08/17/2020 Pension Trustees Meeting Minutes August 17, 2020
City of Clearwater
Main Library- Council Chambers
100 N. Osceola Avenue
Clearwater, FL 33755
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Meeting Minutes
Monday, August 17, 2020
9:00 AM
Main Library - Council Chambers
Pension Trustees
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City of Clearwater
Pension Trustees Meeting Minutes August 17, 2020
To ensure public safety and comply with the Governor's Safer at Home order in response to the
COVID-19 virus, the Clearwater Pension Trustees will hold a public meeting on Monday August 17,
2020 at 9:00 a.m. using communications media technology.
Pursuant to Executive Order No. 20-69, issued by the Office of Governor Ron DeSantis on March 20,
2020, municipalities may conduct meetings of their governing boards without having a quorum of its
members present physically or at any specific location, and utilizing communications media technology
such as telephonic or video conferencing, as provided by Section 120.54(5)(b)2, Florida Statutes.
Roll Call
Present 5 - Chair Frank Hibbard, Trustee David Allbritton, Trustee Hoyt Hamilton,
Trustee Kathleen Beckman, and Trustee Mark Bunker
Also Present—William B. Horne II — City Manager, Micah Maxwell — Assistant
City Manager, Michael Delk — Assistant City Manager, Pamela
K. Akin — City Attorney, Rosemarie Call — City Clerk, Nicole
Sprague — Official Records and Legislative Services
Coordinator and Jennifer Poirrier— 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 Hibbard
The meeting was called to order at 9:00 a.m. via communications media
technology.
2. Approval of Minutes
2.1 Approve the June 15, 2020 Pension Trustees Meeting Minutes as submitted in written
summation by the City Clerk.
Trustee Hamilton moved to approve the June 15, 2020 Pension
Trustees Meeting Minutes 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 Accept the January 1, 2020 Annual Actuarial Valuation for the Employees' Pension Plan.
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City of Clearwater
Pension Trustees Meeting Minutes August 17, 2020
Per the actuarial valuation report dated January 1, 2020, a minimum city
employer contribution of$11.52 million, or 12.72% of covered payroll, is required
for fiscal year 2021. This is an increase of approximately $1.81 million over the
fiscal 2020 required contribution of$9.71 million, which represented 11.48% of
covered payroll.
In prior years, the actuary has simply calculated a single average employer
contribution rate for all employees in the plan. Due to recently negotiated
enhancements to pension benefits for Police participants, it was necessary to
engage the actuary to calculate separate employer contributions for police
officers, firefighters, and non-public safety participants.
Per this calculation, the required employer contributions by group are as
follows:
Police $ 4,872,378 23.55%
Fire $ 3,115,146 18.64%
Non-public safety $ 3,534,489 6.64%
Total $11,522,013 12.72%
The calendar year 2019 investment return was 20.20%, versus an assumed
rate of 6.75% for 2019. The five-year smoothed actuarial investment rate of
return was 7.39% versus the 6.75% assumption. Calendar 2015 through 2019
investment returns were (-0.28%), 6.70%, 16.01%, (-2.48%), and 20.20%,
respectively.
As previously approved by the Trustees, the assumed rate of return was
lowered to 6.65% as of January 1, 2020. This change increased the Fiscal Year
2021 employer contribution by $411,325, which represented 0.45% of covered
payroll. The assumed rate of return is scheduled to be lowered in two additional
increments - to 6.55% in 2021, and to 6.50% effective January 1, 2022.
The plan experienced a net actuarial experience gain of$1.19 million for the
year. The gain was primarily due to investment returns, partially offset by higher
than expected salary increases (8.84% versus 4.35% expected) and a lower
than expected mortality rate.
The plan's funded ratio at January 1, 2020 was 102.60% (including the credit
balance in the assets) versus 104.09% for the prior year. The actuarial value of
assets exceeds the market value of assets by $76.7 million as of January 1,
2020.
The plan's credit balance, which reflects actual contributions in excess of
actuarially required contributions in prior years, increased from $26.61 million to
$28.96 million during calendar 2019, primarily due to interest earned on the
credit balance. This credit balance is available as a "rainy day" fund to subsidize
volatile required employer contributions during investment market downturns.
The Plan is highly leveraged on investment returns in comparison to most
pension plans, which means changes in investment earnings can cause
significant increases in required employer contributions. This year-to-year
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City of Clearwater
Pension Trustees Meeting Minutes August 17, 2020
volatility is offset by setting aside excess earnings in the credit balance during
periods of positive investment returns.
Actuary Pete Strong provided a PowerPoint presentation.
In response to questions, Mr. Strong said the rolling 5-year smoothing
period is a normal smoothing method. The State of Florida allows
smoothing and 99% of the pension plans smooth out the volatility in the
market. The maximum smoothing period in the state of Florida is 5
years. The City's pension plan is tied for the best in Florida, most
pension plans are funded in the 70% to 90% range. Mr. Strong said the
City's plan is 100% funded and ranks in the top 10% nationwide. The non
investment administrative cash flow on page C3 is the sum of all
contributions from the City and employees minus all benefit payments
that went out.
Trustee Hamilton moved to accept the January 1, 2020 Annual
Actuarial Valuation for the Employees' Pension Plan. The motion
was duly seconded and carried unanimously.
4.2 Determine Trustees' expected rate of return for pension plan investments for the current
year, each of the next several years, and for the long term thereafter, in accordance with
Florida Statutes 112.661(9).
Florida Statutes 112.661(9) requires filing of an annual determination of
expected rates of return for the pension plan with the Florida Department of
Management Services, with the plan's sponsor, and with the consulting actuary.
Staff is recommending the currently adopted plan investment rate of return
assumptions including 6.65%, net of investment-related fees, as the expected
annual rate of return for the current year; 6.55% for the next year; and 6.50% for
all years thereafter.
Trustee Hamilton moved to determine Trustees' expected rate of
return for pension plan investments for the current year, each of
the next several years, and for the long term thereafter, in
accordance with Florida Statutes 112.661(9). The motion was duly
seconded and carried unanimously.
4.3 Appoint Sheldon Goldberg to the Pension Investment Committee with a term to expire
August 31, 2022.
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City of Clearwater
Pension Trustees
Meeting Minutes August 17, 2020
APPOINTMENT WORKSHEET
BOARD: Pension Investment Committee
TERM: 2 years
APPOINTED BY: City Council (Pension Trustees)
RESIDENCY REQUIREMENT: City of Clearwater
CONTACT: Jay Ravins, Finance Dir.
APPTS. NEEDED: 1
THE FOLLOWING PENSION INVESTMENT COMMITTEE MEMBER HAD A
TERM THAT EXPIRED AND NOW REQUIRES REPLACEMENT BY A NEW
APPOINTEE:
1. Nino Accetta - 2717 Via Cipriani, 33764 - Banking
Original Appointment: 6/12/17
Interest in reappointment: No
(term expired 6/30/19)
THE NAME BELOW IS BEING SUBMITTED FOR CONSIDERATION TO FILL
THE ABOVE VACANCY:
1. Sheldon Goldberg - 2060 Marilyn St., #215, 33765 - Real Estate Broker
(application on file for PAC)
Trustee Hamilton moved to appoint Sheldon Goldberg to the
Pension Investment Committee with a term to expire August 31,
2022. The motion was duly seconded and carried unanimously.
5. Director's Report - None.
6. Adjourn
Attest
The meeting adjourned at 9:32 a.m.
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Employees' Pension Plan Trustees
City Clerk
City of Clearwater