02/14/2000
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
February 14, 2000
Present: Brian J. Aungst Chair
Ed Hooper Vice-Chair/Trustee
J. B. Johnson Trustee
Robert Clark Trustee
Ed Hart Trustee
Also present: Michael J. Roberto City Manager
Pamela K. Akin City Attorney
Lee Dehner Pension Trustees Attorney
Paul O'Rourke Human Resources Administrator
Cynthia E. Goudeau City Clerk
Brenda Moses Board Reporter
The Chair called the meeting to order at 1:25 p.m. at City Hall.
To provide continuity for research, items are in agenda order although not necessarily
discussed in that order.
ITEM #2 - Approval of Minutes:
Trustee Hooper moved to approve the minutes of the January 18, 2000, meeting, as
motion
recorded and submitted in written summation by the City Clerk to each Trustee. The
carried
was duly seconded and 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:
Christina M. Byers, Brian Frank, Norine Borrow, Linda Weglarz, Robert Warnken, Shawn
Helms, Judy Beaman, Mason Merryman, Floyd Thurman, Brian Barker, Richard Rispoli, Allison
Griffiths, Gordon Ross, Kimmie Brooks, James Newman, Paul San Giovanni, Thomas Coyle, &
Stephanie Vilar
Trustee Johnson moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
ITEM #4 - Request for Pension:
The City Manager presented the recommendation of the Pension Advisory Committee
Sue C. Creamer, Janice White, & Jay Loveregular pensions
that be granted under
Section(s) 2.393 and 2.397 of the Employees' Pension Plan.
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Sue C. Creamer was employed on December 3, 1973, and her pension service credit is
effective on July 1, 1974. Her pension will be effective January 1, 2000.
Based on an average salary of approximately $30,923 per year over the past 5 years,
the formula for computing regular pensions, and Ms. Creamer's selection of the Joint &
Survivor Annuity, this pension will approximate $21,685 annually.
Janice White was employed on June 12, 1978, and her pension service credit is
effective on July 1, 1974. Her pension will be effective February 1, 2000.
Based on an average salary of approximately $45,340 per year over the past 5 years,
the formula for computing regular pensions, and Ms. White's selection of the 10-Year Certain
and Life Annuity, this pension will approximate $28,319 annually.
Jay M. Love was employed on August 6, 1979, and his pension service credit is
effective on July 1, 1974. His pension will be effective March 1, 2000.
Based on an average salary of approximately $40,466 per year over the past 5 years,
the formula for computing regular pensions, and Mr. Love's selection of the 50% Joint &
Survivor Annuity, this pension will approximate $23,528 annually.
The PAC approved these pensions on January 13, 2000. Section 2.393 (p) provides
for normal retirement eligibility when a participant has reached age 55 and completed 20 years
of credited service or has completed 30 years of credited service. Ms. Creamer qualifies under
the age 55 and 20 years of service criteria. Section 2.393(p) also provides for normal
retirement eligibility when a participant has completed 20 years of credited service in a type of
employment described as “hazardous duty” and further specifically defines service as a Police
Officer or Firefighter as meeting the hazardous duty criteria. Ms. White and Mr. Love qualify
under the hazardous duty criteria.
Trustee Hooper moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
ITEM #5 - Request to Vest Pension:
The City Manager presented the recommendation of the Pension Advisory Committee
Charles Esposito, Bryan Makowski, & Thomas Mudano vest their
that be allowed to
pensions
under Section(s) 2.397 and 2.398 of the Employees' Pension Plan.
Charles Esposito was employed on August 18, 1986, and his pension service credit is
effective on that date.
Bryan Makowski was employed on November 7, 1988, and his pension service credit is
effective on that date.
Thomas Mudano was employed on December 9, 1985, and his pension service credit is
effective on that date.
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The Employees’ Pension Plan provides that should an employee cease to be an
employee of the City of Clearwater after completing 10 or more years of creditable service
(pension participation), then 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 2.393 (p) provides for normal retirement eligibility when a participant has
reached age 55 and completed 20 years of credited service or has completed 30 years of
credited service. Section 2.393(p) also provides for normal retirement eligibility when a
participant has completed 20 years of credited service in a type of employment described as
“hazardous duty” and further specifically defines service as a Police Officer as meeting the
hazardous duty criteria.
Mr. Esposito would have completed 20 years of service as a Police Officer on August
18, 2006. His pension will be effective on September 1, 2006. Mr. Makowski would have
completed at 20 years of service as a Police Officer on November 7, 2008. His pension will be
effective December 1, 2008. Mr. Mudano would have completed 30 years of service on
December 9, 2015. His pension will be effective January 1, 2016. The PAC approved these
requests on January 13, 2000.
