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HomeMy WebLinkAboutCOMM - Meeting Minutes - 149 - 4-18-1996 - RETIREMENTSold By IMR Limited Form 825 E417350 r 77 Moved by Mr. Burns, seconded by Mrs. Irey, that the Treasurer's Report be approved as submitted. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. Requisitions Moved by Mr. Belcastro, seconded by Mr. King, that the following Requisitions be approved: Check No. Payee Amount 1548 Janney Montgomery Scott as Trustee $48,146.35 of IRA of Joseph V. Giecek 1549 - Joseph V. Giecek 4,165.65 1550 The PBHG Funds Inc. as Trustee of 19,592.04 IRA of Terri Rae Anthony 1551 Terri Rae Anthony 769.88 1552 Travelers Insurance Co. as Trustee of 56,277.11 IRA of Clifford W. Fleming 1553 Clifford W. Fleming 2,913.11 1554 Washington Federal S&L as Trustee 6,896.70 Individual Retirement Account of Minerva P. Frye 1555 Mon Valley Community FCU as Trustee 6,896.70 of IRA of Robert D. Dean Jr. 1556 - Karen S. Hanning 1,901.82 1557 Winford Burns Larue, Jr. 2,105.71 1558 Samuel J. Marra 2,930.27 1559 Jacqueline Olshock 55.85 1560 Susan M. Ramsey 66.08 1561 Frank C. Roney, Jr. 1,739.15 1562 Capital Guardian Trust Co. as Trustee of 23,609.77 IRA of Frank C. Roney, Jr. 1563 PNC Bank as Trustee of IRA of Susan 448.37 Schmidt 1564 PNC Bank (Fed Tax W/H - Pensions & 4,916.51 Refunds) 20 1565 Washington County Cash Disbursement 12,600.07 Transfer: Washington County Retirement Allow. 96,626.35 Total To Be Transferred $303A08.02 Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. New Business Mr. King stated he had a brief conversation this morning with Frank Burnette of RRZ concerning their first quarter earnings. The return on the account amounted to 1.97 vs. the benchmark of 1.52 and their equities were at 5.56 vs. the benchmark of 5.38. He noted that a detailed report will be forthcoming. There being no further business, Chairman Ford declared the meeting adjourned at approximately 10:50 a.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: LIA -c ATTEST: SECRETARY 1996 1 Sold By IMR Limited Form 825 E417350 21 L� 1-7 L Minute No. 150 Washington County Retirement Board Washington, Pa., May 30, 1996 The monthly meeting of the Washington County Retirement Board was held at approximately 10:30 a.m. on Thursday, May 30, 1996, in the Public Meeting Room, Courthouse Square Office Building, Washington, Pennsylvania, with the following members being present: Commissioners Ford, Irey and Burns; Treasurer Francis King; and Controller Paul Belcastro. Also being present: Chief Clerk Dallatore; Duane Kavka, Acting Director of Administration; Mary Elizabeth Yancosek and David Kimenski of Washington; Fred Fleet, Highland -Erie Committee; John Rotheram, Kirk Holman and Gordon Hanson, interested citizens; Mike McCormick, Republican Nominee for U.S. Representative; Bob Irey and Frank Irey, husband and father-in-law of Commissioner Irey; Joe Smydo, Observer - Reporter; Kathy Thomas, The Valley Independent; Chris Haines, Herald Standard; Jim Jefferson, WJPA; Jeff Helsel, California University; Don Herrington, Smith Barney; Norm Allan, C.S. McKee; Frank Burnette, RRZ Investment Management, Inc.; and Norm Pickering, Hay/Huggins Company. Approval of Minutes Chairman Ford noted that approval of Minute No. 148 dated April 11, 1996 and Minute No. 149 dated April 18,1996, would be held in abeyance. Treasurer's Report RETIREMENT SYSTEM REPORT I Bank Balance as of April 1,1996 $130,133.65 I Deposits to Checking Account $153,401.81 Transfers from Investment Account $303,408.02 Less: Cancelled Checks $187,168.83 Less: Transfers to Investment Account $153,401.81 Bank Balance as of May 1,1996 $246,372.84 I Less: Outstanding Checks $177,106.61 Less: Retirement Check Run - April 30, 1996 $ 69,267.59 Credit - Bank error $ 2.00 Less: Deposit error $ .64 Reconciled Balance as of May 30, 1996 $ - 0 - Moved by Mr. Belcastro, seconded by Mr. Burns, that the Treasurer's Report be approved as submitted. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. Requisitions Moved by Mr. Belcastro, seconded by Mr. Ford, that the following Requisitions be approved: Check No. _ Payee Amount 1568 Merrill Lynch as trustee of $ 31,382.44 Individual Retirement Account of Katherine B. Emery 1569 Lincoln National Life Insurance Co. 9,131.77 Individual Retirement Account of Joseph L. Martino 1570 Paul A. Plinta 2,317.31 1571 Estate of Helen S. Bartok 4.25 1572 Estate of Caroline Gillespie 191.88 1573 Frank Lomago 57.37 1574 PPI Retirement Programs FBO 3,260.38 Christopher T. Mary 1575 Washington Federal Savings Bank 4,839.47 as Trustee of Individual Retirement Account of Janet K. Stitelar 1576 Nancy A. Rice 174.16 1577 Robert W. Sweeny 24.80 1578 PNC Bank 4,003.47 1579 Wash. Co. Cash Disbursement 21,253.21 Transfer: Wash. Co. Retirement Allowance 95,759.02 Total To Be Transferred $172,399.53 231 Sold By IMR Limited Form 825 E417350 j Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. QUARTERLY REPORTS Don Herrington of Smith Barney Shearson reviewed with the Board members the Fund's Investment Performance Review for the quarter ending March 31, 1996, which reflected the performance of the two managers as follows: Quarter Ending Trailing Total Fund 3/31/96 