CITY OF KNOXVILLE PENSION BOARD

MINUTES

Thursday – August 9, 2007

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 August 9, 2007.

 

Present were:  Mayor Bill Haslam, Mr. Scott Calloway, Mr. Greg Coker, Mr. Buddy Harrell, Mr. Stephen King, Mr. Larry Martin, Ms. Barbara Pelot, Mr. Michael Cherry and Attorney Bud Gilbert.

 

Also present:  Mr. Dan Holmes, Summit Strategies; Mr. Dick Loebig, Enhanced Investment Technologies (INTECH); Mr. Christopher Cowie, Silchester International Investors and Mr. Billy Williams, STW Fixed Income Management.

 

CALL TO ORDER:

 

            Mr. Calloway presided and called the meeting to order at 8:15 a.m.

 

APPROVAL OF REGULAR MEETING MINUTES FOR July 12, 2007:

Mr. Harrell made a motion to approve the July 12, 2007, meeting minutes.  Mr. Martin 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:  None

 

ADMINISTRATIVE MATTERS:

 

Schedule Pension Board Meetings for Fourth Quarter 2007

 

                        Thursday, October 11, 2007 – 8:15 a.m.

                        Thursday, November 8, 2007 – 8:15 a.m.

                        Thursday, December 13, 2007 – 8:15 a.m.

 

The Pension Board meeting schedule for the fourth quarter 2007 was accepted without objection.

 

            Office drainage problem

 

Mr. Cherry informed the Board about the sudden dampness in several areas of the carpet in the Pension office after a brief rain period.  Mr. Cherry suggested that the recent construction around the office and the drainage work directly in front of the building may have created the drainage problem, since there has never been a problem like this before.

 

Mr. Coker arrived at 8:20 a.m.

 

Mr. Cherry asked the Board for permission to locate other office space that the Pension System might be able to rent from the City.  Mr. King advised Mr. Cherry to file a claim with TDOT regarding the drainage problem.

 

            Pinnacle Associates

 

Mr. Cherry advised the Board that the transition had been completed with Pinnacle Associates, LTD, the new small cap value equity manager that the Board hired in June 2007.

 

EXECUTIVE DIRECTOR COMMENTS:  None

 

ATTORNEY COMMENTS:  None

 

ENROLLMENTS:

 

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

 

            Gary D. Adams

            Steven Beauman

            Randall S. Clowers

            Kathy Ellis

Melissa Foster

Kristin Hayden

Mark Julian

Earl W. Kesterson

Karen Randolph

Chris Vandergriff

 

Motion:  Mr. Harrell made a motion to approve these applications for enrollment in the Plan G1 pensions system.  Ms. Pelot 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.

 

Greg Combs, General Government, G1 – Non-vested

Joshua Cox, General Government, G1 – Non-vested

Charles E. Gibson, General Government, G1 – Vested

                        Wyatt A. Knight, General Government, A – Non-vested

                        Roger M. Nooe, General Government, G1, Non-vested

            Diana S. Pattison, General Government, G1 – Non-vested

                        Jennifer Ridgeway, General Government, G1 – Non-vested

 

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

 

DISABILITY

 

APPLICATION FOR INJURY IN LINE OF DUTY RETIREMENT:  PLAN C – Exhibit 2

CHARTER SECTION:  1390.11

         

          Brian E. Keith, Fire Department – Uniformed                               Option A-9

                                                                                                                        100% with reinstatement

            Date of birth, June 26, 1969:  38 years of age

            Total credited service:  10 years 3 months 9 days

            Average monthly salary for 2 highest – 12 month periods, $3,022.41 x 50% =

$1,511.20.  Mr. Keith chose Option A – 9 – 100% with reinstatement to Candace L. Keith, spouse.  $1,511.20 x .9617 =

            $1,453.32  pension effective June 1, 2007.

 

Motion:  Mr. Harrell made a motion to approve this application for injury in line of duty pension, based on Dr. Reed’s medical report and Mr. Cherry’s Disability Recommendation Report, subject to a review in six months.  Mr. Martin seconded the motion.  Mr. Coker voted no.  The motion carried.

 

 

APPLICATION FOR RETIREMENT:  PLAN A

CHARTER SECTION 1360.12

 

            Carolyn A. Dix, Schools Non-Certified                               No Option

            Date of birth, July 24, 1945:  62 years of age

            Total credited service:  36 years 10 months (combined City & County)

            Average base earnings for 3 years, $400.00 x .75% = $3.00

            Average excess earnings for 3 years, $1,244.05 x 1.50% = $18.66

            making a total of $21.66 benefit per year of service.  $21.66 x 36.8333 =

            $797.81  Total benefit

475.98    minus County benefit

321.83    City pension effective June 1, 2007.

 

Motion:  Mr. Martin made a motion to approve this application for retirement.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

APPLICATION FOR SURVIVOR’S BENEFIT:  PLAN C

CHARTER SECTION 1390.14

 

Paul W. Dunn, active Fire Department – Uniformed employee died in service July 18, 2007.

