06/17/2002
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
June 17, 2002
Present: Whitney Gray Vice-Chair/Trustee
Hoyt Hamilton Trustee
Frank Hibbard Trustee
William C. Jonson Trustee
Absent: Brian Aungst Chair
Also Present: William B. Horne II City Manager
Pamela K. Akin City Attorney
Rick Ebelke Interim Human Resources Director
Margie Simmons Finance Director
Lee Dehner Pension Trustees Attorney
Cynthia E. Goudeau City Clerk
Brenda Moses Board Reporter
The Chair called the meeting to order at 9:11 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: 5/13/02
Trustee Hamilton moved to approve the minutes of the May 13, 2002, 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:
Recommendation of the Pension Advisory Committee to approve membership for the
employees listed below:
Delaney Mulholland and Joanne Bunton
Member Jonson moved to accept the request for membership in the Employees’
motion
Pension Plan for Delaney Mulholland & Joanne Bunton. The was duly seconded and
carried
unanimously.
ITEM #4 – Regular Pension(s) to be granted:
Frank Hill, Jorge Carrasquillo and Michael Gust
Frank Hill, III, Fire District Chief, Fire Department, was employed by the City on October 10,
1977, and his pension service credit is effective on that date His pension will be effective May
1, 2002. Based on an average salary of approximately $55, 536 per year over the past five
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years, the formula for computing regular pensions, and Mr. Hill’s selection of the 100% Joint
and Survivor Annuity, this pension will approximate $36,847 annually.
Jorge Carrasquillo, Police Officer, Police Department, was employed by the City on
June 23, 1982, and his pension service credit is effective on that date. His pension will be
effective July 1, 2002. Based on an average salary of approximately $55,769 per year over
the past five years, the formula for computing regular pensions, and Mr. Carrasquillo’s
selection of the 100% Joint and Survivor Annuity, this pension will approximate $30,134
annually.
Michael Gust, Traffic Operations Engineer, Public Works Department, was employed
by the City on April 21, 1980, and his pension service credit is effective on May 12, 1977. His
pension will be effective July 1, 2002. Based on an average salary of approximately $50,965
per year over the past five years, the formula for computing regular pensions, and Mr. Gust’s
selection of the Joint and Survivor Annuity, this pension will approximate $31,098 annually.
Member Hamilton moved to approve the request for Frank Hill, III, Jorge Carrasquillo &
motioncarried
Michael Gust for regular pensions. The was duly seconded and unanimously.
ITEM #5 – Accept the Actuary’s Report for the Employees’ Pension Plan for the plan year
beginning 1/1/02
Steve Metz, City’s actuary, reviewed the report.
The 1/1/02 actuarial report for the Employees’ Pension Plan indicates that a 3% City
contribution is required ($1,766,058). This is an increase from the 2001 valuation, which
required no City contribution. However, the City Ordinance governing the pension plan
requires that the city contribute at least 7% of the compensation of all employees participating
in the plan (estimated at $4,125,071).
The minimum City contribution was affected by the following factors:
??
Changes in actuarial assumptions (this reduced the actuarial required contribution from
4.5% to 3%);
??
Actuarial investment return of 7.4% in comparison to an assumed rate of 7% for plan year
2001 (2000 actuarial investment return was 12.42%);
??
Actual salary increases of 5.9% in comparison to an assumed rate of 5% for plan year
2001 (2000 actual salary increases were 5.8%);
??
Amortization of the plans initial unfunded liability was reduced due to the final partial year
payment towards this liability; and
??
Actual expenses for the plan year were $239,578 more than expected.
The difference between the ordinance required contribution of $4,125,071 and the
actuarial determined contribution of $1,766,058 will increase the existing credit balance, which
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is currently $21,360,525. This credit balance can be used to pay additional actuarial required
City contribution above the ordinance required 7%.
