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02/28/1994 TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING February 28, 1994 The City Commission, meeting as the Board of Trustees of the Employees Pension Fund, met in regular session at City Hall, Monday, February 28, 1994 at 9:23 A.M., with the following members present: Rita Garvey Chairperson Richard Fitzgerald Trustee Arthur X. Deegan, II Trustee Fred Thomas Trustee Absent: Sue Berfield Trustee Also Present were: Elizabeth M. Deptula Interim City Manager Milton A. Galbraith, Jr. City Attorney Cynthia E. Goudeau City Clerk ITEM #2 - Minutes: Trustee Deegan moved to approve the minutes of the February 14, 1994, meeting. The motion was duly seconded and carried unanimously. ITEM #3 - Request for Acceptance into Membership: The City Manager presented the recommendation of the Pension Advisory Committee to approve membership for the employee(s) listed below: a) John M. Murray b) Eric L. Hannah c) Arthur Rivers d) Troy Collie e) Cynthia A. Lavallee f) Eric A. Pryor g) Barbara Moon h) Terence B. Griggley i) Michael W. Anderson j) Valerie Hornbeck Trustee Thomas moved to accept the recommendation of the Pension Advisory Committee. The motion was duly seconded and carried unanimously. ITEM #4 - Request for Pension: The City Manager presented the recommendation of the Pension Advisory Committee that William Trullard be granted a regular pension under Section 2.396 of the Employees' Pension Plan. William Trullard was employed on February 12, 1973, and began participating in the Pension Plan on August 12, 1973. His retirement will be effective on January 20, 1994, at the beginning of the day. Mr. Trullard's pension was approved by the PAC at its meeting of February 2, 1994. Based on an average salary of approximately $29,879 over the past five years and the formula for computing regular pensions, Mr. Trullard's pension will approximate $15,612 annually. Charts from Finance which take into consideration mortality rates and age reflect the "present value cost of financing" this pension will be approximately $130,907. Note: When Mr. Trullard was originally employed, pension deductions were not taken for the first six months and employees contributed to Social Security. When employees were given an option to buy back their first six months of service, Mr. Trullard chose not to exercise such option. Trustee Deegan moved to accept the recommendation of the Pension Advisory Committee. The motion was duly seconded and carried unanimously. ITEM #5 - Request for Pension: The City Manager presented the recommendation of the Pension Advisory Committee that William E. Kroeger be granted a regular pension under Section 2.396 of the Employees' Pension Plan. William E. Kroeger was employed on January 17, 1972, and began participating in the Pension Plan on that date. His retirement will be effective on February 17, 1994, at the beginning of the day. Mr. Kroeger's pension was approved by the PAC at its meeting of February 2, 1994. Based on an average salary of approximately $43,203 over the past five years and the formula for computing regular pensions, Mr. Kroeger's pension will approximate $23,761 annually. Charts from Finance which take into consideration mortality rates and age reflect the "present value cost of financing" this pension will be approximately $244,006. Trustee Thomas moved to accept the recommendation of the Pension Advisory Committee. The motion was duly seconded and carried unanimously. ITEM #6 - Request for Pension: The City Manager presented the recommendation of the Pension Advisory Committee that Joshua and Heather Thurston, minor children of Dennis Thurston be granted a survivor's pension under Section(s) 2.398 and/or 2.399 of the Employees' Pension Plan. Dennis Thurston was employed on August 8, 1983, and began participating in the Pension Plan on that date. He passed away on December 18, 1993. Dennis Thurston is survived by two children, Joshua, age 10, and Heather, age 17. Debra Thurston, mother of Joshua, has applied for benefits on his behalf. A legal opinion from the Assistant City Attorney provides that these children are entitled to these benefits until they reach age 18. Mr. Lance's legal opinion was stated as follows: It appears that Dennis Thurston is deceased and has left two children as best as can be ascertained. They are entitled to survivor's benefits as provide by the City of Clearwater's Pension Plan. Joshua's mother has applied for benefits on his behalf. Heather's mother has not, but application is anticipated. These benefits are to be divided equally between the children until Heather reaches 18. After Heather reaches 18, Joshua will be eligible for 100% of the benefits until five years from the date of Mr. Thurston's death have elapsed. At that time, the benefits will be cut in half as provided by the Pension Plan and Joshua will receive 50% until he reaches age 18. The pension should be paid to those persons who have followed all legal procedures to be appointed guardians of the two children, Joshua and Heather. Ed Hooper made this as an official motion and emphasized that the Committee is approving the pension for the minor children but no disbursements will be made until all legal requirements are met. The motion was duly seconded by Fred Starzinger and carried unanimously. Benefits payable to Joshua and Heather Thurston are based on the formula for a non-job-connected disability pension for Dennis Thurston, i.e. years of service times 2 1/2% times the average salary for the last five years. Dennis