CITY OF KNOXVILLE PENSION BOARD
MINUTES
FRIDAY – February 11, 2011
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 February 11, 2011.
Present were: Ms. Barbara Pelot, Mr. Jack Banks, Mr. Greg Coker, Mr. Stephen King, Mr. Larry Martin, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert. Mr. Martin attended as Mayor Brown’s designated representative as authorized by T.C.A. § 6-54-112 and the mayor’s letter of designation dated January 12, 2011.
Also present: Mr. Ted Hotz and Ms. Kristi Paczkowski, Pugh and Company; Mr. Jonathan Evans, Summit Strategies; Mr. Sam Brabston, retired Fire Department - Uniformed.
CALL TO ORDER:
Ms. Pelot presided and called the meeting to order at 8:19 a.m.
Audit Presentation
2009 – 2010 Audit Report and Financial Statement
Ms. Kristi Paczkowski and Mr. Ted Hotz of Pugh & Co. made a presentation to the Pension Board regarding their firm’s annual audit of system’s financial statements for fiscal year July 1, 2009 through June 30, 2010. A copy is on file in the Pension Office.
Motion: Mr. Martin made a motion authorizing the Executive Director to request proposals for a Formal Risk Assessment of the Pension System and directing him to report back to the Board with his findings and recommendations. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
Motion: Mr. York made a motion to accept the Audit Report – June 30, 2009 and June 30, 2010. Mr. Martin seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF REGULAR MEETING MINUTES FOR January 13, 2011:
Mr. Martin made a motion to approve the January 13, 2011, 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.
EXECUTIVE DIRECTOR COMMENTS:
Market Performance
Mr. Cherry reported to the Board positive investment returns for January and signs, to date, of favorable returns for February.
ADMINISTRATIVE MATTERS:
Pension Study Task Force
Mr. Martin updated the Board on the city administration’s progress in designating the members to the administration’s recently announced Pension Study Task Force and briefly described how the process is anticipated to work.
Motion: Mr. King nominated Ms. Pelot to serve as the Pension Board representative to the Pension Study Task Force and then moved that nominations cease and she be elected by acclamation. Mr. Martin seconded the motion. The motion carried unanimously with Ms. Pelot abstaining on the vote.
Motion: Mr. King made a motion for the Pension Board to send Mayor Brown a letter requesting that he consider appointing a second representative from the Pension Board to serve on the Pension Study Task Force. Mr. Banks seconded the motion. The vote carried with Mr. Banks, Mr. Coker and Mr. King voting yes. Mr. Martin voted no. Ms. Pelot and Mr. York abstained.
Mr. Martin left the meeting at 9:48 a.m.
Calculation of benefit payments
Mr. Cherry informed the Board of a verbal request from a Fire Department – Uniformed employee who had began the Drop Program on January 1, 2011, to have his final, two year average salary recalculated to include the recently applied salary increase from the Mercer Compensation Plan.
No action was taken by the Board since a formal request had not been received in the Pension Office.
ATTORNEY COMMENTS:
Executive Directory’s Authority – Exhibit 2
Attorney Gilbert distributed to the Board a resolution, with revisions, delegating administrative responsibilities and authority to the Executive Director of the Pension Board. Mr. Gilbert advised the Board that the primary change was to clarify the Executive Director’s authority to promulgate the necessary forms and procedures to properly operate and administer the pension system.
Motion: Mr. King made a motion to approve the amended and restated Resolution delegating administrative responsibilities and authority to the Executive Director of the Pension Board. Mr. Banks seconded the motion. The motion passed. Mr. York abstained.
Supplemental Plan Provisions
Attorney Gilbert explained to the Board the Supplemental Plan Provisions and related IRS qualified plan status filings work being performed by his firm to keep the Pension System in compliance with the IRS.
G1 Discussion
Attorney Gilbert updated the Board on the pending G1 employees’ litigation.
CONTRACTS:
JP Morgan
Mr. Cherry advised the Board of the need to consult with Investment Consultant, Mr. Dan Holmes, before the contract with JP Morgan is executed, and will ask Mr. Holmes to give an opinion to the Investment Committee at its March 1, 2011 meeting.
DRUM
Mr. Cherry informed the Board of an e-mail he had received from Mr. Holmes regarding Summit’s recommendation to proceed with an investment managed by the DRUM (distressed debt) investment advisers. Mr. Cherry advised the Board that a request for a new presentation on DRUM will be discussed with Mr. Holmes at the March 1, 2011 Investment Committee meeting.
ENROLLMENTS:
The following General Government employees have filed applications to become members of the Plan G1 pension system.
Ann Bateman
Brian Brown
Robert Clark
Marjorie L. Crawford
Matthew Dake
Brian Donlon
Donald E. Neary
Charles D. Ottinger
Alan K. Shields
Motion: Mr. York made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. King 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.
Hannah Parker, General Govt. – Plan G1, Non-vested
William Rosenbalm, General Govt. – Plan G1, Non-Vested
Bert Turner, Police Dept. – Plan C, Vested
Motion: Mr. York made a motion to approve these applications for withdrawal of employee contributions. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR NORMAL RETIREMENT: PLAN G2
CHARTER SECTION 1360.12
Sylvia E. Bovee, General Govt. No Option
Date of birth, December 1, 1948: 62 years of age
Total credited service: 14 years 2 months 14 days
Average monthly salary for 2 highest – 12 month periods, $2,402.62 x 2.1% =
$50.46 x 14.20502 =
$716.79 pension effective February 1, 2011.
