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11/13/2003PENSION ADVISORY COMMITTEE MEETING CITY OF CLEARWATER November 13, 2003 Present: Whitney Gray Chair/Commissioner John Schmalzbauer Committee Member Tom Jensen Committee Member Hoyt P. Hamilton Committee Member/Commissioner Frank Hibbard Committee Member/Commissioner Absent: John Lee Vice-Chair Nathan Hightower Committee Member Also Present: Joe Roseto Human Resources Director Stuart Kaufman Pension Advisory Committee Attorney Patricia O. Sullivan 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. 2 - Approval of Minutes Member Hibbard moved to approve the minutes of the regular meeting of October 9, 2003, as recorded and submitted in written summation to each board member. The motion was duly seconded and carried unanimously. 3 - Employees to be Heard - None. 4 - Action Items a) Review and Action on Employee Requests for Years of Service Pension 1. James W. Thomas - Police Department 2. Gordon W. Yaudes - Fire Department Member Hamilton moved to approve a Years of Service Pension for James W. Thomas and Gordon W. Yaudes. The motion was duly seconded and carried unanimously. b) Approval of New Hires as Plan Members: As of October 30, 2003, the City had 1766.3 FTEs out of 1844.9 budgeted positions. Member Jensen moved to accept the following employees into membership in the Pension Plan: Date of Pension Employment Elig. Date Michael Franco, Solid Waste Equip Oper. Solid Waste 10/06/03 10/06/03 Kyle Kilian, Accountant Parks & Recreation 10/06/03 10/06/03 Vincent Jones, Solid Waste Worker Solid Waste 10/06/03 10/06/03 James Weinreich, Field Service Rep Customer Service 10/08/03 10/08/03 Demetrius Brown, Solid Waste Worker Solid Waste 10/06/03 10/06/03 Nicole Anderson, Police Recruit Police Department 05/19/03 05/19/03 Gary Martinez, Police Cadet Police Department 05/19/03 05/19/03 Mitch Arnold, Parks Svc Technician I Parks & Recreation 09/22/03 09/22/03 Amanda Seibel, Recreation Programmer Parks & Recreation 10/20/03 10/20/03 Chris Hicks, Parks Service Technician I Parks & Recreation 10/20/03 10/20/03 Kerri Leeman, Rec. Program Support Tech Parks & Recreation 10/20/03 10/20/03 Jeff Mahar, Parks Service Technician I Parks & Recreation 10/20/03 10/20/03 Timothy Smith, Pool Guard Parks & Recreation 10/12/03 10/12/03 5 - Pending/New Business a) Marcus Lane - Set Hearing Date for Job-connected Disability Application Consensus was to schedule the hearing for Marcus Lane’s job-connected disability application on December 11, 2003. Pension Advisory Committee Attorney Stuart Kaufman said it was acceptable to him for Mr. Lane’s medical provider, therapist Lisa Averoff, to have forwarded her notes to Dr. Kaplan, who performed Mr. Lane’s IME (Independent Medical Examination) and summarized the notes. The entire package of information related to this case has been forwarded to PAC (Pension Advisory Committee) members. As Mr. Lane is in a no pay status, it was requested that this hearing be scheduled prior to December 11, 2003, if possible. b) Discuss Policies and Procedures It was recommended this item be continued as two committee members are absent. Member Schmalzbauer moved to table Item 5b. The motion was duly seconded and carried unanimously. Human Resources Director Joe Roseto said tomorrow staff will distribute to committee members a revised loose leaf binder of Committee policies and procedures. c) Hire Fixed Income Manager Cash & Investments Manager Steve Moskun invited Committee members to attend the 10:00 a.m. Pension Investment meeting, where discussions with Putnam are scheduled. A Pension Investment training session has been scheduled for December 16, 2003, in Room 130 of the Municipal Services Building from 1:00 to 5:00 p.m. The Plan’s Pension Attorney and program investment consultants will participate. Mr. Moskun reviewed the request. The Pension Trustees previously authorized Callan Associates to conduct a search for a fixed income manager. The following is a list of fixed income managers that Callan recommended to the Investment Committee: 1) Dodge & Cox (D&C); 2) Western Asset Management Co. (WAMCO); 