10/14/2004
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PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
October 14,2004
Present:
John Lee
Tom Jensen
John Schmalzbauer
Hoyt P. Hamilton
Frank Hibbard
Carlen Petersen
Nathan Hightower
Chair
Committee Member
Committee Member
Committee Member/Councilmember
Committee Member/Councilmember
Committee Member/Councilmember
Committee Member
Also Present: Richard Ebelke
Brenda Moses
Assistant Human Resources Director
Board Reporter
The Chair called the meeting to order at 9:01 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
3 - Emplovees to be Heard - None.
4 - Action Items
a) Review and Action on Employee Requests to Vest Pensions:
1. Paul Hoobler, Public Utilities
Member Hamilton moved to recommend approval of the request by Paul Hoobler to vest
his pension. The motion was duly seconded and carried unanimously.
b) Approval of New Hires as Plan Members:
As of September 30, 2004, the City had 1797.14 FTEs out of 1895.4 budgeted
positions.
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Member Hightower moved to accept the following employees into membership in the
Pension Plan:
Pension Elig.
Name. Job Class. & Dept./Div.
Teresa Scrima, Library AssistanULibrary
Maxwell Jenkins, Solid Waste Worker/Solid Waste
Richard Allison, Landscape ArchitecUParks & Recreation
Theodore Mellis, Electronic Technician/Engineering
Mark Pack, Solid Waste Worker/Solid Waste
Keyl Groff, Planner II/Planning
Jeff Camden, Fire Pub. Educ. & Information SpecialisUFire
Scott Rhodes, Solid Waste Worker/Solid Waste
Charles Shuman, Fleet Mechanic/General Services
Kevin Webb, Recreation SpecialisUParks & Recreation
Hire Date
Date
3/8/04
9/7/04
9/7/04
9/7/04
9/7/04
9/13/04
9/7/04
9/7/04
9/20/04
9/20/04
8/23/04
9/7/04
9/7/04
9/7/04
9/7/04
9/13/04
9/7/04
9/7/04
9/20/04
9/20/04
Teresa Scrima was originally hired as part-time; status changed to full-time, and she is
pension eligible as of August 23, 2004.
The motion was duly seconded and carried unanimously.
5 - Pendino/New Business:
a) Ronnie White - Set Hearing for Job-connected Disability Request
Assistant Human Resources Director Richard Ebelke said Assistant City Attorney Leslie
Dougall-Sides has a conflict with the November 4,2004, meeting. Although she anticipates that
the other matter will be resolved prior to then so these hearings may proceed, she will request a
continuance if it is not resolved.
It was noted the November 11 meeting was rescheduled for November 4, 2004. Mr.
Ebelke said PAC (Pension Advisory Committee) members would receive all pertinent
information.
Member Hibbard moved to schedule the hearing for the job-connected disability request
by Ronnie White for November 4, 2004, and set December 9, 2004, as a back-up date. The
motion was duly seconded and carried unanimously.
b) James Albright - Set Hearing for Non-job-connected Disability Request
Mr. Ebelke reported that James Albright's case is scheduled for November 4, 2004.
6 - Director's Reports
Cash and Investments Manager Steve Moskun said the Pension Investment Committee
recommends that an asset allocation study be performed on the Pension Plan.
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The purpose of an Asset Allocation Study is to determine the proper asset mix that will
generate the maximum return with an acceptable level of risk and to determine what rate of
return can be expected over time based upon the asset mix.
Currently, the Plan's assets allocation is 52% Domestic Equity, 9% International Equity
(for a total equity of 61%), and 39% Domestic Fixed Income. The actuary assumed rate of
return is 7.5%.
Staff obtained price quotes from: 1) Kalson & Associates - $12,000; 2) Palmer & Cay -
$12,500; and 3) Callan Associates - $20,000. These firms were the three finalists in the
Performance Measurement RFP (Request for Proposal).
Staff met with representatives from Kalson & Associates, reviewed their approach to the
study, and checked their references. PAC Attorney Stu Kaufman highly recommended Kalson.
In response to a question, Mr. Moskun said the study will review Pension Fund historical
data and asset allocations. All firms indicated that current information is more valuable than
historical information.
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Discussion ensued with a recommendation that "triggers" requiring more frequent asset
reallocation during the five-year period could enhance performance, a remark that many
businesses change their models monthly, a request that Pension Plan information provided to
the consultant for the study be submitted to the PAC, and a suggestion that performance
measurements be completed first. Concern was expressed about cost and performance
issues. Discussion ensued with a recommendation that the performance measurement firm be
capable of performance monitoring, compliance testing, etc., and a concern was expressed that
bundling those services would increase the contract's overall cost.
Finance Director Margie Simmons reported the Pension Trustees previously had
recommended that Callan Associates perform the asset allocation study. At that time, the SEC
(Securities and Exchange Commission) was investigating multiple firms, including Callan. As
Callan already was under City contract, staff did not rush into finalizing their recommendation
for selection of a consultant until more information regarding the investigation was available.
Current contract fees are substantially less than they would be under a new contract, which
benefits the Pension Plan. When the performance measurement consultant RFP (Request for
Proposal) originally was released, staff felt an asset allocation study also was needed. Staff
obtained quotes from top-ranked firms. Kalson was the lowest bidder. Ms. Simmons
recommended another perspective review of the Plan asset allocation.
Discussion ensued regarding Callan Associates with comments that the firm is
expensive, charges for requests/reports needed by the City, has not supplied compliance
verification for the Plan's portfolio, does not adhere to its fiduciary duties, and adds the names
of managers who attend firm conferences into its database for recommendations to other firms.
Currently, the City pays Callan $31,500 annually. The firm has requested fee increases but
staff has managed to maintain fee levels. The City can delay negotiations with Callan until the
SEC investigation is completed.
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Discussion ensued with recommendations for Plan management. In response toa
question, Ms. Simmons said Investment Committee discussions address asset allocation
issues, etc. She suggested that staff could include compliance-testing, performance
monitoring, etc. in contract negotiations with Callan. Mr. Moskun said he performs compliance
testing and includes in it each investment manager's guidelines. He also checks for
overlapping securities. Ms. Simmons said staff has on-line access to all investments through
Northern Trust. Discussion ensued regarding related costs.
Member Hibbard moved to recommend approval of an asset allocation study for the
Employees' Pension Plan. The motion was duly seconded and carried unanimously.
7 - Committee Members to be Heard
Member Jensen questioned the status of recommended Plan changes and expressed
concern that the City has blamed the delay on IAFF (International Association of Fire Fighters)
union negotiations. He said the Pension's law firm, Klausner and Kaufman, has had sufficient
time to review the Plan and requested that current review results be submitted to the PAC. He
expressed frustration with the process and hoped that the PAC can be more proactive
regarding related issues.
Member Schmalzbauer concurred and reviewed problems experienced by a deceased
police officer's family under the current Plan. He supported recommended Pension Plan
changes, stating they are separate from union negotiations and should not be delayed.
8 - Adiournment
The meeting adjourned at 9:41 a.m.
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