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11/17/2014 Pension Trustees Meeting Minutes November 17, 2014 City of Clearwater City Hall 112 S. Osceola Avenue Clearwater, FL 33756 e d s w r' �mu Meeting Minutes Monday, November 17, 2014 1 :00 PM Council Chambers Pension Trustees Page 1 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Roll Call Present 5 - Chair George N. Cretekos, Trustee Doreen Hock-DiPolito, Trustee Jay E. Polglaze, Trustee Bill Jonson, and Trustee Hoyt Hamilton Also Present William B. Horne 11 - City Manager, Jill S. Silverboard-Assistant City Manager, Rod Irwin -Assistant City Manager, Pamela K. Akin — City Attorney, Rosemarie Call- City Clerk, Nicole Sprague- Official Records and Legislative Services Coordinator To provide continuity for research, items are listed in agenda order although not necessarily discussed in that order. 1. Call To Order The meeting was called to order at 1:07 p.m. at City Hall. 2. Approval of Minutes 2.1 Approve the minutes of the October 13, 2014 Pension Trustees meeting as submitted in written summation by the City Clerk. Trustee Hock-DiPolito moved to approve the minutes of the October 13, 2014 Pension Trustees meeting as submitted in written summation by the City Clerk. The motion was duly seconded and carried unanimously. 3. Citizens to be Heard Regarding Items Not on the Agenda — None. 4. New Business Items 4.1 Approve the new hires for acceptance into the Pension Plan as listed. Body: SUMMARY: Pension Name, Job. Class, & Dept./Div. Elig. Date Kyia Price, Police Comm Operator Trainee, Police Dept 9/8/2014 Jacqueline Armstead, Comm Operator Trainee, Police Dept 9/8/2014 Wendy Ferlanie, Comm Operator Trainee, Police Department 9/8/2014 JaQuay Young, Police Comm Operator Trainee, Police Dept 9/8/2014 Lorraine Young, Accounting Clerk, Finance Department 9/8/2014 Valerie Hunter, Service Dispatcher, Gas Department 9/8/2014 Nikolas Papadopoulos, Traffic Signal Tech, Engineering Dept 9/8/2014 Patrick Competelli, Fire Inspector II, Fire Department 9/22/2014 Shawn Brown, Parking Enforcement Spec, Engineering Dept 9/22/2014 Page 2 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Sonja Cooper, Library Assistant, Library Department 9/22/2014 Trustee Polglaze moved to approve the new hires for acceptance into the Pension Plan as listed. The motion was duly seconded and carried unanimously. 4.2 Approve the following request of employees Stephen Coward, Fire Department and Kathy LaBelle, Solid Waste General Services Department, to vest their pensions as provided by Section 2.419 of the Employees' Pension Plan. Stephen Coward, Fire Lieutenant, Fire Department, was employed by the City on March 4, 1996, and began participating in the Pension Plan on that date. Mr. Coward terminated from City employment on September 9, 2014. Kathy LaBelle, Administrative Analyst, Solid Waste General Services Department, was employed by the City on July 6, 1999 and began participating in the Pension Plan on that date. Ms. LaBelle terminated from City employment on September 16, 2014. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater or change status from full-time to part-time after completing ten or more years of creditable service (pension participation), 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 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Ms. LaBelle will meet the non-hazardous duty criteria and begin collecting a pension in June 2019. Section 2.416 provides for normal retirement eligibility for hazardous duty Page 3 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty-five years and completed ten years of credited service. Mr. Coward will meet the hazardous duty criteria and begin collecting pension in April 2016. Trustee Hamilton moved to approve the following request of employees Stephen Coward, Fire Department and Kathy LaBelle, Solid Waste General Services Department, to vest their pensions as provided by Section 2.419 of the Employees' Pension Plan. The motion was duly seconded and carried unanimously. 4.3 Approve the following request of employees Mark Behring, Information Technology Department; Thomas Bracalento, Police Department; Randy Cline, Marine and Aviation Department; Diane Fitzgerald, Public Communications Department; Gregory Pippins, Solid Waste General Services Department; and William Tedder, Finance Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees' Pension Plan. Mark Behring, Senior Systems Programmer, Information Technology Department, was employed by the City on June 4, 1984 and his pension service credit is effective on that date. His pension will be effective October 1, 2014. Based on an average salary of approximately $75,392.35 over the past five years, the formula for computing regular pensions and Mr. Behring's selection of the 100% Joint and Survivor Annuity, this pension benefit will be approximately $60,744.36 annually. Thomas Bracalento, Police Officer, Police Department, was employed by the City on June 21, 1989 and his pension service credit is effective on that date. His pension will be effective October 1, 2014. Based on an average salary of approximately $82,717.21 over the past five years, the formula for computing regular pensions and Mr. Bracalento's selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $55,544.40 annually. Randy Cline, Marine Supervisor, Marine and Aviation Department, was employed by the City on April 29, 1985 and his pension service credit is effective