CITY OF KNOXVILLE PENSION BOARD

MINUTES

July 14, 2005

8:15 A.M.

917B E. 5TH AVENUE

 

 

 

 

The regular meeting of the City of Knoxville Pension Board was held in the Pension Board Conference Room at 917 E. 5th Avenue at 8:15 a.m. on July 14, 2005.

 

Present were:  Mayor Bill Haslam, Mr. Kent Bates, Mr. Scott Calloway, Mr. Buddy Harrell, Mr. Stephen King, Ms. Barbara Pelot, Mr. Michael Cherry and Attorney C. C. “Bud” Gilbert.

 

 

CALL TO ORDER:

            Mayor Haslam presided and called the meeting to order at 8:18 a.m.

 

APPROVAL OF REGULAR MEETING MINUTES FOR June 9, 2005

Motion:  Mr. Calloway made a motion to approve the June 9, 2005, meeting minutes.  Ms. Pelot 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:

 

            Ophelia Martin

 

Mr. Cherry advised the Board that despite his continued efforts, Ms. Judy Burke, daughter of Ms. Ophelia Martin, has not obtained the necessary bond to have the distribution of funds completed.  Mr. Cherry indicated he will follow up with Ms. Burke and offer any assistance to resolve this situation.

 

Principal Global Investors – Exhibit 2

 

Mr. Cherry informed the Board of a personnel change at Principal Global Investors.  Mr. Cherry advised the Board that he had spoken with Dan Holmes, the Board’s Investment Consultant. Mr. Holmes indicated they were monitoring the situation and no immediate reaction is necessary.

 

SEC Consultant Examination Conclusions – Exhibit 3

 

Mr. Cherry distributed the “Conclusions of the SEC Consultant Examination” dated June 21, 2005. The SEC indicated that no deficiencies or violations were discovered during the course of the SEC’s examination of Summit Strategies’ books and records.

 

Deutsche Asset Management

 

Mr. Cherry informed the Board that the fixed income section of Deutsche Asset Management located in Philadelphia, Pennsylvania, had been sold to Aberdeen Asset Management. Aberdeen Asset Management is a United Kingdom firm headquartered in London. Mr. Cherry advised the Board that he had spoken to Dan Holmes, Investment Consultant, regarding this event. Mr. Holmes indicated Summit had been aware of and following this situation since Deutsche had announced a review of their organization several months earlier. Mr. Holmes indicated there was no need for immediate action and would address this matter with the Board at the August 11, 2005 Pension Board meeting.

 

 

EXECUTIVE DIRECTOR COMMENTS:  None

           

ATTORNEY COMMENTS:

 

Glenda Fields Litigation

 

Attorney Gilbert informed the Board that his firm had answered the petition, and that a court date in this case had been set for November 29, 2005.

 

Global Crossing Bankruptcy Proceedings

 

Attorney Gilbert informed the Board that the City of Knoxville pension plan, along with approximately 116 other pension plans and similar type defendants, had been named in the Global Crossing Bankruptcy proceedings litigation.  Mr. Cherry informed the Board that the maximum claim against the pension system was under $14,500.  After Attorney Gilbert’s advice and assurance that he would monitor and follow the legal proceedings of the lead defendant, the Board authorized Mr. Cherry to resolve this situation with the assistance of legal counsel in the manner he determined to be in the system’s best interest. Such resolution may require the system to return the funds in question if there is no viable defense to the claim and if doing so would avoid unnecessary legal fees.

 

ENROLLMENTS:

 

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

 

            Charles Allred

            Demarcus Q. Andrews

Marcia Eardly

Willis M. Prewitt

Frederick Wagoner

 

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.

           

WITHDRAWALS:

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

 

            Katrina Bell, General Government – G1 – Vested

            (refund of defined benefit)      

 

Motion:  Mr. Calloway made a motion to approve this application for withdrawal of employee contributions.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

APPEALS: None

 

RETIREMENTS:

 

APPLICATION FOR RETIREMENT:  PLAN A

CHARTER SECTION 1360.12

 

Robert Black, Schools Certified                                          Option A-6

                                                                                                            100% without reinstatement

            Date of birth, November 2, 1942:  62 years of age

            Total City credited service:  23 years

            Total County credited service:  18 years

            Total credited service:  41 years

            Last date of employment with City:  June 1987

            Last date of employment with County:  May 2005

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

            Average excess earnings for 4 years, $1,596.17 x1.50% = $23.94

making a total of $26.94 benefit per year of service.  $26.94 x 23 =

$619.62.  Mr. Black chose Option A-6 – 100% Joint & Survivor without reinstatement to Brenda T. Black, spouse.  $619.62 x .8208 =

            $508.58 pension effective June 1, 2005.

