CITY OF KNOXVILLE PENSION BOARD

MINUTES

MARCH 9, 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 March 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:  General Government employees – Ms. Carol Mahler, Ms. Robin Shelton, Mr. Scott Williams and Mr. Jim York; Knox County Schools Employee, Ms. Brenda Hankins and Knox County School retirees – Mr. Paul Bean, Mr. Gary Mahoney, Mr. Tom Underwood and Mr. George Whedbee; Fire Department disability applicant, Mr. James Morsch and his mother, Ms. Ruth Morsch; Police Department disability applicant, Mr. Jerrod Smith and Mrs. Smith.

 

CALL TO ORDER:

           

            Mayor Haslam presided and called the meeting to order at 8:20 a.m.

 

APPROVAL OF REGULAR MEETING MINUTES FOR February 9, 2006

Mr. Coker made a motion to approve the February 9, 2006, meeting minutes.  Ms. Pelot 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:

ADMINISTRATIVE MATTERS:

 

            Retroactive Benefit payment - Nancy Pressley – Exhibit 2

 

Mr. Cherry reviewed for the Board Knox County Schools retiree, Nancy Pressley’s, request to have retroactive benefit payments made to her beginning January 2004 through May 2005, which is the time Ms. Pressley began a medical leave of absence without pay status with Knox County Schools. 

 

Mr. Cherry explained to the Board that benefit payments are not typically started until an employee has officially terminated their employment.  Mr. Cherry advised the Board that Ms. Pressley did terminate employment with Knox County Schools on May 24, 2005, and benefit payments were started in June 2005.  Mr. Cherry had requested  Attorney Gilbert to render an opinion on whether or not the pension system could make retroactive payments to Ms. Pressley for the time she was on an unpaid medical leave of absence status with Knox County.  Attorney Gilbert presented Mr. Cherry with an opinion and concluded that Ms. Pressley was entitled to a retroactive benefit commencing on January 1, 2004 through May 2005. Mr. Cherry had presented to the Board a schedule of the retroactive payments due from the city and the Knox County portion of her Plan A benefit. Knox County had been presented the schedule for retroactive payments due Ms. Pressley and indicated the County had not raised any concerns.

 

Motion:  Ms. Pelot made a motion to change Ms. Pressley’s retirement effective date to January 1, 2004, and approve the schedule of retroactive benefit payments be made to Ms. Pressley in the amount of $3,783.55 by the city and $20,635.19 by the county.  Mr. Calloway seconded the motion.  The motion carried unanimously by the members present.

 

Actuarial cost studies – Exhibit 3

 

G1 to G2 Transfers

 

A discussion was held by the Board on the cost study regarding Plan G Option 1 members who had 10 or more years of service prior to the passage of “Rule of 80” for plan G. 

 

Motion:  Mr. Kinney made a motion to recommend a charter amendment to City Council which would provide a limited one-time transfer to Option 2 election period for those employees in Option 1 who had completed 10 years of service prior to the addition of the “Rule of 80” in plan G. Ms. Pelot seconded the motion.  Mr. King abstained.  The motion carried unanimously by the remaining members.

 

Post Retirement Benefit Adjustment Effective Date language – Exhibit 4

 

Mr. Cherry reviewed for the Board the cost study prepared by the actuary regarding  differences in the post retirement benefit adjustment language for the Certificated teachers who continued employment with Knox County after the consolidation of the City of Knoxville schools into the Knox County School System. Current charter language indicates the language providing for a minimum 3% increase and the compounding of the annual increase will be effective through January 15, 2007. Thereafter, the post retirement benefit adjustment calculations will revert to the language which does not have a minimum increase and the increase percentage is applied to a payee’s initial rather than current retirement benefit.

 

Motion:  Mr. Calloway made a motion to recommend to City Council the charter language which limits the effective date to January 15, 2007 be eliminated from the charter.  Ms. Pelot 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

 

          James R. Morsch, Fire Department – Uniformed                          No Option

            Date of birth, September 10, 1970:  35 years of age

            Total credited service:  3 years 8 months 24 days

            Average monthly salary for 2 highest – 12 month periods, $2,392.89 x 50% =

            $1,196.45 pension effective February 1, 2006.

 

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

 

Jerrod W. Smith, Police Department – Uniformed                                   No Option

            Date of birth, January 28, 1968:  38 years of age

            Total credited service:  12 years 3 months 2 days

            $1,537.38   pension effective May 1, 2006.

 

APPLICATION FOR DISABILITY NOT IN LINE OF DUTY RETIREMENT:  PLAN C

CHARTER SECTION 1350.2 (M) & 1390.12

 

Jerrod W. Smith, Police Department – Uniformed                                   No Option

            Date of birth, January 28, 1968:  38 years of age

            Total credited service:  12 years 3 months 2 days

            $751.28 pension effective May 1, 2006.

