CITY OF KNOXVILLE PENSION BOARD
MINUTES
Thursday – December 9, 2010
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 December 9, 2010.
Present were: Ms. Barbara Pelot, Mr. Greg Coker, Mr. Joe Hackney, Mr. Jim Hutchens, Mr. Larry Martin, Ms. Robin Shelton, Mr. Jim York, Mr. Michael Cherry and Attorneys Mr. Bud Gilbert and Mr. Michael Kelly with Kennerly, Montgomery and Finley. Mr. Martin attended as Mayor Haslam’s designated representative as authorized by T.C.A. § 6-54-112 and the mayor’s letter of designation dated March 5, 2010.
Also present: General Government, Plan G1 employee Mr. Brent Johnson;
CALL TO ORDER:
Ms. Pelot presided and called the meeting to order at 8:15 a.m.
APPROVAL OF REGULAR MEETING MINUTES FOR November 11, 2010:
Mr. Martin made a motion to approve the November 11, 2010, meeting minutes. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF REVISED AGENDA: - Exhibit 1
The Revised Agenda was approved without objection.
ADMINISTRATIVE MATTERS:
Election of Pension Board Officers
Mr. Cherry reminded the Pension Board members that officers for the 2011 calendar year would need to be elected at the January Pension Board meeting.
Actuarial Valuation
Mr. Martin informed the Board of the City administration’s desire to form an advisory group consisting of representatives from City Council, the Pension Board and Administration, to conduct a comprehensive review of the current pension benefit plan. In addition, Mr. Martin expressed the need to include the Board’s actuary, Mr. Alan Pennington and other professionals.
Mr. Hutchens arrived at 8:38 a.m.
Motion: Mr. Hackney made a motion to accept the actuarial report as of July 1, 2010, as prepared and presented by Mr. Alan Pennington, the Pension Board’s actuary. Ms. Shelton seconded the motion. The motion carried unanimously by the members present.
Correction of Financial Impact of 39 Plan G – Option 1 Employees – Exhibit 2
Mr. Cherry informed the Board of his request to the actuary, Alan Pennington, to have the additional cost calculated to change eight, Plan G – Option 1 members who had either retired, deferred or been refunded, from Plan G – Option 1, to Plan G – Option 2. In his reassessment, Mr. Pennington discovered an error in his initial calculation for the 31 active members. The correction of the original calculation for the 31 active employees and the additional cost related to the 8 employees who had previously left employment resulted in a revised cost of $3.1 million.
EXECUTIVE DIRECTOR COMMENTS:
General Government Seat B Election
Mr. Cherry updated the Board on the run off election between Mr. Pat Armstrong and Mr. Stephen King, in the General Government – Seat B representative election for the three year term beginning January 1, 2011 through December 31, 2013.
Uniformed Bodies Seat B Election
Mr. Cherry advised the Board that Mr. Jack Banks had been certified as elected, for the Fire Department, Uniformed – Seat B representative for the three year term beginning January 1, 2011 through December 31, 2013.
ATTORNEY COMMENTS:
Request for Consent to Represent – Exhibit 3
Attorney Gilbert disclosed to the Board that his firm, as legal counsel for Knoxville’s Community Development Corporation, was filing an eminent domain proceeding in the name of the City of Knoxville. Because his firm also serves as legal counsel to the Pension Board in the lawsuit pending in Knox County Chancery Court filed by the City of Knoxville against the Pension Board, Attorney Rob Quillin also with Attorney Gilbert’s firm of Kennerly, Montgomery & Finley, had asked for Mr. Cherry to sign a letter of consent for their firm to handle the condemnation issue for the City of Knoxville, since both cases are unrelated.
Motion: Mr. Hutchens made a motion authorizing Mr. Cherry to sign the letter of consent as requested by Rob Quillin, Attorney for Kennerly, Montgomery & Finley. Mr. Hackney seconded the motion. The motion passed 5-0-2. Ms. Shelton and Mr. York did not vote on the matter because of their previously disclosed conflict of interest related to the Pension Board’s pending lawsuit with the City of Knoxville.
Glenda Fields Litigation
Attorney Gilbert updated the Board on the settlement negotiations in the Glenda Field’s litigation.
Motion: Mr. Coker made a motion to accept Attorney Tony Farmer’s counter offer in Ms. Field’s behalf. Mr. Hackney seconded the motion. The motion passed unanimously by the members present.
