CITY OF KNOXVILLE PENSION BOARD
MINUTES
Thursday – November 12, 2009
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 November 12, 2009.
Present were: Mayor Bill Haslam Ms. Barbara Pelot, Mr. Greg Coker, Mr. Joe Hackney, Mr. Jim Hutchens, Ms. Robin Shelton, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert.
Also present: Mr. Matthew Hollingshead-Cook - Police Department, Uniformed employee; Ms. Lynn S. Fields, Certified Court Reporter; Mr. C. Edward Daniel, Attorney; Lt. Cheri Matlock - Knoxville Police Department; Mr. Dan Holmes -Summit Strategies.
CALL TO ORDER:
Ms. Pelot presided and called the meeting to order at 8:17 a.m.
APPROVAL OF REGULAR MEETING MINUTES FOR October 8, 2009.
Mayor Haslam arrived at 8:19 a.m. and presided.
Ms. Pelot made a motion to approve the October 8, 2009, meeting minutes. Mr. Coker 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:
Mr. Cherry advised the Board that City Council’s passing of the Investment Policy now allowed the Board to proceed with the hiring and funding of Acadian Asset Management as the manager for the pension system’s emerging markets portfolio.
ADMINISTRATIVE MATTERS:
Schedule Pension Board Meetings for First Quarter 2010
Thursday, January 14, 2010 – 8:15 a.m.
Thursday, February 11, 2010 – 8:15 a.m.
Thursday, March 11, 2010 – 8:15 a.m.
The Pension Board meeting schedule was noted.
Post Retirement Benefit Adjustment Resolution – Exhibit 2
Mr. Cherry reviewed with the Board the cost of living adjustments effective January 1, 2010. Mr. Cherry noted to the Board that due to deflation, the CPI was so affected as to result in a first time, 1.3% decreased COLA amount, for City of Knoxville Education employees who worked for both the City and County. All other retirees will receive a 3% COLA increase.
Mr. Cherry advised the Board that letters detailing their COLA would be mailed to each retiree.
Motion: Mr. Hackney made a motion to approve the Post Retirement Benefit Adjustment Resolution as presented by the Executive Director. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
EXECUTIVE DIRECTOR COMMENTS: None
ATTORNEY COMMENTS:
Acceptance of payment from Patty Maples – Exhibit 3
Attorney Gilbert advised the Board that payment had been received by Ms. Patty Maples, a relative of deceased, Plan A retired member, William Manis, for overpayment of retirement benefits.
Motion: Ms. Pelot made a motion to accept as payment in full, without interest, Ms. Maples’ payment to the Pension Board of $4,045.00, which has been received by the Pension Board and deposited into the pension fund. Mr. Hutchens seconded the motion. The motion carried unanimously by the members present.
Investment Policy – Exhibits 4 and 5
Attorney Gilbert distributed to the Board for information purposes a one page document containing a definition of Derivatives and informed the Board that the revised Statement of Investment Policy was approved by City Council on November 3, 2009 by a vote of 7-2, with no amendments. Attorney Gilbert thanked Councilwoman Barbara Pelot, and all the other Board members for their hard work on the revised Investment Policy. In addition, Attorney Gilbert informed the Board about an e-mail, a copy of which was in each board member’s folder, from Councilwoman Marilyn Roddy, expressing her thanks to Attorney Gilbert and the Board for their work on the revised investment policy.
ENROLLMENTS:
The following General Government employees have filed applications to become members of the Plan G1 pension system.
Wendy Bowman
John Hunter
Danny L. Marshall
Terence C. Prater, Jr.
Motion: Ms. Pelot made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. York seconded the motion. The motion carried unanimously by the members present.
WITHDRAWALS:
The following employees have filed an application to withdraw employee pension contributions plus 4% interest and the supplemental retirement account as applicable in Plan G Option 1.
Jennifer Coe, General Govt. – G1, Non-vested
Michael S. Hornbeck, General Govt. – G1, Non-vested
Rachel C. Smith, General Govt. – G1, Non-vested
Motion: Ms. Pelot made a motion to approve these applications for withdrawal of employee contributions. Mr. York seconded the motion. The motion carried unanimously by the members present.
Mayor Haslam called for a recess at 8:31 a.m. and called the meeting back to order at 8:41 a.m.
DISABILITY
APPLICATION FOR INJURY IN LINE OF DUTY: PLAN C – Exhibits D-1 through D-2
CHARTER SECTION 1390.11
Matthew Hollingshead-Cook, Police Dept. – Uniformed Option A-9
100% with reinstatement
Date of birth, January 6, 1979: 30 years of age
Total credited service: 7 years 9 months 9 days
Average monthly salary for 2 highest – 12 month periods, $3,386.68 x 50% =
$1,693.34. Mr. Hollingshead-Cook chose Option A -9 – 100% with reinstatement to Kenya Gomez Hollingshead-Cook, spouse. $1,693.34 x .97530 =
$1,651.51 pension effective June 1, 2009.
Motion: Mr. Coker made a motion to approve this application for Injury in Line of Duty pension. Mr. York seconded the motion. The motion passed by a vote of 4-2. Ms. Pelot and Mr. Hutchens voted no. Mayor Haslam did not vote.
Mayor Haslam left the meeting at 9:52 a.m. and Ms. Pelot presided.
APPLICATION FOR SURVIVOR’S BENEFIT: PLAN G1
CHARTER SECTION 1360.24
David W. Brown, active General Government employee died in service October 23, 2009. Mr. Brown’s statistics:
63 years of age, 3 years 1 day service
Average monthly salary for 2 highest 12 month periods, $1,652.45 x .0121% =
$19.99 x 3.00274 = $60.02. Mr. Brown had vested by virtue of age but had not filed an option. Default benefit per charter: 50% Joint and Survivor.