 

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

            The total amount of the combined City & County benefit is $1,899.36.

 

Motion:  Mr. Harrell 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.

 

            James E. Reynolds, General Government                         No Option

            Date of birth, August 28, 1937:  67 years of age

            Total credited service:  35 years 7 months 6 days

            Average base monthly earnings for 3 years, $400.00 x .88% = $3.52

            Average excess monthly earnings for 3 years, $2,380.89 x 1.76% = $41.90

            making a total of $45.42 benefit per year of service.  $45.42 x 35.6025 =

            $1,617.07 pension effective July 1, 2005.

 

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

 

APPLICATION FOR EARLY RETIREMENT:  PLAN A

CHARTER SECTION 1360.17

 

Helen Bush, Schools Certified                                            No Option

Date of birth, December 13, 1946: 58 years of age

Total City credited service:  13 years

Total County credited service: 18 years

Total credited service:  31 years

Last date of employment with City:  June 1987

Last date of employment with County:  May 2005

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

Average excess earnings for 4 years, $1,105.99 x 1.50% = $16.59

making a total of $19.59 benefit per year of service.  $19.59 x 13 =

$254.67 x ER factor .7513 =

           

            $191.33 pension effective July 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 $1,223.44.

 

25 years required to Early retirement.  Supreme Court ruling entitles retiree to combine City & County credited service.

 

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

 

            Connie C. Graham, Schools Certified                                No Option

            Date of birth, August 4, 1949:  55 years of age

            Total City credited service:  15 years

            Total County credited service: 18 years

Total credited service:  33 years

Last date of employment with City:  June 1987

Last date of employment with County:  June 2005

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

Average excess earnings for 4 years, $1,213.35x 1.50% = $18.20

making a total of $21.20 benefit per year of service.  $21.20 x 15 =

$318.00 x ER factor .5726 =

$182.09 pension effective July 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 $1,610.30.

 

25 years required to Early retirement.  Supreme Court ruling entitles retiree to combine City & County credited service.

 

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

 

            Robert E. Wallace, Schools Certified                                 No Option

            Date of birth, December 31, 1947:  57 years of age

            Total City credited service:  17 years

Total County credited service: 18 years

            Total credited service:  35 years

Last date of employment with City:  June 1987

Last date of employment with County:  May 2005

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

Average excess earnings for 4 years, $1,420.07 x 1.50% = $21.30

making a total of $24.30 benefit per year of service.  $24.30 x 17 =

$413.10 x ER factor .6853 =

$283.10 pension effective July 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 $1,421.14.

 

25 years required to Early retirement.  Supreme Court ruling entitles retiree to combine City & County credited service.

 

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

 

            Wanda G. Widener, Schools Certified                               No Option

            Date of birth, December 4, 1948:  56 years of age

            Total City credited service:  17 years

            Total credited service:  35 years

            $278.39 pension effective July 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 $1,223.44.

 

25 years required to Early retirement.  Supreme Court ruling entitles retiree to combine City & County credited service.

 

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

 

APPLICATION FOR RETIREMENT:  PLAN G2 – RULE OF 80

CHARTER SECTION 1371.4

 

            Samuel T. Melton, General Government                            No Option

            Date of birth, April 10, 1952:  53 years of age

            Total credited service:  30 years 9 months 27 days

            Average monthly salary for 2 highest – 12 month periods, $2,122.03 x 2.1% =

            $44.56 x 30.82397 =

            $1,373.52 pension effective July 1, 2005.

 

Motion:  Mr. King made a motion to approve this application for retirement.  Mr. Harrell 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 1390.22 – PLAN C.

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

 

            John D. Rose, Police Department – Uniformed                            Option A-9

                                                                                                                        100% with reinstatement

            Date of birth, February 13, 1953:  52 years of age

            Total credited service:  30 years 7 months 20 days

            Average monthly salary for 2 highest 12 month periods, $4,170.19 x 2.5% =

$104.25 x 30 = $3,127.50.  Mr. Rose chose Option A-9 – 100% with reinstatement to Deanna M. Rose, spouse.  $3,127.50 x .9101

            $2,846.34 pension effective July 1, 2005.

            DROP complete June 30, 2007.

 

Motion:  Mr. Bates made a motion to approve this application for retirement payable under Option A-9.  Mr. Calloway 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 G2.

