions: Section 112.664(1)(d) requires reporting of contributions to
fund the plan based items 1) and 2) above, stated as an annual dollar value and a percentage
of valuation payroll. The reporting of these alternative contribution values are in addition to
the actual recommended contribution set forth in the plan's latest valuation.
5) 5 year historic comparison: Section 112.664(2)(b)1 requires reporting of side -by -side
comparisons of the plan's assumed rate of return compared to the actual rate of return for the
previous 5 years beginning 2013;
6) portfolio construction: Section 112.664(2)(b)2 requires reporting of side -by -side
comparisons of the percentages of cash, equity, bond and alternative investments in the
plan's portfolio during each of the previous 5 years.
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Requirement to post data and reports on -line: Each defined benefit retirement plan and its
plan sponsor shall provide the information required in SB 534, including the plan's funded
ratio, as part of the disclosure required by plan sponsors under Section 166.241(3), Florida
Statutes. Additionally, disclosure is required "on any website that contains budget
information relating to the plan sponsor or performance information related to the system or
plan." If a plan sponsor or plan has a publicly available website, copies of the plan's most
recent financial statement, actuarial valuation, and a link to the Division of Retirement's fact
sheet shall be posted on the plan and plan sponsor's website. The Division of Retirement's
fact sheets are expanded and shall also contain the information specified in Section
112.664(1).
Penalties for noncompliance: The Department of Management Services "may" notify the
Department of Revenue and the Department of Financial Services of noncompliance, which
"shall" withhold any funds not pledged for satisfaction of bond debt service and which are
otherwise payable to the plan sponsor, until the required information is provided. The state
is required to specify the date of the withholding 30 days in advance, to permit a request for
hearing under Chapter 120, Florida Statutes.
State of Florida not liable for shortfalls: SB 534 amends Section 112.66 to clarify that the
state of Florida is not liable for any obligations relating to shortfalls in any Local government
retirement system.
SB 534 law takes effect on July 1, 2013, except as described above. Our office is available to
discuss the new legislation at upcoming board meetings, along with the board's actuary and other
consultants. We anticipate that guidance will be necessary from the Division of Retirement. For
example, the Division of Retirement is charged with formulating a "standardized, user - friendly, and
easily interpretable format" for the data required by Sections 112.664(2)(b)1 &2.
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