05/12/2014Monday, May 12, 2014
1:00 pm
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
Pension Trustees
Work Session Agenda
May 12, 2014Pension Trustees Work Session Agenda
1. Call To Order
2. Approval of Minutes
Approve the minutes of the April 14, 2014 Pension Trustees meeting as
submitted in written summation by the City Clerk.
ID#13-1452.1
3. Citizens to be Heard Regarding Items Not on the Agenda - None.
4. New Business Items
Approve the request of employee Elizabeth Pearce, Parks and
Recreation Department, to vest her pension as provided by Section
2.419 of the Employees’ Pension Plan .
ID#13-0944.1
Approve the following request of employees Luis Acosta , Public Utilities
Department; Michael Faulkner, Fire Department; and Linda Myers,
Finance Department for a regular pension as provided by Sections 2.416
and 2.424 of the Employees’ Pension Plan .
ID#13-0954.2
Obtain approval for the process to purchase of prior service pension
credit for the Clearwater Fire and Rescue Chief and certain Assistant
Chiefs and provide direction to staff .
ID#13-1444.3
Approve the new hires for acceptance into the Pension Plan as listed.ID#13-0974.4
5. Adjournment
Page 2 City of Clearwater Printed on 6/3/2014
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#13-145
Agenda Date: 5/12/2014 Status: PassedVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 2.1
SUBJECT/RECOMMENDATION:
Approve the minutes of the April 14, 2014 Pension Trustees meeting as submitted in written
summation by the City Clerk.
SUMMARY:
Approve the minutes of the April 14, 2014 Pension Trustees meeting as submitted in written
summation by the City Clerk.
APPROPRIATION CODE AND AMOUNT:
USE OF RESERVE FUNDS:
Page 1 City of Clearwater Printed on 6/3/2014
TRUSTEES OF THE EMPLOYEES’ PENSION FUND MEETING MINUTES
CITY OF CLEARWATER
April 14, 2014
Present: Chair/Trustee George N. Cretekos, Trustee Doreen Hock-DiPolito,
Trustee Hoyt Hamilton, Trustee Bill Jonson, Trustee Jay 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, Nicole Sprague – Official
Records and Legislative Services Coordinator
To provide continuity for research, items are listed in agenda order although not
necessarily discussed in that order.
Unapproved
1. Call to Order – Chair George N. Cretekos
The meeting was called to order at 1:08 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 17, 2014 Pension Trustees meeting as
submitted in written summation by the City Clerk.
Trustee Bill Jonson moved to approve the minutes of the March 17, 2014 Pension
Trustees meeting as submitted in written summation by the City Clerk. The motion was
duly seconded and carried unanimously.
3. Citizens to be Heard re Items Not on the Agenda – None.
4. Pension Trustee Items 4.1 Accept the January 1, 2014 Annual Actuarial Valuation for the Employees'
Pension Plan.
Per the actuary report dated January 1, 2014, a minimum City employer
contribution of $10.8 million, or 14.53% of covered payroll, is required for fiscal
year 2015. This is a decrease of $8.8 million over the fiscal 2014 required
contribution of $19.6 million, or 26.33% of covered payroll.
Pension Trustees 2014-04-14 1
Draft
If the City had not implemented pension reforms effective January 1, 2013, it is
estimated that the required fiscal year 2015 employer contribution would be $15.2
million (20.4% of covered payroll), or $4.4 million greater than currently required.
The net decrease in the required contribution of $8.8 million versus the prior year
is primarily due to improved investment earnings experience. The calendar year
2013 investment return was 16.90% net of investment fees, versus the assumed
rate of 7.0%. The excellent 2013 investment return, along with the fact that the
negative (27.01%) investment loss from 2008 dropped from the plan’s five year
actuarial value smoothing, resulted in an improvement in the five-year smoothed
investment return based on the actuarial value of assets from 5.50% for the prior
year to 14.04% for the current year valuation. Calendar 2009 thru 2013
investment returns were 30.93%, 17.50%, (0.32%), 13.92%, and 16.90%,
respectively.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions for prior years, decreased from $6,343,864 to
$5,390,884 during calendar 2013. This $952,980 decrease resulted from the use
of approximately $1.4 million of the credit balance to subsidize current year
employer contributions, offset by interest earnings on the credit balance. The
Plan's funded ratio is 93.2% versus 92.2% for the prior year based on the Frozen
Entry Age funding method, which is currently used. For comparability to other
plans, the actuary notes in the report that the current funded ratio is 97.0% based
on the more commonly used Entry Age Normal funding method.
