12/12/2006
TRUSTESS OF THE EMPLOYEES’ PENSION FUND MEETING MINUTES
CITY OF CLEARWATER
December 12, 2006
Present: Frank Hibbard Chair
Carlen Petersen Trustee
William C. Jonson Trustee
John Doran Trustee
Also Present: J.B. Johnson Councilmember Appointee
William B. Horne, II City Manager
Garry Brumback Assistant City Manager
Rod Irwin Assistant City Manager
Pamela Akin City Attorney
Cynthia E. Goudeau City Clerk
Rosemarie Call Management Analyst
The Chair called the meeting to order at 3:23 p.m. at City Hall.
To provide for continuity for research, items are in agenda order although not
necessarily discussed in that order.
2. Approval of Minutes
2.1 Approve the minutes of the November 14, 2006 Pension Trustees Meeting as submitted in
written summation by the City Clerk.
Trustee Petersen moved to approve the minutes of the November 14, 2006 meeting, as
motion
recorded and submitted in written summation by the City Clerk. The was duly seconded
carried
and unanimously.
3. Pension Trustee Items
3.1 Accept the employees listed below into membership in the City of Clearwater's Employees'
Pension Plan.
Pension Elig. Name, Job. Class, & Dept./Div. Hire Date Date
Meghan Holder, Recreation Programmer/P&R 10/2/06 10/2/06
Matthew Parker, Pol. Com. Oper. Tr./Police 10/16/06 10/16/06
Rita Izaguirre, Pol. Com. Oper. Tr./Police 10/16/06 10/16/06
Michael R. Brown, Firefighter/Fire 10/16/06 10/16/06
Alain Cauper, Fire Medic/Fire 10/16/06 10/16/06
Jesse Cross, Fire Medic/Fire 10/16/06 10/16/06
Michael Garrity, Fire Medic/Fire 10/16/06 10/16/06
Jerome McIntee, Fire Medic/Fire 10/16/06 10/16/06
Jerome Mourelatos, Fire Medic/Fire 10/16/06 10/16/06
Josiah Wolfe, Fire Medic/Fire 10/16/06 10/16/06
Douglas Wood, Fire Medic/Fire 10/16/06 10/16/06
Pension Trustees 2006-12-12 1
Brenda Curry, Custodial Worker/Solid Waste 5/15/06 9/18/06*
Valerie Smutko, Solid Waste Wkr./Solid Waste 6/16/03 10/2/06**
Jennifer Obermaier, Librarian III/Library 10/16/06 10/16/06
Charmatee Rodrigues, Util. Chemist/Pub. Util. 10/16/06 10/16/06
Myra Mingo, Recreation Leader/P&R 8/19/06 10/16/06 ***
* originally hired a part-time 5/15/06; transferred to full-time and pension eligible as of
9/18/06
** originally hired as temporary 6/16/03; promoted and pension eligible as of 10/2/06
*** originally hired as part-time on 8/19/06; transferred to full-time and pension eligible as
of 10/16/06
Trustee Doran moved to accept the listed employees into membership in the City of
motion carried
Clearwater’s Employees’ Pension Plan. The was duly seconded and
unanimously.
3.2 Richard Novo-Mesky, Engineering Department, and Ross H. Smith, Jr., Police Department,
be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees’ Pension Plan
as approved by the Pension Advisory Committee.
Richard Novo-Mesky, Design & Mapping Technician, Engineering Department, was
employed by the City on October 24, 1972, and his pension service credit is effective on that
date. His pension will be effective November 1, 2006. Based on an average salary of
approximately $47,943 per year over the past five years, the formula for computing regular
pensions, and Mr. Novo-Mesky’s selection of the Joint & Survivor Annuity, this pension will
approximate $44,852 annually.
Ross H. Smith, Jr., 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 January 1, 2007. Based on an average salary of approximately $66,199 per year over
the past five years, the formula for computing regular pensions, and Mr. Smith’s selection of the
100% Joint & Survivor Annuity, this pension will approximate $31,318 annually.
