04/13/2015 Pension Trustees Meeting Minutes April 13, 2015
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
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Meeting Minutes
Monday, April 13, 2015
1 :00 PM
Pension Trustees
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
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: Jill 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— Chair Cretekos
The meeting was called to order at 1:25 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 16, 2015 Pension Trustees meeting as submitted in
written summation by the City Clerk.
Trustee Jonson moved to approve the minutes of the March 16,
2015 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.
Pension
Name, Job. Class, & Dept./Div. Elig. Date
Joseph Contreras, Recreation Leader, Parks and Recreation 1/26/2015
Dept
Natalie Lamb, Recreation Specialist Parks and Recreation 1/26/2015
Dept
Erin Marks, Librarian I, Library Dept 1/26/2015
Mark Smith, Stormwater Technician, Engineering Dept 1/26/2015
Kyle Aldrich, Parking Technician, Engineering Dept 2/9/2015*
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
Brandon Fletcher, Solid Waste Worker, Solid Waste Dept 2/9/2015**
Kyle Harter, Water Plant Operator C, Public Utilities Dept 2/9/2015
Belinda Nichol, Customer Service Rep, Customer Service Dept 2/9/2015
Kristen Parete, Legal Staff Assistant, Legal Dept 2/2/2015
Brandi Portalatin, Solid Waste Worker, Solid Waste Dept 2/9/2015***
Linda Rothstein, Librarian III, Library Dept 2/9/2015
John Toston, Parks Service Technician I, Parks and Recreation 2/9/2015
Dept
Jonathan Hurt, Police Cadet, Police Dept 2/21/2015
Erik Jordan, Water Plant Operator Trainee, Public Utilities Dept 2/23/2015
Scot MacDonald, Radio Manager, General Services Dept 2/23/2015
* Kyle Aldrich was hired into a part time position on 05/6/2013, and transferred to a
full-time permanent position as of 2/9/2015; he will be eligible for pension as of
2/9/2015.
** Brandon Fletcher was hired into a temporary position on 11/17/14, and transferred
to
a full-time permanent position as of 2/9/2015; he will be eligible for pension as of
2/9/2015.
*** Brandi Portalatin was previously employed with the City of Clearwater, resigned
effective 08/14/2014, rescinded resignation and was rehired 2/9/2015; she will be
eligible for pension as of 2/9/2015.
Trustee Hock-DiPolito 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 Karen Maldonado, Engineering Department, to vest
her pension as provided by Section 2.419 of the Employees' Pension Plan.
Karen Maldonado, Construction Office Specialist, Engineering Department,
was employed by the City on June 5, 2004 and began participating in the
Pension Plan on that date. Ms. Maldonado terminated from city employment
on February 21, 2015.
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
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
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. Maldonado will meet the non-hazardous duty criteria and
begin collecting a pension in March 2031.
Trustee Polglaze moved to approve the following request of Karen
Maldonado, Engineering Department, to vest her pension 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 Etheridge Hall, Police Department;
Marianna Mallon, Police Department, and Leonard Rickard, Fire Department, for a
regular pension as provided by Sections 2.416 and 2.424 of the Employees' Pension
Plan.
Etheridge Hall, Police Sergeant, Police Department, was employed by the City
on April 5, 1993, and his pension service credit is effective on that date. His
pension will be effective April 1, 2015. Based on an average salary of
approximately $91,217.61 over the past five years, the formula for computing
regular pensions and Mr. Hall's selection of the Single Life Annuity, this
pension benefit will be approximately $58,583.28 annually.
Marianna Mallon, Police Service Technician, Police Department, was employed
by the City on June 13, 1984, and her pension service credit is effective on that
date. Her pension will be effective March 1, 2015. Based on an average salary
of approximately $52,568.79 over the past five years, the formula for
computing regular pensions and Ms. Mallon's selection of the Single Life
Annuity, this pension benefit will be approximately $44,389.20 annually.
Leonard Rickard, Assistant Fire Marshal, Fire Department, was employed by
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
the City on July 25, 2005, and his pension service credit is effective on that
date. His pension will be effective August 1, 2015. Based on an average
salary of approximately $71,913.72 over the past five years, the formula for
computing regular pensions and Mr. Rickard's selection of the 75% Joint and
Survivor Annuity with a 30% partial lump sum distribution, this pension benefit
will be approximately $13,892.28 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. Ms. Mallon has 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. Hall and Mr. Rickard
have met the hazardous duty criteria.
Trustee Hamilton moved to approve the following request of
employees Etheridge Hall, Police Department; Marianna Mallon,
Police Department, and Leonard Rickard, Fire 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 Determine Trustees' expected rate of return for the pension plan's investment for the
current year, for each of the next several years, and for the long term thereafter.
