CITY OF KNOXVILLE PENSION BOARD
MINUTES
Thursday – August 14, 2008
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 14, 2008.
Present were: Mayor Bill Haslam, Mr. Greg Coker, Mr. Joe Hackney, Mr. Buddy Harrell, Ms. Barbara Pelot, Ms. Robin Shelton, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert.
Also present: Mr. Dan Holmes, Summit Strategies; Mr. Russell Bjorkman, Enhanced Investment Technologies (INTECH); Mr. Christopher Cowie, Silchester International Investors; Mr. Jeremy Getson and Mr. Christopher Palazzolo, AQR.
CALL TO ORDER:
Ms. Pelot presided and called the meeting to order at 8:17 a.m.
APPROVAL OF REGULAR MEETING MINUTES FOR July 10, 2008.
Motion: Mr. Coker made a motion to approve the July 10, 2008, meeting minutes. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF REVISED AGENDA:
The Revised Agenda was approved without objection.
CONTRACTS:
Mr. Cherry advised the Board that he was working on the contracts for the new Investment Managers for Portable Alpha, International Small Cap Equities and International Emerging Markets, the Board hired in July.
ADMINISTRATIVE MATTERS:
4th Quarter 2008 - Pension Board Meeting Dates
Thursday, October 9, 2008 – 8:15 a.m.
Thursday, November 13, 2008 – 8:15 a.m.
Thursday, December 11, 2008 – 8:15 a.m.
It was the consensus of the Board to accept the Pension Board meeting schedule for the fourth quarter 2008.
Fiduciary Insurance Policy
Mr. Cherry informed the Board of difficulties he had incurred in obtaining the annual renewal of the fiduciary insurance policy with Travelers’ Insurance., The Mowery Insurance Company is the local agency handling the . Mr. Cherry explained that the insurance representatives had concerns with the RREEF investment account held by the Pension System and would only renew the policy with a sub-limit liability of $2M on the RREEF investment portfolio instead of $10 M which is the normal liability limit for coverage applying on the other assets.
Investment Manager, Dan Holmes, assured the Board that the personnel changes at RREEF, which probably accounted for the insurance company’s concerns, were on the value added product side, in which the Pension System did not participate. Mr. Holmes informed the Board that the Pension Systems’ assets were in RREEF America II, an open ended core real estate REIT and did not recommend any changes to the portfolio at this time.
The Board then advised Mr. Cherry to proceed with a one year bond through Mowery Insurance Company with the $2M sub-limit clause on the RREEF account.
G1 Accounts
Mr. Cherry asked the Board to consider adding to the list of suggested charter changes for 2010, an opportunity for participants in Plan G Option 1 as they near retirement age to elect an option which would offer a guaranteed return in their supplemental retirement account. Mr. Gilbert advised the Board that he would add this item to the 2010 listing of proposed charter changes.
Knox County Valuation – Exhibit 2
Mr. Cherry presented the Board a copy of the Executive Summary of Knox County’s annual actuarial valuation as of January 1, 2008. Mr. Cherry advised the Board that the county was appropriately funding their portion of the Plan A benefits for certified teachers.
EXECUTIVE DIRECTOR COMMENTS:
Super Bowl of Indexing Seminar
Mr. Cherry informed the Board about an upcoming, expense paid, conference he was considering attending in Phoenix, Arizona this December, and asked the board members if they had any concerns in lieu of the ethics policy. Attorney Gilbert reviewed with the Board the Pension System ethics policy and Mr. York advised the Board that he would check with the Law Department regarding the City’s ethics policy applicability to this situation.
ATTORNEY COMMENTS:
Mayor Haslam arrived at 8:46 a.m. and presided.
Securities Lending
Attorney Gilbert reported to the Board that since the last Board meeting discussion regarding securities lending revenue, he had learned that the Tennessee Consolidated Retirement System also had a limitation of 30%. Mr. Cherry reported that he had learned that the pension system had never been close to reaching the 30% limitation, so it was decided that no further action needed to be taken on the matter. Mr. Cherry also informed the Board that in June 2008, an additional $38,000 had been gained from securities lending.