Trustee Johnson moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
increase in performance measure fees
ITEM #6 - Approve paid to Callan & Associates, from
$14,000 to $31,500 per year
The following is a summary of the pension plan's history with Callan and Associates:
Date Description Annual Fee
10/88 Relationship began $10,200
10/90 Fee increase $14,000
09/91 Eickhoff, Piper & Willoughby replaced Fla Nat'l Bank $14,000
10/91 Added Shields as a money manager $14,000
09/96 Added Ark as a money manager $14,000
08/97 Added ARM as a money manager $14,000
07/98 Sirach replaces Shields as money managers $14,000
Currently Callan provides performance measure on the following money managers:
Money Manager Type Style Cap
Aeltus Investment Management Equities Growth Large
Ark Asset Management Equities Value Large
ARM Capital Managers Bonds Core N/A
Denver Investment Management Equities Growth Medium
Hanson Investment Management Equities Growth/value Large
Eickhoff, Piper & Willoughby Bonds Treasury N/A
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Sirach Capital Management, Inc. Bonds Core N/A
Any manager searches would be at an additional fee, currently $20,000 per search.
Callan has been requesting an increase in its fee for several years. Staff has been
able to postpone a fee increase until this time.
Callan has requested a fee increase to $33,500 per year. Staff has been able to
reduce that request to $31,500.
Steve Moskun, Cash and Investments Manager, said this is a request for approval of
an increase in performance measure fees paid to Callan & Associates from $14,000 to
$31,500 per year. He stated it has been awhile since the fee was increased and the firm has
added money managers. Finance Director Margie Simmons said in 1990 the firm monitored
four money managers and now monitors seven. Previous requests by the firm for fee
increases were not considered by staff or presented to the Trustees. Callan & Associates
provides quarterly meetings and ongoing analysis of all pension funds and changes regarding
money managers.
Trustee Hooper moved to approve the request for an increase in performance measure
motion
fees paid to Callan & Associates from $14,000 to $31,500 per year. The was duly
carried
seconded and unanimously.
international equity style manager
ITEM #7 - Authorize staff to conduct search for for
Employees Pension Fund; authorize Callan & Associates to assist with search; authorize cost
of search, including staff travel of approx. $3,500 and Callan's fee of $20,000 to be paid from
pension fund
The Investment Committee unanimously recommends the addition of an "international
equity" style manager to better diversify the investments.
For the year ending September 30, 1999, the Employees Pension Plan had a rate of
return of 17.13%
At September 30, 1999, the plan had investments with a market value of $430 million.
Up to 10% of the plan's assets may be in international investments.
The Investment Committee is made up of the, Finance Services Administrator,
Assistant Finance Director, Finance Controller, Risk Manager, Senior Accountant, and Cash &
Investments Manager.
The City contracts with Callan & Associates to provide performance measurement and
to provide information on investment managers.
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Callan's fee for the search will be $20,000. Callan's fees are paid by directing
investment trades through a selected broker. The plan's money managers use this selected
broker only if they can not get better execution someplace else.
The cost of committee member travel to investigate/research the top ranked firm(s) is
estimated at $3,500. The actual amount will be affected by the location of the investment
manager(s) and the number that needs to be researched.
The Investment Committee will come back to the Trustees in late summer or early fall
with the results of the search for approval.
Mr. Moskun said this is a request to authorize a search for an international equity style
money manager. He said the Pension fund currently is heavy in U.S. equities and U.S. fixed
income. Diversification with an international equity portfolio will lower the risk to the plan.
Based on current information, it is anticipated that international equities will increase the yield
and outperform U.S. equities by one-half a percent to one percent a year over the next five
years. By ordinance, the City cannot go above 10% for foreign investments. Mr. Moskun said
the ratio between fixed income and equities will remain the same. Finance Director Margie
Simmons said most plans include international investments and staff feels it important for the
City to incorporate international equities into the plan. She said travel costs are for staff site
visits to international firms. Discussion ensued regarding how the money manager collects
fees. Ms. Simmons noted this request is simply to authorize staff to search for an international
equity style manager. The results of the search and any fees will require Trustee approval.
Trustee Hooper moved to approve the request for staff to conduct a search for an
international equity style manager for the Employees Pension Fund, to authorize Callan &
Associates to assist with the search, authorize cost of search, including staff travel of approx.
$3,500 and Callan's fee of $20,000 to be paid from pension fund.
The City Manager said the City’s financial advisors are suggesting that the more
diversified the plan, the less risk involved. In response to a question, Bill Badger, Callan &
Associates, said over the last twelve months, the return on Japanese investments was
84.77%. Global style investments have yielded 30.67%. Historical overseas equity markets
returns over the last five to six years have underperformed domestic equity markets, however,
in 1999, the international index was up 28% and the S&P (Standard & Poors) stock index was
up 21%. European returns last year was relatively flat last year due to issues in Japan. Mr.
Badger anticipates over the next few years international investments will do well.
motion
The was duly seconded. Upon the vote being taken, Trustees Hooper and Hart
carried
and Chair Aungst voted “aye”; Trustees Johnson and Clark voted “nay”. Motion .
Ms. Simmons said for the last twelve months ending December 30, 1999, according to
the City’s asset mix, the plan should have yielded 12.2% and the plan made 18.5%. The plan
was in the fourth percentile of all public pension plans.
ITEM #8 - Other Business – None.
ITEM #9 - Adjournment
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The meeting adjourned at 1:51 p.m.
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