Florida Statutes 112.661(9) requires an annual determination of expected rates
of return be filed with the Florida Department of Management Services, with
the plan's sponsor, and with the consulting actuary.
Staff is recommending the current plan investment rate of return assumption of
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
7.0%, net of investment-related fees, as the expected annual rate of return for
the current year, for each of the next several years, and for the long term
thereafter.
Trustee Hock-DiPolito moved to Determine Trustees' expected rate
of return for the pension plan's investment for the current year, for
each of the next several years, and for the long term thereafter. The
motion was duly seconded and carried unanimously.
4.5 Accept the January 1, 2015 Annual Actuarial Valuation for the Employees' Pension
Plan.
Per the actuary report dated January 1, 2015, a minimum city employer
contribution of$8.8 million, or 11.66% of covered payroll, is required for fiscal
year 2016. This is a decrease of$2.0 million over the fiscal 2015 required
contribution of$10.8 million, or 14.53% of covered payroll.
The net decrease in the required contribution of$2.0 million versus the prior
year is primarily due to investment earnings experience, partially offset by the
increase in contributions resulting from the change in the actuarial cost method
from frozen entry age to entry age normal.
The calendar year 2014 investment return was 7.99% net of investment fees,
versus the assumed rate of 7.0%. The "five-year smoothed" investment return
based on the actuarial value of the assets was 11.04% versus the assumed
rate of 7.0%. Calendar 2010 thru 2014 investment returns were 17.50%,
(0.32%), 13.92%, 16.90% and 7.99%, respectively.
Additional actuarial experience gain occurred due to actual salary increases of
3.38% versus expected 4.04%, and fewer retirements than expected (45 actual
versus 51 expected).
The Plan's funded ratio is 101.89% (including the credit balance) versus
97.05% for the prior year, based on the Entry Age Normal funding method. The
Actuarial Value of Assets exceeds the Market Value of Assets by $57.2 million
as of January 1, 2015.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions for prior years, increased from $5,390,884 to
$10,381,518 during calendar 2014. This $5.0 million increase was due to the
City's intentional overfunding of fiscal 2014's contribution. The City contributed
approximately 20% of salaries, versus the actuarially required 14.53%, in order
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City of Clearwater
Pension Trustees Meeting Minutes April 13, 2015
to increase the plan's credit balance reserves for future volatility in required
contributions.
The Employees' Pension Plan is highly leveraged on investment returns in
comparison to most pension plans, which means changes in investment
earnings cause significant increases or decreases in required employer
contributions. This year-to-year volatility necessitates building reserves, such
as the plan's credit balance, during periods of positive investment earnings
experience. This provides the City the ability to subsidize increased employer
contributions during periods of negative investment earnings experience with
contributions from accumulated reserves.
Gabriel Roeder Smith Actuary Pete Strong reviewed the actuarial
valuation results. He said the contribution requirement decreased by
approximately$2 million and the credit balance is currently$10.38 million.
There was a funding methodology change this year to Entry Age Normal
(EAN). The funding method has been implemented in this year's valuation,
causing the pension plan to be fully funded.
In response to a concern, the City Clerk said she has been working with
Human Resources Director Joseph Roseto regarding proposed state
legislation that would require a less conservative mortality table and
providing the actuary's feedback to the City's state lobbyists. Mr. Smith
said the proposed legislation should provide a minimum mortality
requirement, allowing municipalities to use a more conservative mortality
table. Clearwater's plan already uses a more conservative mortality
table.
Trustee Jonson moved to accept the January 1, 2015 Annual
Actuarial Valuation for the Employees' Pension Plan. The motion
was duly seconded and carried unanimously.
4.6 Annual review of the Employees' Pension Plan investment performance for the
calendar and plan year ended December 31, 2014.
This is the annual presentation on the investment performance of the
Employees' Pension Plan for calendar and plan year ended December 31,
2014.
For the last calendar year, the plan had a return of 8.24%, versus a customized
benchmark of 9.91%, placing the plan in the 12th percentile of public pension
plans per the Wilshire Public Plan Sponsor Universe.
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City of Clearwater
Pension Trustees
5. Adjourn
Meeting Minutes April 13, 2015
For the last three calendar year period, the plan had an annualized return of
13.27% versus a benchmark of 12.55 %, placing the plan in the 15th percentile
of public plans for that period.
There were no changes in money managers during calendar 2014. The
Pension Investment Committee will be proposing hiring of two new Core Plus
real estate managers at the May Trustees meeting.
A number of managers underperformed their indexes during calendar 2014,
and their performance is being monitored closely.
Finance Director Jay Ravins provided a PowerPoint presentation.
The meeting adjoumed at 1:54 p.m.
City of Clearwater
CLeOfle IC( { 4tkos
Chair
Employees' Pension Plan Trustees
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