CITY OF KNOXVILLE PENSION BOARD

MINUTES

MAY 12, 2005

8:15 A.M.

917B E. 5^TH AVENUE

 

 

The regular meeting of the City of Knoxville Pension Board was held in the Pension Board Conference Room at 917 E. 5^th Avenue at 8:15 a.m. on May 12, 2005.

 

Present were:  Mayor Bill Haslam, Mr. Kent Bates, Mr. Buddy Harrell, Mr. Stephen King, Mr. Christopher Kinney, Mr. Michael Cherry and Attorney C. C. “Bud” Gilbert.

 

Also present:  Mr. Dan Holmes, Summit Strategies; Mr. Scott Johnston and Mr. Kurt Kroger, Sterling Johnston Capital Management; and Mr. Todd Jewett, STW Fixed Income Management.

 

CALL TO ORDER:

           Mayor Haslam presided and called the meeting to order at 8:20 a.m.

 

APPROVAL OF SPECIAL MEETING MINUTES FOR APRIL 13, 2005

Motion:  Mr. Bates made a motion to approve the April 13, 2005, special meeting minutes.  Mr. King seconded the motion.  The motion carried unanimously by the members present.

APPROVAL OF REGULAR MEETING MINUTES FOR APRIL 14, 2005

 

Motion:  Mr. Harrell made a motion to approve the April 14, 2005, meeting minutes.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

APPROVAL OF REVISED AGENDA:  Exhibit 1

 

           The Revised Agenda was approved without objection.

 

CONTRACTS:  None

 

ADMINISTRATIVE MATTERS:

 

           Financial Statements – Exhibit 2

 

Mr. Cherry presented the Board, for their review, two pages of financial statements for Administrative Expenditures for the City of Knoxville Pension System.  Mr. Cherry reported to the Board that the Investment Services’ fees were higher than projected, due to manager performance incentives.

 

Mayor Haslam suggested to the Board that the financial statements be further reviewed by the Board members and scheduled for further discussion and approval at the June 9, 2005, Pension Board meeting.

 

           Vicki Dagnan – Exhibit 3

 

Mr. Cherry reviewed with the Board a request by General Government employee Vicki Dagnan to have her pension service date adjusted.  Mr. Cherry presented the Board with a draft determination letter for their comment and/or approval, and recommended that her hire date be adjusted from March 26, 1996 to February 27, 1995 based on documentation provided by Civil Service. The records indicate Ms. Dagnan was a permanent full time employee effective on February 27, 1995 and thus required to participate in the pension upon completion of six months of employment with the city.     Ms. Dagnan is required to pay the pension system $1,125.98, which is the total of the employee pension contributions that would have been withheld had the above error not occurred. 

 

Attorney Gilbert advised the Board that after considering the personnel documentation provided by Civil Service, the Board had the authority under Charter Section 1352.2 to correct Ms. Dagnan’s pension service date if the Board determined that an error had been made.

 

Motion:  Mr. Bates made a motion under the authority of Charter Section 1352.2 to find that an error had been made which required Ms. Dagnan’s pension service date to be adjusted from March 26, 1996 to February 27, 1995, and to require Ms. Dagnan to pay pension contributions to the Pension System in the amount of $1,125.98 to correct the error..  Mr. Harrell seconded the motion.  The motion carried unanimously by the members present.

 

           Debbie Beeler

 

Mr. Cherry advised the Board that an appeal of the Board’s decision not to reinstate prior credited service time to General Government employee Debbie Beeler, which was presented to the Board at the January and February Pension Board meetings, was received late in the Pension Office after the 60 day appeal period.

 

Mr. Cherry advised the Board that he would reply, by letter, to Ms. Beeler explaining that her request had arrived too late and that it was his administrative determination that the time period for appealing the decision had passed.

 

           IRS Ruling 401(a) (9) (A) (ii)

 

Mr. Cherry advised the Board that he had learned from the Board’s actuary, Alan Pennington, of an amendment effecting IRS Code Section 401(a) (9) (A) (ii). ERISA regulation 409(a) (9) -6 Q2 provides an explanation of the above IRS code section. The regulation indicates that an employee who names a non spouse beneficiary who is 10 or more years younger than the member is limited to a Joint & Survivor benefit which provides a death benefit of no more than 60% of the member’s initial benefit. The change to the IRS code was effective January 1, 2003. Attorney Gilbert is researching the IRS Code Section to see if public plans may be exempt from this ERISA regulation. Mr. Cherry will check records to see how many members currently have an option on file which may be affected by this change.