These pensions were approved by the Pension Advisory Committee on November 9,
2006. Section 2.393 provides for normal retirement eligibility when a participant has reached
age 55 and completed twenty years of credited service, has completed thirty years of credited
service, or has reached age 65 and completed ten years of credited service. Section 2.393 also
provides for normal retirement eligibility when a participant has completed twenty years of
credited service or has reached age 55 and completed ten years of credited service in a type of
employment described as “hazardous duty” and further defines service as a Police Officer as
meeting the hazardous duty criteria. Mr. Novo-Mesky qualifies under the age 55 and twenty
years of service and the 30 years of service criteria. Mr. Smith qualifies under the hazardous
duty criteria.
Trustee Jonson moved to grant Richard Novo-Mesky, Engineering Department, and
Ross H. Smith, Jr., Police Department, regular pensions under Section(s) 2.393 and 2.397 of
motion
the Employees’ Pension Plan as approved by the Pension Advisory Committee. The
carried
was duly seconded and unanimously.
Pension Trustees 2006-12-12 2
3.3 Authorize staff to conduct a large cap value manager search and approve hiring Dahab
Associates at a cost of $15,000 to assist with the search.
For the last five years the pension plan’s large cap value manager has performed below
the median of the large cap value style peer group with a ranking of the 73rd percentile for the
last 5 years. Their annual rankings during that time period (2002 - 2006 YTD) have been 52nd,
83rd, 57th, 59th, and 58th, respectively.
This performance is not meeting our expectations and staff and the plan’s consultants
feel that the manager should be replaced. Formal approval to terminate the existing manager
will be obtained concurrently with the approval to hire the new manager. Staff has recently
concluded both a mid cap value manager and a small cap growth manager search. Dahab
Associates has been assisting staff with one of those searches. Staff was extremely satisfied
with the performance of Dahab and would like to use them for this large cap value manager
search as well. Dahab has agreed to hold its current price of $15,000. Dahab was hired through
a RFQ process and their price was extremely competitive compared to other respondents. The
price is significantly under Dahab’s price for new clients.
In response to questions, Cash & Investments Manager Steve Moskun said most firms
do not incorporate search fees with services; firms may have a set number of allowable
searches and charge a fee beyond that number. In a passive index fund, the hired company
replicates the investment index but does not actively trade. Currently, there is $42.6 million in
the large cap value.
Trustee Petersen moved to authorize staff to conduct a cap value manager search and
motion
approve hiring Dahab Associated at a cost of $15,000 to assist with the search. The
carried
was duly seconded and unanimously.
3.4 Approve the termination of Putnam as an international equity manager and ratify and
confirm the transfer of assets to Northern Trust for the management of the assets in a passive
index fund.
Marsh McLennan the parent company of Putnam has put Putnam up for sale. So far the
three interested parties in buying Putnam are: Amvescap PLC of the U.K., Unicredito Italiano
SpA of Italy, and Power Corp. of Canada. The plan’s consultants John Willoughby with Charles
D. Hyman and Associates and Paul Troup with Callan Associates have recommended that the
plan be early with its termination of Putnam in an effort to preserve some capital.
As mentioned at the November 2006 Trustee meeting, staff initiated the transfer of all
funds held by Putnam to Northern Trust. The Pension Investment Committee has been
watching Putnam’s performance and if the performance did not improve would have
recommended a termination in the not too distant future. Northern Trust has a passive EAFE
Fund, NTGI-QM Enhanced EAFE that the plan already had money in. The fee for this fund is
.35% for the first $100 million. Northern Trust also acted as a transition manager for the transfer.
It is important that the plan continued with its international exposure. For the year ending
September 30th the S&P 500 had a return of 5.67% while the EAFE returned 19.16%. In the
early part of next year the Pension Investment Committee will come back to the Trustees for
approval to start an international equity search.
Pension Trustees 2006-12-12 3
.
.
.
Trustee Doran moved to approve termination of Putnam as an international equity
manager and ratify and confirm the transfer of assets to Northern Trust for the management of
the assets in a passive index fund. The motion was duly seconded and carried unanimously.
4. Other Business - None
5. Adjourn
The meeting adjourned at 3:40 p.m.
", "
:=i 'f1~ p(' ~
Chiir .
Employees' Pension Plan Trustee
~
Pension Trustees 2006-12-12
4