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Home My WebLink AboutCOMM - Meeting Minutes - 155 - 10-31-1996 - RETIREMENT49 1 1 Reconciled Balance as of October 31, 1996 $ -0- Moved by Mr. Belcastro, seconded by Mr. Burns, that the Treasurer's Report be approved as submitted. Roll call vote taken: i 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. Burns, that the following Requisitions be approved: Check No. Payee Amount 1636 Walter Poole $ 4,571.54 1637 Mellon Bank NA as Trustee of 6,653.66 Individual Retirement Account of Raymond G. Beech 1638 Michael V. Konyk 7,822.90 1639 Estate of Norman Carson 313.35 1640 Amy Bialon 9,649.36 1641 Fidelity Trust Co. 4,203.65 as trustee of Individual Retirement Account of Bonnie Hazen 1642 Renee Jenkins 3,451.35 1643 Georgia L. Mitchell 2,424.24 1644 C. Jerome Moschetta 2,731.84 1645 National City of PA as trustee of 5,901.29 Individual Retirement Account of C. Jerome Moschetta 1646 American General as trustee of 9,492.19 Individual Retirement Account of Donna G. Nickolas 1647 Kathleen R. Woods 15,513.77 1648 Void -0- 1649 PNC 14,092.74 1650 Washington County Cash Disb. Acct. 10,294.99 Transfer: Washington County Retirement Allow. 99,377.45 5U Total To Be Transferred Roll call vote taken: Mr. Belcastro - Yes; Mr. King - Yes; Mr. Burns - Yes; Mrs. Irey - Yes; Mr. Ford - Yes. Motion carried unanimously. $196,494.32 1997 BUDGET Moved by Mr. Belcastro, seconded by Mr. King, that the proposed 1997 operating budget in the total amount of $1,148,058, a copy of which is attached hereto and made a part hereof, be submitted to the Board of Commissioners in accordance with P.S. 16, Section 11661. 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 reviewed with the Board members the Fund's Investment Performance for the quarter ending September 30, 1996, which reflected the performance of the two managers as follows: Quarter Ending Year -To Total Fund 9/30/96 Date Entire Fund 1.53 6.34 McKee 0.54 4.78 RRZ 2.53 7.93 50 SP/50 LB G/C 2.48 6.55 Equities Entire Fund 1.37 11.99 McKee -0.59 8.97 RRZ 3.26 14.92 S + P 500 3.09 13.50 Russell 1000 Growth 3.60 16.11 Russell 1000 Value 2.91 10.61 Fixed Income Entire Fund 1.73 -0.90 McKee 1.84 -1.08 RRZ 1.60 -0.74 LB G/C Bonds 1.76 -0.17 1 1 Sold 3y VN'H Ljmiled r .— 825 '`11 s 5111 1 1 1 C. S. McKee RRZ Difference Beginning Value $22,370,749 $22,139,586 $+231,163 Ending Value $22,417,555 $22,624,186 $ - 206,631 Difference $ + 46,806 $+ 484,600 Don Herrington noted that C.S. McKee's performance experienced an unusual swing during this quarter, largely attributable to the equity market. Commissioner j E Burns asked Don Herrington if he had a statement relative to C.S. McKee's 1 performance. Don Herrington stated that he is quite concerned with C.S. McKee's performance and feels that the Board should look at other managers in order to make a comparison. Discussion followed. 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. A. Economic Perspective B. Portfolio Structure C. Cash Flow Summary (Third Quarter 1996) D. Performance E. Portfolio Summary as of September 30, 1996 Norm Allan addressed the underperformance of C.S. McKee relative to the market. He provided to the Board a list of observations which identified the reasons for the firm's underperformance. He noted that the firm's performance within the overall market during the past two years has been varied depending upon both capitalization (large,mid and small cap stocks) and investment approach (growth vs. value). He stated that large capitalization stocks continue to significantly outperform both mid and small capitalization stocks, and that the S&P 500 Index is primarily driven by large capitalization stocks. He noted that as far as the investment approach, growth has certainly overshadowed value in 1995 and 1996. C.S. McKee's value style of investing has resulted in a portfolio which is statistically cheaper than the market and is spread among large, mid and small capitalization stocks. He noted that although the firm's value style and capitalization weighting has not been the recent most favored approach, history strongly indicates though that a diversified portfolio of large, mid and small cap stocks, possessing strong value characteristics, has been and will continue to be a proven approach for providing favorable returns over time. 52 Norm Allan also provided to the Board a copy of an article which appeared in the October 14, 1996 issue of Barron's