CITY OF KNOXVILLE PENSION BOARD

MINUTES

THURSDAY – September 8, 2011

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 September 8, 2011.

 

Present were:  Mr. Greg Coker, Mr. Jack Banks, Mr. Stephen King, Mr. Larry Martin, Mr. Jim York, Mr. Michael Cherry and Attorney Bud Gilbert.  Mr. Martin attended as Mayor Brown’s designated representative as authorized by T.C.A. § 6-54-112 and the mayor’s letter of designation dated January 12, 2011.

 

Also present:  Mr. John Craig; Mr. Donald Sams - City of Knoxville Police Officer; Mr. Jim Balloch - Knoxville News Sentinel.

 

CALL TO ORDER:

 

Mr. Coker presided and called the meeting to order at 8:25 a.m.

 

APPROVAL OF REGULAR MEETING MINUTES FOR August 11, 2011:

 

Mr. York made a motion to approve the August 11, 2011 meeting minutes.  Mr. Banks seconded the motion.  The motion carried unanimously by the members present.

 

APPROVAL OF REVISED AGENDA: - Exhibit 1

 

The Revised Agenda was accepted by the Pension Board without objection.

 

EXECUTIVE DIRECTOR COMMENTS:  None

 

ADMINISTRATIVE MATTERS:

 

Donald Sams – request to establish prior service as creditable service

 

Mr. Cherry reviewed for the Board the details, initially discussed at the August 11, 2011, Pension Board meeting, of current Police Officer, Mr. Donald Sams’ request to have his time served as a Special Police Officer with the City of Knoxville established as creditable service with the Pension System. 

 

Attorney Gilbert requested of the Board additional time to research a legal memorandum dated April 7, 1997, which he thought might be applicable in Police Officer’s Sams’ situation.  After his research, Attorney Gilbert will make a recommendation to the Board regarding Mr. Sams’ request.

 

ATTORNEY COMMENTS:

 

G1 Discussion

 

Attorney Gilbert advised the Board of the motions heard by Chancellor Fansler on August 22, 2011, regarding the Board’s authority under Charter Section 1352 and further advised the Board that he would expect a ruling on the matter from Chancellor Fansler soon.

 

CONTRACTS: 

 

            State Street Contract Renewal – option for one additional year  

 

Mr. Cherry recommended to the Board that the present contract with State Street be renewed for an additional year if the following conditions could be met:

 

1)     Fee should not increase more than 3%

2)     New language introduced by State Street into short term investment funds (State Street Global) should be found acceptable by Summit Strategies.  If language is found to be unacceptable, contract should be modified and another manager should be secured to manage short term investment funds.

 

Motion:  Mr. York made a motion to extend the present contract with State Street for an additional year contingent upon completion of a contract which meets the above criteria.  Mr. Banks seconded the motion. The motion carried unanimously by the members present.

 

ENROLLMENTS:

 

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

 

            David W. Cawood

            Elijah M. Clark

            Jeff Hamilton

            Robert L. Perry, II

            Tyler Pitts

            Guy Wyatt

 

Motion:  Mr. Martin made a motion to approve these applications for enrollment in the Plan G1 pension system.  Mr. King seconded the motion.  The motion carried unanimously by the members present.

 

WITHDRAWALS:

The following employees have filed an application to withdraw employee pension contributions.

 

                        Everette Butler, General Govt. – Plan G1, non-vested

                        A. Renee Kesler, General Govt. – Plan G1, non-vested

                        Christen McDonald, General Govt. – Plan G1, non-vested

Eric Razote, Police Dept. – Plan C, non-vested

 

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

 

APPLICATION FOR NORMAL RETIREMENT:  PLAN G2

CHARTER SECTION 1360.12

 

            Charles S. Wilcox, General Government                            No Option

            Date of birth, August 29, 1949:  62 years of age

            Total credited service:  14 years 11 months 1 day

            Average monthly salary for 2 highest 12 month periods, $3,169.80 x .021 =

$66.57 x 14.91941 =

            $993.19 pension effective September 1, 2011

 

Motion:  Mr. King made a motion to approve this application for Normal retirement.  Mr. Martin seconded the motion.  The motion passed 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.

 

Willie T. Andrews, General Government – Plan G2          Option A-4

                                                                                                50% without reinstatement

            Date of birth, March 12, 1957:  54 years of age

            Total credited service:  26 years 9 months 18 days

            Average monthly salary for 2 highest 12 month periods, $2,778.92 x .021 =

$58.36 x 26.79932 = $1,564.01.  Mr. Andrews chose Option A-4 – 50% - without reinstatement to LaRoyce Dalton.  $1,564.01 x .938 =

            $1,467.04 pension effective September 1, 2011.

