CITY OF KNOXVILLE PENSION BOARD MINUTES JANUARY 12, 2006 8:15 A

CITY OF KNOXVILLE PENSION BOARD

MINUTES

JANUARY 12, 2006

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 January 12, 2006.

Present were: Mayor Bill Haslam, Mr. Scott Calloway, Mr. Greg Coker, Mr. Buddy Harrell, Mr. Stephen King, Mr. Christopher Kinney, Ms. Barbara Pelot, Mr. Michael Cherry and Attorney Bud Gilbert.

Also present: Mr. John Pannell and Ms. Teressa Upchurch with HG&A Associates; Lt. Cheri Matlock, Knoxville Police Department; General Government employees - Mr. Jim York, Ms. Carol Mahler, Ms. Robin Shelton, Mr. Jeff Caldwell and Mr. Mike Brooks; disability applicant, Mr. Jerrod Smith and Mrs. Smith; Mr. Hayes Hickman and Mr. Joe Howell, Knoxville News Sentinel.

CALL TO ORDER:

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

WELCOME TO NEW MEMBER

Mayor Haslam welcomed new Pension Board member and Police Department – Seat A, representative, James (Greg) Coker.

ELECTION OF OFFICERS - CHAIR, VICE-CHAIR & SECRETARY FOR 2006

Motion: Mr. Calloway made a motion to elect Mayor Haslam as Chair. Ms. Pelot seconded the motion. The motion carried. Mayor Haslam did not vote.

Motion: Mr. Calloway made a motion to elect Mr. Harrell as Vice-Chair. Mr. Harrell declined. Ms. Pelot then made a motion to elect Mr. Calloway as Vice-Chair. Mr. Kinney seconded the motion. The motion carried. Mr. Calloway did not vote.

Motion: Mr. Harrell made a motion to elect Ms. Pelot as Secretary. Mr. Kinney seconded the motion. The motion carried. Ms. Pelot did not vote.

APPROVAL OF REGULAR MEETING MINUTES FOR December 8, 2005

Mr. Harrell made a motion to approve the December 8, 2005, meeting minutes. Mr. Calloway seconded the motion. The motion carried unanimously by the members present.

APPROVAL OF REVISED AGENDA: Exhibit 1

The Revised Agenda was adopted without objection.

CONTRACTS: None

ADMINISTRATIVE MATTERS:

2004 – 2005 Audit Report & Financial Statement – John Pannell

Mr. John Pannell of HG&A Associates made a presentation to the Pension Board of the annual audit for June 30, 2004 and June 30, 2005. A copy is on file in the Pension Office.

Police Department – Seat A Pension Board Representative – Exhibit 2

Mr. Cherry advised the Board that James G. Coker had been certified as elected representative for the Police Department – Uniformed Seat A, Pension Board representative.

Proposed Charter Changes – Exhibit 3

Further discussion was held on each item by the Board on the Charter Amendment List that the Board had been considering for the 2006 referendum.

Item 1: It was suggested that the charter language be addressed to specify when a member can apply for an extension. Mr. Calloway recommended 90 days prior to original or first extension drop end date.

Item 2: Defer to 2008.

Item 3: Prepare amendment and get a cost of doing away with the sunset provision regarding how COLA’s are calculated on the education division.

Item 4: Housekeeping issue – no cost to plan; prepare amendment.

Item 5: Housekeeping issue – no cost to plan; prepare amendment.

Item 6: Open up window to employees to buy back previous employment and publicize heavily. Draw up amendment and get cost with and without interest. Interest to be calculated using assumed actuarial investment rate.

Item 7: Plan G Option 1 participants who had 10 or more years of service prior to passage of “Rule of 80” for plan G.

Motion: Ms. Pelot made a motion to have this item put before City Council for a vote. Mr. Calloway seconded the motion. The motion carried unanimously by the members present. Mr. King did not vote.

Item 8: Prepare an amendment for employees on a leave of absence, as a result of an injury in line of duty and eligible for worker’s compensation, to make required employee contributions at their option to establish this time as creditable service for pension benefits.

Item 9: Housekeeping issue – no cost to plan; prepare amendment.