The Plan uses a phase-in approach of prior asset gains (losses) through a rolling five-
year average used to “smooth” investment performance. The market value basis performance
for the last five years (1997, 1998, 1999, 2000, and 2001, respectively) has been 17.49%,
16.74%, 18.61%, (3.43)%, and (5.16)%. As a result of the last 2 years poor investment market
performance, the actuarial value of the assets of the plan exceeds the market value by almost
$50 million. This deficit will be included in the actuarial value and will gradually increase the
funding requirements. This is expected to result in the City required contributions exceeding
the current 7% required in the next 4 to 6 years, even after taking advantage of the credit
balance.
The funded status of the plan (ratio of assets at market value to the actuarial present
value of accumulated plan benefits) decreased from 162% at 1/1/00 to 148% at 1/1/01 to
137% at 1/1/02, primarily due to the poor plan investment performance for calendar years
2000 and 2001. The plan experienced a negative 3.43% investment return in 2000 and a
negative 5.16% in 2001 due to the downturn in the stock market.
Member Hamilton moved to accept the Actuary’s Report for the Employees’ Pension
motion
Plan for the plan year beginning January 1, 2002. The was duly seconded and
carried
unanimously.
Mr. Dehner reported the Trustees need to make a determination regarding the
expected rate of return for the plan. This determination needs to be included in
correspondence to the Division of Retirement.
Trustee Jonson moved that the Trustees have determined, based on the
recommendation of their consultants that the total expected annual rate of return for the
current year, each of the next several years and the long term thereafter, will be 7.5% net of
investment related expenses. The motion was duly seconded and carried unanimously.
ITEM #6 - Adopt Resolution 02-01 of the Pension Trustees authorizing registration of Metro-
Goldwyn-Mayer Inc. stock in electronic form, correcting scrivener's errors that were present in
Resolution 02-10.
On May 23, 2000, Denver Investment Advisors participated in a Stock Purchase
Program for Metro-Goldwyn-Mayer, Inc. for 24,700 shares. The shares were delivered in
physical form to our safekeeping custodian in the name of the City of Clearwater. These
shares should have been delivered in a Depository Trust Corporation electronic format.
On April 29, 2002, the Pension Trustees adopted Resolution 02-10 to authorize the
conversion of the shares to electronic form.
There were scrivener’s errors in the Resolution, including the resolution number and
title.
Member Hibbard moved to correct scrivener’s errors that were present in Resolution 02-
motion
10, which was passed and adopted on April 29, 2002. The was duly seconded and
carried
unanimously.
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The City Attorney presented Resolution #02-01 and read it by title only. Commissioner
Hamilton moved to pass and adopt Resolution #02-01 and authorize the appropriate officials to
execute same. The motion was duly seconded and upon roll call the vote was:
“Ayes”: Gray, Jonson, Hamilton, and Hibbard
“Nays”: None.
Absent: Aungst
ITEM #7 - Verdell Powell, widow of James Powell, Public Services Department, be granted a
death benefit under Section 2.397 of the Employees' Pension Plan as approved by the
Pension Advisory Committee
James Powell, Public Services Technician II, Public Services Department, was
employed by the City on September 2, 1980, and his pension service credit was effective on
that date. Mr. Powell passed away on March 21, 2002. Verdell Powell, widow of James
Powell, applied for death benefits on April 9, 2002. Mr. and Mrs. Powell were legally married
on October 24, 1972, thereby entitling her to death benefits under provisions of the
Employees’ Pension Plan.
Mrs. Powell’s request for death benefits was approved by the Pension Advisory
Committee on May 9, 2001. The amount of Mrs. Powell’s pension will be computed by the
Finance Department at a later date. This pension will be effective April 1, 2002.
Based on an average salary of approximately $34,082 per year over the past five
years, this pension will be approximately $18,360 annually.
Member Jonson moved to approve the request to grant a death benefit for Verdell
Powell, widow of James Powell, Public Services Department under Section 2.397 of the
motioncarried
Employees' Pension Plan. The was duly seconded and unanimously.
ITEM #8 – Other Business – None.
ITEM #9 – Adjourn
The meeting adjourned at 9:29 a.m.
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