CITY OF KNOXVILLE PENSION BOARD
MINUTES
Thursday – May 13, 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 May 13, 2010.
Present were: Ms. Barbara Pelot, Mr. Greg Coker, Mr. Joe Hackney, Mr. Larry Martin, Ms. Robin Shelton, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert
Also present: Mr. Richard Woodby and Mr. David Walton General Government employees. General Government, Plan G1 employees – Valerie Coleman, Mr. Don Dailey, Mr. Brent Johnson, Mr. Stephen J. King, Ms. Carol Mahler, Ms. Fannie Maples, Ms. Debbie Moore, Ms. Sandra Schade, Mr. Tim Schade, and Mr. Scott Williams. Mr. Al Holifield, Attorney and Ms. Katie Dotson, Paralegal representing General Government employees. Mr. Dan Holmes, Summit Strategies.
CALL TO ORDER:
Ms. Pelot presided and called the meeting to order at 8:13 a.m.
APPROVAL OF REGULAR MEETING MINUTES FOR April 8, 2010:
Attorney Gilbert advised the Board that the April 8, 2010, meeting minutes which had been distributed to the Board this morning for their approval had been revised from the draft minutes previously distributed to the Board for review. He informed the Board that the revisions to the minutes occurred on page 10 under the section containing comments made by Attorney Bill Mason.
Mr. Hackney made a motion to approve the revised draft of the April 8, 2010, meeting minutes. Ms. Shelton 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:
Pugh and Company – Audit Contract
Mr. Cherry advised the Board that the annual 2009-10 audit contract had been completed and sent to the State. He advised the Board that he would follow up with Pugh and Company for completion of the full contract to include the two, one year option extensions which were approved by the Board in February 2010.
Richard T. Woodby Appeal – Exhibit 2
Mr. Cherry advised the Board that Mr. Woodby would be making a presentation to request the Board’s reconsideration of its earlier decision on December 11, 2008, to deny his request to reinstate prior service. Mr. Cherry reviewed with the Board a timeline of events in this matter that included several key documents.
Mr. Woodby then made a presentation to the Board on his behalf. In his presentation Mr. Woodby made several references to a decision made by the Board allowing general government employee, Ms. Kim Scarborough to purchase prior service time.
Attorney Gilbert reviewed with Mr. Woodby a letter sent to him from the Executive Director dated August 19, 2009, which explained in detail the Board’s denial and emphasized to Mr. Woodby how his situation was different from Ms. Scarborough’s.
Mr. Coker requested that Mr. Woodby speak specifically to his situation and asked if Mr. Woodby had any additional information that supported his assertion that the Pension Board incorrectly handled his claim. Mr. Woodby provided no additional information.
Motion: Mr. Coker made a motion to deny Mr. Woodby’s request for reconsideration and to affirm the Pension Board’s December 11, 2008 decision denying his claim. Mr. Hackney seconded the motion. The motion passed unanimously by the Board.
ADMINISTRATIVE MATTERS: None
EXECUTIVE DIRECTOR COMMENTS:
Knox County Plan A – Actuarial Valuation – Exhibit 3
Mr. Cherry presented the Board a copy of the Executive Summary of Knox County’s annual actuarial valuation as of January 1, 2010. Mr. Cherry advised the Board that the county was actuarially funding its portion of the Plan A benefits for certified teachers.
ATTORNEY COMMENTS:
Plan G1 Member Claim – Exhibit 4
Attorney Holifield and several of the Plan G1 members entered the meeting. Attorney Holifield spoke to the Board in support of the Plan G1 members’ claim, during which he referenced his claim filing dated May 7, 2010.
Motion: Mr. Martin moved for a 20 minute recess at 9:30 a.m. to allow all Board members additional time to review the claim letter from Attorney Holifield and also moved that the Board enter into an Executive Session during the recess. Mr. Hackney seconded the motion. The motion passed 4-0-2 ( Ms. Shelton and Mr. York abstained because of their personal conflict of interest on the matter, which had been disclosed at prior meetings of the Pension Board and again at this meeting). Ms. Shelton and Mr. York did not attend the Executive Session because of their conflict of interest.