EXECUTIVE DIRECTOR COMMENTS:

Jerrod Smith appeal

Mr. Cherry advised Mr. Smith, a disability applicant, that his appeal was not scheduled for this agenda meeting. Mr. Cherry explained to Mr. Smith that he would need to be scheduled with an orthopedic specialist for an independent opinion before his appeal could be brought back to the Board for a decision.

ATTORNEY COMMENTS:

Glenda Fields Litigation

Attorney Gilbert informed the Board that a hearing was held in Chancellor Weaver’s court on January 5, 2006. Attorney Gilbert advised the Board that a review of the court transcript and consultation was necessary prior to reappearance in court.

Mayor Haslam left the meeting at 9:50 a.m. and Mr. Calloway presided.

Global Crossing Bankruptcy Proceedings

Attorney Gilbert advised the Board that his firm was still waiting to hear from the bankruptcy court on the defendant pleadings filed on behalf of the Pension Board and the other plan defendants in the proceeding.

ENROLLMENTS:

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

Reginald F. Arrington

Herbert K. Boles

Matthew Bradburn

Narda G. Cappuccilli

Johnny C. Davis

Andra C. Jackson

Jackie McCarty

Robert L. McDaniel

William C. Mitchell

Amy N. Rogers

Donnie R. Young, Jr.

Motion: Ms. Pelot made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. Kinney 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.

Randall K. Best, General Government, Plan G-1, Non-vested

Tammie L. Gentry, General Government, Plan G-1, Non-vested

Frederick L. Kaufman, Police Department, Plan C – Non-vested

Curtis G. Long, General Government, Plan G-1, Non-vested

Krista D. Marshall, General Government, Plan G-1, Non-vested

Kevin A. Shaw, Police Department, Plan C – Non-vested

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

DISABILITIES

APPLICATION FOR INJURY IN LINE OF DUTY RETIREMENT: PLAN C

CHARTER SECTION: 1390.11

Donald McClendon, Police Department – Uniformed No Option

Date of birth, June 4, 1953: 52 years of age

Total credited service: 7 years 4 months 29 days

Average monthly salary for 2 highest – 12 month periods, $2,767.43 x 50% =

$1,383.72 pension effective January 1, 2006.

Motion: Ms. Pelot made a motion to approve this application for an injury in line of duty pension, based on Dr. Cooper’s report, to be reviewed in two years. Mr. Coker seconded the motion. The motion carried unanimously by the members present.

APPLICATION FOR INJURY IN LINE OF DUTY RETIREMENT: PLAN G1

CHARTER SECTION: 1360.22

Tresia L. Conner, General Government Option B-12

15 Yr. Certain & Life

Date of birth, July 16, 1965: 40 years of age*

Total credited service: 2 years 1 month 17 days**

*(computed as if 62 years of age)

**Computed as if worked until 62 (23 years 10 months 2 days)

$324.16 (defined benefit) pension effective May 1, 2005.

Motion: Mr. Harrell made a motion to deny this application for an injury in line of duty retirement. Mr. Kinney seconded the motion. The motion carried unanimously by the members present. The Board concluded that Ms. Conner could perform the duties of her position notwithstanding the injury to her knee. It was noted in the record that Ms. Conner had resigned her position voluntarily.

RETIREMENTS:

APPLICATION FOR EARLY RETIREMENT: PLAN A

CHARTER SECTION 1360.17

Yvonne Poppen, Schools Certified No Option

Date of birth, November 27, 1950: 55 years of age

Total City credited service: 15 years

Total County credited service: 18 years 6 months

Total credited service: 33 years 6 months

Last date of employment with City: June 1987

Last date of employment with County: December 2005

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

Average excess earnings for 4 years, $1,124.28 x 1.50% = $16.86

making a total of $19.86 benefit per year of service. $19.86 x 15 =

297.90 x ER factor .5245 =

$156.25 pension effective January 1, 2006.