on that date. His pension will be effective October 1, 2014. Based on an average salary of approximately $52,050.98 over the past five years, the formula for computing regular pensions and Mr. Cline's selection of the Single Life Annuity, this pension benefit will be approximately $42,234.36 annually. Page 4 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Diane Fitzgerald, Public Information Coordinator, Public Communications Department, was employed by the City on April 20, 1988 and her pension service credit is effective on that date. Her pension will be effective October 1, 2014. Based on an average salary of approximately $59,174.32 over the past five years, the formula for computing regular pensions and Ms. Fitzgerald's selection of the Single Life Annuity, this pension benefit will be approximately $43,037.40 annually. Gregory Pippins, Transfer Station Scales Operator, Solid Waste General Services Department, was employed by the City on December 28, 1987 and his pension service credit is effective on that date. His pension will be effective October 1, 2014. Based on an average salary of approximately $43,577.90 over the past five years, the formula for computing regular pensions and Mr. Pippins' selection of the 66 2/3% Joint and Survivor Annuity, this pension benefit will be approximately $23,819.04 annually. William Tedder, Accountant, Finance Department, was employed by the City on February 19, 1988 and his pension service credit is effective on that date. His pension will be effective October 1, 2014. Based on an average salary of approximately $47,716.09 over the past five years, the formula for computing regular pensions and Mr. Tedder's selection of the 50% Joint and Survivor Annuity, this pension benefit will be approximately $32,435.16 annually. Section 2.416 provides for normal retirement eligibility for non-hazardous duty employees hired prior to the effective date of this reinstatement (January 1, 2013), a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of fifty-five years and completed twenty years of credited service; the date on which a participant has reached age sixty-five years and completed ten years of credited service; or the date on which a member has completed thirty years of service regardless of age. For non-hazardous duty employees hired on or after the effective date of this restatement, a member shall be eligible for retirement following the earlier of the date on which a participant has reached the age of sixty years and completed twenty-five years of credited service; or the date on which a participant has reached the age of sixty-five years and completed ten years of credited service. Mr. Behring, Mr. Cline, Ms. Fitzgerald, Mr. Pippins and Mr. Tedder have met the non-hazardous duty criteria. Section 2.416 provides for normal retirement eligibility for hazardous duty employees, a member shall be eligible for retirement following the earlier of the date on which the participant has completed twenty years of credited service regardless of age, or the date on which the participant has reached fifty-five years and completed ten years of credited service. Mr. Bracalento has met the hazardous duty criteria. Page 5 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Trustee Jonson moved to approve the following request of employees Mark Behring, Information Technology Department; Thomas Bracalento, Police Department; Randy Cline, Marine and Aviation Department; Diane Fitzgerald, Public Communications Department; Gregory Pippins, Solid Waste General Services Department; and William Tedder, Finance Department, for a regular pension as provided by Sections 2.416 and 2.424 of the Employees' Pension Plan. The motion was duly seconded and carried unanimously. 4.4 Approve the recommended pension plan expenditures for fiscal year 2015, totaling $309,000. The Employees' Pension Plan does not have a legally required budget. However, the Trustees must approve all expenditures. The following are routine expenditures that staff is requesting approval of for administrative efficiency. The recommended expenditures for fiscal year 2015 reflect a $12,000, or 3.7% decrease from the fiscal 2014 expenditures. This decrease is primarily due to decreased administrative support charges from the Human Resources Department, along with a $5,000 decrease in estimated costs of post-employment physicals. Training and travel are the estimated costs of pension training and related travel, including fiduciary training for the Trustees and Pension Advisory Committee (PAC) members. This is a not-to-exceed amount given uncertainty regarding the number of Trustees and PAC members that may elect to pursue training. Reimbursements to the General Fund and Central Insurance Fund are for the cost of oversight and administration of the Plan. The reimbursements are for services provided by Human Resources, Payroll, and Finance personnel. The firm of Klausner, Kaufman, Jensen and Levinson currently serves as the Plan's pension attorneys. Annual attorney fees also include medical bills for medical services authorized by the PAC. Money manager, performance measurement consulting, safekeeping, and actuary fees are all governed by contracts separately approved by the Trustees, and are not included in this agenda item total. APPROPRIATION CODE AND AMOUNT: 0646-xxxxx-5xxxxx (various pension plan expenditure codes) Page 6 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Trustee Hock-DiPolito moved to approve the recommended pension plan expenditures for fiscal year 2015, totaling $309,000. The motion was duly seconded and carried unanimously. 