04/18/2016 Pension Trustees Meeting Minutes April 18, 2016
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
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Meeting Minutes
Monday, April 18, 2016
1 :00 PM
Council Chambers
Pension Trustees
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
Roll Call
Present 5 - Chair George N. Cretekos, Trustee Doreen Caudell, Trustee Bob
Cundiff, Trustee Hoyt Hamilton, and Trustee Bill Jonson
Also Present—William B. Horne — City Manager, Jill Silverboard —Assistant City
Manager, Pamela K. Akin — City Attorney, Rosemarie Call — City
Clerk, Nicole Sprague — Official Records and Legislative Services
Coo rd in ator
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 2:34 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 14, 2016 Pension Trustees meeting as submitted in
written summation by the City Clerk.
Trustee Hamilton moved to approve the minutes of the March 14,
2016 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.
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
Name/Job Classification/Department Pension
Eligibility
Date
Eryn Berg, Gas Dispatcher, Gas Department
2/06/2016
Anthony Medina *, Police Comm. Operator Trainee, Police Dept.
2/08/2016
Mark Jones, Service Dispatcher, Gas Department 2/08/2016
Anthony Violante, Solid Waste Accounts Coordinator, Solid Waste
2/08/2016
Jose Jaquez, Stormwater Technician I, Engineering
2/08/2016
Michele Stewart, Customer Service Accounting Rep., Customer Service
2/08/2016
Vincent Giallonardo, Traffic Signal Technician, Engineering
2/22/2016
Christopher Smith, Stormwater Technician I, Engineering
2/22/2016
Chauncey Swinton, Stormwater Technician I, Engineering
2/22/2016
Zane King, Tradesworker, General Services
2/22/2016
Molly Doran, Police Comm. Operator Trainee, Police Department
2/22/2016
Kellen Scott, Police Comm. Operator Trainee, Police Department
2/22/2016
Nancy Selvick, Police Comm. Operator Trainee, Police Department
2/22/2016
Nicolette Sepanski, Police Comm. Operator Trainee, Police Department
2/22/2016
James Hatten, Fire Inspector II, Fire Department
2/22/2016
SemieAkeen Hearns, Public Utilities Technician I, Public Utilities
2/22/2016
LaRon Brown, Water Distribution Operator Trainee, Public Utilities
2/22/2016
Craig Campbell, Recreation Supervisor I, Parks and Recreation
2/22/2016
Bryan Burke, Stormwater Technician I, Engineering
2/08/2016
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
*Anthony Medina was employed in temporary part-time positions from 06/02/2014 to
12/12/2014, 01/05/2015 to 12/11/2015, and 12/29/2015 to 02/05/2015. He was hired into a full
time position on 02/08/2016 and will be eligible for pension as of 02/08/2016.
Trustee Jonson 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 employee Christopher Lyons, Police Department to
vest his pension as provided by Section 2.419 of the Employees' Pension Plan.
Christopher Lyons, Police Officer, Police Department, was employed by the
City on March 12, 2001 and began participating in the Pension Plan on that
date. Mr. Lyons terminated from city employment on March 11, 2016.
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 (60) 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.
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. Lyons will meet the
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
hazardous duty criteria and begin collecting pension in April 2021.
Trustee Caudell moved to approve the following request of
employee Christopher Lyons, Police Department to vest his
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 Konrad McCree, Solid Waste General
Services Department, Ronnie Melton, Marine and Aviation Department, Richard
Nestor, Police Department and Raymond Niski, Police Department for a regular
pension as provided by Sections 2.416 and 2.424 of the Employees' Pension Plan.
Konrad McCree, Solid Waste Equipment Operator, Solid Waste General
Services Department, was employed by the City on August 19, 1985, and his
pension service credit is effective on that date. His pension will be effective
March 1, 2016. Based on an average salary of approximately $43,982.86 over
the past five years, the formula for computing regular pensions and Mr.
McCree's selection of the 100% Joint and Survivor Annuity with a 10% Partial
Lump Sum, this pension benefit will be approximately $30,034.20 annually.
Ronnie Melton, Marine Operations Supervisor, Marine and Aviation
Department, was employed by the City on July 17, 2006, and his pension
service credit is effective on that date. His pension will be effective August 1,
2016. Based on an average salary of approximately $37,971.11 over the past
five years, the formula for computing regular pensions and Mr. Melton's
selection of the 100% Joint and Survivor Annuity, this pension benefit will be
approximately $8,841.84 annually.
Richard Nestor, Police Sergeant, Police Department, was employed by the City
on February 6, 1995, and his pension service credit is effective on that date.
His pension will be effective March 1, 2016. Based on an average salary of
approximately $99,598.09 over the past five years, the formula for computing
regular pensions and Mr. Nestor's selection of the 100% Joint and Survivor
Annuity with a 30% Partial Lump Sum, this pension benefit will be
approximately $39,254.16 annually.
Raymond Niski, Police Communication Supervisor, Police Department, was
employed by the City on April 28, 1986, and his pension service credit is
effective on that date. His pension will be effective May 1, 2016. Based on an
average salary of approximately $66,676.92 over the past five years, the
formula for computing regular pensions and Mr. Niski's selection of the 50%
Joint and Survivor Annuity, this pension benefit will be approximately
$53,156.52 annually.