Investment Committee Member
Motion: Mr. Hackney made a motion to nominate Mr. Hutchens as a replacement for Ms. Shelton as Investment Committee Member, since her term as Pension Board representative ends December 31, 2010.
Mr. Hackney then withdrew his nomination of Mr. Hutchens in view of his pending surgery and the following motion was made:
Motion: Ms. Shelton nominated Mr. Coker as her replacement on the Investment Committee for the January 12, 2011, scheduled Investment Committee meeting and until the new, full Board can name her permanent replacement for the term commencing January 1, 2011. Mr. Hackney seconded the motion. The motion passed unanimously by the members present.
Core Fixed Income Manager Reviews
Mr. Cherry advised the Board that January’s Investment Committee Meeting was scheduled for Wednesday, January 12, 2011- 1:00 p.m., instead of the regularly scheduled meeting date of Tuesday, January 4, 2011, in order to interview four Core Fixed Income Money Managers.
CONTRACTS:
KUB Transfer Agreement – Exhibit 4
Mr. Cherry advised the Board of a letter he had received from Knoxville Utilities Board regarding the termination of the reciprocal transfer agreement between Knoxville Utilities Board and City of Knoxville employees effective May 31, 2011, due to an amendment in the Knoxville Utilities Board pension plan.
WITHDRAWALS:
The following employee has filed an application to withdraw employee pension contributions plus 4% interest and the supplemental retirement account as applicable in Plan G Option 1.
Gary Sands, General Govt. – Plan G1, non-vested
Motion: Mr. Hackney made a motion to approve this application for withdrawal of employee contributions. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR INJURY IN LINE OF DUTY: PLAN C – See Folder
CHARTER SECTION 1390.11
Chyrl M. Spitzer, Police Dept. – Uniformed No Option
Date of birth, December 14, 1974: 35 years of age
Total credited service: 10 years 4 months 19 days
Average monthly salary for 2 highest – 12 month periods, $3,457.61 x 50% =
$1,728.81 pension effective (to be determined).
Motion: Mr. Hackney made a motion to defer this application for Injury In Line of Duty retirement to the January meeting in order to obtain additional information. Mr. Hutchens seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR INJURY IN LINE OF DUTY: PLAN G1 – See Folder
CHARTER SECTION 1360.22
Kimberly S. Price, General Govt. No Option
Date of birth, May 4, 1975: 35 years of age*
Total credited service: 2 years 10 months 30 days actual service**
*computed as if 62 years of age
**computed as if worked until age 62 (30 years 11 months 28 days)
Average monthly salary for 2 highest 12 month periods, $2,407.40 x 0.0115 =
$27.69 x 30.99338 = $858.21.
Ms. Price elected to convert the supplemental retirement account applicable in Plan G1 into an additional monthly annuity. Her total benefit consists of $858.21 (defined benefit) plus $13.20 (supplemental annuity portion). $858.21 + $13.20 = $871.41 pension effective December 1, 2010.
(includes supplemental retirement account applicable in Plan G1, as an additional monthly annuity)
Motion: Mr. York made a motion to defer this application for Injury In Line of Duty retirement to the January meeting in order to obtain additional information.
Mr. Martin seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR NORMAL RETIREMENT: PLAN G2
CHARTER SECTION 1360.12
William E. Collins, Jr., General Government No Option
Date of birth, February 3, 1935: 75 years of age
Total credited service: 11 years 5 months 12 days
Average monthly salary for 2 highest – 12 month periods, $1,097.72 x 2.1% =
$23.05 x 11.44954 =
$263.91 pension effective December 1, 2010
Motion: Mr. York made a motion to approve this application for Normal retirement. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR DEFERRED RETIREMENT: PLAN G2
CHARTER SECTION 1360.28
Kermit Lowe, General Government Option A-9
(last employed September 1997) 100% with reinstatement
Date of birth, November 29, 1948: 62 years of age
Total credited service: 14 years 8 months
Average monthly salary for 2 highest – 12 month periods, $1,374.74 x 2.1% =
$28.87 x 14.6667 = $423.43. Mr. Lowe chose Option A-9 – 100% with reinstatement to Mildred Marlene Lowe, spouse. $423.43 x .8080 =
$342.13 pension effective December 1, 2010
APPLICATION FOR PARTICIPATION IN THE DELAYED RETIREMENT OPTION PROGRAM (DROP): PURSUANT TO CHARTER SECTION 1371.8 – PLAN G.
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.
