04/16/2018 Pension Trustees Meeting Minutes April 16, 2018
City of Clearwater
City Hall
112 S. Osceola Avenue
Clearwater, FL 33756
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Meeting Minutes
Monday, April 16, 2018
1 :00 PM
Council Chambers
Pension Trustees
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City of Clearwater
Pension Trustees Meeting Minutes April 16, 2018
Roll Call
Present 5 - Chair George N. Cretekos, Trustee Doreen Caudell, Trustee Bob
Cundiff, Trustee Hoyt Hamilton, and Trustee David Allbritton
Also Present—William B. Horne — City Manager, Jill Silverboard — Deputy City
Manager, Micah Maxwell — Assistant City Manager, Pamela K.
Akin — City Attorney, Rosemarie Call — City Clerk, Nicole
Sprague — Official Records and Legislative Services Coordinator,
and Joe Roseto — Human Resources Director
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 1:31 p.m. at City Hall.
2. Approval of Minutes
2.1 Approve the minutes of the March 12, 2018 Pension Trustees Meeting as submitted in
written summation by the City Clerk.
Trustee Cundiff moved to Approve the minutes of the March 12,
2018 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.
Name/Job Classification/Department Pension
Eligibility Date
Gregory Jones, Parking, Facility&Security Aide, Marine&Aviation 2/03/2018
Travontae Butler, Solid Waste Worker, Solid Waste 2/05/2018
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Pension Trustees Meeting Minutes April 16, 2018
Matthew Henderson, Solid Waste Worker, Solid Waste 2/05/2018
Gordon Dixon, Solid Waste Equipment Operator, Solid Waste 2/05/2018
Derek Williams, Solid Waste Equipment Operator, Solid Waste 2/05/2018
Jennifer Bowne, Librarian II, Library 2/05/2018
Jennifer Jones, Librarian I, Library 2/05/2018
Jewel Smith, Recreation Specialist, Parks& Recreation 2/05/2018
Carrie Szurly, Human Resources Office Assistant, Human Resources 2/05/2018
Rachel Fox,Accounting Technician, Parks&Recreation 2/05/2018
Marci Colton, Police Information Technician I, Police 2/05/2018
Zeron Rance, Utilities Mechanic, Public Utilities 2/05/2018
Kelly Calhoun, Telecommunications Analyst, Information Technology 2/05/2018
Michael Hegenbarth, Parking Technician, Engineering 2/17/2018
Alexandra Eustis, Pool Guard, Parks&Recreation 2/17/2018
Michele LaBrie, Marine Facility Operator, Marine&Aviation 2/18/2018
Tre Bunch, Solid Waste Worker, Solid Waste 2/19/2018
Andrew Crews, Construction Inspector II, Engineering 2/20/2018
Modesto Gonzalez, Traffic Engineering Assistant, Engineering 2/20/2018
Ursula Landsman, Accounting Technician, Library 2/20/2018
Daniel Smith, Utilities Mechanic, Public Utilities 2/20/2018
Trustee Hamilton 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 employees Christopher Defayette, Police Department
and Jeffery Richardson, Police Department, to vest their pensions as provided by Section
2.419 of the Employees' Pension Plan.
Christopher Defayette, Police Officer, Police Department, was employed by the
City on January 9, 2006, and began participating in the Pension Plan on that
date. Mr. Defayette terminated from city employment on February 3, 2018.
Jeffery Richardson, Police Officer, Police Department, was employed by the
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Pension Trustees Meeting Minutes April 16, 2018
City on December 16, 2002, and began participating in the Pension Plan on that
date. Mr. Richardson terminated from city employment on February 3, 2018.
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 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. Defayette will meet the
hazardous duty criteria and begin collecting pension in February 2026. Mr.
Richardson will meet the hazardous duty criteria and begin collecting pension in
January 2023.
Trustee Allbritton moved to approve the following request of
employees Christopher Defayette, Police Department and Jeffery
Richardson, Police Department, to vest their pensions 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 Kevin Cobb, Solid Waste General Services
Department, Terrance Labelle, Public Utilities, Roger Larkin, Engineering and Kathleen
McMullen, Information Technology Department, for a regular pension as provided by
Sections 2.416 and 2.424 of the Employees' Pension Plan.
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Pension Trustees Meeting Minutes April 16, 2018
Kevin Cobb, Fleet Mechanic, Solid Waste General Services Department, was
employed by the City on May 28, 1996, and his pension service credit is
effective on that date. His pension will be effective June 1, 2018. Based on an
average salary of approximately $59,797.69 over the past five years, the formula
for computing regular pensions and Mr. Cobb's selection of the Life Annuity, this
pension benefit will be approximately $36,191.28 annually.
Terrance Labelle, Public Utilities Coordinator, Public Utilities Department, was
employed by the City on December 1, 1996, and his pension service credit is
effective on July 21, 1998. His pension will be effective March 1, 2018. Based
on an average salary of approximately $68,628.45 over the past five years, the
formula for computing regular pensions and Mr. Labelle's selection of the 100%
Joint and Survivor Annuity, this pension benefit will be approximately $31,245.96
annually.
Roger Larkin, Construction Inspector II, Engineering Department, was employed
by the City on May 27, 1997, and his pension service credit is effective on that
date. His pension will be effective March 1, 2018. Based on an average salary
of approximately $40,479.19 over the past five years, the formula for computing
regular pensions and Mr. Larkin's selection of the Life Annuity, this pension
benefit will be approximately $23,089.20 annually.
