03/18/2002
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
March 18, 2002
Present: Brian J. Aungst Chair
Whitney Gray Trustee
Hoyt P. Hamilton Trustee
William C. Jonson Trustee
Absent: Ed Hart Vice-Chair/Trustee
Also present: William B. Horne II City Manager
Pamela K. Akin City Attorney
Lee Dehner Pension Trustees Attorney
Paul O'Rourke Human Resources Director
Cynthia E. Goudeau City Clerk
Patricia O. Sullivan Board Reporter
The Chair called the meeting to order at 9:12 a.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 Jonson moved to approve the minutes of the March 4, 2002, meeting, as
motion
recorded and submitted in written summation by the City Clerk to each Trustee. The
carriedmotioncarried
was duly seconded and unanimously. The was duly seconded and
unanimously.
ITEM #3 - Request for Acceptance into Membership:
Human Resources Administrator Paul O’Rourke presented the recommendation of the
Pension Advisory Committee to approve membership for employees: Corey Lenczden, James
Phelps, Thelma Catio, Judy Hill, Debra Caputo, Steve Ussery, Rhonda Gracie, Joannis
Kourmoulakis, Robert Fahey, and Raghu Thanjavur.
Trustee Gray moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
ITEM #4 - Requests for Pension
Mr. O’Rourke presented the recommendation of the Pension Advisory Committee that
James LittleDean Edwards regular pensions
and be granted under Sections 2.393 and
2.397 of the Employees' Pension Plan.
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James Little was employed on July 16, 1973 and his pension service credit is effective
on that date. His pension will be effective February 1, 2002. Based on an average salary of
$56,720 per year over the past 5 years, the formula for computing regular pensions, and Mr.
Little’s selection of the 100% Joint & Survivor Annuity, this pension will approximate $42,913
annually.
Dean Edwards was employed on August 16, 1979, and his pension service credit is
effective on that date. His pension will be effective March 1, 2002. Based on an average
salary of $59,350 per year over the past 5 years, the formula for computing regular pensions,
and Mr. Edwards’ selection of the 100% & Survivor Annuity, this pension will approximate
$36,402 annually.
The PAC (Pension Advisory Committee) approved these pensions on February 14,
2002. Section 2.393 (p) 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 services as a Police Officer and Fire District Chief as meeting
the hazardous duty criteria. Messrs. Little and Edwards qualify under the hazardous duty
criteria.
In response to a question, Human Resources Director Paul O’Rourke said pensions
approved by the PAC in March will be presented to the Pension Trustees for approval in April.
James LittleDean Edwards
Trustee Hamilton moved to grant regular pensions for and
be granted under Sections 2.393 and 2.397 of the Employees’ Pension Plan, as approved by
motioncarried
the Pension Advisory Committee. The was duly seconded and unanimously.
ITEM #5 – Pension to be Vested
Terry Webber was employed by the City on September 10, 1981 and terminated from
City employment on January 11, 2002. James Powell was employed by the City on
September 14, 1982 and terminated from City employment on April 18, 2002. Gregory Howe
was employed by the City on January 25, 1988 and terminated from City employment on
January 11, 2002.
The Employees’ Pension Plan provides that should an employee cease to be an
employee of the City of Clearwater after completing ten 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
twenty years of credited service, has completed 30 years of credited service, or has reached
age 65 and completed ten years of credited service.
Terry Webber would have completed twenty years of service and reached age 55 on
July 26, 2004. Her pension will be effective August 1, 2004. James Powell would have
completed twenty years of service and reached age 55 on September 14, 2002. His pension
will be effective October 1, 2002. Gregory Howe would have completed twenty years of
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service and reached age 55 on May 11, 2014. His pension will be effective June 1, 2015. On
February 14, 2002, the PAC approved these pensions.
Trustee Jonson moved to allow Terry Webber, Planning & Development Services
Department, James Powell, Public Services Department, and Gregory Howe, Parks &
Recreation Department, to vest their pensions under Sections 2.397 and 2.398 of the
motion
Employees’ Pension Plan as approved by the Pension Advisory Committee. The was
carried
duly seconded and unanimously.
ITEM #6 – Approve increase in the amount authorized to be spent with
PriceWaterhouseCoopers, LLP for actuary and other related pension consulting services
related to potential changes in the Pension Plan by $30,000 at a total cost not to exceed
$124,000 for the three-year period ending December 31, 2004.