Robert H. Polk, General Government – Plan G2 Option A-6 – 100%
Joint & Survivor without reinstatement
Date of birth, June 14, 1946: 64 years of age
Total credited service: 13 years 5 months 1day
Average monthly salary for 2 highest – 12 month periods, $9,003.09 x 2.1% =
$189.06 x 13.41941 = $2,537.07. Mr. Polk chose Option A-6 – 100% Joint and Survivor to Molly H. Polk, daughter. $2,537.07 x .6871 =
$1,743.22 pension effective December 1, 2010.
DROP complete November 30, 2012.
Motion: Mr. Hackney made a motion to approve this application for Drop retirement payable under Option A-6. Ms. Shelton seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:
Bryan, Pendleton, Swats & McAllister – Actuary (October 2010) $10,674.00
Kennerly, Montgomery & Finley – Attorney (General - Aug 2010) 2,477.00
Kennerly, Montgomery & Finley – Attorney (General - Sept 2010) 2,410.20
Kennerly, Montgomery & Finley – Attorney (General - Oct 2010) 3,195.00
Kennerly, Montgomery & Finley – Attorney (General - Nov 2010) 2,660.00
Kennerly, Montgomery & Finley – Attorney (G. Fields - Oct 2010) 3,113.80
Kennerly, Montgomery & Finley – Attorney (G. Fields - Nov 2010) 460.00
Kennerly, Montgomery & Finley – Attorney (G1 Claim - Aug 2010) 10,157.30
Kennerly, Montgomery & Finley – Attorney (G1 Claim - Sept 2010) 9,096.02
Kennerly, Montgomery & Finley – Attorney (G1 Claim - Oct 2010) 3,588.52
Kennerly, Montgomery & Finley – Attorney (G1 Claim - Nov 2010) 3,369.15
Wimberly Lawson Wright Daves & Jones – Attorney 2,041.40
State Street – Trustee (Oct – 2010) 3,406.26
State Street Global – Money Manager (July & Aug 2010) final payment 971.57
Calamos – Money Manager (3rd Qtr 2010) 34,962.00
UBS – Money Manager (3rd Qtr 2010) final payment 20,656.67
Mr. Cherry, Executive Director, has reviewed the invoices and certifies that they are consistent with the services provided and are within the budgeted figures of the system’s financial plan.
Motion: Mr. Hackney made a motion to pay the invoices as presented. Mr. Hutchens seconded the motion. The motion carried unanimously by the members present.
INVESTMENT MATTERS:
Aether Real Assets Fund of Funds
Mr. Cherry reported to the full Board the Investment Committee’s recommendation that Aether Investment Partners be retained to manage $11M in Aether’s Real Assets Fund-of-Funds program.
Motion: Mr. Martin made a motion based upon the recommendation of the Investment Committee and Summit Strategies, to retain Aether Investment Partners Real Assets Fund-of-Funds to manage up to $11M for the pension system, subject to additional review by Attorney Gilbert, Mr. Cherry and Mr. York. Upon a satisfactory review, the Board further authorized Mr. Cherry to sign an investment 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 passed unanimously by the members present.
Asset Allocation Report - Exhibit 5
Mr. Cherry distributed to the Board members an Asset Allocation report for their information and review.
Investment Committee Minutes
Mr. Cherry advised that there were no further action items from this month’s Investment Committee meeting.
Ms. Shelton and Mr. York left the meeting at 11:30 a.m.
G1 Discussion
Attorney Michael Kelly updated the Board on the pending G1 employees’ litigation advising the Board that the Pension Board took no position in City Council’s motion to intervene in the lawsuit.
Attorney Kelly advised the Board that Mr. Pennington was scheduled to be deposed at 1:30 p.m., December 13, 2010, in his office regarding his revised actuarial calculation in the cost to change eight, Plan G – Option 1 members who had either retired, deferred or been refunded, from Plan G – Option 1, in addition to the 31 active Plan G – Option 1 members in the pending litigation.
After further discussion the following motion was made:
Motion: Mr. Hackney made a motion directing legal counsel to mount all necessary and appropriate defenses in the pending litigation filed by the City of Knoxville against the Pension Board while maintaining and preserving to the best of counsel’s ability the Pension Board’s valued and good relationship with City Council. Mr. Coker seconded the motion. The motion passed 4-1 with Mr. Martin voting no.
OTHER: None
PUBLIC COMMENTS: None
ADJOURNMENT:
Motion: Mr. Coker made a motion to adjourn the meeting at 12:35 p.m. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
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Chair
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Date
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