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04/10/2003PENSION ADVISORY COMMITTEE MEETING CITY OF CLEARWATER April 10, 2003 Present: Whitney Gray Acting Chair/Commissioner John Lee Committee Member Tom Jensen Committee Member Hoyt P. Hamilton Committee Member/Commissioner Frank Hibbard Committee Member/Commissioner Nathan Hightower Committee Member John Schmalzbauer Committee Member Also Present: Joe Roseto Human Resources Director Scott Christiansen Pension Advisory Committee Attorney Leslie Dougall-Sides Assistant City Attorney Sara DeBella Human Resources Analyst Brenda Moses Board Reporter The Chair called the meeting to order at 9:00 a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. ITEM #2 – Selection Of Chair and Vice-Chair Member Hamilton nominated Acting Chair Gray as Chair. The motion was duly seconded and carried unanimously. Member Schmalzbauer nominated Member Lee for Vice-Chair. The motion was duly seconded and carried unanimously. Human Resources Director Joe Roseto said staff would confirm the terms for Chair and Vice-Chair. ITEM #3 – Approval of Minutes of March 13, 2003 Member Jensen requested that paragraph six, page 4, sentence three read “…Mr. Willoughby does not meet…” Member Hibbard moved to approve the minutes of the regular meeting of March 13, 2003, as changed. The motion was duly seconded and carried unanimously. ITEM #4 – Employees to be heard – None. ITEM #5 – Action Items: Review and Action on Employee Requests for Years of Service Pensions: Fred Aust, Solid Waste Department Howard Wister, Engineering Department Kenneth Fairchild, Police Department Joseph Colbert, Fire Department Samuel Garrett, Police Department Member Schmalzbauer moved to approve Years of Service Pensions for Fred Aust, Howard Wister, Kenneth Fairchild, Joseph Colbert, and Samuel Garrett. The motion was duly seconded and carried unanimously. b. Approval of New Hires as Plan Members: As of March 27, 2003, the City had 1744.01 FTEs out of 1844.9 budgeted positions. Member Hamilton moved to accept the following employees into membership in the Pension Plan: Pension Elig. Name, Job. Class, & Dept./Div. Hire Date Date Timothy Murch, Senior Marine Lifeguard/Marine & Aviation 2/22/03 2/22/03 Micah Maxwell, Management Intern/City Manager 3/10/03 3/10/03 Sergo Alexandre, Firefighter/Fire 3/10/03 3/10/03 Michael Dellavolpe, Firefighter/Fire 3/10/03 3/10/03 Mark Eggers, Firefighter/Fire 3/10/03 3/10/03 Mark Herny, Firefighter/Fire 3/10/03 3/10/03 Gregory Record, Firefighter/Fire 3/10/03 3/10/03 John Savage, Firefighter/Fire 3/10/03 3/10/03 Christian Schuele, Firefighter/Fire 3/10/03 3/10/03 Adam Siegel, Firefighter/Fire 3/10/03 3/10/03 Steve Wilensky, Firefighter/Fire 3/10/03 3/10/03 Michele Williams, Firefighter/Fire 3/10/03 3/10/03 Floyd Thurman, Mechanic II/Solid Waste/General Services 3/25/03 3/25/03 Christopher Jenkins, Recreation Leader/Parks & Recreation 3/24/03 3/24/03 Clifford Fisher, Police Recruit/Police 3/24/03 3/24/03 Bryan Berry, Planner/Planning 3/17/03 3/17/03 Michael Reynolds, Senior Planner/Planning 3/24/03 3/24/03 Ronald Gideon, Risk Management Specialist/Finance 3/24/03 3/24/03 The motion was duly seconded and carried unanimously. ITEM #6 – Pending/New Business Discussion of Pension Changes Human Resources Director Joe Roseto said at a previous meeting, Member Jensen had requested discussion of this item. In response to a question, Mr. Roseto said staff reviewed the proposed pension plan changes and placed asterisks where there might be some potential bargaining issues. The PAC could bring forward proposals regarding changes to the employees’ pension plan and could discuss the merits of a particular item, which would then be forwarded to the unions and management for collective bargaining discussions. Member Jensen expressed concern about the composition of the Investment Committee. He said meetings are not governed by Sunshine laws and are informal. He said attendance is inconsistent and anyone who wishes to attend meetings is welcome. He also expressed concern about the disposition of previously proposed pension plan changes. In response to a question, Finance Director Margie Simmons said the employees’ pension plan states the City’s Finance Director is to serve as Treasurer for the Pension Trustees. She explained how the Investment Committee was formed. She said the Investment Committee has included a union representative from each of the unions, the Finance Director, Assistant Finance Director, and the Cash and Investments Manager as the main participants in Investment Committee meetings. Ms. Simmons also appoints various Finance staff to attend meetings for training purposes. The Trustees make the final decisions regarding Investment Committee recommendations. In response to a question, she said the Investment Committee is not a formal subcommittee of the Trustees. There are agendas for Investment Committee meetings. The committee meets quarterly and minutes are taken. During meetings, the Committee reviews items such as the performance of consultants, review of investment reports, hears presentations by money managers, discusses current and future market conditions and the need for additional investment managers, discusses if rebalancing of funds are needed, and other related issues. A remark was made that it is appropriate for the three City staff members to bring the recommendations to the PAC and Trustees. It was felt that people on the Investment Committee would specifically need to be trained in this field if the Committee is expanded beyond what it is now. It was remarked that consideration should be given to whether or not there is a specific task the PAC or Trustees feels the Committee should be charged with, and the focus should be on the overall performance of the Pension Plan. In response to a question, Mr. Jensen said employee Investment Committee membership should involve an open election to include one or two residents and an employee to represent each group. He expressed concern about the amount of time being spent between the three committees (Investment Committee, PAC and Trustees). He said there seems to be a reliance on a single person to drive the recommendations that are presented to the Trustees. In response to a