Overpayment to William Manis
Attorney Gilbert informed the Board regarding five months of retirement benefits paid to a deceased retiree, William Manis, whose death was not reported to the Pension Office or obtained through obituaries. Attorney Gilbert discussed with the Board a plan of action to retrieve these overpayments.
Glenda Fields Litigation
Attorney Gilbert advised the Board that Glenda Field’s attorney, Tony Farmer, had filed a brief on his client’s behalf, a copy of which he would obtain for the Board. Attorney Gilbert advised that his firm would be filing an answer soon.
ENROLLMENTS:
The following General Government employees have filed applications to become members of the Plan G1 pension system.
Bonita G. Chamberlain
Jason W. Cooper
LaDonna Hayes
Motion: Mr. Coker made a motion to approve these applications for enrollment in the Plan G1 pension system. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
The following Police Department employees have filed applications to become members of the Plan C pension system.
Amy L. Ballon
Michael D. Barlow
Adam J. Barnett
Jason M. Boston
Justin E. Burnette
James M. Burnham
Terri N. Caldwell
Robert T. Capouellez
Robert A. Cook
Anthony S. Cusmano
Michael E. Deets
Marcus R. Duncan
John E. Duty, III
Kevin E. Garab
Jeffery P. Green
Michael J. Greenberg
Clarence B. Huckleby, Jr.
John D. Lawson
Matthew T. Lawson
Jason M. Lay
Kyle G. Loveday
David K. Mehta
Brian C. Melvin
Brendan T. Mills
Adam L. Minner
Edward L. Nation
Andrew P. Olson
Adam S. Parnell
Shaun A. Sakovich
Josef E. Sexton
Adam W. Smith
Joshua R. Smith
Derek W. Swartz
Brandon J. Tindell
Roger B. Vandergriff
Thomas R. Whillock
Jarrod M. Williams
Shane P. Wilson
Motion: Mr. Coker made a motion to approve these applications for enrollment in the Plan C pension system. Mr. Hackney 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.
Kevin Blue, General Government, G1 – Non-vested
Glenn K. Bowden, General Government, G1 – Non-vested
Mark S. Julian, General Government, G1 – Non-vested
William E. Keesee, General Government, G1 – Non-vested
Motion: Mr. Harrell made a motion to approve these applications for withdrawal of employee contributions. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
DISABILITY
APPLICATION FOR INJURY IN LINE OF DUTY: PLAN G1 – Exhibit 3
CHARTER SECTION 1360.22
Terry D. Gilland, General Government Option C – Cash Refund
Date of birth, October 8, 1964: 43 years of age*
Total credited service: 23 years 11 months 13 days**
*Computed as of 62 years of age
**Computed as if worked until age 62
Average monthly salary for 2 highest 12 month periods, $1,908.00 x .0115 =
$21.94 x 23.95228 = $525.51. Mr. Gilland chose Option C – Cash Refund to Angie Gilland, spouse. $525.51 x .9876 = $518.99 (total defined benefit). Mr. Gilland chose to have the supplemental retirement account applicable in Plan G1 converted to an additional lifetime monthly annuity. Mr. Gilland’s account of balance of $5,849.49 converted to an additional annuity of $36.61 per month under the cash refund option.
$518.99 (defined benefit) + ($36.61 – supplemental retirement account) =
$555.60 pension effective January 1, 2008
Motion: Mr. Harrell made a motion to approve this application for injury in line of duty pension with a review to be performed in two years, based on Mr. Cherry’s Disability Recommendation and Dr. Jeffrey Uzzle’s report. Mr. Hackney seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR DEFERRED RETIREMENT: PLAN G2
CHARTER SECTION 1360.28
Brenda Bullard French, General Government Option A-7
50% with reinstatement
Date of birth, July 27, 1946: 62 years of age
Total credited service: 19 years
Average monthly salary for 2 highest 12 month periods, $1,979.12 x .021 =
$41.56 x 19 = $789.64. Ms. French chose Option A-7 – 50% with reinstatement to William B. French, spouse. $789.64 x .8938 =
$705.78 pension effective August 1, 2008.