The Actuarial Value of Assets exceeds the Market Value of Assets by $74.6
million as of January 1, 2014. If Market Value had been the valuation basis, the
actuarially required contribution rate would have been less than the City’s
minimum 7% contribution rate.
The significant current year decrease in the City’s required contribution rate
reflects the high level of volatility, relative to other pension plans, of the City’s plan
to changes in investment earnings. This volatility in required employer
contributions from year to year necessitates building reserves, such as the plan’s
credit balance, during periods of positive investment earnings experience. This
provides the City the ability to subsidize increased employer contributions during
periods of negative investment earnings experience with contributions from
reserves.
Gabriel, Roeder and Smith actuary Peter Strong reviewed the 2014 Actuarial Valuation
for the Employees’ Pension Plan.
Pension Trustees 2014-04-14 2
Draft
In response to questions, Mr. Strong said the last revision in the actuarial assumptions
was incorporated in the January 2013 valuation. The funded ratio looks at actuarial
liability as of today versus the market value of assets. The 106.4% funded ratio (if the
Market Value and Entry Age Normal funding method had been used) does not
incorporate the amortization period. The reason why there is so much volatility in the
Plan’s current funding method is because the Plan amortizes all gains and losses over a
10 to12-year period. The suggested Entry Age Normal (EAN) will not affect the
actuarial value of assets. The maximum amortization period allowed is thirty years.
Under the Frozen Entry Age Method, the Plan has an unfunded frozen liability that
being amortized down for a set number of years, which does not change much from
year to year because it does not include the affects of any gains or losses. Mr. Strong
said this method is not considered a true funded ratio and is used by few pension plans.
The EAN funded ratio includes all the benefits accrued to date versus the value of
assets in the Plan. EAN is considered a true funded ratio. Mr. Strong said if the Plan
was not smoothed, the contribution rate would go significantly higher, to the point it
would not be affordable.
Trustee Doreen Hock-DiPolito moved to accept the January 1, 2014 Annual Actuarial
Valuation for the Employees' Pension Plan. The motion was duly seconded and carried
unanimously.
4.2 Annual review of the Employees' Pension Plan investment performance for the
calendar and plan year ended December 31, 2013.
This is the annual presentation on the investment performance of the Employees’
Pension Plan for calendar and plan year ended December 31, 2013. For the last
calendar year, the plan had a return of 17.75%, versus a custom benchmark of
14.62%. This is a return of 3.13% over the benchmark and a return of 1.57% over
the median public pension plan, placing the plan in the 36th percentile of public
pension plans per the Wilshire Public Plan Sponsor Universe. For the last three
calendar years, the plan has a return of 10.16% (annualized) versus a benchmark
of 9.71%. This is an excess return of 0.45% over the benchmark and placed the
plan in the 36thpercentile of public pension plans for this three-year period.
There were no changes in the money managers over the past year. All of the
current managers in the plan are performing as expected given their stated
investment strategies and investment style.
Cash and Investment Manager Steve Moskun provided a PowerPoint presentation.
In response to a question, Cash and Investment Manager Steve Moskun said the
reason the Plan is shifting away from REITS is because they will underperform in the
next five years and are valued differently, there will be less volatility, which will dampen
Pension Trustees 2014-04-14 3
Draft
the volatility in the Plan going forward. He said the Plan would always have some
REITS, as diversification is a cornerstone for balance.
4.3 Determine Trustees' 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 rates of
return be filed with the Florida Department of Management Services, with the
plan's sponsor, and with the consulting actuary.
Staff is recommending the current plan investment rate of return assumption of
7.0%, net of investment-related fees, as the expected annual rate of return for the
current year, for each of the next several years, and for the long term thereafter.
Trustee Jay Polglaze moved to determine 7.0% as the Trustees' 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.
4.4 Approve the new hires for acceptance into the Pension Plan as listed.
Pension
Name, Job. Class, & Dept./Div. Hire Date Elig. Date
Valerie Mathre*, Librarian I, Library Dept 01/11/2014 01/11/2014
Chad Siple, Beach Lifeguard, Parks and Rec Dept 02/08/2014 02/08/2014
Tim Grosz, Parks Strts and SW Tech I, Parks and Rec Dept 02/09/2014 02/09/2014
Donivan Boykins, Cust Service Rep, Customer Service Dept 02/10/2014 02/10/2014
Eric Fernandez, Recreation Leader, Parks and Rec Dept 02/10/2014 02/10/2014
John Grosso, Park Service Tech I, Parks and RecDept 02/24/2014 02/24/2014
* Ms. Mathre went from part time to full time and her date of full time status was
incorrect on last month’s agenda.