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 $980.98

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

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

APPLICATION FOR DEFERRED RETIREMENT: PLAN A

CHARTER SECTION 1360.28

Howard F. Rash, Schools Certified Option A-6

100% without reinstatement

Date of birth, December 19, 1943: 62 years of age

Total City credited service: 18 years

Total County credited service: 16 years 6 months

Total credited service: 34 years 6 months

Last date of employment with City: June 1987

Last date of employment with County: December 2003

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

Average excess earnings for 4 years, $2,164.26 x 1.50% = $32.46

making a total of $35.46 benefit per year of service. $35.46 x 18 =

$638.28. Mr. Rash chose Option A-6 – 100% without reinstatement to Monika M. Rash, spouse. $638.28 x .8210 =

$524.03 pension effective January 1, 2006.

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 $2,527.40.

Motion: Ms. Pelot made a motion to approve this application for a Deferred Retirement payable under Option A-6. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.

APPLICATION FOR RETIREMENT: PLAN C

CHARTER SECTION 1390.16

Billy L. Kirk, Jr., Police Department – Uniformed Option A-4

50% without reinstatement

Date of birth, June 4, 1955: 50 years of age

Total credited service: 26 years 10 months 24 days

Average monthly salary for 2 highest 12 month periods, $3,865.37 x 2.5% =

$96.63 x 26.89909 = $2,599.26. Mr. Kirk chose Option A-4 – 50% without reinstatement to Deborah A. Kirk, spouse.

$2,599.26 pension effective January 1, 2006.

(No reduction for 50% option when spouse is beneficiary in Plan C)

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

APPLICATION FOR RETIREMENT: PLAN G2 – RULE OF 80

CHARTER SECTION 1371.4

Victor C. Fowler, General Government No Option

Date of birth, March 3, 1952: 53 years of age

Total credited service: 29 years 2 months 9 days

Average monthly salary for 2 highest 12 month periods, $3,476.18 x 2.1% =

$73.00 x 29.19132 =

$2,130.97 pension effective January 1, 2006.

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

Neal H. Inklebarger, General Government Option A-4

50% without reinstatement

Date of birth, July 4, 1952: 53 years of age

Total credited service: 29 years 8 months 12 days

Average monthly salary for 2 highest 12 month periods, $2,108.17 x 2.1% =

$44.27 x 29.69954 = $1,314.80. Mr. Inklebarger chose Option A-4 – 50% without reinstatement to Patricia A. Inklebarger, spouse. $1,314.80 x .9257 =

$1,217.11 pension effective January 1, 2006.

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

APPLICATION FOR PARTICIPATION IN THE DELALYED 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.

William O. Arnold, Fire Department Uniformed Option A-6

100% without reinstatement Date of birth, April 2, 1945: 60 years of age

Total credited service: 37 years 2 months 12 days

Average monthly salary for 2 highest 12 month periods, $4,401.12 x 2.5% =

$110.03 x 30 = $3,300.90. Mr. Arnold chose Option A-6 – 100% without reinstatement to Glinda F. Arnold, spouse. $3,300.90 x .8942 =

$2,951.66 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement payable under Option A-6. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

Herman E. Helton, Fire Department Uniformed Option A-6

100% without reinstatement Date of birth, September 7, 1947: 58 years of age

Total credited service: 30 years 2 months 5 days

Average monthly salary for 2 highest 12 month periods, $3,811.64 x 2.5% =

$95.29 x 30 = $2,858.70. Mr. Helton chose Option A-6 – 100% without reinstatement to Janet Lee Helton, spouse. $2,858.70 x .8946 =

$2,557.39 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement payable under Option A-6. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

Carl E. Kitts, Fire Department Uniformed Option A-4

50% without reinstatement

Date of birth, December 1, 1945: 60 years of age

Total credited service: 36 years 10 months 12 days

Average monthly salary for 2 highest 12 month periods, $3,885.53 x 2.5% =

$97.14. $97.14 x 30 = $2,914.20. Mr. Kitts chose Option A-4 – 50% without reinstatement to Gail M. Kitts, spouse.

$2,914.20 pension effective January 1, 2006.

DROP complete December 31, 2007.