Ms. Pelot called the meeting back into session at 10:05 a.m.
Mr. Cherry, the Executive Director, gave an administrative review of the claim and expressed his opinion that the plan design issue was not the type of error that should be remedied by Charter Section 1352.2.
Motion: Mr. Coker moved that the Pension Board find that an error was made by the Knoxville City Council in its passage of Ordinance No. 0-413-00 implementing the Rule of 80’s and certain other increased benefit accruals for Plan G that became effective on or about January 7, 2001 after its approval by the voters of the City of Knoxville voting in the city referendum on November 7, 2000, and further that pursuant to City of Knoxville Charter Section 1352.2 that such error be corrected by allowing any city employee who was required to elect a Plan G option prior to the effective date of the subject ordinance and who selected the G1 option (or who by his or her failure to make such election remained in Plan G1 by default) be given a limited window of opportunity to reconsider that election and change his or her election by filing a new election of option with the Pension Board on or before July 9, 2010. Mr. Hackney seconded the motion.
Mr. Martin expresses his desire to delay voting on the motion so that the Board members and the City Administration could more thoroughly review the situation and the suggested remedy. After further discussion, the chair asked for a vote on the motion.
Motion Passes 3-0-3 (Mr. Martin abstained from the vote and Mr. York and Ms. Shelton abstained because of their disclosed conflict of interest. Ms. Pelot, Mr. Coker and Mr. Hackney voted aye).
Mr. York called for a brief recess at 11:44 p.m. and the meeting resumed shortly thereafter.
Glenda Fields’ Litigation
Attorney Gilbert advised the Board that he had attempted to contact Attorney Tony Farmer concerning Chancellor Weaver’s ruling in the Glenda Fields’ litigation and would follow up on the matter and report back to the Board.
ENROLLMENTS:
The following General Government employees have filed applications to become members of the Plan G1 pension system.
Douglas R. Hollander
Cory Nicholson
Christopher C. Roberts
Motion: Mr. Hackney made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
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.
Steven G. Beauman, General Govt., - Plan G1, non-vested
Rebecca G. Hill, General Govt., - Plan G2 - vested
Lincoln B. Steele, III, Police Dept. - Plan C; 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 DEFERRED RETIREMENT: PLAN A
CHARTER SECTION 1360.28
Royce Sanders, Schools Certified Option A-7
50% with reinstatement
Date of birth, April 23, 1948: 62 years of age
Total City credited service: 14 years
Total County credited service: 16 years
Total credited service: 30 years
Last date of employment with City: June 1987
Last date of employment with County: May 2003
Average base earnings for 4 years, $400.00 x .75% = $3.00
Average excess earnings for 4 years, $1,160.24 x 1.50% = $17.40
making a total of $20.40 benefit per year of service. $20.40 x 14 =
$285.60. Ms. Sanders chose Option A-7 – 50% Joint and Survivor with reinstatement to Charles S. Sanders, spouse. $285.60 x .8970 =
$256.18 pension effective November 1, 2009
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 & County benefit is $1,322.36.
APPLICATION FOR NORMAL RETIREMENT: PLAN C
CHARTER SECTION 1390.6
Lloyd M. Strawn, Fire Dept. - Uniformed Option A-6
100% without reinstatement
Date of birth, February 12, 1951: 59 years of age
Total credited service: 36 years 6 months 24 days
Average monthly salary for 2 highest 12 month periods, $4,572.29 x .025 =
$114.31 x 30 = $3,429.30. Mr. Strawn chose Option A-6 – 100% Joint and Survivor without reinstatement to Karen Elaine Strawn, spouse. $3,429.30 x .9025 =
$3,094.94 pension effective May 1, 2010.