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
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. McCree, Mr. Melton, and Mr. Niski 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. Nestor has met the
hazardous duty criteria.
Trustee Cundiff moved to approve the following request of
employees Konrad McCree, Solid Waste General Services
Department, Ronnie Melton, Marine and Aviation Department,
Richard Nestor, Police Department and Raymond Niski, Police
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 Annual review of the Employees' Pension Plan investment performance for the
calendar and plan year ended December 31, 2015.
Annually a presentation of the Plan's investment performance is made to the
Trustees. For calendar 2015, the Plan realized an investment return of 1.42%,
versus a customized benchmark of 0.22%, placing the plan in the 31 st
percentile of public pension plans per the Wilshire Public Plan Sponsor
Universe.
For the last three calendar years period, the plan had an annualized return of
8.98%, versus a benchmark of 8.08%, placing the plan in the 18th percentile of
public plans.
During calendar 2015, the Plan introduced a new investment category, core
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
plus real estate, per the hiring of two new money managers. The Plan also
terminated one international equity money manager and hired two new
international equity money managers during calendar 2015.
During calendar 2016 to-date, the Trustees approved a new infrastructure
money manager, as well as the termination of an additional international equity
money manager.
Staff continues to seek diversification and decreased volatility in investment
returns for the Plan via alternative investment categories. In recent years, new
categories introduced have included timber investments, core plus real estate,
and infrastructure.
A number of money managers underperformed their indexes during calendar
2015. The investment committee, with the assistance of the Plan's investment
consultant, CapTrust, closely monitors underperforming money managers and
will continue to recommend terminations and replacements when appropriate.
Finance Director Jay Ravins presented a PowerPoint presentation.
Trustee Caudell departed Chambers at 2:42 p.m.
Trustee Hamilton moved to accept the annual review of the
Employees' Pension Plan investment performance for the calendar
and plan year ended December 31, 2015. The motion was duly
seconded and carried unanimously.
4.5 Accept the January 1, 2016 Annual Actuarial Valuation for the Employees' Pension
Plan.
Per the actuary report dated January 1, 2016, a minimum City employer
contribution of$8.93 million, or 11.13% of covered payroll, is required for fiscal
year 2017. This is an increase of$176 thousand over the fiscal 2016 required
contribution of$8.76 million, or 11.66% of covered payroll.
The calendar year 2015 investment return was a loss of(0.28%) 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 7.64% versus
the assumed rate of 7.0%. Calendar 2011 through 2015 investment returns
were (0.32%), 13.92%, 16.90%, 7.99%, and (0.28%), respectively.
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City of Clearwater
Pension Trustees Meeting Minutes April 18, 2016
The plan experienced a net actuarial experience loss of$475,313 for the year.
The actuarial gain from an actuarial return of 7.64% versus assumption of
7.0% was more than offset by actuarial losses, primarily due to actual salary
increases of 8.65% versus expected 4.09%. This increase was partially due to
the inclusion of 27 pay periods in the calendar 2015 payroll totals, versus the
normal 26 pay periods. Adjusting for the extra pay period, the estimated
increase was 4.62% versus the assumption of 4.09%.
The Plan's funded ratio is 102.92% (including the credit balance) versus
101.89% for the prior year. The Actuarial Value of Assets exceeds the Market
Value of Assets by $8.7 million as of January 1, 2016.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions for prior years, increased from $10,381,518 to
$15,570,503 during calendar 2015. This $5.2 million increase was due to the
City's intentional overfunding of the fiscal 2015 required contribution. The City
contributed approximately 17% of salaries, versus the actuarially required
11.66%, in order 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 representative Pete Strong reviewed the valuation
report.
Trustee Caudell entered Chambers at 2:46 p.m.
Trustee Hamilton moved to accept the January 1, 2016 Annual
Actuarial Valuation for the Employees' Pension Plan. The motion
was duly seconded and carried unanimously.
4.6 Determine Trustees' expected rate of return for pension plan investments for current
year, each of the next several years, and for the long term thereafter, in accordance
with FL Statutes 112.661(9).
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City of Clearwater
Pension Trustees
5. Adjourn
Meeting Minutes April 18, 2016
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
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.
In response to a question, Finance Director Jay Ravins said GASB 68
does not effect this actuarial report or valuation. GASB 68 marked up
the Plan's net assets at the beginning of the fiscal year; this year's
investment performance eliminated the asset and took it in as a $7
million liability by the end of the fiscal year. GASB 68 did not have a
significant impact on the balance sheet this year. A net pension liability
means that at September 30, 2015 valuation, the pension liability exceeded
the market value of the investments by $7 million. The information presented
to the Trustees today is based on the December 31, 2015 valuation.
Trustee Jonson moved to determine Trustees' expected rate of
return assumption of 7.0% for pension plan investments for the
current year, each of the next several years, and for the long term
thereafter, in accordance with FL Statutes 112.661(9). The motion
was duly seconded and carried unanimously.
The meeting adjourned at 3:07 p.m.
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City of Clearwater
Chair
Employees' Pension Plan Trustees
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