Motion: Mr. Coker made a motion to approve this application for normal retirement. Mr. King seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR EARLY RETIREMENT: PLAN A
CHARTER SECTION 1360.17
Trula Kerns, Schools Certified No Option
Date of birth, December 28, 1953: 57 years of age
Total City credited service: 11 years
Total County credited service: 23 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 2010
Average base earnings for 4 years, $400.00 x .75% = $3.00
Average excess earnings for 4 years, $1,071.13 x 1.50% = $16.07
making a total of $19.07 benefit per year of service. $19.07 x 11 =
$209.77 x ER Factor .6260
$131.32 pension effective January 1, 2011
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 $1,359.54.
25 years required for Early retirement. Supreme Court ruling entitles retiree to combine City and County credited service.
Motion: Mr. King made a motion to approve this application for Early retirement. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR INJURY IN LINE OF DUTY: PLAN C
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
$1,728.81 pension effective (to be determined).
Motion: Mr. York made a motion to postpone Ms. Spitzer’s application for Injury In Line of Duty to the March 10, 2011, meeting per Ms. Spitzer’s request. Mr. King 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 .0115 =
$27.69 x 30.99338 = $858.21.
$871.41 pension will be effective upon her leaving employment with the city.
(includes supplemental retirement account applicable in Plan G1, as an additional monthly annuity)
Motion: Mr. Coker made a motion to approve this application for an In Line of Duty Disability based on the medical reports and Mr. Cherry’s Disability Recommendation Report, to be reviewed in two years. Mr. Banks 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.
Edgar E. Mitchell, Police Dept. - Uniformed Option A-9
100% with reinstatement
Date of birth, December 1, 1953: 57 years of age
Total credited service: 30 years 16 days
Average monthly salary for 2 highest 12 month periods, $4,784.98 x .025 =
$119.62 x 30 = $3,588.60. Mr. Mitchell chose Option A-9 – 100% with reinstatement to Frances B. Mitchell, spouse. $3,588.60 x .9063 =
$3,252.35 pension effective February 1, 2011.
DROP complete January 31, 2013.
Motion: Mr. Coker made a motion to approve this application for DROP retirement payable under Option A-9. Mr. Banks 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 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.
William H. Denton, General Government – Plan G1 Option A-7
50% with reinstatement
Date of birth, April 22, 1948: 62 years of age
Total credited service: 5 years 10 months 9 days
Average monthly salary for 2 highest 12 month periods, $4,605.72 x .0115% =
$52.97 x 5.85799 = $310.30. Mr. Denton chose Option A-7 – 50% with reinstatement to Brenda D. Denton, spouse. $310.30 x .8923 =
*$276.88 pension (defined benefit) effective February 1, 2011.
DROP complete January 31, 2013.
*Mr. Denton chose to convert the supplemental retirement account, applicable in Plan G1, into an additional, lifetime monthly annuity pending the quarter ended 2010, account value determination.
Motion: Mr. York made a motion to approve this application for DROP retirement payable under Option A-7. Mr. King seconded the motion. The motion carried unanimously by the members present.
Karen D. Johnson, General Government – Plan G2 No Option
Date of birth, May 31, 1954: 56 years of age
Total credited service: 23 years 8 months 4 days
Average monthly salary for 2 highest – 12 month periods, $2,724.30 x 2.1% =
$57.21 x 23.67763 =
$1,354.60 pension effective February 1, 2011.
DROP complete January 31, 2013.
Motion: Mr. York made a motion to approve this application for DROP retirement. Mr. King seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:
Bryan, Pendleton, Swats & McAllister – Actuary (Dec 2010) $ 6,633.00
Kennerly, Montgomery & Finley – Attorney (General – Dec 2010) 5,096.50
Kennerly, Montgomery & Finley – Attorney (G1 – Dec 2010) 12,672.89
Kennerly, Montgomery & Finley – Attorney (G. Fields – Dec 2010) 240.00
State Street – Trustee (Dec – 2010) 3,424.59
Aberdeen – Money Manager (4th Qtr – 2010) 25,827.83
Acadian – Money Manager (4th Qtr – 2010) 59,899.00
AQR – Money Manager (4th Qtr – 2010) 59,313.00
CastleArk – Money Manager (4th Qtr – 2010) 48,886.39
Eagle Capital – Money Manager (4th Qtr – 2010) 76,585.16
IRM – Money Manager (4th Qtr – 2010) 1,452.65
Pinnacle Associates – Money Manager (4th Qtr – 2010) 63,975.00
STW – Money Manager (4th Qtr – 2010) 28,980.57
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. Banks seconded the motion. The motion carried unanimously by the members present.
INVESTMENT MATTERS:
Jonathan Evans – Summit Strategies
4Q 2010 Performance Report
Mr. Jonathan Evans made a presentation of the pension system’s 4th Quarter 2010, Performance Report and a preliminary flash report for January 31, 2011. Copies of the reports are on file in the Pension Office.
Investment Committee Minutes
Mr. Cherry reviewed with the full Board the action items from the Investment Committee’s February 1, 2011, meeting.
OTHER:
Personnel Matters
Mr. Cherry updated the Board on his plans to fill the staff accounting position.
Fund Performance Report
Mr. Cherry, at Mr. Coker’s request, gave a brief historical report of the funds’ performance at its high and low performance points.
Future Study
Mr. Coker made a request to, at a future meeting, have a review of the unfunded liabilities.
PUBLIC COMMENTS:
Retired Fire Department member, Mr. Sam Brabston, thanked the Board for their service.
ADJOURNMENT:
Motion: Mr. Coker made a motion to adjourn the meeting at 11:50 a.m. Mr. King 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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