The URL can be used to link to this page

Home My WebLink AboutCOMM - Meeting Minutes - 151 - 6-27-1996 - RETIREMENTI Sold By IMR Limited Form 825 E417350 1 Vice -Chairman Irey entertained a motion to approve Minute No. 150 dated May 30, 1996. Moved by Mr. Belcastro, seconded by Mr. King, that Minute No. 150 dated May 30, 1996, be approved as presented. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously. Treasurer's Report RETIREMENT SYSTEM REPORT Bank Balance as of May 1, 1996 $246,372.84 4 f Deposits to Checking Account S $113,151.39 i Transfers from Investment Account $172,519.55 Less: Cancelled Checks $250,483.12 Less: Transfers to Investment Account $107,101.97 Bank Balance as of June 1, 1996 $174,458.69 Less: Outstanding Checks $105,554.86 Less: Retirement Check Run -May 31, 1996 $ 62,928.69 Less: Deposits In Transit $ 6,050.14 Credit: Deposit Error $ 75.00 Reconciled Balance as of June 27, 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. Motion carried unanimously. Requisitions Moved by Mr. Belcastro, seconded by Mr. King, that the following Requisitions be approved: Check No. Payee 1580 Reinette M. Dubich 1581 Fidelity Management Trust Co. as trustee of Individual Retirement account of Reinette M. Dubich Amount $ 1,727.12 23,745.54 30 1582 Void 00.00 1583 Deborah L. Atkinson 5,494.70 1584 John D. Bartoletti 1,105.35 1585 Mary Rossi Blumer 250.34 1586 Maria R. Campieri 3,282.37 1587 Sandra R. Curtis 38.63 1588 Joyce E. Miller 53.70 1589 Andrea L. Pattison 1,479.92 1590 Stanley Deboe 14,103.10 (Bene. Ruth B. Abruzzi) 1591 Mark Deboe 12,784.10 (Bene. Ruth B. Abruzzi) 1592 Richard Abruzzi 12,784.09 (Bene. Ruth B. Abruzzi) 1593 Estate of Peter Jollick - 56.82 1594 Void 00.00 1595 Washington County Cash Disbursement 21,461.94 1596 PNC Bank 13,369.69 Transfer: Wash. Co. Retirement Allowance 95,553.13 Total To Be Transferred $207,290.54 Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously. Old Business Don Herrington of Smith Barney provided to the Board the following interim performance report reflecting the portfolio balances for the period of December 31, 1995 through May 31, 1996: Balances CS McKee RRZ Difference Dec. 31, 1995 $21,571,537 $21,143,023 $ 428,514 Mar. 29, 1996 $21,769,615 $21,463,816 $ 305,799 May 31, 1996 $22,511,247 $21,822,058 $ 689,189 YTD Gain $ 939,710 $ 679,035 $ 260,675 YTD Gain M 4.36% 3.21% 31 F Sold By IMR Limited Form 825 E417350 Balances CS McKee YTD 50SP/50LB G/C Gain % 3.09% RRZ 3.09% It was noted that Norm Allan had provided to the Board members the following performance numbers through the end of May for C.S. McKee's portion of the assets: Total Return Equity Bonds Washington County Index 5.26% 4.54% 12.83% 9.68% -4.83% -3.18% * 60% S&P 500/40% Lehman Brothers Government Corporate Don Herrington also provided to the Board members documentation which reflected (1) the Excess Interest Reserve Account at $2,400,414 as of January 1, 1996, as reported by HayGroup; and (2) PNC's custodial report as of May 31,1996, reflecting $2,674,915 of unrealized gains in equities (C.S. McKee) and $2,906,990 of unrealized gains in equities (RRZ). He also noted that the year-to-date (end of May) dividends and interest of C.S. McKee and RRZ combined is $880,000. He stated that he estimates that it would cost about $2,400 per million to capture gains on an immediate basis. Vice -Chairman Irey requested that a copy of Commissioner Ford's memorandum dated June 19, 1996, and its attached memorandum from Roger Metcalfe, Budget Director, be made a part of the minutes. Commissioner Ford's memorandum reflects his support to realize a gain of approximately $2.5 million. Moved by Mr. Burns, seconded by Mr. Belcastro, to realize current unrealized equity gains of 50% based upon the total value of the unrealized equity gains as of the end of the second quarter (June 30, 1996). REMARKS: Mr. Herrington stated that as soon as he obtains the exact number from the custodian, he will divide that number in half and then in half again and will immediately so notify each money manager who then can each decide to achieve this within a reasonable period of time. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously. 