$60.02 x .9482 = $56.91. Mr. Brown had named Jo Ellen Brown, spouse as beneficiary. $56.91 x .50 =
*$28.45 Jo Ellen Brown’s monthly defined benefit, beginning November 1, 2009.
*Does not include supplemental retirement account applicable in Plan G1. Mrs. Brown chose to receive a one-time, lump sum payment of the supplemental retirement account. Amount to be determined.
Motion: Mr. Hutchens made a motion to approve this application for a survivor’s benefit. Mr. Hackney 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 employees have 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.
Kenneth E. Lowe, Fire Dept. - Uniformed No Option
Date of birth, June 7, 1950: 59 years of age
Total credited service: 34 years 7 months 16 days
Average monthly salary for 2 highest 12 month periods, $4,883.09 x .025 =
$122.08 x 30 =
$3,662.40 pension effective November 1, 2009.
DROP complete October 31, 2011.
Motion: Ms. Shelton made a motion to approve this application for DROP retirement. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:
Bryan, Pendleton, Swats & McAllister – Actuary (September 2009) $ 16,133.00
Kennerly,Montgomery & Finley – Attorney (General – Sept 2009) 5,220.00
Kennerly,Montgomery & Finley – Attorney (General – Oct 2009) 9,731.80
State Street – Custodial (August 2009) 8,494.00
State Street – Custodial (September 2009) 8,386.35
State Street – Trustee (Sept. 2009) 3,425.04
STW – Money Manager (3rd Qtr – 2009) 34,279.47 Aberdeen Asset Manager (3rd Qtr – 2009) 31,901.65
AQR Capital – Money Manager (3rd Qtr – 2009) 63,885.00
Calamos Advisors – Money Manager (3rd Qtr – 2009) 32,575.00
INTECH – Money Manager (3rd Qtr – 2009) 5,636.70
Pinnacle Associates – Money manger (3rd Qtr – 2009) 48,326.00
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. Coker made a motion to pay these invoices. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
INVESTMENT MATTERS:
Dan Holmes – Summit Strategies
Investment Committee Updates
State Street Litigation
Mr. Holmes updated the Board on Summit Strategies monitoring of State Street’s securities lending litigation involving a Missouri public plan and litigation by the State of California involving alleged malfeasance related to trading commissions. Mr. Holmes advised the Board that Index Funds are the only funds of the Pension System’s managed by State Street, but because of the above developments, Summit is recommending that another TIPS manager be identified.
Cadogen
Mr. Holmes advised the Board that Stuart Leaf, Hedge Fund Manager with Cadogan Management, would be at the December board meeting to address the Board regarding recent organizational changes at his firm. Mr. Holmes reminded the Board that it currently has a pending redemption order in place with Cadogan that will be implemented at the end of December 2009. If Summit recommends and the Board desires to rescind such redemption, the Board will need to take action at its December meeting.
Union Bancaire Privee
Mr. Holmes informed the Board regarding recent personnel changes at Hedge Fund manager, Union Bancaire Privee.
3Q 2009 Performance Report
Mr. Dan Holmes made a presentation of the 3rd Quarter 2009, Performance Report. A copy of his report is on file in the Pension Office.
Treasury Inflation-Protected Securities Manager Search (TIPS)
Mr. Holmes gave a presentation to the Board on Summit Strategies Group, Treasury Inflation-Protected Manager Search. A copy of his report is on file in the Pension Office.
Mr. York, upon the recommendation of Mr. Dan Holmes, made a motion to retain Income Research & Management as the Treasury Inflation-Protection fund manager for the pension system subject to the review and recommendation of an investment management contract by Mr. Gilbert, and to authorize Mr. Cherry to sign such contract and proceed with all action necessary or convenient to properly effect this investment manager appointment and implement the investment management agreement including without limitation the funding of the account upon advice and consultation with Dan Holmes of Summit Strategies. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
Large Cap Growth Equity Manager Search
Mr. Holmes gave a presentation to the Board on Summit Strategies Group, Large Cap Growth Equity Manager Search. A copy of his report is on file in the Pension Office.
Mr. York, upon the recommendation of Mr. Dan Holmes, made a motion to retain CastleArk Management as the Large Cap Growth Equity fund manager for the pension system subject to the review and recommendation of an investment management contract by Mr. Gilbert, and to authorize Mr. Cherry to sign such contract and proceed with all action necessary or convenient to properly effect this investment manager appointment and implement the investment management agreement including without limitation the funding of the account upon advice and consultation with Dan Holmes of Summit Strategies. Mr. Hutchens seconded the motion. The motion carried unanimously by the members present.
High Yield Fixed Income Manager Search
Mr. Holmes recommended proceeding at a later date with a High Yield Fixed Income Manager Search.
OTHER:
Stone Energy Litigation
Mr. Cherry advised the Board that he had participated in depositions on Stone Energy Litigations this week.
Personnel Committee Report
Attorney Gilbert advised the Board that he hoped to be ready to have a discussion with the Board on personnel committee issues in December.
Plan G1 Member Complaint
Attorney Gilbert advised the Board that he was making progress on the complaint of the group of 31 Plan G1 members and hoped to be able to give recommendations to the Board on the matter in December, but it would probably be January before a recommendation could be rendered.
PUBLIC COMMENTS:
ADJOURNMENT:
Motion: Mr. York made a motion to adjourn the meeting at 11:19 a.m. Mr. Hackney seconded the motion. The motion carried unanimously by the member present.
_______________________
Chair
_______________________
Date