3) Pacific Investment Management Co. (PIMCO); 4) Baird Advisors; 5) Banc One Investment Advisors; 6) Black Rock; 7) Barrow, Handley, Mewhinney & Strauss, Inc.; 8) Deutsche Asset Management; 9) Evergreen Investments; 10) Hartford Investment Management Co.; 11) Richmand Capital Management; 12) Weiss, Peck & Greer; and 13) Wells Capital Management After reviewing the information provided on these managers, the Investment Committee ranked the managers and conducted interviews with the top three firms listed above. Based upon the interviews, Dodge & Cox and Western Asset Management were ranked as the top two firms. Representatives from the Investment Committee visited the top two managers. Dodge & Cox is a bit more conservative in their investment style and the committee felt that Dodge & Cox fits better into our goals and objectives. The Investment Committee recommends that the Trustees hire Dodge & Cox. The Investment Committee recommends that Dodge & Cox be funded at $75 million with the funds coming from the Northern Trust Lehman Index Fund, where funds were placed after the termination of EPW and Sirach. Dodge & Cox charges a money management fee based upon the amount invested and will result in the fee of .25 of 1% for $75 million. Additional amounts above the $75 million will be charged at .15 of 1%, up to a total $135 million. We estimate the fees to be approximately $200,000 annually and will vary based upon the market value of the funds managed. This fee is consistent with industry norms. Klausner and Kaufman, the Plan's Attorneys, have reviewed the contract. Mr. Moskun said Dodge & Cox has an excellent reputation. It was stated the firm cannot provide this level of service for a lower fee. Member Schmalzbauer moved to approve the contract with Dodge & Cox as fixed income managers for the Employee's Pension Plan and authorize the appropriate officials to execute same. The motion was duly seconded and carried unanimously. d) Elizabeth Alvarez Appeal Mr. Kaufman reported Elizabeth Alvarez has filed a petition for writ of certiorari, appealing the PAC’s decision to deny her request for a job-connected disability pension. He said PAC comments are not evidentiary material and snippets of PAC member comments cited in the petition do not reflect entire remarks. He will reference the meeting transcript when filing a response and requesting oral arguments. He said case law research supports the City’s position. Based on Florida Statute, he also will file a motion for reimbursement by the plaintiff of City attorney fees. The hearing date will be determined by the court’s docket. As they occur, Mr. Kaufman will forward case updates to Mr. Roseto for distribution to PAC members. Mr. Kaufman anticipated the case will be upheld on appeal. 6 - Director’s Reports Mr. Roseto reported the yearly membership fee for FPPTA (Florida Public Pension Trustees Association) is $400. Consensus was for staff to provide additional information regarding FPPTA and to schedule a vote on the issue for December 11, 2003. 7 - Committee Members to be Heard Member Schmalzbauer expressed sorrow at the passing of Sergeant Joseph Rinaldi and requested that staff streamline their efforts to award his pension benefit to his family. Member Jensen said it has been several years since the last actuarial review of the Pension Plan and stated the disparity in benefits between single and married Pension Plan members continues, even though the last actuarial review had indicated equalizing this disparity would not harm the Plan. He suggested this issue be explored. Mr. Roseto agreed a new actuary report is needed. All changes to the Pension Plan must be discussed with the labor organizations before going to referendum for citizen approval. He said these discussions are planned after labor negotiations are resolved. Mr. Kaufman said he will review related issues in the next month or so. It was noted there is insufficient time to add Pension questions to the March 2004 referendum and preparation should begin now for their inclusion in the following election. 8 - Adjournment The meeting adjourned at 9:26 a.m.