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MINUTES OF MEETING NO 331 BOARD OF TRUSTEES KENTUCKY RETIREMENT

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MINUTES OF MEETING NO 331 BOARD OF TRUSTEES KENTUCKY RETIREMENT Powered By Docstoc
					                                 MINUTES OF MEETING NO. 331
                                     BOARD OF TRUSTEES
                              KENTUCKY RETIREMENT SYSTEMS
                                  April 5, 2007 at 9:30 A.M., E.T.
                                            Board Room
                             Perimeter Park West, 1270 Louisville Road
                                    Frankfort, Kentucky 40601

                                                Item 1

At the Annual Meeting of the Board of Trustees held on April 5, 2007, the following members
answered to their names: Randy J. Overstreet, Chair, Patricia R. Ballenger, Brian J. Crall, Lynn T.
Harpring, Bobby D. Henson, Susan S. Horne, Vince Lang and Walter Pagan.

In addition, staff members present were William P. Hanes, Executive Director, Megan O’Malley,
Recording Secretary, William A. Thielen, Gerri D. Miller, Adam C. Tosh, Todd Coleman, and J. Eric
Wampler, Sarah Webb, Becky Stephens, Charlene Haydon, Suzanne Howe, Lela Hatter, Connie
Coleman, Kenton Bottoms, Shawn Sparks, Sandy Bush, Chris Clark, Bo Cracraft, Donna Beckley and
Alpa Vyas. Also present were Rebecca Heckler, Mary Helen Peter, Ed Davis and Brad Gross.

                                                Item 2

It was moved by Mr. Pagan, seconded by Mr. Crall and carried by the Board to approve the Minutes
of Meeting Nos. 325 and 326 as presented.

                                                Item 3

Mr. Overstreet presented the memorandum “SPRS Election.”

Mr. Coleman reviewed the memorandum.

It was moved by Mr. Crall, seconded by Ms. Ballenger and carried by the Board to accept the
External Auditor’s certification letter of the winners of the KERS Board election, and declare the
election final.

                                                Item 4

Mr. Overstreet presented the memorandum “Oath of Office.”

Jennifer A. Steele, Notary Public, administered the Oath of Office to Mr. Overstreet.
                                                Item 5

Mr. Overstreet presented the memorandum “Amendments to the Statement of Bylaws and Committee
Organization and Election of Officers.”

Mr. Overstreet stated that over the last year the Board has been faced with circumstances of different
reporters contacting trustees. Mr. Overstreet stated that it has been a communicated policy to the
Board for a number of years to refer media inquiries to the Executive Director so that questions from
the media are answered with one voice. The Bylaws as amended provide that the Board, or individual
members of the Board, shall refer all news media inquiries to the Executive Director and to not
discuss matters that affect the Systems or the Board generally with the news media. The role of the
Executive Director is also redefined. Mr. Overstreet opined that those matters are better addressed by
the Executive Director who has the information and knowledge to answer those questions.
Mr. Crall advised that it somewhat implies that the Executive Director is the one to respond on behalf
of KRS to entities because the Bylaws do not specifically allow for the board members to do that.
Mr. Crall advised that there are times when he is asked to do that and would use appropriate discretion
in doing so. Mr. Crall stated that there are also times when he would need to respond to questions as
the Governor’s representative.

It was moved by Mr. Lang, seconded by Ms. Ballenger, and carried by the Board to adopt the
amended Statement of Bylaws and Committee Organization as presented.

                                                *****

Mr. Overstreet advised that the Board must elect a Chair and Vice-Chair.

Mr. Overstreet turned the proceedings over to Mr. Hanes for nominations for Chair of the Board of
Trustees.

Mr. Hanes announced that the floor was open for nominations for Chair. Ms. Horne nominated
Mr. Overstreet to serve as Chair of the Board for the ensuing Board year or until a successor is
elected. Mr. Lang seconded the nomination.

It was moved by Mr. Crall, seconded by Mr. Henson and carried that nominations for Chair cease.
There being no discussion, a vote was called for, and Mr. Overstreet was elected Chair of the Board of
Trustees of Kentucky Retirement Systems.
Mr. Overstreet opened the floor for nominations for Vice Chair.

Mr. Henson nominated Mr. Pagan to serve as Vice Chair of the Board for the ensuing Board year or
until a successor is elected. Ms. Horne seconded the nomination.

