07/12/2004
TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
CITY OF CLEARWATER
July 12, 2004
Present: Brian Aungst Chair
Frank Hibbard Trustee
William C. Jonson Trustee
Carlen Petersen Trustee
Absent: Hoyt Hamilton Trustee
Also Present: William B. Horne II City Manager
Garry Brumback Assistant City Manager
Ralph Stone Assistant City Manager
Pamela K. Akin City Attorney
Cyndie Goudeau City Clerk
Brenda Moses Board Reporter
The Chair called the meeting to order at 1:14 p.m. at City Hall.
To provide continuity for research, items are in agenda order although not necessarily
discussed in that order.
1. Accept the employees listed below into membership in the City of Clearwater's
Employees' Pension Plan.
Mr. Roseto presented the recommendation of the Pension Advisory Committee that the
following employees be accepted into membership:
Pension Elig.
Name, Job. Class, & Dept./Div. Hire Date Date
Ronald Barton, Parks Service Tech I/Parks & Rec 5/3/04 5/3/04
Nancy Oakley, Accounting Tech/Parks & Rec 5/3/04 5/3/04
Jesus Nunez, Police Aide/Police 5/1/04 5/1/04
Patrick Zulla, Parks Service Tech I/Parks & Rec 5/17/04 5/17/04
Konrad McCree, Jr., Custodial Worker/Parks & Rec 5/17/04 5/17/04
Bryon Smethers, Development Review Tech/Dev. Services 5/17/04 5/17/04
Matthew Massato, Rec Prog Sup. Tech/Parks & Rec 5/17/04 5/17/04
Greg Boos, Firefighter/Paramedic, Fire 5/17/04 5/17/04
Chris Chancy, Firefighter/Paramedic, Fire 5/17/04 5/17/04
Chris Nelson, Firefighter/Paramedic, Fire 5/17/04 5/17/04
Jeff Wallace, Firefighter/Paramedic, Fire 5/17/04 5/17/04
James Westerman, Firefighter/Paramedic, Fire 5/17/04 5/17/04
Trustee Jonson moved to accept the recommendation of the Pension Advisory
motioncarried
Committee. The was duly seconded and unanimously.
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2. James Hagedorn, Fire Department; Karen Jackson, Fire Department; James Roe, Fire
Department; and Garry Wigington, Fire Department, be granted regular pensions under
Section(s) 2.393 and 2.397 of the Employees’ Pension Plan as approved by the Pension
Advisory Committee.
Human Resources Director Joe Roseto presented the recommendation of the Pension
Advisory Committee that James Hagedorn, Fire Department; Karen Jackson, Fire Department;
James Roe, Fire Department; and Garry Wigington, Fire Department be granted regular
pensions under Section(s) 2.393 and 2.397 of the Employees’ Pension Plan as approved by the
Pension Advisory Committee.
James Hagedorn, Firefighter, Fire Department, was employed by the City on August 28,
1978, and his pension service credit is effective on that date. His pension will be effective July
1, 2004. Based on an average salary of approximately $48,824 per year over the past five
years, the formula for computing regular pensions, and Mr. Hagedorn’s selection of the 100%
Joint & Survivor Annuity, this pension will approximate $34,015 annually.
Karen Jackson, Firefighter/Paramedic, Fire Department, was employed by the City on
May 3, 1976, and her pension service credit is effective on November 3, 1976. Her pension will
be effective June 1, 2004. Based on an average salary of approximately $53,477 per year over
Life Annuity, this pension will approximate $40,544 annually.
James Roe, Firefighter/Driver Operator, Fire Department, was employed by the City on
April 14, 1980, and his pension service credit is effective on that date. His pension will be
effective June 1, 2004. Based on an average salary of approximately $51,977 per year over the
past five years, the formula for computing regular pensions, and Mr. Roe’s selection of the
100% Joint & Survivor Annuity, this pension will approximate $34,070 annually.
Garry Wigington, Firefighter/Driver Operator, 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 September 1, 2004. Based on an average salary of approximately $50,416 per year
over the past five years, the formula for computing regular pensions, and Mr. Wigington’s
selection of the 100% Joint & Survivor Annuity, this pension will approximate $42,310 annually.
Trustee Petersen moved to grant regular pensions for James Hagedorn, Fire
Department; Karen Jackson, Fire Department; James Roe, Fire Department; and Garry
motioncarried
Wigington, Fire Department. The was duly seconded and unanimously.
3. Amend the collective fund custody agreement with Northern Trust Investments by adding
the HTGI-QM Collective Weekly Enhanced EAFE Index Fund-Lending, and that the appropriate
officials be authorized to execute the same.
