06/02/2005
. TRUSTEES OF THE EMPLOYEES' PENSION FUND SPECIAL MEETING MINUTES
CITY OF CLEARWATER
June 2, 2005
Present:
Frank Hibbard
William C. Jonson
Hoyt Hamilton
Carlen Petersen
John Doran
Chair
Trustee
Trustee
Trustee
Trustee
Also Present:
William B. Horne II
Garry Brumback
Pamela K. Akin
Cynthia E. Goudeau
Patricia O. Sullivan
City Manager
Assistant City Manager
City Attorney
City Clerk
Board Reporter
The Chair called the meeting to order at 5:30 p.m. at City Hall.
To provide continuity for research, items are in agenda order although not
necessarily discussed in that order.
Pension Trustee Items
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1 - Accept the Actuary's Report for the Emplovees' Pension Plan for the plan year beainnina
January 1. 2005.
Assistant Finance Director Jay Ravins reviewed reasons the City must increase its
contribution to the Pension Plan. The January 1, 2005 actuarial report for the Employees'
Pension Plan indicates that a required City contribution of $14,471,960, equivalent to 19.6% of
covered payroll, is required for fiscal year 2005/2006. This is an increase from the 2004
valuation, which required a contribution of $8,414,878. This actuarially-required contribution
required by Florida Statutes exceeds the minimum City contribution per the plan ordinance of
7% of covered payroll, currently estimated at $5,168,541.
The required City contribution was affected by the following factors: 1) Actuarial
investment return (5-year weighted average) of 2.18% versus an assumed rate of 7.5%. This is
due to three years of poor investment performance (calendar years 2000 through 2002 at
(3.43)%, (5.16)%, and (8.83)%, respectively), partially offset by returns of 20.08% and 9.73%
for calendar years 2003 and 2004. The actuarial investment return of 2.18% decreased from
7.45% for the previous year due to an 18.61 % year (1999) falling off the 5-year average,
replaced by a 9.73% return for 2004; 2) Actual salary increases of 6.38% versus an assumed
rate of 6.00%. This was primarily a result of hurricane-related overtime of $900,000; 3) Actual
expenses for the plan year were $529,055 more than expected, primarily due to increased
money manager fees. .
Actuary Steve Metz said the City's Pension Plan is better funded than most, is over-
funded if the Plan were to be frozen today, and is well-funded for the long term, even though it
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Pension Trustees Special 2005-06-02
. will require increased City contributions. In response to a question, he said future City costs will
drop if returns increase above 7.5%. It was recommended that salary assumptions be reviewed
as actual salary increases have outpaced assumptions every year but one. Finance Director
Margie Simmons reported the timing of City contributions relates to budgeting purposes and
changes would have a detrimental effect on the budget.
In response to concerns, Mr. Metz said while future high costs are not attractive, the
City's Pension Plan is in better shape than many others.
Trustee Doran moved to accept the Actuary's Report for the Employees' Pension Plan
for the plan year beginning January 1, 2005. The motion was duly seconded and carried
unanimously.
Other Business
Investment Presentation
Cash & Investments Manager Steve Moskun reviewed the performances of City
investments, changes made during the last three years, and portfolio allocations. He presented
recommended allocation changes, indicating some would require referendum approval.
.
In response to a question, Mr. Moskun reported last year's performance, at slightly
under 10%, was higher than the Plan's 7.5% benchmark. It is beneficial for the Plan to have
money managers rated above the 50 percentile. A search is underway for a mid-cap manager.
Adjourn
The meeting adjourned at 5:54 p.m.
Attest:
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W. City rk .
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'eh'air, Pension Trustees'
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Pension Trustees Special 2005-06-02
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