            Mr. Dunn’s statistics:

            Date of birth, November 22, 1936:  70 years of age

            Total credited service:  44 years 6 months 3 days

            Average monthly salary for 2 highest – 12 month periods, $5,013.55 x 2.5% =

$125.34 x 30 = $3,760.20.  Mr. Dunn chose Option A-6 – 100% without reinstatement to Janet L. Dunn, spouse.  $3,760.20 x .8391 =

            $3,155.18 pension effective August 1, 2007.

 

Motion:  Mr. Martin made a motion to approve this application for a survivor’s benefit.  Mr. Harrell seconded the motion.  The motion carried unanimously by the members present.

 

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES:    

           

Bryan, Pendleton, Swats & McAllister – Actuary (June 2007)       $     4,732.00                       Kennerly, Montgomery & Finley – Attorney (general July 2007)         2,602.73

Kennerly, Montgomery & Finley – Attorney (G. Fields July 2007)             89.50

AQR Capital – money manager (2nd Qtr. - 2007)                          77,188.00

Calamos – money manager (2nd Qtr. – 2007)                                           37,990.00

INTECH – money manager (2nd Qtr. – 2007)                                            36,038.69

STW – money manager (2nd Qtr. – 2007)                                      28,372.68

UBS – money manager (2nd Qtr. – 2007)                                                  24,071.61

 

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

 

Mayor Haslam arrived at 8:50 a.m. and presided.

 

PERSONNEL MATTERS:

 

Personnel Committee (Mr. Cherry left the meeting for the following discussion and Mayor Haslam joined the meeting during the following discussion prior to the vote on the Committee’s recommendation).

 

Scott Calloway reported for the Personnel Committee regarding its recommendation for an annual salary adjustment for the Executive Director.  The Committee recommends that the Executive Director receive a 4% salary adjustment effective July 1, 2007 (which includes the mandatory 2.5% salary adjustment required by the City Charter).  Mr. Calloway noted in his report that the City Civil Service Board provided no comparable salary information for the Executive Director’s position but the Committee did take note of a Greewich salary study provided to it by Mr. Cherry that showed that the Executive Director’s annual salary was in the low 25% percentile of similarly sized pension systems.  The Committee also recommends that the Board take some action to formulate and adopt a plan to move the Executive Director’s pay toward the 50% percentile.  Mr. Martin advised the Board that the city was about to issue a RFQ’s for a comprehensive compensation study that will include a salary survey.  He stated that the study and survey could easily include the Executive Director’s position.  After additional discussion by the Board and legal counsel on Mr. Cherry’s history with the system and his exemplary service, the following action was taken:

 

Motion:  To adopt the recommendation of the Personnel Committee to raise the Executive Director’s annual salary by 4% effective July 1, 2007 (which includes the mandatory 2.5% increase mandated by the city charter).  No second was required.  The motion was approved unanimously by the members.

 

There followed additional discussion on the merits of having the Executive Director’s position included in the upcoming city’s compensation study.  It was the consensus of the Board that participation in the study would possibly provide additional useful information to the Personnel Committee and the Board, and Mr. Martin agreed to accomplish the same.  Attorney Gilbert also called to the Board’s attention his concern that the loss of Mr. Cherry because of retirement or other cause would pose a significant challenge for the Board.  He advised the Board that it would be highly advisable to formulate a succession plan to protect the system in such event. He also suggested the Board consult with Mr. Cherry on determining whether the system was properly staffed since he believed that Mr. Cherry was handling a much larger work load than most systems of comparable size.  Mr. Holmes stated that the Missouri legislature has a joint pension and retirement study committee that has recently undertaken a salary study and staffing needs study for all pension systems in that state that might provide some useful information for the Board.  Attorney Gilbert will also inquire as to whether any comparable information exists at the state level. 

 

INVESTMENT MATTERS:

 

            Money Manager Reviews

 

Enhanced Investment Technologies (INTECH)

 

Dick Loebig of Enhanced Investment Technologies (INTECH) made a presentation to the Board.  A copy of his report is on file in the Pension Office.

 

Silchester International Investors

 

Christopher Cowie of Silchester International Investors made a presentation to the Board.  A copy of his report is on file in the Pension Office.

                                   

STW Fixed Income Management

 

Billy Williams of STW Fixed Income Management made a presentation to the Board.  A copy of his report is on file in the Pension Office.

 

Dan Holmes – Summit Strategies

 

2Q 2007 Performance Report

 

Mr. Holmes made a presentation of the 2nd Quarter, 2007 Performance Report.  Copies of his report are on file in the Pension Office.

           

Alternative Investment Education

 

Mr. Holmes made a presentation on Alternative Investment.  Copies of his report are on file in the Pension Office.

 

OTHER:

 

 

PUBLIC COMMENTS:

 

ADJOURNMENT:

 

There being no further business, the following motion was made:

 

Mr. Martin made a motion to adjourn the meeting at 12:01 p.m.  Ms. Pelot seconded the motion.  The motion carried unanimously by the members present.

 

 

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