On August 13, 2001, the Pension Trustees approved the FY (fiscal year) Pension Plan
budget to include $30,000 for pension actuary and consulting services related to potential
changes to the Pension Plan. The PriceWaterhouseCoopers, LLP, contract needs to be
increased by $30,000, from $94,000 to $124,000, to conduct actuarial analyses on the costs of
potential Pension Plan changes: 1) DROP (Deferred Retirement Option Plan); 2) “opt in” option
for excluded employees; 3) purchase of prior government service credit; 4) designation of
beneficiary and joint pensioner option; 5) normal retirement conversion benefit; 6) disability
presumption for “extra duty” assignments; 7) reemployment option; 8) increase of cost of living
adjustment from 1.5% to 3%; 9) increase to benefit formula multiplier from 2.75% to 3.5%; 10)
average final compensation from average salary of 5 best years of last 10 to three best years
of credited service; and 11) formal actuarial impact statement, which must be prepared for the
State prior to implementation of any changes. The PAC recommended approval.
In response to a question, Mr. O’Rourke said this request will use funds budgeted for
consultants.
Trustee Jonson moved to approve an increase in the amount authorized to be spent
with PriceWaterhouseCoopers, LLP for actuary and other related pension consulting services
related to potential changes in the Pension Plan by $30,000 for a total cost not to exceed
$124,000 for three-year period ending December 31, 2004 and that the appropriate officials be
motion carried
authorized to execute same. The was duly seconded and unanimously.
ITEM #7 – Approve settlement agreement with SunTrust for damages in the amount of
$109,959 to be paid by SunTrust to the Employees' Pension Plan.
SunTrust, one of the Pension Plan’s custodian banks, holds assets managed by 6 or
the Plan’s 10 money managers. On May 31, 2001, the Pension Plan was funding a new
international manager with $20-million taken from other money managers. A SunTrust
employee incorrectly contacted money manager, Vanderbilt, and informed them to convert
$20-million from bonds into cash. Staff has not reason or logic as to why SunTrust notified
Vanderbilt, as Vanderbilt was not a party to this transaction. After noticing the cash remained
their account following the transfer date, Vanderbilt notified the City about the SunTrust
directive. Staff directed Vanderbilt to reinvest the funds into the appropriate securities.
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Plan performance measurement consultant Callan and Associates has estimated the
resulting damages to the plan. As interest rates moved significantly over the short period of
time, actual costs are difficult to calculate. Callan and Associates estimated a market loss of
$103,236.27 and transaction costs of $76,532.69 for a total estimated loss of $179,768.96.
SunTrust calculated the City’s loss at $79,445.03.
Staff has worked with SunTrust to resolve this problem without litigation. Due to the
unique characteristics of the market at that time, staff feels $140,000 would be reasonable
compensation. SunTrust has offered $109,959. Considering costs associated with litigation,
staff recommends accepting the SunTrust offer. The PAC recommended approval
Trustee Hamilton moved to approve the settlement agreement with SunTrust for
damages in the amount of $109,959 to be paid by SunTrust to the Employees’ Pension Plan
motion
and that the appropriate officials be authorized to execute same. The was duly
carried
seconded and unanimously.
ITEM #8 – Approve an expenditure in the estimated amount of $40,000 to the law firm of
Christiansen & Dehner for legal services for the remainder of FY 2001/02 budget
The Pension Trustees approved a Pension Plan budget, which included an estimated
$50,000 for legal services. To date, $30,000 has been authorized to Christiansen & Dehner
for legal services. The initial estimate of legal service expenses did not address adequately
legal costs associated with proposed changes to the Pension Plan, the transfer of disability
case management from the City to Christiansen & Dehner, and the late receipt for legal
services rendered in FY 2000/01. To date, monthly legal expenses average $5,500, with a
projected annual cost of $66,000.
Staff requests approval of an additional estimated $40,000 to Christiansen & Dehner
for the remainder of FY (fiscal year) 2001/02 to cover: 1) late receipt of bills for expenses
incurred in previous fiscal year with $5,777.71 bill for September 2001 paid in October; 2)
$3,000 for revision of Pension Plan; 3) attorney attendance at six meetings at $1,000 each
with staff and unions to discuss proposed pension changes; 4) increase in number of
processed disability application with 9 pending cases, estimated at $1,000 each; and 5)
disability medical expenses being charged to legal services with 9 pending cases estimated at
$1,000 each. The PAC recommended approval.
In response to a question, Mr. O’Rourke stated estimating funding for Christiansen &
Dehner will be easier to predict next year. Additional funding for Christiansen & Dehner to
oversee the Investment Committee and $5,000 for reviewing contracts is not part of this
request.
Mr. O’Rourke reported approximately $6,000 of the other $20,000 approved by the
Pension Trustees was used for legal services provided by Cypen & Cypen. The remainder has
not been spent and was not designated for Christiansen & Dehner. Funding for this cost will
come from the Pension Plan.
Trustee Jonson moved to approve an increase in the amount authorized to be spent
with the law firm of Christiansen & Dehner for legal services by $40,000, increasing total
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expenditures authorized for legal services from $30,000 to $70,000 in FY 2001/02. The
motion carried
was duly seconded and unanimously.
ITEM #9 – Other Business – None.
ITEM #10 - Adjournment
The meeting adjourned at 9:28 a.m.
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