07/14/2003
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
July 14, 2003
Present: Brian Aungst Chair
Hoyt Hamilton Vice-Chair/Trustee
Whitney Gray Trustee
Frank Hibbard Trustee
William C. Jonson Trustee
Also Present: Garry Brumback Assistant City Manager
Pamela K. Akin City Attorney
Joe Roseto Human Resources Director
Cynthia E. Goudeau City Clerk
Brenda Moses Board Reporter
The Chair called the meeting to order at 1:37 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 Jonson moved to approve the minutes of the June 16, 2003, meeting, as
recorded and submitted in written summation by the City Clerk to each Trustee. The
motioncarried
was duly seconded and unanimously.
ITEM #3 - Request for Acceptance into Membership
Human Resources Joe Roseto presented the recommendation of the PAC
(Pension Advisory Committee) to approve membership for employees: Dylan Newell;
Joshua Baxter; Brian Frank; Jennifer Cunningham; Robert Ramos; Justin Nieves; Mike
Ward; Scott Pettay; Daniel Angove; Peter Eichner; Franklyn Golpl; Michael Kirkpatrick;
Richard DeCastro II; Liberian Miles and Erik Soderlund.
Trustee Hamilton moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
ITEM #4 - Regular Pensions to be granted: John Slack; Robert W. Repp, Jr.; and
William McClure II.
John Slack, Police Captain, Police Department, was employed by the City on
June 12, 1978, and his pension service credit is effective on that date. His pension will
be effective July 1, 2003.
Based on an average salary of approximately $68,552 per year over the past five
years, the formula for computing regular pensions, and Mr. Slack’s selection of the 100%
Joint & Survivor Annuity, this pension will be approximately $46,520 annually.
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Robert W. Repp, Jr., Police Lieutenant, Police Department, was employed by the
City on June 18, 1973, and his pension service credit is effective on that date. His
pension will be effective June 1, 2003.
Based on an average salary of approximately $78,711 per year over the past five
years, the formula for computing regular pensions, and Mr. Repp’s selection of the 100%
Joint & Survivor Annuity, this pension will be approximately $63,703 annually.
William McClure II, Firefighter, Fire Department, was employed by the City on
August 27, 1973, and his pension service credit is effective on that date. His pension
will be effective June 1, 2003.
Based on an average salary of approximately $48,412 per year over the past five
years, the formula for computing regular pensions, and Mr. McClure’s selection of the
100% Joint & Survivor Annuity, this pension will be approximately $39,781 annually.
These pensions were approved by the Pension Advisory Committee on June 3,
2003. Section 2.393 (p) provides for normal retirement eligibility when a participant has
completed twenty years of credited service in a type of employment described as
“hazardous duty” and further specifically defines service as a Police Captain, Police
Lieutenant, and Firefighter as meeting the hazardous duty criteria. Mr. Slack, Mr. Repp,
and Mr. McClure qualify under the hazardous duty criteria.
Trustee Gray moved that John Slack, Robert W. Repp, Jr., and William McClure
II be granted regular pensions under Sections 2.393 and 2.397 of the Employees’
motion
Pension Plan, as approved by the Pension Advisory Committee. The was duly
carried
seconded and unanimously.
ITEM #5 - Approve the contracts with Atlanta Capital Management Co., LLC and
Systematic Financial Management, Inc., as small cap equity managers for the
Employee’s Pension Plan.
The Trustees previously authorized Callan to conduct a search for a small cap
value equity manager.
The following is the list of small cap value equity managers that Callan
recommended to the Investment Committee:
Ark Asset Management Co., Inc.
Atlanta Capital Management Co. LLC
Systematic Financial Management
Boston Partners Asset Management
Chartwell Investment Partners
Northpointe Capital
After reviewing information provided on the above managers, the Investment
Committee ranked the managers and conducted interviews with the top three. Staff also
visited the top three managers.
The Investment Committee recommends to the Trustees that they add two small
cap equity managers. Atlanta Capital and Systematic are firms that are on the opposite
Pension Trustees 2003-07-14 2 7/14/03
ends of the small cap value spectrum. Atlanta Capital invests in small cap firms that are
of high quality and tend to be well known. The annual turnover rate for Atlanta Capital’s
portfolio is about 40%. Systematic invests in small cap firms that had a positive earnings
surprise and positive free cash flow. The firms in Systematic’s portfolio tend to be
lesser-known firms. The annual turnover rate of Systematic’s portfolio is about 170%.
Both firms consistently out perform their benchmark, the Russell 2000 Value Index.
Atlanta Capital charges a management fee of .7%. Systematic charges a
management fee of 1%. Both fees are in line with industry standards given their
investment styles.
The Investment Committee recommends that each manager be funded with $15
million. The source of the funding will be determined at the time of funding. At that time
the entire portfolio will be rebalanced and the funding will come from parts of the portfolio
that are over funded.
In response to a question, Cash & Investments Manager Steve Moskun said
Atlanta Capital Management has less volatility than Systematic. Together, they would
provide the pension plan higher returns. The investment amount is to be evenly split
between the two managers.
Trustee Hamilton moved to approve the contracts with Atlanta Capital
Management Co., LLC and Systematic Financial Management, Inc. as small cap equity
motion
managers for the Employees’ Pension Plan. The was duly seconded and
carried
unanimously.
ITEM #6 - Other Business – None.
ITEM #7 - Adjourn
The meeting adjourned at 1:41 p.m.
Pension Trustees 2003-07-14 3 7/14/03