Motion: Mr. Hackney made a motion to approve this application for a normal retirement payable under Option A-7. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR NORMAL RETIREMENT: PLAN G1
CHARTER SECTION 1360.12
William G. Haney, General Government No Option
Date of birth, April 2, 19 48: 62 years of age
Total credited service: 7 years 10 months 21 days
Average monthly salary for 2 highest 12 month periods, $2,456.46 x .0115 =
$28.25 x 7.89087 =
*$222.92 pension effective May 1, 2010
*Represents defined benefit only - Mr. Haney chose to convert the supplemental retirement account, applicable in Plan G1, into an additional, lifetime monthly annuity, amount to be determined upon receipt of 1st Qtr. 2010 data.
Motion: Mr. Hackney made a motion to approve this application for a normal retirement. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR NORMAL RETIREMENT: PLAN G2
CHARTER SECTION 1360.12
Alfred L. Knight, General Government No Option
Date of birth, February 8, 1948: 62 years of age
Total credited service: 18 years 7 months 15 days
Average monthly salary for 2 highest 12 month periods, $3,990.95 x .021 =
$83.81 x 18.62443 =
$1,560.91 pension effective May 1, 2010
Motion: Mr. Hackney made a motion to approve this application for a normal retirement. 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 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.
Michael Bensey, General Government – Plan G2 No Option
Date of birth, October 31, 1954: 55 years of age
Total credited service: 28 years 2 months 13 days
Average monthly salary for 2 highest 12 month periods, $2,902.84 x .021 =
$60.96 x 28.20228
$1,719.21 pension effective May 1, 2010.
DROP complete April 30, 2012.
Motion: Mr. Hackney made a motion to approve this application for a Drop retirement. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES: - Invoice copies in folder
Bryan, Pendleton, Swats & McAllister – Actuary (March 2010) $ 7,467.00
Kennerly, Montgomery & Finley – Attorney (March 2010) 7,124.10
Kennerly, Montgomery & Finley – Attorney (April 2010) 12,398.20
State Street – Trustee (March – 2010) 3,446.17
State Street – Custodial (March – 2010) 8,443.86
AQR – Money Manager (1st Qtr – 2010) 64,857.00
Aberdeen - Money Manager (1st Qtr – 2010) 33,305.64
Calamos – Money Manager (1st Qtr – 2010) 34,754.00
INTECH – Money Manager (1st Qtr – 2010) 6,413.67 STW - Money Manager (1st Qtr – 2010) 35,200.80
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:
Dan Holmes – Summit Strategies
Hedge Fund Manager Search
Mr. Holmes gave a presentation to the Board on Summit Strategies Group, Hedge Fund Manager Search. A copy of his report is on file in the Pension Office.
Motion: Mr. Martin made a motion to recommend that the Investment Committee meet with and evaluate Blackstone Partners as per Summit Strategies search recommendation and that the Investment Committee make a recommendation to the full Board on its decision following such meeting. Mr. Hackney seconded the motion. The motion passed unanimously by the Board.
Large Cap Value Manager Search
Motion: Mr. Martin made a motion recommending that the Investment Committee evaluate the managers initially recommended by Summit Strategies and then interview the leading manager(s) and upon completion of these steps make a recommendation to the full Board. Mr. Hackney seconded the motion. The motion passed unanimously by the Board.
Real Assets Allocation Review
Mr. Holmes gave a presentation to the Board on the Real Assets Allocation.
1st Qtr 2010 Performance Report
Mr. Dan Holmes made a presentation of the 1st Quarter 2010, Performance Report. Copies of the reports are on file in the Pension Office.
OTHER: Investment Committee Meeting Date
The next Investment Committee Meeting date was changed from June 1, 2010 to Tuesday, June 8, 2010 at 8:00 a.m.
Mr. Martin and Mr. York left the meeting at 12:05 p.m.
PUBLIC COMMENTS: None
ADJOURNMENT:
Motion: Mr. Coker made a motion to adjourn the meeting at 12:18 p.m. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.