12 mos. Entire Fund +1.58 20.91 McKee +1.19 20.26 RRZ +1.98 21.54 50 SP/50 LB G/C +1.47 21.15 7.00% Annualized +1.71 7.00 Equities Entire Fund 5.12 McKee 4.66 RRZ 5.59 S+P500 5.37 Russell 1000 Growth 5.37 Russell 1000 Value 5.66 Fixed Income Entire Fund -2.90 McKee -3.20 RRZ -2.59 LB G/C Bonds -2.34 CS McKee Beginning Value $21,715,273 Ending Value $21,872,570 Difference $ + 157,297 29.99 28.31 31.69 32.11 31.99 33.49 10.76 11.09 10.36 10.93 RRZ Difference $21,282,876 $ 432,397 $21,601,629 $ 270,941 $ + 318,753 $ 161,456 Chairman Ford asked Don Herrington how he feels a second money manager has helped the fund. Don Herrington stated that it has spurred competition and he feels, along with other monitors and consultants, that it is extremely prudent to have at least two managers for this size of fund. He stated that another reason for two managers is to have two different types of managers, i.e., C.S. McKee is a value manager whereas RRZ is a growth manager. He explained that the idea is that over a period of time, both managers will probably reach the same point although in different cycles, but the fund will have a smoother ride with the returns that it experiences. Treasurer Francis King questioned Don Herrington as to the timeframe to properly evaluate a money manager. Don Herrington stated that the normal range is 3-5 years which would be considered a market cycle which would give the manager a chance for his style to come into favor and have the opportunity to average out and provide a fair return. Chairman Ford stated that there is approximately $4.4 million currently available in unrealized gains. He asked Don Herrington for his opinion as to the Board capturing these gains. Don Herrington stated that if the goal of the Board is to capture gains for the excess interest account, he feels that the Board can do that very inexpensively and suggested that the gains be captured in equities. Chairman Ford suggested that the Board consider taking action at the next meeting to capture these gains or a portion thereof in equities. Commissioner Burns and Don Herrington discussed Don Herrington's letter to Commissioner Burns dated May 21,1996, wherein Don Herrington stated that C.S. McKee's investment style is mixed and difficult to consistently identify and is impossible to predict/anticipate in terms of reliability against a benchmark or standard because they invest in companies believed to be undervalued and can be large cap, small cap, mid cap, international and even obscure companies. Don Herrington also explained the different investment philosophies of value versus growth. Commissioner Burns asked Don Herrington if he has parameters which he utilizes in order to notify the Board when it should be concerned with discrepancies. Don Herrington stated that he felt that at the Retirement Board meeting on February 22, 1996, he expressed concern to the Board that C.S. McKee's equity performance was seriously below expectation (i.e. 7.58 percentage points below the S&P 500 Index and 8.35 percentage points below the Russell 1000 Value Index for 1995). Discussion followed. j 1 rAV Ad Sold By IMR Limited Form 825 E417350 1 J 1 (Due to Norm Pickering's time schedule, he gave his actuarial report at this point in the meeting.) ACTUARIAL REPORT Norm Pickering of Hay/Huggins Company reported to the Board that from an actuarial point of view the retirement plan is extremely well funded. He noted that he changed the salary scale assumption from 5% to 4% which resulted in the reduction of the present value of future benefits of $2.8M which in turn resulted in a reduction in the normal cost of $272,000. He noted that relative to the fund's investment performance, last year's rate of return was 25.57%, the five-year rate of return was 13.47% and the ten-year rate of return was 10.82%. He stated that even though the fund has experienced some very attractive rates of return, he does not like to change the actuarial assumption or the interest rate and he prefers to remain conservative and continue to value the fund using the 7% interest rate. Chairman Ford asked Norm Pickering for his opinion relative to the Board capturing some or all of the $4.4 million currently available in unrealized gains. Mr. Pickering stated that it is his opinion that the investment managers really should be managing the fund based upon the investment merits rather than trying to specifically raise cash as far as the excess interest account is concerned. He added that unless there is an absolute need to force an investment manager to sell securities before he/she chooses or feels it is merited, those gains should not be taken unless the investment manager chooses to take them. Treasurer Francis King noted that a few months ago a retiree wrote a letter to the editor in the local newspaper expressing concern with the pension fund and the use of the excess interest account. He asked Norm Pickering to address this issue. Norm Pickering reiterated that the plan is extremely well funded and it is legal to use the excess interest account to either offset the County's annual appropriation or to grant a cost -of -living increase to retirees. (CONTINUATION OF QUARTERLY REPORTS) Norm Allan of C. S. McKee made a quarterly report to the Board in which he discussed the following topics. A written overview of each topic was distributed to the Board members. 