CITY OF KNOXVILLE PENSION BOARD

 MINUTES

Thursday – March 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 March 12, 2009.

 

Present were: Mayor Bill Haslam, Mr. Greg Coker, Mr. Joe Hackney, Mr. Jim Hutchens, Ms. Barbara Pelot,  Ms. Robin Shelton, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert.

 

Also present:  Mr. Gillis Barbee, General Government employee.

 

 

CALL TO ORDER:

 

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

 

APPROVAL OF REGULAR MEETING MINUTES FOR February 12, 2009.

 

Ms. Pelot made a motion to approve the February 12, 2009, 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.

 

CONTRACTS:

 

            Adams Street Partners

 

Mr. Cherry advised the Board that the paperwork had been completed on the Adams Street Partners contract and funding would be transferred upon their instruction.

 

            Pugh & Co. – June 30, 2009 Audit – Exhibit 2

 

Mr. Cherry presented to the Board a fee proposal from Pugh & Co. for the annual audit for the year ending June 30, 2009, with an amount not to exceed $20,800.

 

Motion:  Ms. Pelot made a motion to authorize the Executive Director to enter into a contract on behalf of the Pension Board with Pugh & Co. for the audit of the Pension System’s financial statement for the year ending June 30, 2009, for an amount not to exceed the fee quoted of $20,800.  Ms. Shelton seconded the motion.  The motion carried unanimously by the members present.

 

ADMINISTRATIVE MATTERS:

 

Investment Committee – Exhibit 3

 

Attorney Gilbert distributed to and reviewed with the Board a draft Investment Committee Charter for their further consideration at the April board meeting.

 

Mayor Haslam left the meeting at 8:45 a.m. and Ms. Pelot presided.

 

Hiring Process

 

Attorney Gilbert advised the Board that he would prepare suggested guidelines to be presented at the April meeting to assist the Board in the hiring process for additional Pension Board staff members.

 

Glenda Field’s Litigation

 

Attorney Gilbert advised the Board that the decision from Chancellor Weaver had not yet been rendered.

 

Kennerly, Montgomery & Finley

 

Attorney Gilbert informed the Board of the addition of new shareholders, Mr. Bill Mason and Mr. Michael Kelly, to his law firm, noting to the Board the welcomed expertise both men would add to the firm regarding governmental pension and municipal law matters.

 

 

EXECUTIVE DIRECTOR COMMENTS:

 

            UBP Offer – Exhibit 4

 

Mr. Cherry distributed to the Board a memo outlining an offer of reimbursement from Hedge Fund Manager UBP regarding the Madoff losses.  Mr. Cherry advised the Board of a pending conference call with Investment Consultant, Dan Holmes, later in the meeting and deferred a decision on the matter pending their discussion with Mr. Holmes.

 

            STW Bond

 

Mr. Cherry advised the Board that he had been informed by STW that three bonds had dropped below investment grade, however, STW had indicated a desire to hold the bonds.  The Board decided to seek Mr. Holmes’ advice on this matter as well as the UPB offer, during the scheduled conference call.

 

Mayor Haslam returned to the meeting at 9:18 a.m. and presided.

 

ATTORNEY COMMENTS:  Noted above

 

APPEAL BY MR. GILLIS BARBEE TO HAVE PRIOR SERVICE REINSTATED: - Exhibit 5

 

General Government, Chilhowee Park employee, Mr. Gillis Barbee presented his appeal to the Board to have two weeks of prior service time reinstated which he lost on a leave of absence during the TVA & I Fair.  Pension contributions were not received by the pension system during this leave. 

 

Mr. Cherry’s letter denying Mr. Barbee’s appeal to have this time reinstated cites Charter Section 1360.2 as the basis of his denial which states that an employee shall not be entitled to credit for the time during a leave of absence.

 

Attorney Gilbert advised Mr. Barbee and the Board that he would need to review the charter to see if the Board has any legal authority to reverse Mr. Cherry’s administrative determination to deny Mr. Barbee’s appeal.  Attorney Gilbert promised Mr. Barbee and the Board a legal opinion on the matter by next month’s board meeting.

 

ENROLLMENTS:

 

The following General Government employees have filed applications to become members of the Plan G1 pension system.

                       

                        Michael S. Hornbeck

 

Motion:  Mr. Hackney made a motion to approve this application for enrollment in the Plan G1 pension system.  Mr. Coker 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.

 

           

Angela Hill, General Govt., G-1 – Vested

Josef E. Sexton, Police Dept., Plan C – Non-vested

                        Perry L. Wilson, General Govt., G-1 – Non-vested

 

Motion:  Mr. Hackney 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 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.