With the termination of Invesco, the Pension Fund has been under-weight with respect to
International Equity investments. The best available estimates have International Equity returns
out performing Domestic Equity returns in the near future.
Staff recommends the addition of Northern Trust Global Investments Weekly Enhanced
EAFE Index Fund. “Weekly” references the fund’s weekly valuation. “Enhanced” means the
fund may make limited use of futures and/or options for the purpose of maintaining equity
exposure. The fund also may participate in securities lending.
Pension Trustees 2004-07-12 2
The following is the performance of the Northern Trust EAFE Index Fund V.S. the
Benchmark:
Northern Benchmark
1 Year 57.59% 57.54%
3 Years 3.89% 3.43%
5 Years 1.27% 0.52%
10 Years 5.57% 4.55%
Northern Trust charges a fee of 35 basis points (.35 of 1%). This fee is reasonable fee
for this type of product.
The Northern Trust Enhanced EAFE Index Funded will be funded by rebalancing the
portfolio.
Concern was expressed the PAC (Pension Advisory Committee) will not consider this
item until its meeting on Thursday. Finance Director Margie Simmons said staff did not want to
delay a decision for a month. She said the Investment Committee has reviewed this item and
noted the Pension Trustees are solely responsible for the management of pension funds. In
response to questions, it was indicated 4% of the funds would be rebalanced and a full search
of investment managers would be necessary to review more active types of investments. The
proposed change is an interim step.
Trustee Hibbard moved to amend the collective fund custody agreement with Northern
Trust Investments by adding the HTGI-QM Collective Weekly Enhanced EAFE Index Fund-
motion
Lending, and that the appropriate officials be authorized to execute the same. The was
carried
duly seconded and unanimously.
4. Authorize the termination of Vanderbilt Capital Advisors as a fixed income money
manager.
For the year ending March 31, 2004, Vanderbilt Capital Advisors placed in the 72nd
percentile. For the last three-year and five-year periods, Vanderbilt placed 96th and 95th. The
Investment Committee has been monitoring the performance of Vanderbilt very closely. At this
time, the Investment Committee recommends termination of Vanderbilt. The plan’s two
advisors, John Willoughby and Paul Troup, concur with this recommendation.
The assets under Vanderbilt's management will be transferred to a new manager,
Western Asset Management Company (WAMCO). WAMCO is being hired under a separate
agenda item.
Trustee Jonson moved to authorize the termination of Vanderbilt Capital Advisors as a
fixed income money manager, and that the appropriate officials be authorized to execute same.
motioncarried
The was duly seconded and unanimously.
Pension Trustees 2004-07-12 3
.
5. Approve the contract with Western Asset Manaaement Company as a fixed income
manaaer and that the appropriate officials be authorized to execute the same.
Under a separate agenda item, the plan has terminated Vanderbilt Capital Advisors.
Last summer, when the Plan conducted a search for a fixed income manager, the top three
ranked firms were:
Dodge & Cox - Funded February 1, 2004, with $75 million
Western Asset Management Company 0NAMCO)
PIMCO
Callan has updated their search information and WAMCO still appears very favorable.
WAMCO finished a very close second to Dodge & Cox in last year's search.
Staff has updated it's research and noticed a number of plan sponsors have been
moving assets to W AMCO because of problems with other fixed income managers. W AMCO
has informed staff they are able to accept additional assets without difficulty. The minimum
funding for W AM CO is $75 million. Funding will come from the termination of Vanderbilt and
rebalancing the portfolio. WAMCO changes a fee of 0.30 of 1% for the first $100 million and
0.15 of 1 % on all amounts over $100 million. This rate is competitive other money manager
charges for this type of product.
.
Concern was expressed $75 million is a lot for one manager to handle. Ms. Simmons
said previously the fund retained three managers. Termination of one was approved under the
previous item. She said two firms will not manage portfolios smaller than $75 million. The
funds are invested in bonds, treasuries, and corporate securities, not high yield. Mr. Moskun
said scandals currently affect the investment management industry. Boutique management
fees tend to be higher, with disappointing returns over time. He believed the recommended firm
will provide stability to the pension fund.
Discussion ensued and questions were raised regarding the difference in expense ratios
and managers' fees if smaller firms are used.
Consensus was to schedule a Special Pension Trustees meeting on Thursday, following
the City Council meeting, to further discuss this issue.
6. Other Business - None.
7. Adiourn
The meeting adjourned at 1 :29 p.m.
Attest:
.~
Cufl- City C K
Pension Trustees 2004-07-12
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