Trustee Hoyt Hamilton moved to approve the new hires for acceptance into the Pension
Plan as listed. The motion was duly seconded and carried unanimously.
4.5 Approve the following request of employees Douglas Stocker, Solid Waste and
General Services Department, and Daniel Brown, Parks and Recreation
Department; for a regular pension as provided by Sections 2.416 and 2.424 of
Pension Trustees 2014-04-14 4
Draft
the Employees Pension Plan.
Douglas Stocker, Building and Maintenance Supervisor, Solid Waste and General
Services Department, was employed by the City on June 24, 1985 and his
pension service credit is effective on that date. His pension will be effective April
1, 2014. Based on an average salary of approximately $58,221.76 over the past
five years, the formula for computing regular pensions and Mr. Stocker’s selection
of the 50% Joint and Survivor Annuity, this pension benefit will be approximately
$47,382 annually.
Daniel Brown, Parks Service Technician III, Parks and Recreation Department,
was employed by the City on April 19, 2004 and his pension service credit is
effective on that date. His pension will be effective on May 1, 2014. Based on an
average salary of approximately $27,926.62 over the past five years, the formula
for computing regular pensions and Mr. Brown’s selection of the 100% Joint and
Survivor Annuity, this pension benefit will be approximately $6,436.44 annually.
Section 2.416 provides for normal retirement eligibility for non-hazardous duty
employees hired prior to the effective date of this reinstatement (January 1, 2013),
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 years of
credited service; the date on which a participant has reached age sixty-five years
and completed ten years of credited service; or the date on which a member has
completed thirty 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 years and completed twenty-five years of credited
service; or the date on which a participant has reached the age of sixty-five years
and completed ten years of credited service. Mr. Stocker and Mr. Brown 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 years of credited service
regardless of age, or the date on which the participant has reached fifty-five years
and completed ten years of credited service.
Trustee Bill Jonson moved to approve the following request of employees Douglas
Stocker, Solid Waste and General Services Department, and Daniel Brown, Parks and
Recreation Department, for a regular pension as provided by Sections 2.416 and 2.424
of the Employees Pension Plan. The motion was duly seconded and carried
unanimously.
Pension Trustees 2014-04-14 5
Draft
5. Other Business – None.
6. Adjourn
The meeting adjourned at 1:50 p.m.
Chair
Employees’ Pension Plan Trustees
Attest
City Clerk
Pension Trustees 2014-04-14 6
Draft
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#13-094
Agenda Date: 5/12/2014 Status: PassedVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 4.1
SUBJECT/RECOMMENDATION:
Approve the request of employee Elizabeth Pearce, Parks and Recreation Department, to vest
her pension as provided by Section 2.419 of the Employees’ Pension Plan.
SUMMARY:
Elizabeth Pearce, Aquatic Programmer, Parks and Recreation Department, was employed by
the City on November 20, 1999 and began participating in the Pension Plan on that date. Ms.
Pearce terminated from City employment on March 19, 2014.
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 (January 1, 2013), 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 years of credited service; the date on which a
participant has reached age sixty-five years and completed ten years of credited service; or
the date on which a member has completed thirty 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 years and completed twenty-five years of credited service; or the
date on which a participant has reached the age of sixty-five years and completed ten years of
credited service. Ms. Pearce will meet the non-hazardous duty criteria and begin collecting a
pension in December 2019.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
N/A
Page 1 City of Clearwater Printed on 6/3/2014
File Number: ID#13-094
Page 2 City of Clearwater Printed on 6/3/2014
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#13-095
Agenda Date: 5/12/2014 Status: PassedVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 4.2
SUBJECT/RECOMMENDATION:
Approve the following request of employees Luis Acosta, Public Utilities Department; Michael
Faulkner, Fire Department; and Linda Myers, Finance Department for a regular pension as
provided by Sections 2.416 and 2.424 of the Employees’ Pension Plan .