It was moved by Mr. Crall, seconded by Mr. Lang and carried that nominations for Vice Chair cease.
There being no discussion, a vote was called for and Mr. Pagan was elected Vice Chair of the Board
of Trustees of Kentucky Retirement Systems.

                                                Item 6
Mr. Overstreet presented the memorandum "Employee Service Awards" and noted that at the annual
meeting KRS employees are recognized at five-year intervals for long and distinguished service.

The following employees received their five-year service award:

Marion Fraley                                                      Accounting
Joye Lowery                                                        Accounting
Bobbi King                                                         Disabilities
Cherry Kemper                                                      Disabilities
Shawn Bail                                                Employment Services
Jeff Axon                                                 Employment Services
James Davis                                               Employment Services
Christopher Tapia                                         Employment Services
Terry Squires                                                   Field Services
Patrick Hall                                                    Field Services
Gary Toy                                                        Field Services
Dianne Carr                                                     Field Services
Holly Webb                                                      Field Services
Frank Cardoza                                                   Field Services
James Isaacs                                               Membership Support
Crystal McCann                                             Membership Support
Marc Duvall                                                Membership Support
Warren Luyster                                                Retiree Services
Kathleen Risen                                                Retiree Services
David Tubbesing                                               Retiree Services
Jason Brewer                                                  Retiree Services

The following employees received their ten-year service award:

Jill Whitehouse                                                    Accounting
Gloria Surratt                                                     Accounting
Dianna Gaines                                                      Accounting
Lisa Stivers                                                       Disabilities
Lisa Smith                                                Employment Services
Robby Adkins                                              Employment Services
Christopher Miller                                         Membership Support
Jason Blackburn                                                Office Support
Abigail Sutherland                                            Retiree Services
Adele Rodgers                                                 Retiree Services
Sandy McDonald                                                Retiree Services



The following employees received their twenty-year service award:
Kenton Bottoms                                                      Fixed Assets
Suzanne Howe                                                  Membership Support
Sonia Engle                                                       Office Support
Donna Beckley                                                     Office Support
Connie Coleman                                                   Retiree Services

                                                Item 7

Mr. Overstreet presented the memorandum “Legislative Update.”

Mr. Hanes advised that House Bill 418 was an attempt to open the retirement window and that bill
passed the House and went to the Senate. The Committee Substitute on House Bill 418 occurred on
one day in the Senate Appropriations & Revenue Committee. Then the bill went before the Senate
Chamber that evening and was passed almost unanimously and went back to the House Chamber for
concurrence on the same day. Mr. Hanes stated that a number of legislators in the House were
contacting him and did not have any knowledge about what the bill would do and were inquiring
about the hybrid plan. There were some big concerns about the process and that legislators might be
making major changes for new hires without knowing exactly what the bill provided. The bill also
included a pension obligation bond and the proceeds of $538 million were to be directed to KRS’
pension trust along with a 2.75% increase in the second year of the biennium. Mr. Hanes opined that
it did not seem that anybody had any issues with regard to the pension obligation bond; it was the
package deal that was of concern to KRS’ Legislative Committee as well as the House members.
Mr. Hanes stated that the Governor has assigned a Blue Ribbon Task Force to address this matter.
Mr. Pagan advised that where this falls short is with regard to neglecting the cities and counties
because they do not have the ability to raise revenue. The cities and counties are going to be the
suffering bodies because they do not have the ability to raise revenue and cannot raise the contribution
amounts that are required, especially for hazardous employees. While the state is taking care of this
issue, it can not be done at the neglect of the cities and counties. Some of the cities are seriously
talking about what to do next because these entities do not have the dollars to pay into the pension
fund. Mr. Pagan advised that hopefully something can be done to provide legislation to give the cities
and counties the wherewithal to meet the demands that have been dictated to the Board by the actuary.
Mr. Hanes advised that the Blue Ribbon Task Force is supposed to have recommendations by
December 1, 2006 and hopefully a lot of those issues will be addressed.
Mr. Crall advised that Kentucky Association of Counties and Kentucky League of Cities have
representatives on the task force. The task force will identify working groups at the first meeting. At
the working group level, the task force will then be soliciting whomever the designee would be, to be
a part of a specific work group that might deal with CERS pension benefits or CERS insurance
benefits. That is the mechanism to try and get as much input as possible so that those very concerns
are addressed and brought to the whole task force for possible recommendations.
Mr. Henson asked if the bill passed that would give KRS direction on the previous $12 million
allocation.
Mr. Hanes answered in the negative. KRS will only get limited returns on the money until KRS gets
the directive; which hopefully can be done in the next legislative session.
This memorandum was presented for informational purposes.