4.5 Approve a change in the Pension Plan's actuarial cost method used for funding purposes, from the current Frozen Entry Age (FEA) method to the Entry Age Normal (EAN) actuarial cost method. The required implementation of Governmental Accounting Standards Board Statements 67 and 68 requires the City use the EAN actuarial cost method for financial reporting. It is not required for funding purposes. The EAN method is the most common method used throughout the State of Florida, and is also used by the Florida Retirement System. The Plan's actuary recommends changing to the EAN method for funding purposes at this time. Per the actuary, the EAN method more accurately aligns plan funding with the accrual of benefits over the course of each participant's expected period of employment with the City. Staff recommends changing to the EAN method for funding purposes, to follow the actuary's recommendation, to aid in comparability to other plan's, and for consistency with the financial reporting method required under GASB 67 and 68. In response to questions, Finance Director Jay Ravins said the unamortized gains under the EAN method are improving the City's funded level, versus the current frozen entry age method. Actuary Pete Strong said the FEA method takes the current frozen unfunded liability that has been amortized over time as a fixed level amount and adds to that the recognized gains/losses. The EAN liability method takes a true actuarial liability calculation as it recognizes the accumulated benefits from year to year. A new mortality table was released approximately three weeks ago, which is not being recommended yet because it considers only the experience for private sector pensions plans and does not consider data from public sector employees like police and fire. Mr. Strong said a mortality table that considers public safety employees is expected to follow. The City's pension plan is 97% funded. Page 7 City of Clearwater Pension Trustees Meeting Minutes November 17, 2014 Trustee Polglaze moved to approve a change in the Pension Plan's actuarial cost method used for funding purposes, from the current Frozen Entry Age (FEA) method to the Entry Age Normal (EAN) actuarial cost method. The motion was duly seconded and carried unanimously. 4.6 Provide guidance regarding proposed actuarial funding policy for the Plan. It is recommended that all defined benefit pension plans have a formal funding policy. A formal funding policy provides a long-term road map for plan funding and demonstrates prudent financial management of the plan. The Pension Funding Task Force 2013, including GFOA, ICMA, National League of Cities, and various other national organizations, recommended that all defined benefit pension plans adopt a formal funding policy. The City's actuary has developed a draft funding policy for the Plan, per Appendix A of the report. Staff recommends adopting the proposed funding policy with the following changes: • Adopt the Entry Age Normal actuarial cost method and delete references to Frozen Entry Age method. • Amend the amortization periods to be 25 years, rather than 30 years, for changes in actuarial assumptions or methods. Also, amend the amortization period for plan benefit changes/amendments to be no longer than the average future working period of affected employees (determined at the time a benefit change/amendment is made). These periods are consistent with recent guidance from the Conference of Consulting Actuaries (White Paper on Public Sector Pension Funding issued September 2014). • Amend the Funding Target from "the funding objective is to achieve 100% funding" to "the funding objective is to achieve and maintain at least 100% funding". • Amend language indicating Board "may" request studies of actuarial assumptions every six years to "must" request studies at least every six years, consistent with the pension ordinance requirement. • Staff is seeking guidance on any changes or additions the Trustees would like to the proposed funding policy. Staff intends to bring a final funding policy to the Trustees for approval at the December Trustees Page 8 City of Clearwater Pension Trustees 5. Adjourn Meeting Minutes November 17, 2014 meeting. In response to questions, Actuary Pete Strong said the funding policy is a new concept and considered a good practice. A 100% funding target is a typical funding policy that provides more flexibility for the future than a funding target range (i.e., 95% - 120 %) that would allow the ability to return funds to participants in the form of benefits. Finance Director Jay Ravins said based on the volatility of the plan and other occurrences (i.e., assumption changes, new mortality tables, etc.), it may be determined that a 125% -130% funding target range be appropriate and would not constitute overfunding. Mr. Strong said the 25 -year amortization period is shorter than the current 30 -year period. The 30 -year period extends the liability from the current generation of taxpayers to the next. Trustee Hock - DiPolito moved to approve Item 4.6 as suggested. The motion was duly seconded and carried unanimously. The meeting adjourned at 1:32 p.m. — ctwric acre laos Q ; 4ATt, Chair Attest " "'''-'e? Employees' Pension Plan Trustees eii v �BIISHE� Eat, Ica.) (4 04,e.c City Clerk City of Clearwater Page 9