32 Vice -Chairman Irey provided to the Board members a copy of a letter dated June 26, 1996, which she received from PNC Bank in response to a letter from her requesting verification on ratings of some bonds which are listed on the custodian's report. She requested that this letter as well as Don Herrington's letter to the Board dated June 7, 1996, which attached a recent "Smith Barney Consulting Group Manager Research Opinion Report" on C.S. McKee Investment Managers be made a part of the record. Relative to the non -rated bonds, Don Herrington stated that he feels the Federal Home Loan Mortgage Corporation bonds are generally accepted because they are quality bonds and they have a history and track record. He stated that he did not have any knowledge about the Advanta Mortgage Loan bonds. Vice - Chairman Irey expressed her concern with the Board's liability risk of having non- rated bonds in the portfolio. Commissioner Burns questioned that if the policy of the Board indicates that only rated securities are to be purchased, then what is the Board's intention with the securities that are not rated. Discussion followed. Moved by Mr. Burns, seconded by Mr. Belcastro, to direct Don Herrington of Smith Barney to contact C.S. McKee and direct them to submit to the Board post haste justification for the purchase of non -rated bonds in the portfolio or a notice that they will discontinue the practice. Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes. Motion carried unanimously. Don Herrington commented that a review of the fund over the past three years indicates that C.S. McKee did quite well compared to RRZ during the first year which could be due in part to the fact that RRZ had just come on board, but during the past two years, the situation has reversed although C.S. McKee is still ahead on a dollar basis. He noted that C.S. McKee's performance on the equity side was substantially below the benchmark last year by approximately 8% and it may be difficult and may take a while for C.S. McKee to recoup that. However, he stated that the portfolio is getting a good return and he feels the risk is well in 33 Sold By IMR Limited Form 825 E417350 E 1 1 hand compared to other funds although there is more risk in international and small cap investments. He stated that he feels the Board should be cautious and the fund should be scrutinized more than it has been in the past. Vice -Chairman Irey asked Mr. Herrington if he had any suggestions for the Board to consider relative to reducing the fund's risk. Mr. Herrington stated that his main concern is with C.S. McKee's equities, and a preferable situation would be to have a separate international manager and a separate small cap manager who would be specialized in these areas. He noted that both of the managers are doing very well in fixed income. Vice -Chairman Irey stated that since the Board discussed so many important issues today and will need more time to think about these issues, she declared the meeting recessed until next week. She stated that as soon as a convenient date is selected, she would so notify the Board members. Meeting recessed at 12:00 Noon. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: 5El..11(C 1 Alf, Y 16 Minute No. 151 (continued) Washington County Retirement Board Washington, Pa., July 25, 1996 The meeting of the Washington County Retirement Board which was recessed on Thursday, June 27, 1996, was reconvened at 10:50 a.m. on Thursday, July 25, 1996, in the Public Meeting Room, Courthouse Square Office Building, Washington, Pennsylvania, with the following members being present: Commissioners Ford, Irey and Burns; and Controller Paul Belcastro. Absent being: Treasurer Francis King. Also being present: Chief Clerk Dallatore; Attorney Pat McCune, Interim County Solicitor; Claudia Hargrove, Deputy Treasurer; Don Herrington, Smith Barney; Norm Allan, C.S. McKee; Roger Metcalfe, Budget Director; Jon Azzarello, Harry Sabatasse, Anthony Turriziani and Kirk Holman, interested citizens; Joe Smydo, Observer -Reporter; Kathy Thomas, Valley Independent; Chris Haines, Herald Standard; Vince Ponzio, WJPA; and Dennis Bastian, CUTV. Chairman Ford called the meeting to order and declared the meeting adjourned. THE FOREGOING M,I�NUTES SUBMIT/TED FOR APPROVAL: 1996 ATTEST:'' SECRETARY n rj 1