relative to the issue of value vs. growth. He also noted that since C.S. McKee began as co -managers in 1993, this is the first quarter that the firm has trailed in terms of total dollars managed. Frank Burnette of RRZ Investment Management, Inc., provided to the Board a quarterly report for the period of June 30 through September 30, 1996, detailing the topics of (1) Period Portfolio Review; (2) Account Analysis; and (3) Activity/List of Assets. He commented that although one manager may be outperforming the other, r the entire fund, which is approximately $45M, is up somewhere in the neighborhood of 6.5%YTD which translates into almost $3M in returns for the fund. Commissioner Irey asked Don Herrington if it was his recommendation to the Board that it solicit RFP's for new money managers. Don Herrington suggested that if the Board looked at the performances of other money managers, it might be very impressed with what it would see, whether that be through an RFP or some other method. Moved by Mrs. Irey, seconded by Mr. Burns, to solicit RFP's for new money managers. Treasurer Francis King requested discussion on the motion. He stated that in light of the fact that the Board has interviewed and will soon be hiring a new performance monitor, he would like to have the new performance monitor evaluate both money managers and submit a recommendation to the Board; therefore, he is reluctant to solicit RFP's at this time. Commissioner Irey stated that even if the Board solicits RFP's, it does not t necessarily mean that at the end of the process, the Board will decide that it wants to eliminate C.S. McKee; but it will provide the Board with the opportunity to look at other managers. She stated that by the time the advertisement is completed and the RFP's are submitted, a new money monitor would be on board who be able to help with the RFP review process. Treasurer Francis King stated that if the Board solicits RFP's now, he feels it would be putting the cart before the horse since one of the functions of the new monitor would be to prepare the RFP and to assist in the evaluation of the proposals 1 J a Sold By IMR Limited Form 825 E417:950 1 f� 1 which are received. He feels that another two weeks would be enough time for the Board to hire a new monitor and then have the new monitor evaluate the current money managers and proceed from that point. Discussion followed relative to the Board holding a special meeting within the next two -week period for the purpose of hiring a new performance monitor or the Board taking administrative action in this regard and ratifying the action at the next regular meeting which is scheduled for November 27th. Commissioner Burns stated that if there was a movement within the next two weeks to expedite the process of hiring a new performance monitor, he would be willing to table the foregoing motion which he seconded. Moved by Mr. Burns, seconded by Mr. King, to table the foregoing motion relative to the soliciting of RFP's for new money managers, based on the understanding that action to hire a new performance monitor will be taken within the next two -week period. 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 11:35 a.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: ATTEST: TARY 1996 Minute No. 156 Washington County Retirement Board Washington, Pa., November 27, 1996 The monthly meeting of the Washington County Retirement Board was held at approximately 10:50 a.m. on Wednesday, November 27, 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 Belcastro. Also being present: Chief Clerk Dallatore; James Yanni and Frank Domeisen of Yanni Bilkey; Joe Smydo, Observer -Reporter; Kathy Thomas, The Valley Independent; Chris Haines, Herald Standard; Jim Jefferson of WJPA/WYTK; and J.R. Wheeler, CUTV. Approval of Minutes Chairman Ford noted that approval of Minute No. 155 dated October 31, 1996, would be held in abeyance. Treasurer's Report RETIREMENT SYSTEM REPORT Bank Balance as of October 1, 1996 $ 83,735.17 Deposits to Checking Account $109,129.10 Transfers from Investment Account $196,494.32 Less: Cancelled Checks $153,460.29 Less: Transfers to Investment Account $109,129.10 Bank Balance as of November 1, 1996 $126,769.20 Less: Outstanding Checks $ 54,326.67 Less: Retirement Check Run October 31, 1996 72,442.53 Reconciled Balance as of November 27, 1996 $ -0- Moved by Mr. Burns, seconded by Mr. Belcastro, 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. E 1