            DROP complete August 31, 2013.

 

Motion:  Mr. York made a motion to approve this application for Drop retirement payable under Option A-4.  Mr. Martin seconded the motion.  The motion passed unanimously by the members present.

APPROVAL OF INVOICES FOR PROFESSIONAL SERVICES: 

           

Bryan, Pendleton, Swats & McAllister – Actuary (July 2011)             $   7,525.00

Kennerly, Montgomery & Finley – Attorney (General –June 2011)         8,772.50

Kennerly, Montgomery & Finley – Attorney (General –July 2011)          5,438.80

Kennerly, Montgomery & Finley – Attorney (G1 –June 2011)                 6,943.70

Kennerly, Montgomery & Finley – Attorney (G1 –July 2011)                  2,622.50

State Street – Trustee (July 2011)                                                     3,425.71

State Street – Custodial (June 2011)                                                             8,410.19

State Street – Custodial (July 2011)                                                               8,405.24

Summit Strategies – Investment Consultant (3rd Qtr – 2011)                    31,250.00

AQR – Money Manager (2nd Qtr. 2011)                                                       42,671.00

Calamos – Money Manager (2nd Qtr. 2011)                                                27,681.38

            IRM – Money Manager (2nd Qtr. 2011 – Core Fund)                                    7,683.46

            IRM – Money Manager (2nd Qtr. 2011 – TIPS Fund)                                    2,789.75                 

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 the invoices as presented.  Mr. King seconded the motion.  The motion carried unanimously by the members present.

 

INVESTMENT MATTERS:

 

High Yield Fixed Income Manager Search

 

The Board discussed the Investment Committee’s recommendation to hire MacKay Shields to manage a High Yield Fixed Income account with an approximate allocation of $10M. 

 

Motion:  Mr. York made a motion based upon the recommendation of the Investment Committee and Summit Strategies, to retain MacKay Shields as the High Yield Fixed Income Manager for the pension system subject to the review and recommendation of an investment management contract by Mr. Gilbert, and to authorize Mr. Cherry to sign such contract and proceed with all action necessary or convenient to properly effect this investment manager appointment and implement the investment management agreement, including without limitation the funding of the account upon advice and consultation with Dan Holmes of Summit Strategies.  Mr. Banks seconded the motion.  The motion passed unanimously by the members present.

           


            Private Equity Investment

 

Mr. Cherry and Attorney Gilbert discussed with the Board the Investment Committee’s recommendation to the full Board, and in consultation with Dan Holmes of Summit Strategies, to invest in the Cross Roads 2010 Fund, a special situations private equity fund, which is managed by Neuberger Berman, with an approximate allocation of $5-$6M.

 

Motion:  Mr. Martin made a motion based upon the recommendation of the Investment Committee and Summit Strategies, to invest in the Cross Roads 2010 Fund, a Private Equity special situations fund, by purchasing a limited partnership interest in the fund for the pension system, which investment is managed by Neuberger Berman, subject to an additional Investment Committee Meeting and in further consultation with the Investment Consultant, Mr. Dan Holmes, regarding this investment with respect to the Pension Board’s considering an investment strategy to appropriately de-risk the portfolio as the funding level of the fund improves.

 

If after satisfactory further review of the above concerns and after review and recommendation of the required investment contract by Mr. Gilbert, the Board authorizes Mr. Cherry to sign such contract and proceed with all action necessary or convenient to properly effect this investment and implement the required investment documentation, including without limitation the funding of the account upon advice and consultation with Dan Holmes of Summit Strategies.  Mr. Banks seconded the motion.  The motion passed unanimously by the members present.

 

            Executive Session

 

Motion:  Mr. Martin made a motion that the Board enter into an Executive Session at 9:55 a.m.  Mr. York seconded the motion.  The motion passed unanimously by the members present.  The Executive Session ended at 10:28 a.m.

 

OTHER:  None

 

 

PUBLIC COMMENTS:  None

 

 

ADJOURNMENT:

 

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

 

 

 

 

 

 

Motion:   Mr. Martin made a motion to adjourn the meeting at 10:30 a.m.  Mr. York seconded the motion.  The motion carried unanimously by the members present.

 

 

Chair

 

 

____________________

 

 

                                                                                                            ____________________

                                                                                                            Date