 

           Ophelia Martin distribution

 

Mr. Cherry informed the Board that he had finally received the legal documentation that would give the Pension System authority to disperse Ms. Martin’s funds.  Mr. Cherry advised the Board that he would compute the amount of the distribution, which would include all retroactive benefits owed to Ms. Martin, including interest, and report back to the Board in June. Ms. Martin will be added to the pension roll effective in June.

          

EXECUTIVE DIRECTOR COMMENTS:

Mr. Cherry advised the Board that he had made a request to the personnel committee for salary increases for himself and staff.

 

ATTORNEY COMMENTS:

 

           Possible Pending Litigation

 

Attorney Gilbert informed the Board that he had been advised by Tony Farmer, attorney representing disability applicant Glenda Fields, that litigation was imminent regarding the Board’s denial of her request for an in line of duty benefit at the March 10, 2005, Pension Board Meeting.

 

ENROLLMENTS:

 

The following General Government employees have filed applications to become members of the Plan G1 pension system.

 

           Richard S. Edmonds

           Kevin Goodwin

           Michael Kent

           Curtis Glenn Long

           John Shubzda

           Gregory L. Trusty

Lynne M. Williams

Travis Williams

Melvin W. Wright

 

Motion:  Mr. Harrell made a motion to approve these applications for enrollment in the Plan G1 pension system.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

                     

The following Fire Department - Uniformed employees will file applications on May 16, 2005, to become members of the Plan C pension system. 

 

                      Dennis B. Bambach, Jr.

                      Scott D. Bell

                      Kenneth E. Brewer

                      Ty R. Browning

                      Michael E. Carey

                      Matthew D. Catline

                      Richard S. Coaker

                      Thomas R. Cole

                      Clayton R. Collins

                      Gary L. Ellis

                      Chad D. Gentry

                      Bradley T. Hammel

                      Vickey L. Harris, Jr.

                      Joseph L. Janeway

                      Carl R. Jenkins, III

                      Joseph E. Jones

                      Corinne C. Kirby

                      Shane C. Lake

                      William E. Lay

                      Johnathan K. Leitch

                      Adam D. Noe

                      Matthew P. Oliver

                      Adam A. Payne

                      Justin A. Roberts

                      Gary E. Shelton

                      Quentin A. Smith

                      Danny S. Stewart, Jr.

                      James K. Ward

                      Raymond L. Whaley

Philip A. Woods

 

Motion:  Mr. Bates made a motion to approve these applications for enrollment in the Plan C pension system.  Mr. Harrell seconded the motion.  The motion carried unanimously by the members present.

                     

 

WITHDRAWALS:

 

The following employees have filed applications to withdraw employee pension contributions plus 4% interest and the supplemental retirement account as applicable in Plan G Option 1.

 

Jan W. Davis, General Government – Plan G-1 – Non-vested

Stacy Helcl, General Government – Plan G-1 – Non-vested

Jonathan M. Jacobs, Police Department – Plan C – Non-vested

William L. Ketron, General Government – Plan G-1 – Non-vested

Thomas LoBasso, Police Department – Plan C – Non-vested

Daniel D. McCleary, Police Department – Plan C – Non-vested

Phillip Merritt, Fire Department – Plan C - Vested

 

Motion:  Mr. Bates made motion to approve these applications for withdrawal of employee contributions.  Mr. Kinney seconded the motion.  The motion carried unanimously by the members present.

 

RETIREMENTS:

 

APPLICATION FOR DISABILITY NOT IN LINE OF DUTY RETIREMENT:  PLAN A

CHARTER SECTION 1360.20 – (BLUE TAB)

 

           Gary L. Mabry, General Government                                    No Option

           Date of birth, May 21, 1953:  51 years of age*

           *(computed as if 62 years of age)

           Total credited service:  28 years 10 months 18 days

           Average base monthly salary for 2 years, $400.00 x .75% = $3.00

           Average excess monthly earnings for 2 years, $1,591.37 x 1.50% = $23.87

           Making a total of $26.87 benefit per year of service.  $26.87 x 28.8826 =

           $776.09 pension effective August 1, 2005

 

Motion:  Mr. Harrell made a motion to approve this application for a disability, not in line of duty retirement benefit, based on the medical reports of Dr. Pool and Dr. Cooper, and pending receipt of the department director’s letter stating there is no job available which Mr. Mabry could perform in view of his disability.   Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

 