26 A. Economic Perspective B. Portfolio Structure C. Portfolio Characteristics D. Performance E. A Look Forward F. Portfolio Summary as of 3/31/96 Commissioner Burns asked if it would be possible for the Board members to receive these written reports prior to the meeting so that they could review them. It was the consensus that the money managers and the monitor would provide their respective written quarterly reports to the Board members seven calendar days prior to the meeting at which the reports would be discussed. Chairman Ford asked Commissioner Irey if she wanted to discuss Norm Allan's letter dated May 28th which was in reply to her letter dated April 10th. Commissioner Irey stated that since she just received it, she has not had an opportunity to review it and commented to Norm Allan that she would appreciate a more timely response in the future. It was the consensus that Norm Allan would attend the next meeting in order to discuss Commissioner Irey's concerns. Chairman Ford suggested that, in the interim, Norm Allan contact Commissioner Irey relative to her concerns. Commissioner Irey asked Don Herrington if he had a recommendation at this time to make to the Board in consideration of the performance of the fund. Don Herrington stated that he feels there is an obvious downward trend in the performance of C.S. McKee which needs to be reviewed and discussed. He suggested that the end of June would be a target date for the Board to determine what action, if any, it feels necessary. Chairman Ford questioned Don Herrington, Norm Allan and the Board members as to their position relative to Commissioner Irey's concern which she expressed at the April 11th special meeting relating to C.S. McKee's investment in ADR's (foreign companies listed on the New York Stock Exchange). Don Herrington stated that although he is not against international investments, from a monitoring point of view, he would prefer the managers not to invest in ADR's. 27 Sold By IMR Limited Form 825 E417350 1 I 1 Norm Allan stated that, in his opinion, the inclusion of up to 10% at any given point in time, over time, will enhance the overall return of a domestic equity portfolio. He added that up to more than 60% of public funds today probably have even greater exposure to international securities. He stated that if the Board wishes C.S. McKee to cease and desist from that practice, they will do so; however, it is not C.S. McKee's recommendation to do so. Chairman Ford asked if there was a motion to have C.S. McKee stop investing in ADR's. No motion was made. Frank Burnette of RRZ Investment Management, Inc., made a quarterly report to the Board in which he discussed the following topics. A written overview of each topic was distributed to the Board members. A. Period Portfolio Review B. Account Analysis C. Activity/List of Assets PURCHASE OF SERVICE CREDIT Moved by Mr. Belcastro, seconded by Mr. Burns, to approve an Employee Purchase of Service Credit request by Helen Jones, a custodial worker, who was absent from service without pay. The total amount due is $4,004.23. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. There being no further business, Chairman Ford declared the meeting adjourned at approximately 12:15 p.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: ATTEST: SECRETARY 1996 28 Minute No. 151 Washington County Retirement Board Washington, Pa., June 27, 1996 The monthly meeting of the Washington County Retirement Board was held at approximately 11:15 a.m. on Thursday, June 27, 1996, in the Public Meeting Room, Courthouse Square Office Building, Washington, Pennsylvania, with the following members being present: Commissioners Irey and Burns; Treasurer Francis King; and Controller Paul Belcastro. Absent being: Commissioner Ford who was on vacation. Also being present: Chief Clerk Dallatore; Attorney Jim McCune, Interim County Solicitor; David Martino of Commissioner Ford's Office; Don Herrington, Smith Barney; Attorney Tom Lonich and Kirk Holman, interested citizens; Joe Smydo, Observer -Reporter; Kathy Thomas, Valley Independent; Chris Haines, Herald Standard; and Jim Jefferson, WJPA. Approval of Minutes Vice -Chairman Irey entertained a motion to approve Minute No. 148 dated April 11, 1996. Moved by Mr. Belcastro, seconded by Mr. Burns, that Minute No. 148 dated April 11, 1996, be approved as presented. REMARKS: Mr. Belcastro requested that Don Herrington provide to the Board a written statement confirming that Smith Barney will reduce the $25,000 annual flat fee for monitor consulting services based on equity transactions that the managers do with Smith Barney. This is based on action taken by the Board at the meeting on April 11, 1996 (see pp. 13-14 for further reference). Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously. Vice -Chairman Irey entertained a motion to approve Minute No. 149 dated April 18, 1996. Moved by Mr. Belcastro, seconded by Mr. King, that Minute No. 149 dated April 18,1996, be approved as presented. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously.