CITY OF KNOXVILLE PENSION BOARD
MINUTES
FEBRUARY 9, 2006
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, 917 E. 5th Avenue at 8:15 a.m. on February 9, 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: Lt. Cheri Matlock, Knoxville Police Department; Mr. Dan Holmes, Summit Strategies; Mr. Jim Oberweis and Mr. Brian Lee from Oberweis Asset Management; Mr. Kimon Passios and Mr. Ken Sobolewski from Pinnacle Associates LTD; Mr. Mark Merlet and Mr. Joe Frohna from Cortina Asset Management.
CALL TO ORDER:
Mayor Haslam presided and called the meeting to order at 8:18 a.m.
Pension Benefit - Donald McClendon
Prior to the approval of the minutes for the Pension Board’s January meeting, Attorney Gilbert called to the Board’s attention the wording on the motion for Donald McClendon’s injury in line of duty pension benefit, which the Board awarded Mr. McClendon on January 12, 2006. Attorney Gilbert explained to the Board that it was not formally disclosed at the January meeting that Mr. McClendon has a pending felony charge related to his duties as a police officer with the City of Knoxville. Mr. Gilbert explained that all pensions awarded by the Pension Board were potentially subject to TCA Section 8-35-124, which under certain circumstances can result in a forfeiture of a members pension when there is a felony conviction constituting malfeasance in office.
Attorney Gilbert informed the Board that the court proceedings involving vehicular homicide/accidental felony charges were still pending against Mr. McClendon and that he is presumed innocent until proven otherwise. Attorney Gilbert explained to the Board that the wording of the motion was corrected to reflect the state law requirements and that Mr. McClendon’s pension award letter and the City Council resolution were also worded to make clear that this benefit award is subject to the state statue.
APPROVAL OF REGULAR MEETING MINUTES FOR January 12, 2006
Motion: Ms. Pelot made a motion to approve the January 12, 2006, meeting minutes, which included the “subject to” reference to TCA Section 8-35-124 regarding Mr. Donald McClendon’s pension in line of duty award. Mr. Harrell 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:
Schedule Pension Board Meetings for 2nd Quarter 2006
Thursday, April 13, 2006 – 8:15 a.m.
Thursday, May 11, 2006 – 8:15 a.m.
Thursday, June 8, 2006 – 8:15 a.m.
The Pension Board meeting schedule for the second quarter 2006 was accepted without objection.
Dennis Pack – Military buyback - Exhibit 2
Mr. Cherry informed the Board that he had received a request from a former city employee, Dennis Pack, to amend the city charter provisions regarding reinstatement of prior city employment. Currently, a non-vested employee (whether a refund was issued or not) or a vested employee who elected to withdraw his or her contributions upon termination of employment from the city must be rehired within six years of the employee’s termination to reinstate this prior employment service. Mr. Pack has requested that the charter be amended to create an exception to this requirement if the interruption of city employment is for service in the armed forces.
Post Retirement Benefit Summary – Exhibit 3
Mr. Cherry provided the Board with monthly benefit increase summaries which were included in the January 2006 payments, and advised the Board that letters had been previously mailed to all benefit recipients.
EXECUTIVE DIRECTOR COMMENTS:
ATTORNEY COMMENTS:
Charter Amendment Rules and 2006 Timetable– Exhibit 4
Attorney Gilbert distributed and reviewed with the Board the Pension Board Rules Regarding Pension System Charter Amendments, and a 2006 Charter Amendment Timetable, and noted the incorporation of a preliminary report for City Council which is discussed in Section D.
Mr. Calloway arrived at 8:35 a.m.
Motion: Mr. Kinney made a motion to approve the Pension Board Rules Regarding Pension System Charter Amendments subject to a revision recommended by Mr. Kinney related to the submittal requirements of proposed charter amendments to the Pension Board. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
Glenda Fields Litigation
Attorney Gilbert informed the Board that his office was preparing a brief for the court and would update the Board after the next court appearance.
Global Crossing Bankruptcy Proceedings
Attorney Gilbert advised the Board that there was still no word from the bankruptcy court on the 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.
Tyler Eaton
Linda S. Pierucci
Nicholas Yarnell
Motion: Ms. Pelot made a motion to approve these applications for enrollment in the Plan G1 pensions system. Mr. Calloway 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.
William Chappell, General Government, Plan G-1, Non-vested
Charles R. Dossett, General Government, Plan G-1, Non-vested
Benny Evans, General Government, Plan G-1, Non-vested
Andrew Jurbergs, Police Department, Plan C – Non-vested
Wyman D. Lockhart, General Government, Plan G-1, Non-vested
Charles C. Luttrell, Police Department, Plan C – Non-vested
Benny E. Swatzell, General Government, Plan G-1, Vested
Travis Williams, General Government, Plan G-1, Non-vested
Motion: Mr. Harrell made a motion to approve these applications for withdrawal of employee contributions. Mr. King seconded the motion. The motion carried unanimously by the members present.
DISABILITY
APPLICATION FOR INJURY IN LINE OF DUTY RETIREMENT: PLAN C
CHARTER SECTION: 1390.11
James P. Vichich, Police Department – Uniformed Option A-6
100% without reinstatement
Date of birth, March 23, 1964: 41 years of age
Total credited service: 14 years 1 month 19 days
Average monthly salary for 2 highest – 12 month periods, $3,402.73 x 50% =
$1,701.37. Mr. Vichich chose Option A-6 – 100% without reinstatement to Amy Vichich, spouse. $1,701.37 x .9569 =
$1,628.04 pension effective March 1, 2006.
Motion: Mr. Coker made a motion to approve this application for an injury in line of duty pension, based on Dr. Embry’s and Dr. Pool’s psychiatric evaluation reports. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
RETIREMENTS:
APPLICATION FOR RETIREMENT: PLAN A
CHARTER SECTION 1360.17
Glynn F. Mitchell, Schools Non-Certified Option B-12
15 Yr. Certain & Life
Date of birth, March 10, 1939: 66 years of age
Total credited service: 43 years 4 months (combined City & County)
Average base earnings for 3 years, $400.00 x .88% = $3.52
Average excess earnings for 3 years, $3,712.28 x 1.76% = $65.34
making a total benefit of $68.86 benefit per year of service. $68.86 x 43.3333 =
$2,983.93 Total benefit
1,311.17 minus County benefit
1,672.76 Mr. Mitchell chose Option B-12 – 15 Yr. Certain & Life to Edna G. Cole.
$1,672.76 x .8658 =
$1,448.28 pension effective February 1, 2006.
Motion: Ms. Pelot made a motion to approve this application for retirement payable under Option B-12. Mr. Kinney seconded the motion. The motion passed unanimously by the members present.
APPLICATION FOR EARLY RETIREMENT: PLAN A
CHARTER SECTION 1360.17
Vicki Andrews, Schools Certified No Option
Date of birth, January 15, 1951: 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: January 2006
Average base earnings for 4 years, $400.00 x 75% = $3.00
Average excess earnings for 4 years, $1,525.86 x 1.50% = $22.89
making a total of $25.89 benefit per year of service. $25.89 x 15 =
$388.35 x ER factor .5245 =
$203.69 pension effective February 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 $1,599.64
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. Kinney seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR RETIREMENT: PLAN G1
CHARTER SECTION 1360.12
Marva N. Martin, General Government No Option
Date of birth, December 7, 1943: 62 years of age
Total credited service: 7 years 10 months
Average monthly salary for 2 highest 12 month periods, $3,810.05 x .0115% = $43.82
X 7.83333 = $343.26
*Total defined benefit: $343.26 (all service was post 1997)
$343.26 pension effective February 1, 2006.
One time payment of Supplemental Retirement Account.
*Defined benefit portion only. Ms. Martin will receive a lump sum, one time payment, for the supplemental retirement account.
Motion: Mr. Coker made a motion to approve this application for retirement. Mr. Pelot seconded the motion. The motion passed unanimously by the members present.
APPLICATION FOR RETIREMENT: PLAN G2 – RULE OF 80
CHARTER SECTION 1371.4
Carolyn L. Littlejohn, General Government No Option
Date of birth, March 7, 1944: 61 years of age
Total credited service: 18 years 2 months 1 day
Average monthly salary for 2 highest 12 month periods, $2,151.00 x 2.1% =
$45.17 x 18.16941 =
$820.71 pension effective February 1, 2006.
Motion: Mr. Coker made a motion to approve this application for Rule of 80 retirement. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR DEFERRED RETIREMENT: PLAN G2
CHARTER SECTION 1360.28
Patricia A. Cowden, General Government No Option
Date of birth, January 18, 1944: 62 years of age
Total credited service: 15 years 9 months
Average monthly salary for 2 highest 12 month periods, $2,703.68 x 2.1% =
$56.78 x 15.75000 =
$894.28 pension effective February 1, 2006.