SUMMARY:
Luis Acosta, Utilities Chemist, Public Utilities Department, was employed by the City on May
30, 1989 and his pension service credit is effective on that date . His pension will be effective
May 1, 2014. Based on an average salary of approximately $52,580.06 over the past five
years, the formula for computing regular pensions and Mr. Acosta’s selection of the 75% Joint
and Survivor Annuity , this pension benefit will be approximately $35,831.16 annually.
Michael Faulkner, Fire Lieutenant, Fire Department, was employed by the City on September
8, 1992 and his pension service credit is effective on that date . His pension will be effective on
April 1, 2014. Based on an average salary of approximately $87,248.49 over the past five
years, the formula for computing regular pensions, Mr. Faulkner’s selection of the 10 Year
Certain and Life Annuity and a 30% partial lump sum distribution, this pension benefit will be
approximately $36,180 annually.
Linda Myers, Accountant, Finance Department, was employed by the City on July 12, 1976
and her pension service credit is effective on that date . Her pension will be effective May 1,
2014. Based on an average salary of approximately $47,816.69 over the past five years, the
formula for computing regular pensions and Ms. Myers’ selection of the 50% Joint and
Survivor Annuity, this pension will be approximately $51,894.72 annually.
Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees
hired prior to the effective date of this reinstatement (January 1, 2013), 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 years of credited service; the date on which a
participant has reached age sixty-five years and completed ten years of credited service; or
the date on which a member has completed thirty 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 years and completed twenty-five years of credited service; or the
date on which a participant has reached the age of sixty-five years and completed ten years of
credited service. Mr. Acosta and Ms. Myers 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 years of credited service regardless of age, or the date on which the
participant has reached fifty-five years and completed ten years of credited service. Mr.
Faulkner has met the hazardous duty criteria.
APPROPRIATION CODE AND AMOUNT:
Page 1 City of Clearwater Printed on 6/3/2014
File Number: ID#13-095
N/A
USE OF RESERVE FUNDS:
N/A
Page 2 City of Clearwater Printed on 6/3/2014
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#13-144
Agenda Date: 5/12/2014 Status: PassedVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 4.3
SUBJECT/RECOMMENDATION:
Obtain approval for the process to purchase of prior service pension credit for the Clearwater
Fire and Rescue Chief and certain Assistant Chiefs and provide direction to staff .
SUMMARY:
In 2005, the City began employing Assistant Fire Chiefs from outside the City . At the
time, Section 2.393 of the Pension Ordinance excluded employees hired into contract
positions (SAMP 4, 5, 6) from participation in the City's Employee Pension Plan.
Because they were hired as contract employees, they were excluded from pension
plan participation and enrolled in the City's 401 A program established for similarly
situated employees per the existing Pension Ordinance.
The Pension Trustees approved at the August 13, 2012 Trustee meeting that all
hazardous duty contract employees are eligible for participation in the City of
Clearwater Employee Pension Plan and directed they be enrolled in the plan
accordingly. This was done based on the Pension Plan Attorneys opinion that all
firefighters and police officers must participate in the pension plan in order to comply
with Chapters 175 and 185 of State Statute. The only exception being the Police Chief
and Fire Chief who have the option to not participate in the plan.
The Trustees were also advised at the time by the City’s Pension Plan Attorneys that
the affected employees be permitted to purchase credited service in the Pension Plan
retroactive to their dates of hire on a voluntary basis and that the City would have the
option to require the employees to pay the full actuarial cost or to pay only what would
have been their annual contribution for the amount of past service credit to be
purchased. The attorneys also indicated that the employees would be permitted to roll
over funds from their money purchase pension plan to pay for prior service credit.
The City subsequently determined that in order to be entitled to purchase prior service,
the employees would be required to contribution the equivalent of 15% of covered
salary rather than the actuarial cost for each year or portion thereof that the
employees wished to purchase prior service credit. The amount would provide for the
normal employee pension contribution in effect at that time as well as the contributions
the city made into a 401a plan on behalf of the employees from their date of hire.
These contributions would be treated as employee contributions should any of these
employees leave employment prior to vesting. In accordance with this approach, the
City would make up the balance of the required contribution for the full actuarial cost
of the service being purchased for each year.
Page 1 City of Clearwater Printed on 6/3/2014
File Number: ID#13-144
The affected employees were placed in the Employees’ Pension Plan in September
2012 and were notified at that time of the process for purchasing prior service credit.