APPLICATION FOR DEFERRED RETIREMENT:  PLAN A

CHARTER SECTION 1360.28

 

           Gloria J. Kendrick, Schools Certified                                                     No Option

           Date of birth, April 30, 1943:  62 years of age

           Total City credited service:  11 years 10 months

           Total County credited service:  15 years 11 months

           Total credited service:  27 years 9 months

           Last date of employment with City:  June 1987

           Last date of employment with County:  May 2003

           Average base earnings for 4 years, $400.00 x 75% = $3.00

           Average excess earnings for 4 years, $1,255.57 x 1.50% = $18.83

           making a total of $21.83 benefit per year of service.  $21.83 x 11.8333 =

$258.32 pension effective May 1, 2005

 

The City benefit payment is determined using City only salaries and City service time.  The City benefit does not include any County service.

           The total amount of the combined City and County benefit is $1,482.96

 

Motion:  Mr. King made a motion to approve this application for a deferred retirement benefit.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR SURVIVOR’S BENEFIT:  PLAN G2

CHARTER SECTION 1360.24

 

           Laura M. Goss, survivor of Ralph G. Goss, who died in service April 29, 2005.

           Mr. Goss chose Option A-6 – 100% with reinstatement.

           The following are Mr. Goss’ statistics:

           Date of birth, June 7, 1940:  64 years of age

           Credited service:  32 years 10 months 22 days

           Average monthly salary $2,835.79 x .021 = $59.55 x 32.89360 =

$1,958.81.  Mr. Goss chose Option A-6 – 100% Joint & Survivor to Laura M. Goss, spouse.  $1,958.81 x .8298 =

           $1,625.42 Laura Goss’ monthly benefit beginning May 1, 2005.

 

Motion:  Mr. King made a motion to approve this application for a survivor’s benefit.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR SURVIVOR OF A DEFERRED MEMBER’S BENEFIT:  PLAN G2

CHARTER SECTION 1360.28 (member had more than 10 years service)

 

Donna Cole, survivor of Jerry Lynn Cole, deferred vested member, who died March 16, 2005.  Mr. Cole chose Option A-6 – 100% without reinstatement.

The following are Mr. Cole’s statistics:

Date of birth, June 20, 1949:  56 years of age

Computed as if 62 years of age

Credited service:  11 years 5 months

Average monthly salary $2,124.17 x .021 = $44.61 x 11.41667 =

$509.30.  Mr. Cole chose Option A-6 – 100% Joint & Survivor to Donna Cole, spouse.

$509.30 x .821 =

$418.14 Donna Cole’s monthly benefit beginning April 1, 2005

 

Motion:  Mr. King made a motion to approve this application for a survivor’s benefit.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR RETIREMENT:  PLAN G1

CHARTER SECTION 1360.12

 

           Werner J. Anderson, General Government             Option A-6

                                                                                                       100% without reinstatement

           Date of birth, January 30, 1943:  62 years of age

           Total credited service:  8 years 1 month 1 day

Plan A benefit:  Average monthly salary for 2 highest 12 month periods, $400.00 x .0081 = $3.24 x .25000 = $.8100 plus average excess salary for 2 highest 12 month

periods, $1,492.06 x .0162 = $24.17 x .2500 = $6.04  Total A benefit = $6.85

Plan G1 benefit:  Average monthly salary for 2 highest 12 month periods, $1,892.06 x

.0115% = $21.76 x 7.83607 = $170.51

Total benefit:  $177.36.  Mr. Anderson chose Option A-6 – 100% without reinstatement to Sally Jane Anderson, spouse.  $177.36 x .8028 = $142.38 (defined benefit) pension effective May 1, 2005.

Mr. Anderson will receive a one time payment of the Supplemental Retirement Account.  (refund application was approved on the April agenda)

 

 

Motion:  Mr. King made a motion to approve this application for retirement payable Under Option A-6.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR RETIREMENT:  PLAN G2 – RULE OF 80

CHARTER SECTION 1371.4

 

           Joanne R. Hurd, General Government                        Option B-12

                                                                                                       15 Yr. Certain & Life

           Date of birth, February 14, 1944:  61 years of age

           Total credited service:  25 years 2 months 26 days

           Average monthly salary for 2 highest 12 month periods, $3,106.47 x .021 =

$65.24 x 25.23790 = $1,646.52.  Ms. Hurd chose Option B-12 – 15 Yr. Certain & Life to Steven L. Hurd, spouse.  $1,646.52 x .9242 =

           $1,521.71 pension effective May 1, 2005.