                                                Item 8
Mr. Overstreet presented the memorandum "Kentucky Retirement Systems Progress Report for
Calendar Year 2006."

Kentucky Retirement Systems consists of thirteen divisions organized under three Chief Officers.
      Adam Tosh, Chief Investments Officer
               Division of Fixed Assets, Kenton Bottoms, Director
               Division of Equity Assets, presented by Bo Cracraft, Compliance Officer

       Bill Thielen, Chief Operations Officer
                Division of Support Services, Donna Beckley, Director
                Division of Accounting, Sandra Bush, Director
                Division of Information Technology, Chris Clark, Interim Director
                Division of Planning and Constituent Services, Shawn Sparks, Director

       Gerri Miller, Chief Benefits Officer
               Division of Disabilities, Charlene Haydon, Director
               Division of Field Services, Sarah Webb, Director
               Division of Employment Services, Becky Stephens, Director
               Division of Membership Support, Suzanne Howe, Director
               Division of Retiree Services, Connie Coleman, Director

The Directors were in attendance to review the past year’s performance and provide strategic plans for
the future.

                                            *****
            Mr. Clark, Mr. Bottoms, Mr. Cracraft, Ms. Beckley, Ms. Bush, Ms. Webb,
           Ms. Stephens, Ms. Howe, Ms. Coleman, Ms. Hatter and Ms. Haydon departed.

                                               *****


                                               Item 9

Mr. Overstreet presented the memorandum "Committee Appointments."

Mr. Overstreet appointed the following committees:

                              DISABILITY APPEALS COMMITTEE
                                     Susan S. Horne, Chair
                                       Bobby D. Henson
                                         Vince Lang
                            ADMINISTRATIVE APPEALS COMMITTEE
                                     Susan S. Horne, Chair
                                       Bobby D. Henson
                                         Vince Lang
                                   INVESTMENT COMMITTEE
                                      Susan S. Horne, Chair
                                       Patricia R. Ballenger
                                        Lynn T. Harpring
                                        Bobby D. Henson
                                       Randy J. Overstreet

                               HUMAN RESOURCES COMMITTEE
                                    Walter J. Pagan, Chair
                                      Larry C. Conner
                                     Randy J. Overstreet

                                       AUDIT COMMITTEE
                                     Patricia R. Ballenger, Chair
                                          Lynn T. Harpring
                                           Susan S. Horne

                           LEGISLATIVE AND BUDGET COMMITTEE
                                   Bobby D. Henson, Chair
                                        Brian J. Crall
                                        Vince Lang
                                       Susan S. Horne
                                     Randy J. Overstreet


                              RETIREE HEALTH PLAN COMMITTEE
                                    Bobby D. Henson, Chair
                                      Patricia R. Ballenger
                                          Brian J. Crall
                                           Vince Lang
                                       Randy J. Overstreet


                                              Item 10

Mr. Overstreet presented the memorandum “Statements of Investment Policy – Pension Funds and
Insurance Funds.”

Mr. Tosh advised that in light of the Asset Liability Modeling Study and the proposed KRS Five Year
Investment Plan, staff would request deferring the policies to the May meeting.

This memorandum was presented for informational purposes.
                                           Item 11

Mr. Overstreet presented the memorandum “Conflict of Interest Statement.”

Mr. Wampler advised that the Conflict of Interest Policy and statement that the Board and Executive
Director are requested to sign today are as a result of an opinion from KRS’ external auditor
indicating that KRS should have such a policy.

This memorandum was presented for informational purposes only.

                                               Item 12

Mr. Overstreet presented the memorandum “Fiduciary Issues Report.”

Mr. Wampler reviewed the memorandum.

This memorandum was presented for informational purposes.

                                               Item 13

Mr. Overstreet presented the memorandum "Contracts."

Mr. Hanes reviewed the memorandum.

It was moved by Mr. Crall, seconded by Mr. Pagan and carried by the Board to authorize renewal of a
one year contract with Mountjoy Bressler, LLP under the fee structure provided in the presentation
memorandum.

                                               Item 14

Mr. Overstreet presented the memorandum “Hearing Officer Request for Proposal.”

Mr. Wampler reviewed the memorandum.

It was moved by Ms. Ballenger, seconded by Mr. Pagan, and carried by the Board to authorize a
contract with Sammie Pigg, Jr., James Springate and Robert Fields to provide hearing officer services.


                                               Item 15

Mr. Overstreet presented the memorandum “Fiduciary Liability Insurance Renewal.”

Mr. Thielen reviewed the memorandum.

It was moved by Mr. Pagan, seconded by Ms. Ballenger and carried by the Board to authorize the
renewal of its fiduciary liability insurance coverage effective April 25, 2007 under the terms and
coverage outlined in the presentation memorandum.

                                               Item 16

Mr. Overstreet presented the memorandum “Surplus Property Disposition.”
Mr. Thielen reviewed the memorandum.

It was moved by Ms. Ballenger, seconded by Mr. Henson and carried by the Board to approve the
donation of all property presented on the Declared Surplus lists to the Finance Cabinet’s Division of
Surplus Property for disposal.

                                                 *****

It was moved by Ms. Horne, seconded by Mr. Henson and carried by the Board to enter into "Closed
Session" for the purpose of discussing litigation pursuant to KRS 61.810(1)(c) because of the
necessity of protecting the confidentiality of the Systems' litigation strategy and preserving any
available attorney-client privilege.

                                                 *****

It was moved by Ms. Horne, seconded by Mr. Henson and carried by the Board to return to "Open
Session" after discussion of litigation in "Closed Session" under the provisions of KRS 61.810(1)(c),
with no action being taken in “Closed Session.”

                                                Item 17

Mr. Overstreet advised that pending litigation was reviewed in closed session with no action taken.

                                                Item 18

Mr. Overstreet advised that the Personnel Committee met prior to the Board meeting.
Mr. Hanes advised that he has talked to the Personnel Committee for several months regarding his
retirement. Mr. Hanes announced that he would be retiring effective June 1, 2007.
Mr. Pagan stated that the Committee has discussed this matter for the last couple months in
anticipation of Mr. Hanes’ retirement and now the Board has to act accordingly to fill the position.
Mr. Pagan advised that Mr. Overstreet would appoint a committee to handle the succession plan. The
Committee talked extensively and determined that there is a provision for a temporary Executive
Director position. While Mr. Hanes has named his retirement date, this would give the Board the
opportunity to reemploy Mr. Hanes on a temporary basis to fill that void without jeopardizing the
systems integrity. The Committee would propose that the Board adopt the position of temporary
Executive Director for a period not to exceed nine months.
Mr. Overstreet advised that this is not a retired reemployed situation. Mr. Hanes has agreed to fill this
temporary position to help KRS through that transition period. This would be the establishment of the
temporary position.
Mr. Overstreet advised that he would appoint a committee to begin the search procedure for a new
Executive Director, very similar to what was done with the Chief Investment Officer and has been
done in the past for an Executive Director search.

It was moved by Mr. Pagan, seconded by Mr. Henson and carried by the Board to establish the
temporary position of Executive Director for a period not to exceed nine months.
                                                Item 19

There being no further business, the meeting was adjourned at 12:52 P.M., E.T., to meet on May 17,
2007 at 9:00 A.M., E.T., or upon the call of the Chair, Executive Director, or at the request of five
members of the Board.

                                          CERTIFICATION

I, Megan O’Malley, do certify that I was present at this meeting and that I have recorded above the
action of the Board on the various items considered by it at this meeting. Further, I certify that all
requirements of KRS 61.605 through 61.850 were met in connection with this meeting. Finally, I
certify that the Minutes and supporting materials have been forwarded to each member of the Board
and have been included in the permanent records of the Board.


                                            _______________________________________________
                                                                             Megan O’Malley
                                                                           Recording Secretary

We, the Chair and the Executive Director of the Board of Trustees of the Kentucky Retirement
Systems, do certify that the Minutes of Meeting No. 331 were approved by the Board on August 16,
2007.

Signed: __________________________________

          Chair

Signed:
          Executive Director


I, J. Eric Wampler, have reviewed the Minutes of the April 5, 2007 Board Meeting for form, content
and legality.

_______________________________________
General Counsel

				
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