03/10/2005
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PENSION ADVISORY COMMITTEE MEETING
CITY OF CLEARWATER
March 10, 2005
Present:
John Lee
Nathan Hightower
Tom Jensen
John Schmalzbauer
Hoyt P. Hamilton
Carlen Petersen
John Doran
Also Present:
Joe Roseto
Patricia O. Sullivan
Chair
Vice-Chair
Committee Member
Committee Member
Committee Member/Councilmember
Committee Member/Councilmember
Committee Member/Councilmember
Human Resources Director
Board Reporter
The Chair called the meeting to order at 9:00 a.m. at City Ha!!.
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 February ~ 0,
2005, as submitted in written summation to each board member. The motion was duly
seconded and carried unanimously.
3 - Emplovees to be HearQ - None.
4 -Action_Items:
a) Approval of New Hires as Plan Members:
As of March 10, 2005, the City had 1797.14 of 1895.4 budgeted positions.
Member Jensen moved to accept the following employees into membership in the
Pension Plan:
Name. Job. Class. & Dept./Div.
Daniel Taban, Parks Service Tech. I
Lisa May, Customer Svc. Rep.
Jimmie Evans, Tree Trimmer
Joseph Rice, Tree Trimmer
Karen Vaughan, Senior Staff Assistant
Michael Manlove, Parks Service Tech. I
April Everside, Customer Svc. Rep.
Ellen Ayo, Development Review Tech. I
Michelle Kutch, Accounting Clerk
Anthony Mastracchio, Plans Examiner
Pension Advisory 2005-03-10
Hire Date
Pension Elig.
Date
Parks & Recreation 02/07/05
Customer Service 02/07/05
Public Services 02/07/05
Public Services 02/07/05
Off. Rec/Leg Svcs. 02/14/05
Parks & Recreation 02/22/05
Customer Service 02/22/05
Dev. & Neigh. Svcs. 02/22/05
Finance 02/22/05
Dev. & Neigh. Svcs. 02/22/05
02/07/05
02/07/05
02/07/05
02/07/05
02/14/05
02/22/05
02/22/05
02/22/05
02/22/05
02/22/05
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The motion was duly seconded and carried unanimously.
5 - Pendina/New Business
a) David Crump - NJCD Hearing
Human Resources Director Joe Roseto reported staff had received proper medical
documentation that verifies David Crump has a terminal illness. The City recommends that an
IME (Independent Medical Exam) not be required and that the Committee approve a non-job-
connected disability retirement pension.
Member Petersen moved to accept provided documentation for the record and to waive
the requirement for an IME (Independent Medical Exam) for David Crump. The motion was
duly seconded and carried unanimously.
Member Schmalzbauer moved to approve a non-job connected disability retirement
pension for David Crump. The motion was duly seconded and carried unanimously.
b) Mark Weinreich - JCD Hearing
AND
c) James Albright - NJCD Hearing
Mr. Roseto requested the hearings for Mark Weinreich and James Albright be continued
to April 14, 2005.
Member Hamilton moved to continue the disability pension hearings for Mark Weinreich
and James Albright to April 14, 2005. The motion was duly seconded and carried
unanimously.
6 - Director's Report
Mr. Roseto reported that Ronnie White had withdrawn his application for a disability
pension and requested that members destroy related materials or return them to the Human
Resources Department.
Asset Allocation Study Recommendations
In October 2004, the Pension Trustees authorized the hiring of Kalson and Associates to
conduct an asset allocation study of Pension Plan investments. The goal of this study was to
find the asset mix that would generate the highest possible return with an acceptable amount of
risk. Some recommendations will require going to referendum for voter approval and others
simply will require the reallocation of funds from one investment type to another, including the
hiring and termination of investment managers.
A summary of recommendations from Asset Allocation Study, performed by Kalson &
Associates: a) Changes requiring voter approval via referendum: a) Add Real Estate Investment
Pension Advisory 2005-03-10
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Trusts (REITs) as allowable investment up to 15% of portfolio. R.EITs are companies that
primarily own buildings and land; 2) Increase allowable amount of International Investment from
10% to 20% of portfolio to provide for addition of emerging market equity investments; c)
Increase maximum equity allocation from 65% to 70%; and d) Allow up to 10% of portfolio to be
invested in High Yield 80nds and 2) Changes not requiring voter Bp!xoval via referendum: a)
Add Mid Capitalization Value Equity Manager; b) Add Small Capitalization Growth Equity
Manager; c) Add REIT's Manager (if investment type approved via referendum); and d) Add
active International EAFE Manager to replace current passive EAFE Manager.
Upon Trustee acceptance of Asset Allocation Study recommendations, staff will work
with the Pension Plan's attorney and City Attorney to draft appropriate language for the voter
referendum. In addition, staff 'Nm start the process to select a consultant to assist with
investment manager searches.
In response to questions, Finance Director Margie Simmons said the City's Pension Plan
is guided by Ordinance and investment policy. Changes to requirements related to permitted
investments require referendum approval, a lengthy process. No changes will be mandated, as
Pension Trustee approval is required for all investment policy changes. The recommendations
will provide flexibility to respond to changes in the investment environment.
Consensus was to support the Asset Allocation Study recommendations.
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Recommendations were made to modify the whole ordinance regarding investments,
rather than returning to referendum for every change, and that investment requirements be
aligned with the State. Ms. Simmons said the City does not want to propose controversial
issues on the next referendum, reporting that voters previously have been hesitant to give up
their rights to make decisions.
Investment Performance Measurement
At Trustee direction, staff issued a RFP (Request for Proposals) for Investment
Performance Measurement Cr!teria used to evaluate the proposals included firm qualifications
resources, and staff, fees, and the quality of reports. A total of 24 firm!) responded to the RFP.
The RFP committee ranked the responses and requested additional information from the top
eleven ranked firms: 1) Callan Associates; 2) Consulting Services Group LLC; 3) Frank Russell
Company; 4) GRS Asset Consultants; 5) Kalson& Associates; 6) Marquette Associates, Inc.; 7)
Mercer Investment Consulting; 8) Merrill Lynch Consulting; 9) New England Pension Consulting;
10) Palmer & Cay; and 11) PFM Advisors.
The RFP committee reviewed the second round of submittals and selected threefinaiists' .
for presentations. After the presentations, the RFP committee ranked the firms: 1) Callan
Associates; 2) Palmer & Cay; 3) Kalson & Associates.
The annual fee for the performance measurement service will be $72,000. Any
additional services, such as manager searches, will result in additional fees and require Trustee
approval.
Cash & Investrnents ivianager Steve Moskun said staff is cUiYlfortable with its ranking
now that the SEC investigation of Callan Associates has concluded. The SEC had investigated
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many firms. In response to a suggestion, Ms. Simmons said the Callan contract includes firm
prices for future searches.
7- Committee Members to be Heard
Member Jensen and Chair Lee complimented the recent conference hosted by the
Pension Plan's attorneys and reviewed issues addressed.
Staff will schedule the annual investment training for PAC members and the Pension
Trustees.
8- Adiournment
The meeting adjourned at 9:28 a.m.
~ fl-:~<
Chair.
Pension Advisory Committee
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