 

Motion:  Mr. Coker made a motion to defer this application to the April 13, 2006, Pension Board meeting.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

Actuarial cost studies – cont’d.

 

Mayor Haslam left the meeting at 9:38 a.m.

 

Prior Service Buyback – Exhibit 5

 

Mr. Cherry described the three employee groups, Plan C, Plan G and exempt employees that were previously allowed to buyback prior service time. He also reviewed for the Board the possible allowance of service buyback to employees who are injured in the line of duty and placed on a leave of absence. These employees are generally paid from the city’s workers compensation program. Mr. Gilbert’s firm had issued an opinion that the pension system is not mandated by federal law to permit an employee to establish this time as creditable service with the pension system. After a lengthy discussion by the Board on allowing employees to make employee contributions not made during the leave of absence while on workers compensation, the following motion was made:

 

Motion:  Mr. Harrell made a motion to recommend to City Council that language to amend the pension charter provisions be prepared to allow employees who are injured in the line of duty and paid from the city’s workers compensation program be given the opportunity to make employee contributions which would have otherwise been withheld from the employees pay to establish the leave period as credited service. The motion failed on the absence of a second.

 

Motion:  Mr. King made a motion to recommend to City Council that language to amend the pension charter provisions be prepared to allow those employees who had prior credited service in the system for which the member received a refund and did not make application prior to April 1, 1999 to again make application within a limited time to have the prior credited service recognized by the pension system.  Ms. Pelot seconded the motion. The motion failed by virtue of receiving only three votes in favor. Mr. King abstained from voting.

 

EXECUTIVE DIRECTOR COMMENTS:  None

           

ATTORNEY COMMENTS:

 

            Charter Amendment Rules Revisions – Exhibit 6

 

Attorney Gilbert presented the revised Charter Amendment rules incorporating the requested changes from the Board. He advised and recommended to the Board the revisions were of such significance that the Board should formally approve the rules with changes as presented.

 

Motion:  Ms. Pelot made a motion to approve the Pension Board Rules Regarding Pension System Charter Amendments as amended and presented by Mr. Gilbert.  Mr. Harrell seconded the motion.  The motion carried unanimously by the members present.

 

            Glenda Fields Litigation

 

Attorney Gilbert advised the Board that his office continued to work on 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.

 

R. Duane Abernathy

Gary Brooks

Martin L. Clay

Valerie Clark-Embry

Amy Dilworth

Alicia L. Foster

Dianna B. Gittens

Jack Housewright

Joshalyn Hundley

David W. Jones

Melanie Jones

Angela Mayes

Richard L. Reagan

Jason Russell

James S. Ward

Eric White

Christina J. Wilson

 

Motion:  Mr. Harrell 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.

 

            David T. Harrell, General Government, Plan G2, Vested

            Jason Krumenacker, Police Department, Plan C – Vested

            Joan Varlan, Schools, Plan A - Vested

            Steven W. Wheeler, General Government, Plan G1 – Vested

 

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

 

RETIREMENTS:

 

APPLICATION FOR DEFERRED RETIREMENT:  PLAN C 

CHARTER SECTION 1390.16

 

            Samuel A. Guy, Police Department - Uniformed   Option A-6

                                                                                                            100% without reinstatement            Date of birth, February 13, 1956:  50 years of age

Total credited service:  11 years 7 months

Average monthly salary $1,898.36 x 50% =

$949.18.  $949.18 x 11/27 = $386.70.  Mr. Guy chose Option A-6 – 100% without reinstatement to Janet M. Guy, spouse.  $386.70 x .9413 =

            $364.00 pension effective March 1, 2006.

 

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

 

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:    

           

Bryan, Pendleton, Swats & McAllister – Actuary (January 2006)            $13,385.00

Kennerly, Montgomery & Finley – Attorney (General - Jan. 2006)         4,350.00

Kennerly, Montgomery & Finley – Attorney (G. Fields - Jan. 2006)       6,145.00

Kennerly, Montgomery & Finley – Attorney (General - Feb. 2006)        5,541.50

Kennerly, Montgomery & Finley – Attorney (G. Fields - Feb. 2006)          245.00

State Street – Custodial (January 2006)                                                      14,166.67

State Street Global – money manager (4^th Qtr – 2005)                              4,572.46

Summit Strategies – investment consultant (1^st Qtr. – 2006)                     31,250.00

Deutsche – money manager (4^th Qtr - 2005)                                               38,806.10

INTECH – money manager (4^th Qtr – 2005)                                                94,502.93

Sterling Johnston – money manager (4^th Qtr – 2005)                                 78,041.20

 

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

 

OTHER:

 

INVESTMENT MATTERS:

 

PUBLIC COMMENTS:

 

ADJOURNMENT:

 

            There being no further business before the Board, Mr. Calloway adjourned the meeting at 10:15 a.m.

 

 

 

 

                                                                                                __________________________

                                                                                                Chair

 

 

                                                                                                ___________________________

                                                                                                Date

 

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