They were also provided an estimate, by year, of the amount determined by the City to
be required to purchase service credit. The decision to purchase prior service is
voluntary. At this time, none of the eligible employees have purchased prior service
credit. The 2012 Trustee decision directed that these employees be permitted to
participate in the pension plan but did not approve the mechanism that would be used
to purchase credit in 2012.
The Plan Actuary was recently asked to determine what the actual actuarial cost to the
City would be should each affected employee choose to purchase all service credit for
which they are eligible. The total cost to the City at this time is $544,600.
Therefore, the City recommends the Trustees direct the following :
1. That the affected employees be required to pay 15% of covered salary for
every year or portion thereof of service credit they wish to purchase.
2. That the City makes up the difference between this amount and the
actuarially calculated amount of the required contribution. (A separate
agenda item approved by City Council will provide for this.)
3. That a deadline of 60 days from approval of this action be established to
purchase such service credit since the actuarial calculated amount the City
will be required to pay increases by approximately $7,000 per month.
The City will make a separate contribution to the pension plan for the difference
between the actuarially calculated cost and the 15% contribution by the employees.
The City has consulted with the State Division of Retirements and they concur with
this process and have indicated it complies with State Statute.
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
N/A
Page 2 City of Clearwater Printed on 6/3/2014
City of Clearwater
Fire Chiefs Buyback - Actuarial vs. 15%
Buyback Net
Actuarial Cost Total Actuarial Cost
Employee as of 6/15/2014 15% Buyback to City
Gemsheim 18,484.06$ 10,049.99$ 8,434.07$
Magness 161,090.20 87,988.45 73,101.75
O'Neill 136,852.63 84,334.81 52,517.82
Riley 163,587.69 102,080.83 61,506.86
Roby 104,303.54 63,088.35 41,215.19
Sparrow 134,750.54 77,395.18 57,355.36
Stasiowski 126,670.01 64,010.44 62,659.57
Strong 152,563.83 88,404.36 64,159.47
Watts 107,836.95 67,867.22 39,969.73
Weiss 184,645.90 108,123.32 76,522.58
Totals 1,290,785.34$ 753,342.95$ 537,442.39$
City of Clearwater
Fire Chiefs Buyback - Actuarial vs. 15%
Buyback Net
Actuarial Cost Total Actuarial Cost
Employee as of 7/14/2014 15% Buyback to City
Gemsheim 18,586.56$ 10,049.99$ 8,536.57$
Magness 161,983.52 87,988.45 73,995.07
O'Neill 137,611.55 84,334.81 53,276.74
Riley 164,494.87 102,080.83 62,414.04
Roby 104,881.96 63,088.35 41,793.61
Sparrow 135,497.80 77,395.18 58,102.62
Stasiowski 127,372.46 64,010.44 63,362.02
Strong 153,409.87 88,404.36 65,005.51
Watts 108,434.96 67,867.22 40,567.74
Weiss 185,669.85 108,123.32 77,546.53
Totals 1,297,943.40$ 753,342.95$ 544,600.45$
Cover Memo
City of Clearwater City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
File Number: ID#13-097
Agenda Date: 5/12/2014 Status: PassedVersion: 1
File Type: MinutesIn Control: Pension Trustees
Agenda Number: 4.4
SUBJECT/RECOMMENDATION:
Approve the new hires for acceptance into the Pension Plan as listed.
SUMMARY:
Name, Job. Class, & Dept./Div.Pension Elig. Date
Alioune Fall, Meter Reader, Cust Svc Dept.3/10/2014
Reynold Choo Chew, Accounting Technician, Parks and Rec Dept 3/10/2014
Victor Rosado, Solid Waste Equipment Oper, Solid Waste Dept 3/10/2014
John Conyers, Water Plant Operator A, Public Util Dept 3/10/2014
Karla Maffia, Customer Service Rep, Customer Svc Dept 3/10/2014
Caleb Holman, Parks Service Tech I, Parks and Rec Dept 3/10/2014
Scott Ehlers, Fire Division Chief Emergency Mgr, Fire Department 3/10/2014
Steve Murphy, Building Construction Insp, Planning and Dev Dept 3/10/2014
Sean Blout, Wastewater Plant Operator C, Public Utilities Dept 3/10/2014
Peter Johnson, Field Service Representative, Customer Svc Dept 3/10/2014
APPROPRIATION CODE AND AMOUNT:
N/A
USE OF RESERVE FUNDS:
N/A
Page 1 City of Clearwater Printed on 6/3/2014