Kathleen McMullen, Senior Telecommunications Analyst, Information
Technology Department, was employed by the City on November 10, 1997, and
her pension service credit is effective on that date. Her pension will be effective
March 1, 2018. Based on an average salary of approximately $63,783.76 over
the past five years, the formula for computing regular pensions and Ms.
McMullen's selection of the Life Annuity, this pension benefit will be
approximately $35,621.88 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.
Mr. Cobb, Mr. Labelle, Mr. Larkin and Ms. McMullen 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
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Pension Trustees Meeting Minutes April 16, 2018
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.
Trustee Caudell moved to approve the following request of
employees Kevin Cobb, Solid Waste General Services Department,
Terrance Labelle, Public Utilities, Roger Larkin, Engineering and
Kathleen McMullen, Information Technology 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 Accept the January 1, 2018 Annual Actuarial Valuation for the Employees' Pension Plan.
Per the actuary report dated January 1, 2018, a minimum city employer
contribution of$8.80 million, or 10.69% of covered payroll, is required for fiscal
year 2019. This is an increase of approximately $150,000 over the fiscal 2018
required contribution of$8.65 million, or 10.91% of covered payroll.
The calendar year 2017 investment return was a gain of 16.01%, 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 8.89% versus
the assumed rate of 7.0%. Calendar 2013 through 2017 investment returns
were 16.90%, 7.99%, (0.28%), 6.70%, and 16.01%, respectively.
The plan experienced a net actuarial experience gain of$11.1 million for the
year. The gain is primarily due to the actuarial gain from the actuarial investment
return of 8.89% versus the assumption of 7.0%.
The Plan's funded ratio at January 1, 2018 was 106.96% (including the credit
balance) versus 105.38% for the prior year. The actuarial value of assets
exceeds the market value of assets by $39.0 million as of January 1, 2018.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions for prior years, increased from $19.4 million to
$22.8 million during calendar 2017. This $3.4 million increase was due to the
City's budgeted overfunding of the fiscal 2018 required contribution. The City
contributed 13% of covered salaries, versus the actuarially required 10.91%, to
increase the plan's credit balance reserves in anticipation of future volatility in
required contributions.
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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 & Co. Actuary Pete Strong reviewed the actuarial
valuation report.
In response to questions, Mr. Strong said there are always recessions
and a credit balance protects the plan during an economic downturn. A
recession occurs, on average, every 7 to 10 years. The City's Plan is one
of the best funded plans in the state that Gabriel Roeder Smith reviews. The
Florida Retirement System Pension Plan is funded at 85%. He said the
city's pension plan has more to lose because of its healthy position of
assets, relative to payroll and liabilities, the Plan has accumulated a
large cushion and exposed to more risk during an economic downturn.
Trustee Cundiff moved to accept the January 1, 2018 Annual
Actuarial Valuation for the Employees' Pension Plan. The motion
was duly seconded and carried unanimously.
Ayes: 5 - Chair Cretekos, Trustee Caudell, Trustee Cundiff, Trustee Hamilton
and Trustee Allbritton
4.5 Annual review of the Employees' Pension Plan investment performance for the calendar
and plan year ended December 31, 2017.
A presentation of the Plan's investment performance is made to the Trustees
annually, in addition to quarterly updates. For calendar 2017, the Plan realized
an investment return of 15.98%, versus the plan's assumed rate of 7.00%, and
versus a customized benchmark of 15.44%, placing the plan in the 33rd
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
7.87%, versus a benchmark of 7.48%, placing the plan in the 44th percentile of
public plans. For the past five years, the plan had an annualized return of
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9.89%, versus a benchmark of 9.36%, placing the plan in the 27th percentile of
public plans.
The Pension Investment Committee continues to seek diversification and
decreased volatility in investment returns for the Plan via investment in
alternative investment categories. In recent years, new categories introduced
have included timber investments, core plus real estate, and infrastructure.
During calendar 2017, the Trustees approved termination and replacement of
both a small cap value manager and an international emerging markets money
manager. Both replacements were completed by year-end.
The investment committee, with the assistance of the Plan's investment
consultant, CapTrust Advisors, closely monitors underperforming money
managers and will continue to recommend terminations and replacements
when appropriate.
Finance Director Jay Ravins provided a PowerPoint presentation.
In response to questions, Mr. Ravins said if the Trustees
are interested in placing political-type restrictions (i.e., companies that
manufacture guns or ammunitions) on money managers, a discussion is
needed. Currently the Plan does not include any political-type restrictions
in what money managers invest. The only restrictions the Plan complies
with are those outlined in Florida Statutes. Regarding Voya's
performance, they performed as expected, the Plan hires managers to
protect itself from the downsides. In extreme volatile markets, staff
expects the money managers to underperform. Staff looks at long-term
performance, staff monitors underperforming money managers and
consider termination after three years of underperformance.
Staff was directed to contact the Florida League of Cities regarding other
municipalities implementing political-type of restrictions.
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).
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.
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Meeting Minutes April 16, 2018
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.
The was consensus to establish 7% as the rate of return.
Trustee Cundiff departed Chambers at 2:11 p.m. (he re- entered Chambers
at 2:13 p.m. while the Council reconvened the work session).
Trustee Caudell moved to determine Trustees' expected rate of
return of 7% 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). The motion was duly
seconded and carried unanimously.
5. Director's Report — None.
6. Adjourn
Attest
LGth-.-
City Clerk
City of Clearwater
The meeting adjourned at 2:12 p.m.
-- eteof,encrc44-os
Chair
Employees' Pension Plan Trustees
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