Motion: Mr. York made a motion to approve this application for Deferred Retirement payable under Option A-7. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
APPLICATION FOR RETIREMENT: PLAN A
CHARTER SECTION 1360.12
Lester M. Colquitt, Schools Non-Certified Option A-6
100% without reinstatement
Date of birth, September 24, 1944: 63 years of age
Total credited service: 44 years 9 months
Average base earnings for 3 years, $400.00 x 78% = $3.12
Average excess earnings for 3 years, $3,193.49 x 1.58% = $50.46
making a total of $53.58 benefit per year of service. $53.58 x 44.75 =
$2,397.71 Total benefit
1,228.58 minus County benefit
1,169.13. Mr. Colquitt chose Option A-6 – 100% without reinstatement to Jewel Colquitt, spouse. $1,169.13 x .8212 =
$960.09 pension effective August 1, 2008.
Motion: Mr. York made a motion to approve this application for normal retirement payable under Option A-6. Ms. Pelot 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.
Allen W. Dishman, General Government – Plan G2 Option A-7
50% with reinstatement
Date of birth, July 11, 1948: 60 years of age
Total credited service: 38 years 4 days
Average monthly salary for 2 highest 12 month periods, $2,488.15 x .021 =
$52.25 x 38.01096 = $1,986.07. Mr. Dishman chose Option A-7 – 50% with reinstatement to Diane Dishman. $1,986.07 x .9176 =
$1,822.42 pension effective August 1, 2008.
DROP complete July 31, 2010.
Motion: Mr. York made a motion to approve this application for DROP retirement payable under Option A-7. Ms. Pelot seconded the motion. The motion carried unanimously by the members present.
APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES: (GREEN TAB)
Bryan,Pendleton,Swats & McAllister – Actuary (July 2008) 4,500.00
Kennerly,Montgomery & Finley – Attorney (General –June 08) 5,898.50
Kennerly,Montgomery & Finley – Attorney (General –July 08) 1,469.82
Kennerly,Montgomery & Finley – Attorney (G. Fields – June 08) 40.00
Kennerly,Montgomery & Finley – Attorney (Global Crossing Lit.) 130.88
State Street – Custodial (June 2008) 8,380.79
State Street – Trustee (April 2008 ) 4,270.95
Aberdeen – money manager (2nd Qtr. 2008) 36,506.91
Calamos – money manager (2nd Qtr. 2008) 32,114.00
INTECH – money manager (2nd Qtr. 2008) 8,454.83
Pinnacle Associates – money manager (2nd Qtr. 2008) 65,190.00
STW – money manager (2nd Qtr. 2008) 30,189.59
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. Harrell made a motion to approve payment for these bills. Ms. Shelton seconded the motion. The motion carried unanimously by the members present.
A brief recess was called and then the meeting resumed.
INVESTMENT MATTERS:
Money Manager Reviews
Christopher Cowie of Silchester International Investors made a presentation to the Board. A copy of his report is on file in the Pension Office.
Mayor Haslam left the meeting at 9:45 a.m.
Russell Bjorkman of Enhanced Investment Technologies (INTECH) made a presentation to the Board. A copy of his report is on file in the Pension Office.
Jeremy Getson and Christopher Palazzolo of AQR made a presentation to the Board. A copy of their report is on file in the Pension Office.
Dan Holmes – Summit Strategies
2Q 2008 Performance Report
Mr. Holmes made a presentation of the 2nd Quarter, 2008 Performance Report. Copies of his report are on file in the Pension Office.
OTHER: None
PUBLIC COMMENTS: None
ADJOURNMENT:
There being no further business, the following motion was made:
Ms. Shelton made a motion to adjourn the meeting at 11:13 a.m. Mr. Coker seconded the motion. The motion carried unanimously by the members present.
__________________________
Chair
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Date
M:\Board\minutes\2008\august.doc