06/10/2004
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PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
June 10, 2004
Present:
John Lee
Tom Jensen
Hoyt P. Hamilton
John Schmalzbauer
Nathan Hightower
Carlen Petersen
Vice-Chair
Committee Member
Committee Member/Commissioner
Committee Member
Committee Member
Committee Member/Commissioner
Absent:
Frank Hibbard
Committee Member/Commissioner
Also Present: Rick Ebelke
Stuart Kaufman
Patricia O. Sullivan
Assistant Human Resources Director
Pension Advisory Committee Attorney
Board Reporter
The Vice Chair called the meeting to order at 9:00 a.m. at City Hall.
To provide continuity for research, items are in agenda order although not
necessarily discussed in that order.
2 - Approval of Minutes
Member Hightower moved to approve the minutes of the regular meeting of June 10,
2004, as submitted in written summation to each board member. The motion was duly
seconded and carried unanimously.
3 - Emplovees to be Heard - None.
4 - Action Items
a) Review and Action on Employee Requests for Years of Service Pension:
1. James E. Hagedorn - Fire Department
2. Karen A. Jackson - Fire Department
3. James H. Roe - Fire Department
4. Garry L. Wigington - Fire Department
Member Hamilton moved to approve Years of Service Pensions for James E. Hagedorn,
Karen A. Jackson, James H. Roe, and Garry L. Wigington. The motion was duly seconded
and carried unanimously.
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b) Approval of New Hires as Plan Members:
As of June 10, 2004, the City had 1788.14 FTEs out of 1895.4 budgeted positions.
Member Hamilton moved to accept the following employees into membership in the
Pension Plan:
Ronald Barton, Parks Service Technician I Parks & Recreation
Nancy Oakley, Accounting Technician Parks & Recreation
Jesus Nunez, Police Aide Police Department
Patrick Zulla, Parks Service Technician I Parks & Recreation
Konrad McCree, Jr., Custodial Worker Parks & Recreation
Bryon Smethers, Dev. Review Technician Development Services
Matthew Massato, Rec. Prgmng Suprt Tech Parks & Recreation
Greg Boos, Firefighter/Paramedic Fire Department
Chris Chancy, Firefighter/Paramedic Fire Department
Chris Nelson, Firefighter/Paramedic Fire Department
Jeff Wallace, Firefighter/Paramedic Fire Department
James Westerman, Firefighter/Paramedic Fire Department
The motion was duly seconded and carried unanimously.
5 - Pendino/New Business
a) Actuary Report
Date of Pension
Emplovment Elio. Date
05/03/04
05/03/04
05/01/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/03/04
05/03/04
05/01/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
05/17/04
Assistant Finance Director Jay Ravins reviewed the January 1, 2004, actuary valuation
prepared by City actuary Steve Metz of PricewaterhouseCoopers. The report was prepared to
present to management the contribution requirements for FY (Fiscal Year) 2004/05 and also
the current status of funding of accumulated plan benefits. Since the last actuarial valuation of
the plan in 2003, there have been no changes in the actuarial assumptions, plan provisions, or
the actuarial cost method.
The minimum required City contribution, pursuant to Florida Statutes for the 2004 plan,
year is $8,414,878 (excluding the credit balance of $25,459,838) compared to $7,153,190 for
2003. The minimum required contribution was affected by: 1) The investment return on
actuarial value of assets was 7.45%, compared to an assumed rate of 7.5%; 2) the actual
average salary increase was 6.4%, compared to an assumed rate of 6%; and 3) actual
expenses for the year were $36,978 less than expected.
The plan's credit balance currently is equal to $25,459,838, providing a cushion against
future contributions. On the negative side, the actuarial value of assets of the plan exceeds the
market value by approximately $36-million. Over the next four years, this deficit will be included
in the actuarial value and gradually will increase funding requirements. The funded status of
the plan increased compared to the prior year, primarily due to greater-than-expected returns
on the market value of assets. The ratio of assets at market value to the actuarial present
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value of accumulated plan benefits increased from 112% in January 1, 2003, to 122% at
January 1, 2004.
Mr. Ravins explained the salary increase was related to employees moving into and out
of the plan. He said terminations and retirement are a factor. In response to a question, Mr.
Ravins said several years ago the assumptions were revised and the assumed rate of increase
was increased from 5% to 6%. Any changes require a review of all assumptions. Mr. Metz was
concerned that use of the credit balance reduced the City's level of investments and,
consequently, interest. In response to a question, Mr. Ravins said the credit balance is
invested at the same rate as the plan,
b) Investment Policy Changes
The Pension Investment Advisory Committee reviews the Investment Policy on a regular
basis. The biggest changes relate to a reduction in the amount of a security or equity in a
company that a money manager may hold. In the case of international equity, the amount a
manager may hold in anyone company has been reduced from 10% to 5%. For fixed income,
the amount has been reduced from 10% to 5% for non-government backed securities and from
15% to 10% for government backed securities.
The remaining changes are of a housekeeping nature. The changes comply with
Florida Statutes 218.415. Plan Attorney Stuart Kaufman worked with the committee on the
changes. He has reviewed and approved all of the changes.
Cash & Investments Manager Steve Moskun reviewed the Plan's consultants and
returns posted by equity managers. In comparison to benchmarks, the plan is doing well. An
asset allocation study is necessary to make certain the Plan has the correct mix of assets. A
RFP (Request for Proposal) for Performance Measurement is being prepared.
In response to a question, PAC Attorney Stuart Kaufman said Callan has sent letters to
all Plan consultants for them to provide disclosure statements regarding any relationships with
money managers. In response to a suggestion, Mr. Kaufman reported this requirement had
been formalized in the most recent contract with Callan. It was recommended that full
disclosure be required for all consultants.
c) Virginia Ford/David Lee Ford - Hearing for Job-connected Disability Pension
Assistant Human Resources Director Rick Ebelke reported staff had not received
information from the applicant necessary to proceed with this hearing request. Mr. Kaufman
reported the Fords' counsel will advise the City when the case is ready to move forward.
Member Hamilton moved to continue the hearing for a Job-connected Disability Pension
for Virginia Ford/David Lee Ford to a date uncertain. The motion was duly seconded and
carried unanimously.
6 - Director's Reports
Mr. Kaufman reported three disability cases are pending.
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. 7 - Committee Members to be Heard - None.
8 - Adiournment
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The meeting adjourned at 9:26 a.m.
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