Thurston had 10.3 years of service. The pension for Joshua and Heather Thurston was approved by the PAC at its meeting of February 2, 1994. Based on an average salary of approximately $23,470 over the past five years and the formula for computing non-job-connected disability pensions, this pension will approximate $6,044 annually. Charts from Finance which take into consideration mortality rates and age reflect the "present value cost of financing" this pension will be approximately $64,671. H. M. Laursen, Human Resources Director, stated Mr. Thurston was married and divorced twice and had two children. Joshua's mother has applied for survivor pension benefits and will get 1/2 of those benefits until Heather reaches age 18. If Heather's mother applies, Heather will get 1/2 of the benefit until she reaches age 18 in approximately one year. At that time, Joshua will receive 100% of the benefit. Trustee Thomas questioned if Heather had been notified. Mr. Laursen said she had. Trustee Deegan moved to accept the recommendation of the Pension Advisory Committee. The motion was duly seconded and carried unanimously. ITEM #7 - Request of Denver Investment Advisors to acknowledge and make part of their original agreement statements related to ERISA and assignment of their contract On July 1, 1982, the Trustees of the Employees' Pension Plan entered into an agreement with The First National Bank of Denver to manage a portion of the equity investments of the pension plan. Subsequently, this organization changed its name to IntraWest Bank of Denver and then to First Interstate Bank of Denver. In June of 1984, Denver Investment Advisors, Inc. received approval from the Comptroller of the Currency to incorporate as a wholly-owned subsidiary of First Interstate Bank of Denver. As a result of a review of the contracts maintained by this organization, Denver Investment Advisors has asked the City acknowledge the statements related to ERISA and these statements be made a part of their original agreement. The approval of these amendments will acknowledge Denver Investment Advisors as Investment Manager and prevent them from further assigning this contract without prior approval of the Trustees for the pension plan. Margie Simmons, Assistant Finance Director, indicated additional wording is needed in the contract due to the above referenced mergers. Trustee Fitzgerald questioned if the same individuals would be managing the City's investments. Ms. Simmons indicated this would be the case. She reported the investments being managed by this firm earned 33.8% last year. Trustee Thomas moved to approve the request of Denver Investment Advisors to formally acknowledge and make part of their original agreement, statements related to ERISA and assignment of their contract. The motion was duly seconded and carried unanimously. ITEM #8 - Request of Shields Asset Management to assign their contract for fixed income investment management to Alliance Capital Management L.P. On October 14, 1991, the Trustees approved the recommendation to appoint Shields Asset Management, Inc. of White Plains, New York to manage a portion of the fixed income investments of the pension plan portfolio. According to the agreement with them, the City must approve any assignment of interests in this contract. Shields Asset has reached an agreement with Alliance Capital Management L.P. for Alliance to acquire its business and assets. After this sale, the City's account will be managed by the Shields division of Alliance. All of the principals and employees of Shields are expected to join Alliance, and the investment disciplines and business philosophy that are currently in use are expected to remain the same. This transfer will in no way affect the right of the City's Employees' Pension Plan to terminate this agreement if at any time the City is dissatisfied with their performance. Trustee Deegan moved to approve the request of Shields Asset Management to assign their contract for fixed income investment management to Alliance Capital Management L.P. The motion was duly seconded and carried unanimously. ITEM #9 - Other Business: a) Approve expenditure of not to exceed $25,000 for City's actuary, Coopers & Lybrand, to perform special actuarial analyses estimating costs of proposed pension plan changes to employees covered in the bargaining units and the pension plan The City is beginning bargaining with each union for changes in the pension plan. Many proposed changes have been studied by the City's actuary. There will be some variations on these studies that will be needed to ascertain the impact of those changes and if some are done in conjunction with others, what that impact will be. The City has communicated with the actuary, Coopers & Lybrand, who have indicated their willingness to perform requested studies with a quick turnaround time understanding this is for bargaining. When the City has required numerous studies in the past the fees have not exceeded $25,000. Any expenditure will be approved by the City Manager following a specific request from the bargaining team. These requests will be reported to the City Commission in closed bargaining sessions. Trustee Fitzgerald moved to approve expenditure of not to exceed $25,000 for the City's actuary, Coopers & Lybrand, to perform special actuarial analyses estimating costs of proposed pension plan changes to employees covered in the bargaining units and the pension plan. The motion was duly seconded and carried unanimously. ITEM #10 - Adjournment: The meeting adjourned at 9:30 a.m.