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

 

            Billy R. Bright, General Government                                               Option A-9

                                                                                                                        100% with reinstatement

            Date of birth, May 24, 1948:  57 years of age

            Total credited service:  38 years 4 months 12 days

            Average monthly salary for 2 highest – 12 month periods, $3,841.82 x 2.1% =

$80.68 x 38.36621 = $3,095.39.  Mr. Bright chose Option A-9 – 100% with reinstatement to Tiffany Ann Bright, spouse.  $3,095.39 x .7795 =

            $2,412.86 pension effective July 1, 2005.

            DROP complete June 30, 2007.

 

Motion:  Mr. King made a motion to approve this application for retirement payable under Option A-9.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

            Lionel P. Eblen, General Government                                            Option B-10

                                                                                                                        5 Yr. Certain & Life

            Date of birth, April 7, 1953:  52 years of age

            Total credited service:  28 years 7 months 28 days

            Average monthly salary for 2 highest – 12 month periods, $2,218.70 x 2.1% =

$46.59 x 28.66005 = $1,335.27.  Mr. Eblen chose Option B-10 – 5 Yr. Certain & Life to Edwina Myers, sister.  $1,335.27 x .9962 =

            $1,330.20 pension effective July 1, 2005.

            DROP complete June 30, 2007.

 

Motion:  Mr. King made a motion to approve this application for retirement payable under Option B-10.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

            Diana G. Lobertini, General Government                                       Option A-7

                                                                                                                        50% with reinstatement

            Date of birth, January 28, 1953:  52 years of age

            Total credited service:  28 years 8 months 22 days

            Average monthly salary for 2 highest – 12 month periods, $5,390.16 x 2.1% =

$113.19 x 28.72694 = $3,251.60.  Ms. Lobertini chose Option A-7 – 50% with reinstatement to Robert S. Lobertini, spouse.  $3,251.60 x .9363 =

            $3,044.47 pension effective July 1, 2005.

            DROP complete June 30, 2007.

 

Motion:  Mr. King made a motion to approve this application for retirement payable under Option A-7.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:     (GREEN TAB)

           

Bryan, Pendleton, Swats & McAllister – Actuary (May 2005)               $ 5,571.00            

Kennerly, Montgomery & Finley – Attorney (June 2005)           $ 5,053.95

State Street – Custodial (May 2005)                                                       $14,166.67                                                      

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 2004-2005 accrued expenses financial plan.

 

Motion:  Mr. Calloway made a motion to approve these invoices.  Mr. Bates seconded the motion.  The motion carried unanimously by the members present.

           

INVESTMENT MATTERS:

 

Investment Policy – Exhibit 4

 

Mr. Cherry reviewed with the Board the recommended changes to the Investment Policy, a marked up copy which was sent by the Board’s Investment Consultant, Dan Homes, on pages 8, 12 – 16, 20, 24 and addendum changes on page 27.   After the review the following motion was made:

 

Motion:  Ms. Pelot made a motion to have the final Investment Policy completed and scheduled for consideration by City Council at its August 2, 2005, meeting, upon the condition that no additional substantial changes are recommended by the system’s advisers and pending final review and recommendation by the Board’s attorney, Mr. Gilbert.  Mr. Calloway seconded the motion.  The motion carried unanimously by the members present.

 

Gryphon International

 

Mr. Cherry advised the Board that the Gryphon contract had been completed and the transfer of funds of over $28M was made on July 14, 2005.  Mr. Cherry in consultation with Summit Strategies decided that transition management services be used to handle the transfer of such funds. The fund received four proposals and State Street was selected to handle the transition. Mr. Cherry informed the Board that he in conjunction with Summit will review pre and post trade analyses to evaluate the efficiency of the transfer of assets. This was done to minimize the transaction and market costs of the transfer.

 

OTHER:

 

Investment Policy and Charter Protection Measures

 

Attorney Gilbert advised Mr. Cherry to submit information on the Investment Policy changes, in letter form, to City Council members early so they could contact Mr. Cherry in advance with any questions.

 

Attorney Gilbert also suggested that Mr. Cherry send letters to all employee groups informing them that the Charter Protection Measures would also be on the City Council agenda.

 

Fiscal Year End Market Value

 

Mr. Cherry advised the Board that he had received the net asset value of the fund from State Street for the fiscal year ended June 30, 2005, of $472.7M. Mr. Cherry advised the Board that allocation of additional funds to international equity and real estate were beneficial to the overall return of the fund. The investment return for the fiscal year exceeded the 8% actuarial assumption rate.

 

PUBLIC COMMENTS:  None

 

ADJOURNMENT:

 

There being no further business, Mayor Haslam adjourned the meeting without objection at 8:54 a.m.

 

 

 

                                                                                               

 

                                                                                                                _____________________________

                                                                                    Chair

 

 

                                                                                    ______________________________

                                                                                    Date

 

                                                                                                               

 

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