 

Motion:  Mr. King made a motion to approve this application for retirement payable under Option B-12.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR PARTICIPATION IN THE DELAYED RETIREMENT OPTION PROGRAM (DROP):  PURSUANT TO CHARTER SECTION 1371.8 – PLAN G-2.

The following employee has chosen a Delayed Retirement Option and will receive a one-time payment of accumulated benefits on termination of employment with the City of Knoxville.

 

           Carolyn J. Lakins, General Government                        Option A-4 – 50%

                                                                                                       without reinstatement

           Date of birth, August 3, 1950:  54 years of age

           Total credited service:  35 years 10 days

           Average monthly salary for 2 highest 12 month periods, $3,037.21 x .021 =

$63.78 x 35.02740 = $2,234.05.  Ms. Lakins chose Option A-4 – 50% without reinstatement to Stephanie Marie Lakins, daughter.  $2,234.05 x .8825 =

           $1,971.55 pension effective May 1, 2005.  (Full benefit pursuant to Rule of 80)

           DROP complete April 30, 2007

 

Motion:  Mr. King made a motion to approve this application for DROP retirement payable under Option A-4.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR LEAVE OF ABSENCE FOR MILITARY SERVICE:

 

Robby D. Copas, Fire Department – Uniformed:  May 17, 2005 – October 6, 2005

 

Motion:  Mr. Bates made a motion to approve this application for a leave of absence for military service.  Mr. Kinney seconded the motion.  The motion carried unanimously by the members present.

 

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:    

          

Bryan, Pendleton, Swats & McAllister – Actuary (March)                     3,535.00      

Kennerly, Montgomery & Finley- Attorney (April)                        1,190.00

State Street – Custodial January 2005                                                       14,166.67                State Street – Custodial February 2005                                              14,166.67

State Street – Custodial March 2005                                              14,328.74

Calamos Investments – money manager (1^st Qtr – 2005)          48,800.00 Deutsche Asset Management – money manager (1^st Qtr – 2005)    37,765.14

STW Fixed Income – money manager (1^st Qtr – 2005)                       34,879.41  

TCW Asset Management – money manager (1^st Qtr – 2005)            88,767.80                UBS Global Asset – money manager (1^st Qtr – 2005)                       25,906.82               

Mr. Cherry, Executive Director, has reviewed the bills and certifies that they are consistent with the services provided and are within the budgeted figures of the FY 2005 financial plan.

 

Mr. Cherry noted to the Board that there was an error in the amount of the Calamos Investments invoice listed on the revised agenda.  The correct amount should be $48,800.00 instead of $48,000.00

 

Motion:  Mr. Kinney made a motion to pay these invoices including the corrected amount of $48,800.00 for Calamos Investments.   Mr. King seconded the motion.  The motion carried unanimously by the members present.

 

INVESTMENT MATTERS:

 

                      Sterling Johnston Money Manager Review

 

Mr. Scott Johnston and Mr. Kurt Kroger of Sterling Johnston Capital Management made a presentation and distributed a written report.  A copy of the report is on file in the Pension Office.

 

                        STW Money Manager Review

 

Mr. Todd Jewett of STW Fixed Income Management made a presentation to the Board.  A copy of the report is on file in the Pension Office.

          

Mayor Haslam left the meeting at 9:58           a.m.

 

Investment Policy Revisions – Dan Holmes

 

Mr. Holmes led the Board in a discussion and made recommendations to revise the Board’s Investment Policy.

 

Motion:  Mr. Kinney made a motion to present a recommendation to the City Council to increase the Authorized Limit maximum for International Securities from 25% to 30% in the Board’s investment policy. The request will be placed on the City Council agenda for May 24, 2005. Mr. Harrell seconded the motion.  The motion carried unanimously by the members present.

 

 

                      Dan Holmes – Summit Strategies

 

Mr. Holmes made a presentation of the 1^st Quarter, 2005 Performance Report.  Copies of his report are on file in the Pension Office.

 

 

OTHER:  None 

 

PUBLIC COMMENTS:  None

 

ADJOURNMENT:

 

There being no further business, the following motion was made:

 

Motion:  Mr. Harrell made a motion to adjourn the meeting at 11:00 a.m.  Mr. King seconded the motion.  The motion carried unanimously by the members present.

 

 

 

                                                                             _______________________

                                                                             Chair

 

 

                                                                             ________________________

                                                                             Date

 

             

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