question, Mr. Roseto said staff had distributed a list of proposed pension plan changes dated May 2002, which included a sheet of union proposals. The list included proposals that the Pension Attorney had brought forth. The proposals in parentheses marked “union proposal” were brought forward by the unions. He said those items were discussed in a bargaining session. Mr. Roseto said staff attempted to develop a chart to try to give the PAC a way to sift through some of the proposed changes. In response to a question, Mr. Roseto said the PAC has the ability to bring forth proposals to the pension plan. Mr. Roseto said Mr. Jensen’s suggestion to formalize the Investment Committee would require a change to the pertinent City ordinance. In response to a question, Mr. Roseto said the City is in the process of bargaining with one of the bargaining units and beginning to bargain with another unit. Human Resources staff and other members of the City staff participate in those bargaining sessions. He did not now the timeframes for the sessions and the ability to re-visit the pension plan changes that were proposed in May 2002. Pension Attorney Scott Christiansen said the former Human Resources Director and union representatives met several times regarding revisions to the Pension Plan provisions and developed a generally accepted draft to submit to the PAC. When the draft came before the PAC, it was felt that a formal recommendation from the union was needed. At the same time, the union wanted to talk about benefit improvements, therefore the draft of proposed pension plan changes was postponed. Mr. Christiansen said apparently, there was a breakdown on the negotiations with respect to benefit improvements. Mr. Christiansen said the draft included input from a lot of sources, including employee unions and staff. In response to a question, Ms. Simmons said she disagreed with some of them. She did not recall initiating any of the proposals. It was suggested that Mr. Jensen submit a formal proposal regarding his suggestions and expectations for discussion at the next meeting. Other Mr. Schmalzbauer expressed concern that a pension policy that forces an employee to wait until retirement to select a pension payout benefit has been an issue for several years. He felt the employee should have the right to select their pension benefit the day the employee becomes vested. Mr. Roseto referred to the current ordinance regarding survivorship benefits. He said there have been some discussions and the City has no qualms about changing that pension provision. It was remarked that even if an employee’s situation changes, i.e. divorce, etc., after the pension benefit is selected, the employee still has the ability to change it at a later date prior to receiving the first benefit payment. It was suggested that Mr. Schmalzbauer submit a formal proposal to the PAC regarding this matter. In response to a question, Mr. Christiansen said the change to this section of the pension plan has been delayed as part of the other pending pension plan changes proposed. ITEM #7 – Director’s Reports Mr. Roseto said forthcoming disability claims would be scheduled. Chair Gray thanked staff for distributing pertinent materials to the PAC in a timely manner. It was remarked that in order not to place an undue burden on employees, the PAC generally schedules no more than two disability cases per meeting. Cash & Investments Manager Steve Moskun said Northern Trust Bank, the Plan custodian, has requested that the Trustees authorize by motion individuals who have the authority to transfer funds with Northern Trust. As an internal control function, two of the three authorized individuals would have to approve a transfer. Member Hightower moved to recommend that the Finance Director, Assistant Finance Director, and the Cash & Investments Manager be authorized to transfer with Northern Trust, the plan custodian. The motion was duly seconded and carried unanimously. ITEM #8 – Committee Members to be heard Mr. Lee thanked staff for sending PAC information to members’ homes rather than through interoffice mail. Mr. Jensen requested the Investment Committee send the minutes of meetings out within two weeks of meetings. Ms. Simmons said staffing issues may prevent the completion and mailing of minutes within that timeframe. Member Jensen moved that Investment Committee agenda and minutes be published on the City’s web site. The motion was duly seconded. Ms. Simmons said the Investment Committee is not an advisory board. She said anything the committee does comes forward to the trustees, who make decisions regarding committee recommendations. Ms. Simmons said she did not know the value of placing the minutes on the web site due to the nature of the material discussed. It was suggested that the PAC wait until receipt of Mr. Jensen’s proposal regarding formalization of the Investment Committee prior to posting the minutes on the web site. In response to a question, Ms. Simmons said the annual summary plan regarding the pension is mailed to all employees and retirees. She said minutes of meetings can be requested. It was remarked as the pension plan meetings are considered public documents regardless of the formality of the committee and should be made available to all employees. Upon the vote being taken, Members Gray, Lee, Jensen, Hamilton, Hibbard, Hightower, and Schmalzbauer voted “aye”. Motion carried. In response to a question, Ms. Simmons said the actuary report is expected in May. Mr. Jensen requested that an RFP (Request for Proposal) be offered for a City consultant services for the pension plan. He said there are consultants that do not charge for searches. He said he is concerned that employees’ assets are being used for services that could be free of charge. It was suggested that a formal agenda item and vote be considered regarding this matter. In response to a question, Mr. Moskun said the City pension plan has used Callan & Associates since 1982. Staff already has scheduled a timeframe for an RFP for consultant services early this summer. Mr. Jensen said he would forward the names of five people interested in serving on the PAC to the Human Resources Department. ITEM #9 – Adjournment The meeting adjourned at 10:11 a.m.