Oct -16-03 Ol :17P P.

03

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.JOYNT ME[TTNG

NEW YORK STATE TEAMSTERS CONFERENCE

PENSION & RETIREMENT FUND
AND
NEW YORK STATE TEAMSTERS COUNCTL
HEALTH & HOSPITAL FUND AND PREPAII>
LEGAL SERV1CES FUND

Minutes of meetings held on June 10 and 17.2003 in Syracuse, New York.

In attt'nda nc.e were Trust ees:

Union Trustees Employer Trustees

Frank Posato, Co-Chairman J. Dawson Cunningham, Co-chairman
Brian Masterson Michael S. Scalzo. Sr .
Gary Staring Daniel W. Schmidt
John Bulgaro

Also in attendl\oc,e WE're:

David E. Menter Executive Administrator

Peter P. Paravati, Jr . Paravali. Karl. Green & DeBella
John Ring Morgan, Lewis & Beckius
Ira Mitzner Dickstein, Shapiro. Morin & Oshinsky
Kenneth L. Joos River Cities Corporation
Frank Lilly'" independent Fiduciary Services. Inc.
Ed ward Patchett >10 Independent Fiduciary Services. Inc
Stanley Goldfarb Warson Wyatt Worldwide
Robert Sherwood" Watson Wyatt Worldwide

All or the following items, topics and/or resolutions pertain to both the Pension Fund and Llealth Fund
\lnlcs.~ specifically indicated 10 (he contrary.

Agenda Items 10, 13, IS Rnc116 have been deleted. The remaining items have not been renumbered in order
thnt the minutes accurately reflect the corresponding Agenda Item numbers

All documents, memoranda and reports referred to herein are on file with the minutes at the Fund office.

.. Did not attend the Tuesday session.

AGE N OA ITEM 1

The meeting was called to order at 10:00 a.rn. Trustee Cunningham served as meeting chairman.

GOVERNMENT
EXHIBIT
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~1.. GENOA ITEM 2

After discussion, upon motion made and seconded, t.l'e Trustees unanimously accepted the minutes of the Board
Meetings of March 30 through April 2, 2003 .

AGENDA ITEM J

REPORTS' BY EXECUTIVE ADMINISTRATOR;

. After discussion, upon motion made and seconded, the Trustees unanimously approved the Executive
Adrninistrators Financial Report included in the meetingagenda.

The following reports were also presented;

Mr. Menter reviewed the following reports: operations, audit collections, withdrawal liabilities, delinquent
a.
contributions and new and terminated participating employers.
b. Mr. Menter reported on Express Scripts and the fact that the Health Fund received a fourth quarter, 2002
rebate in the amount of$242,98J.
c. Mr. Menter reported on the transfer of assets a nd the status of the Local 2M merger.
d. Mr. Menter reponed that Prepaid Legal Fund Administrator Faraci & Lang had accepted the Fund's
proposal for a new contract as outlined at the last meeting.
e. Mr. Menter reviewed the status of the Funda' agreement with fFS'. l lc reponed that IFS had agreed to

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accept a 10% cut in,fees tIS proposed hy the Funds.
N1r. Moo1er: reported that the Funds are receiving additional bidS for the Funds' fiduciary liability insurance
coverage. ' .
Mr. Menter .repo rt ed that participating employer Penn Traffic had filed for Chapter 11 Bankruptcy.
The Trustees revie~'cd the health coverage eligibility for ex-parti cipating employer Howard's Express which
is now in Chapter II Bankruptcy. Upon motion made and seconded, the Trustees unanimously agreed tc
be consistent with Health Fund policy, and continue to provide coverage In the company's employees on\)
if those employees had 36 days in the previous quarter even though they arc no longer employed . .
l. The Trustees reviewed the Elderlee Pipe matter which had been tabled from the last meeting, The Trustee!
discussed the January 7,2003 letter from Local 118 regarding the Company's request to continue to make
pension contributions on employees after those employees had ceased. working for the company. After
- - - - - - - - - diseussie nr upoo.mot i.oJu JJade and seconded, the Trustees unanimously denied foe request. in that it wa!
not in accordance wit.h Pension Plan policy. "
J. Mr. Menter' hande.d out a letter concerning pension benefits from numerous employees of Erie Logistics
After discussion, no action was needed or taken.
k. Mi . Menter handed out a letter dated May, 2003 from Richard Bamberger discussing certain pension issues
After discussion, no action was needed or taken.

AGENDA ITEM"

REPORT BY ?ARAVATI, KARL, GRr-EN & DEBELLA

Mr. Paravati, Jr. reviewed an extensive written report listing in detail the litigation files and other cases his effie
_ s settled or resolved since the last meeting and thestatus of other pending matters.

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Mr. Paravati, Jr. also reported at length on the status of the Howard's Express Chapter 11 Bankruptcy.
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Mr. Paravati, Jr. reviewed the employer withdrawal liability settlement on Malcuria Brothers and the fact that the
Co-chair had previously approved that settlement in the amount of $100,000. After Mr. Paravati, Jr.'s report. and
discussion, upon motion made and seconded, the Trustees unanimously ratified the Co-chairs' approval.

Mr. Paravati, Jr. reviewed his letter Io the Trustees dated June 5, 200) on a partial settlement proposal in the
Consolidated Freightways Bankruptcy. After that report and a lengthy discussion on the proposed settlement, upon motion
made and seconded. th Trustees unanimously agreed to the partial settlement as outlined in Mr. Paravati's letter of June
5,4003.
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AG F,NI)A iTEM 5

RE.PORT BY DICKSTEiN. SHAPIRO, MORJN & OSHTNSKY

Mr..' Mitzner reported that the Centrus litigat;on had been settled for $400,000. Following the federal court'!
dismissal of the case (In (he ground that Centrus was not a "fiduciary," the Health Fund look an appeal to the Secane
Circuit Court of Appeals and Fund counsel simultaneously filed a state court action seeking compensatory and punitivr
damages. Following I he.s e actions, the case settled. The Board ofTrustees previously had authorized counsel tosettle t hi
case for $200.00lt The Board unanimously approved the settlement of$400,000.

AGI":NOA ITEM 6

~ E PO RT BV MORGAN, LEWIS &, BOCtKJlJS

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Mr. Ring discussed (he status of the damages phase of the UPS litigation. He informed the Trustees that UPS ha
appealed all contested issues to the Second Circuit CouT1 of Appeals.

AGENDA IT~lv1 7

RP:PORTBYWATSON WYATf

P ursu a nt to' the direction of the Board of Trustees at the April meeting, actuary Stan Goldfarb presented t~
Trustees with his asscssrneru ofl'he-pTesent-and-futur.e.funcFng_s~jUs of the plan, options to address the under-fundir
issues and numerous scenarios depicting the effect of implementing one or more of these options. Irwara'greed-th-
Watson Wyatt, in conjunction with counsel, would speak to the Internal Revenue Service ("TR S") informally as to the lR:
receptiveness to the Fund' ~ seeking relief under §412(c)(8) of the Internal Revenue Code. The Trustees also discuss.
the continuing negotiations with CPAT and the adverse affect that benefit cuts could have on those negotiations. TI
Trustees also discussed the type of communication that should be made with the Fund participants, and when tho
communications would take place. ,II was agreed that if the merger did not progress, the Fund would make applicati.
to the IRS for relief before the end ofrhe year and would inform the participants regarding the status of the Fund and abo
whether a reduction of benefits might by necessary, Once the Trustees made a determination of the changes that wou
be required, there would be further communications with the ' participants by the Trustees . Actuary Goldfut,' confirm
to the .Trustees thai as long as changes were acted upon before the end of the year, the full range of remedies would
, ~ a v a i l a b l e (0 the Tru stees. The Trustees directed the actuary to work closely with Fund counsel and the Executi
~ Jrninisrraror in order to determine what measures would most assist the participants of'the Fund and guard pensions
the future.
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 · Gt:NDA ITEM 8

PARTICIPANT MATTERS (Pension fund)

The Trustees reviewed the following matter:

a. Fred Swayze: Frederick Swayze advised the Pension Fund office that he would he working after retirement
for the International Brotherhood of Teamsters ("IBT"). After discussion, the Trustees ruled that this
employment was not subject to the 40 hour per month cap on work in any trade or craft or industry covered
by the Fund. Mr. Swayze' s preposed employment with the LB T is not prohibited because it is unique and
is not in the industry which traditionally employs participants of this Fund.

AGENDA ITEM 9

REPORT BV TNDEPENDENT FTDUClARY SERVICES

Frank Lilly and Ed Patchett attended the meeting On behalf of IFS . Mr. Lilly directed the Trustees' attention to
the presentation book rFS distributed and highlighted the agenda items he and Mr . Patchett intended to cover at the
meeting.

Mr Lilly directed the Trustees' attention to the Flash Performance Report for the Pension Fund through April 30,
2001 contained in the presentation book . Mr. Lilly reported the stock market rebounded sharply in April and said the
""lOd's overall performance was positive for the quarter and year-to-date periods, consistent with the performance of the
{ .mds Policy Index. Mr. Lilly then revi ewed the performance of the Fund's asset class composites and individual
investment managers.

Thereafter, Mr. Lilly reviewed the investment account market value change summary thatlFS prepared sharing the
year-to-date dollar value changes in each investment manager's account and for the Fund as a whole through April 30 ,
20m.

Next, Mr. Patchett reviewed the investment performance charts and graphs IFS prepared to supplement fFS' regular
quarterly performance book. The charts and graphs showed performance and universe rankings tor the overall Pension
fund, the asset class composites and each investment manager over both long and shorter-term time periods. He then
responded to questions posed by the Trustees regarding investment performance.

Thereafter. Mr. Lilly reported that 1FS discovered that, as part of the overall Pension Fund asset allocation
rebalancing that occurred in February 2003. State Street failed to invest $10.5 million into the S & P 500 Index Account
managed by State Street Global Advisors as directed by the Fund Office . Mr . Lilly said Irs sent a letter to State Street
on June 12111 regarding t his matter and also advised the Co-Chairmen, Fund Office and co-counsel. Following receipt of
the letter. Mr . Lilly said State Street agreed to credit the Fund's account with the $10.5 million contribution as of the
original effective date. which was February 24. 2003

Next. Mr . Patchett reported that IF S had reviewed the RFP responses and interviewed finalist candidates to possibly
rep lac e Wright Investors for the Pension Fund's mid -cap equity mandate. Based o n its review, Mr. Patchett said IFS
Invit ed two firms. Chicago Equity Partners and Franklin Portfolio Associates 10 the Trustees' meeting to present the
-estrnent process their respective firms use in managing mid -cap equity portfolios Mr. Patchell directed the Trustees
attenti on [ 0 the section ofIFS' mee ting book that contained the historical investment performance of those two nnns and
Wright Invesrors and reviewed that information with the Trustees.

Thereafter, Mr . Lilly introduced Todd Davis and Jim Miller of Chicago Equity Partners, who presented an overview
of their firm and the Investment process it uses to manage mid -cap equity portfolios on behalf of clients. Mer responding
to questions posed by the Trustees and rFS, Mr . Davis and Mr . Miller were thanked for their presentation and excused from
the meeting.

Next, Mr . Patchett introduced Tom Lynch from Mellon Institutional Asset Management and Michael Dunn from
Franklin Portfolio Associates . Mr. Lynch expla ined that Franklin is a wholly-owned subsidiary ofMcllon, and that Mellon 's
Taft-Hartley group, of which Mr . Lynch is a member. provides centralized marketing and client service on behalf of all
Mellon investment management subsidiaries. Thereafter. Mr. Dunn presented an overview of Franklin Portfolio Associates
and the investment process ir uses 10 manage mid-cap equity portfolios on behalf of clients. After responding to questions
posed by the Trustees and ITS , Mr. Lynch and Mr Dunn were thanked for their presentation and excused from the
meeting.

Thereafter. Mr. Patchett indicated the standard annual investment management fees quoted by each firm were very
similar for a $110 million account; approximately 37 .5 basis points for Chicago l7.quity and approximately 38.) basis points
for franklin . Upon discussing the historical performance of Wright Investors and the twu candidates, the Trustees decided
to terminate the account managed by Wright Investors. The Trustees directed IFS to ohtain final fee proposals from both
Franklin and Chicago Equity, but indicated their decision was to hire Franklin unless Chicago Equity's final fee proposal
was materially lower than Franklins Mr. Lilly said TFS would follow-up with both firms as directed and would report its
findings [0 the Co-Chairmen as soon as possible. The Trustees further directed TFS to coordinate the steps necessary to
transit ion the Wright port folio to the newly selected investment manager 1hrnugh State St reet Brokerage as has been done
the past.