(No reduction for 50% option when spouse is beneficiary in Plan C)

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

Ralph L. Mantooth, Jr., Fire Department Uniformed No Option

Date of birth, October 1, 1950: 55 years of age

Total credited service: 30 years 2 months 5 days

Average monthly salary for 2 highest 12 month periods, $3,911.89 x 2.5% =

$97.80 X 30 =

$2,934.00 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

Wiley R. McCroskey, Fire Department Uniformed No Option

Date of birth, June 4, 1953: 52 years of age

Total credited service: 30 years 4 months 19 days

Average monthly salary for 2 highest 12 month periods, $3,575.40 x 2.5% =

$89.39 x 30 =

$2,681.70 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

Frank E. Potter, Fire Department Uniformed Option A-9

100% with reinstatement

Date of birth, January 13, 1947: 58 years of age

Total credited service: 40 years 3 months 16 days

Average monthly salary for 2 highest 12 month periods, $4,513.58 x 2.5% =

$112.84 x 30 = $3,385.20. Mr. Potter chose Option A-9 – 100% with reinstatement to Connie K. Potter, spouse. $3,385.20 x .8825 =

$2,987.44 pension effective January 1, 2006.

DROP complete December 31, 2007.

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

Nathan S. Tinder, Police Department Uniformed Option A-5

75% without reinstatement

Date of birth, September 30, 1950: 55 years of age

Total credited service: 30 years 2 months 5 days

Average monthly salary for 2 highest 12 month periods, $4,649.08 x 2.5% =

$116.23 x 30 = $3,486.90. Mr. Tinder chose Option A-5 – 75% without reinstatement to Janet J. Tinder, spouse. $3,486.90 x .9608 =

$3,350.21 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement payable under Option A-5. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

Roy T. Whitfield, Jr., Fire Department Uniformed Option A-6

100% without reinstatement

Date of birth, May 3, 1953: 52 years of age

Total credited service: 30 years 2 months 5 days

Average monthly salary for 2 highest 12 month periods, $3,994.38 x 2.5% =

$99.86 x 30 = $2,995.80. Mr. Whitfield chose Option A-6 – 100% without reinstatement to Patricia Whitfield, spouse. $2,995.80 x .9394 =

$2,814.25 pension effective January 1, 2006.

DROP complete December 31, 2007.

Motion: Ms. Pelot made a motion to approve this application for DROP retirement payable under Option A-6. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:

Bryan, Pendleton, Swats & McAllister – Actuary (November 2005) $11,128.00

Kennerly, Montgomery & Finley – Attorney (Dec. 2005-General) 2,405.00

Kennerly, Montgomery & Finley – Attorney (Dec. 2005-G. Fields) 665.00

Kennerly, Montgomery & Finley – Attorney (Global Crossing Lit.) 86.87

State Street – Custodial (October 2005) 14,166.67

State Street – Custodial (November 2005) 14,200.29

Summit Strategies, Inc. – Investment Consultant (4^th Qtr. 2005) 31,250.00

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 system’s financial plan.

Motion: Mr. Harrell made a motion to pay these invoices. Mr. King seconded the motion. The motion carried unanimously by the members present.

OTHER:

INVESTMENT MATTERS:

Market Report

Mr. Cherry informed the Board that December had been a very good month which resulted in a good year end market report for 2005.

February interviews

Mr. Cherry reminded the Board that three firms would be giving presentations at the February 9, 2006, board meeting to replace the Small/mid Cap Growth manager.

Mr. Cherry asked the Board to review the small cap manager search booklet prepared by Summit Strategies and bring it back to the February 9, 2006, board meeting.

Investment Policy Approved

Attorney Gilbert reminded the Board that the Investment Policy had been approved by City Council on first reading at the December 6, 2005, City Council meeting. Attorney Gilbert told the Board that he would prepare a rule change consisting of a notice component for Council regarding procedures for making changes to the Pension System. The requested ordinance for consideration to have this matter placed on the ballot in either August or November will be presented to the Council on January 31, 2006.

PUBLIC COMMENTS: None

ADJOURNMENT:

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

Motion: Mr. King made a motion to adjourn the meeting at 10:30 a.m. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.

______________________

Chair

_______________________

Date