 

Bryan J. Bates, Police Dept. - Uniformed                          Option A-8

                                                                                                75% with reinstatement

Date of birth, January 31, 1957: 52 years of age

            Total credited service:  30 years 24 days

            Average monthly salary for 2 highest 12 month periods, $4,327.69 x .025 =

$108.19 x 30 = $3,245.70.  Mr. Bates chose Option A-8 – 75% with reinstatement to Brittni Nicole Bates, daughter.  $3,245.70 x .8368 =

            $2,716.00 pension effective March 1, 2009.

            DROP complete February 28, 2011.

 

MOTION:  Mr. Coker made a motion to approve this application for DROP retirement payable under Option A-8.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

Ricky F. Ferguson, Police Dept. - Uniformed                    Option A-5

                                                                                                75% without reinstatement

Date of birth, February 4, 1954: 55 years of age

            Total credited service:  30 years 24 days

Average monthly salary for 2 highest 12 month periods, $4,760.09 x .025 =

$119.00 x 30 = $3,570.00.  Mr. Ferguson chose Option A-5 – 75% without reinstatement to Cynthia Gail Ferguson, spouse.  $3,570.00 x .9548 =

$3,408.64 pension effective March 1, 2009.

            DROP complete February 28, 2011.

 

MOTION:  Mr. Coker made a motion to approve this application for DROP retirement payable under Option A-5.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:     (GREEN TAB)

           

            Kennerly,Montgomery & Finley – Attorney (General –Jan.  09)            1,485.92

Kennerly,Montgomery & Finley – Attorney (G. Fields –Jan. 09)           2,654.20

State Street – Trustee (Dec. 2008)                                                          3,368.30          

State Street – Custodial (Jan. 2009)                                                             8,363.38

State Street Global – Money Manager (4th Qtr. 2008)                                        4.04

Summit Strategies – Investment Consultant (1st Qtr. 2009)                     31,250.00

 

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

 

 

INVESTMENT MATTERS:

 

            Conference call with Dan Holmes

 

            Asset Allocation

 

Mr. Holmes discussed with the Board via a conference call, an asset allocation plan.  A copy of his report is on file in the Pension Office.

 

Mayor Haslam left the meeting at 9:53 a.m.

           

UBP cont’d. – Exhibit 4

 

The Board discussed with Mr. Holmes the offer made by UBP on the Madoff losses.  Mr. Holmes advised the Board that he would be meeting with UBP representatives later that morning to obtain additional details regarding their offer and agreed to report back to the Board and give a recommendation no later than Friday, March 20, 2009.

 

STW Bonds cont’d.

 

Mr. Holmes advised the Board that he would notify Mr. Todd Jewett with STW Fixed Income, requesting a letter to the Board informing them of the bond downgrades and provide the Board with a recommendation regarding the bonds.

 

OTHER:

 

            Board Concerns

 

The Board discussed their concerns regarding the recent financial market volatility  and actions which could be taken to better assess the economic environment and asset allocation strategies to be more proactive in the future. Several members emphasized the need for a more vigilant approach in the current market environment and ongoing.

 

Motion:  Mr. Coker made a motion to require Investment Consultant, Mr. Dan Holmes to respond to a questionnaire which Mr. Cherry had previously requested Mr. Holmes complete last September.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

PUBLIC COMMENTS:  None

 

RECESS:

 

Mr. Hackney made a motion to recess the meeting at 10:45 a.m., to reconvene on Wednesday, March 25, 2009, at 8:15 a.m., and leave to the discretion of the Chair the right to adjourn the meeting.  Mr. Coker seconded the motion.  The motion carried unanimously by the members present.

 

The meeting was reconvened on Wednesday, March 25, 2009, and called to order at 8:21 a.m. by Ms. Pelot.

 

Present were:  Mr. Greg Coker, Mr. Joe Hackney, Ms. Barbara Pelot, Ms. Robin Shelton, Mr. Jim York and Mr. Michael Cherry.

 

INVESTMENT MATTERS

 

            UBP – Exhibit 5

 

Mr. Coker made a motion, upon the recommendation of Summit Strategies, to leave in place the redemption letter to UBP and authorized Mr. Cherry to have Summit Strategies start a replacement search for UBP.  Ms. Shelton seconded the motion.  The motion carried unanimously by the members present.

 

STW Bonds – Exhibit 6

 

Mr. York made a motion to acknowledge and accept a report prepared by Summit Strategies, on the recent STW bond downgrades, which provides for periodic updates regarding the status of the bonds.  Mr. Hackney seconded the motion.  The motion carried unanimously by the members present.

 

ADJOURNMENT:

 

Mr. Hackney made a motion to adjourn the meeting at 9:02 a.m.  Mr. Coker seconded the motion.  The motion carried unanimously by the members present.

 

                                                            ____________________________

                                                            Chair

 

                                                            ____________________________

                                                            Date