Mr. Lilly then directed the Trustees' attention to the Flash Performance Report for the Health found through April
30, 20 0) contained in the presentation hook . Mr. Lilly reported the 1Iealth Funds performance was positive for the quarter
and year-to-date periods. consistent with the performance or the Health Fund 's Policy Index. Mr Lilly then reviewed the
performance of the I lealth Fund "s asset class composites and individuaJ investment managers .

Thereafter, Mr. Lilly reviewed the investment account market value change summary that TFS prepared showing
the year -tel-date dollar value changes in each investment manager's account and for the Health Fund as a whole through
April 30. 2003.

Nex t, Mr . Patchett reviewed the invest ment performance charts and graphs fFS prepared [0 suppl ernent [FS regular
I

quarterly performance book for the Health Fund . The charts and graphs snowed performance and universe rankings for
the overall Health Fund. the asset class composites and each investment manager over both long and shorter-term time
periods. He then responded to questions posed by the Trustees regarding investment performance.

Thereafter, Mr . Patchett reponed that IfS had coordinated with co-counsel at Dick stein Shapiro regarding the
review ofa new prime brokerage agreement with Bear Stearns, which was requested to be put into place by Camden Asset
Management for the account it manages on behalf of the Health Fund . Mr Patchett said Camden requested the aCC0unL
he established to. among other things, improve its ability to borrow securiti es which could ultimately benefit the account
performance. Mr. Patchett said he understood the agreement had been fully reviewed ~y co-counsel and updated \0 reflect
co -counsel 's comments and changes and was now ready for SIgnature by the Fund , Alter discussing this matter further
--ith fFS and co-counsel. the Trustees directed the Executive Admin istrator to sign the Bear Stearns' prime brokerage
curnents.

Next. }..{r Patcneu reported that IFS had rece ived a request from Camden \0 amend Its investment guidelines 10

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allow for the use of credit default swaps. Mr. Patchett said Camden has indicated it could usc this kind of security to hedgr
)ut credit risk within the portfolio it manages on behalf of the fund if permitted under Camden's investment guidelines
.-1r. Patchett said IFS was in the process of discussing this request further with Camden and exploring State Street's abilit)
to custody and accurately price this type of security, and would update the Trustees (In this matter at the next meeting.

Thereafter. Mr . Lilly and Mr. Patchett were thanked for their presentation and excused from the meeting

AGENDA ITEM 11

REPORT BY FUND OFFICE MANAGERS

a. Pension: Mr Heller reported on the current activity in the Pension Department.

b Health: Mr Jasternski reported on the current activity in the Health Department.

c. Finance: Mr. Stilwell reported on the current activity in the Finance Department.

d. MIS : Mr Freeman reported on the current activity in the MlS Department ,

AGENDA ITEM 12

,[ PORT' BY RIVER CITIES

Mr. Joos reviewed the following reports: "Premium Assistance Program (P AP)." dated June 3, 2003, "National
Master Freight Contribution Requirement," dated June 2,2001, "UPS Full-Time Contribution Requirement:' dated June
2,2003. "Central Pennsylvania Teamsters Health & Welfare Fund." dated June 4,2003 , and 'TJPS Part-Time Contribution
Requirement." dated June 3, 200]. After said reports and upon discussion. the Trustees unanimously approved an
allocation of $.JO per hour to the Health Fund from the upcoming UPS and N.MF increases effective August 1, 2003.

ML Ioos handed out a chart entitled "NYST Council H & H Fund-Nlvff Participant Ages ,"

AGENDA TTEM 14

DiSCUSSION \VJTlI TRUSTEES OF LOCAL 557 HEALTH fUND ON PA RTICIPATION WITH NYS FUND

President William Alexander and other representatives of the Local 557 Fund appeared before the Board of
Trustees , After discussion of various items that needed to be resolved. the parties agreed that certain active participants
of the Local 557 Fund would become participants of the NY S Fund, under writ ten 1erms and condi [ions negotiated by
counsel. The final written agreement necessary [0 consummate the transaction will be put before the Board.

AGF:NDAIT E M17

.\ D.tOl! RNM£NT

There being no further business, the meeting or June 16 and 17 , 200] was adjourned
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 TH1S IS TO CERT1FY that the above minutes were duly approved at the meeting of the Board of Trustees hel
on I he _ day of October. 2003 .

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