Motion: Mr. Coker made a motion to approve this application for a Deferred Retirement. Ms. Pelot 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.
James Kent Bates, Police Department Uniformed Option A-6
100% without reinstatement Date of birth, January 31, 1956: 50 years of age
Total credited service: 31 years 7 months 6 days
Average monthly salary for 2 highest 12 month periods, $3,872.63 x 2.5% =
$96.82 x 30 = $2,904.60. Mr. Bates chose Option A-6 – 100% without reinstatement to Donna S. Bates, spouse. $2,904.60 x .9313 =
$2,705.05 pension effective February 1, 2006.
DROP complete January 31, 2008.
Motion: Ms. Pelot made a motion to approve this application for DROP retirement payable under Option A-6. Mr. Coker 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 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.
James E. Meador, General Government – Plan G1 No Option
Date of birth, August 30, 1941: 64 years of age
Total credited service: 7 years 7 months 7 days
Average monthly salary for 2 highest 12 month periods, $4,019.72.
$4,019.72 x .0127 = $51.05 x 7.60251 =
$388.11 (Defined benefit) pension effective February 1, 2006.
DROP complete January 31, 2008.
Motion: Ms. Pelot made a motion to approve this application for DROP retirement. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR MILITARY LEAVE: CHARTER SECTION 1390.20(B)
Donald W. Tipton, Jr., Fire Uniformed: February 1, 2006 – February 19, 2006
Motion: Mr. Calloway made a motion to approve this application for Military Leave. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION TO TRANSFER CREDITED SERVICE FROM DIVISION G TO DIVISION C:
CHARTER SECTION 1350.15
William E. Lay
Motion: Mr. Calloway made a motion to approve this application to transfer credited service from Division G to Division C. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:
Bryan, Pendleton, Swats & McAllister – Actuary (December 2005) $ 3,561.00
State Street – Custodial (December 2005) 14,172.90
Calamos Investments – Money Manager (4th Qtr – 2005) 38,995.00
STW – Money Manager (4th Qtr – 2005) 35,194.17
UBS Global - Money Manager (4th Qtr – 2005) 45,308.00
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: Ms. Pelot made a motion to pay these invoices. Mr. Kinney seconded the motion. The motion carried unanimously by the members present.
OTHER: None
INVESTMENT MATTERS:
Mr. Dan Holmes - Summit Strategies
Mr. Holmes made a presentation of the 4th Quarter, 2005 Performance Report. Copies of his report are on file in the Pension Office.
Mayor Haslam called a recess at 8:50 a.m. and called the meeting back to order shortly thereafter.
Small/Mid Cap Growth Equity Manager Presentations
Oberweis Asset Management
Jim Oberweis and Brian Lee from Oberweis Asset Management made a presentation to the Pension Board regarding their firm’s small/mid cap growth equity investment capability and performance. A copy of their presentation material is on file at the pension office.
Mayor Haslam left the meeting at 9:16 a.m.
Pinnacle Associates LTD
Kimon Passios and Ken Sobolewski from Pinnacle Associates LTD made a presentation to the Pension Board regarding their firm’s small/mid cap growth equity investment capability and performance. A copy of their presentation material is on file at the pension office.
Cortina Asset Management
Mark Merlet and Joe Frohna from Cortina Asset Management made a presentation to the Pension Board regarding their firm’s small/mid cap growth equity investment capability and performance. A copy of their presentation material is on file at the pension office.
The pension board, in consultation with Dan Holmes of Summit Strategies, discussed the various firms’ presentations and capabilities.
Motion: Mr. Kinney made a motion to engage, upon the recommendation of Summit Strategies, Cortina Asset Management as a new money manager to replace Sterling Johnston Capital Management. The engagement is subject to an investment management contract being reviewed and recommended by the Board’s legal counsel. The Executive Director, with the assistance of Mr. Holmes and legal counsel, is also authorized and directed to sign and deliver the contract on behalf of the Pension Board and complete the administrative tasks to establish the engagement and transfer the funds from Sterling Johnston Capital Management to the newly established trust account at State Street for Cortina Asset Management. Mr. Harrell seconded the motion. The motion passed unanimously by the members present.
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 12:42 p.m. Mr. Harrell seconded the motion. The motion carried unanimously by the members present.
_______________________
Chair
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Date
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