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HomeMy WebLinkAboutCOMM - Meeting Minutes - 191 - 5-16-2002 - RETIREMENTIMR 0 L7 1 turnover. She then explained the growth chart and the performance of the benchmark. CS McKee Norm Allan began by stating that CS McKee completed the buyback of the firm and now is owned by the employees. He noted that they were concerned about a rebound after the recession, but are being very cautious. He then mentioned that the rates had been reduced eleven times. Mr. Allan also stated that he believes that Enron will definitely have an impact on the market, but is still hopeful of a positive market. He then mentioned that right now, during the month of February, they are in negative territory across the board for the market. RRZ Investment Frank Burnette first stated that the firm does see signs for an economic recovery, in respect to products for the county. First, the fixed income, has not generated a performance over the last two years. But they do plan on upgrading their personnel over the next 3 to 6 months. Second, as far as equity, they still have great confidence in their equity team, which is very committed. Brian Summers then stated that 2001 was a year that capitalization was a real liability and that it was not a year where any clear direction was established. Mr. Summers ended by mentioning that they feel that the people and the system of RRZ are running fine, they just did not get the desired results. Adjournment There being no further business, Chairman Bevec declared the meeting adjourned at approximately 12:35 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: SECRETARY 0 Minute No. 191 Washington County Retirement Board Washington, Pa., May 16, 2002 The quarterly meeting of the Washington County Retirement Board was held at approximately 10:55 a.m. on Thursday, May 16, 2002, in the Public Meeting Room, Courthouse Square Office Building, Washington, Pennsylvania, with the following members being present: Commissioners John P. Bevec, Diana'' t L. Irey and J. Bracken Burns, Sr., Treasurer Francis King, and Controller Mike Namie. Also being present: Catherine E. Kresh, Administrator/Chief Clerk; Roger Metcalfe, Budget Director; Angela Lemmon, Secretary; Frank Domeisen, Yanni Partners; Norm Allan, CS McKee; Frank Burnette, RRZ Investment Management; Linda Metz, Observer -Reporter. Approval of Minutes t { Chairman Bevec entertained a motion to approve Minute No. 190 dated February; 21, 2002. Moved by Mrs. Irey, seconded by Mr. King, that Minute No. 190 be approved as written. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Burns - Yes; Mr. Bevec - Yes. Motion carried unanimously. Treasurer's Report RETIREMENT ALLOWANCE REPORT February, 2002 Bank Balance as of February 1, 2002 $150,000.54 Deposits to Checking Account $158,621.64 Transfers from Investment Accounts $279,775.49 Credit for Stale Dated Check $ 1,644.52 Less: Cancelled Checks $141,584.73 Less: Transfers to Investment Accounts $158,621.64 Less: ACH Debits $ 76,214.69 1 LJ 1 IMR Limited Form 825 E00102204 0 �7� 1 Bank Balance as of February 28, 2002 $213,621.64 Less: Outstanding Checks $125,992.44 Less: Encoding Error 4.00 Less: Withholding Transfer $ 5,612.72 Less: Retirement Check Run February 28, 2002 $ 82,011.97 Reconciled Bank Balance as of February 28, 2002 $ -0- March, 2002 Bank Balance as of March 1, 2002 $213,621.13 Deposits to Checking Account $159,234.10 Less: Cancelled Checks $221,070.94 Less: Transfers to Investment Accounts $159,234.10 Less: ACH Debits $ 15,813.72 Bank Balance as of March 31, 2002 $170,717.38 Transfers from Investment Accounts $193,980.91 Less: Outstanding Checks $202,403.24 Less: ACH Debit $ 71,114.35 Less: Encoding Error $ 4.00 Less: Withholding Transfer $ 5,612.72 Less: Retirement Check Run March 31, 2002 $ 85,563.98 Reconciled Balance as of March 31, 2002 $ -0- April, 2002 Bank Balance as of April 1, 2002 $170,717.38 Deposits to Checking Account $160,011.33 Transfers from Investment Accounts $412,255.32 Less: Cancelled Checks $364,520.32 Less: Transfers to Investment Accounts $160,011.33 Less. ACH Debits $111,773.35 Bank Balance as of April 30, 2002 $106,679.03 Less: Outstanding Checks $ 16,191.02 Less: Withholding Transfer $ 5,893.58 Less: Retirement Check Run April 30, 2002 $ 84,594.43 0 3!2 R C S� Reconciled Balance as of April 30, 2002 $ -0- Moved by Mr. King that the Treasurer's Report be approved, seconded by' Mrs. Irey. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Burns - Yes; Mr. Bevec - Yes. Motion carried unanimously. Requisitions Moved by Mr. Namie, seconded by Mrs. Irey, that the following Requisitions be approved: February, 2002 Distributions Check No. Payee Amount 2361 Slovenian S&L for trustee of IRA of Diana L. Ciarallo $ 51,618.53 2363 Diana L.Ciarallo $ 1,334.54 2364 Deborah L. Bunner $ 31,756.95 2365 Barbara Cianelli $ 371.14 2366 Equitable as trustee of IRA of Barbara Edwards $ 9,448.89 2367 David T. Hoffman $ 427.76 2368 Keith R. Holdsworth $ 2,753.75 2369 David R. Lambert $ 404.05 2370 Jill N. Nixon $ 5,092.93 2371 M.F.S. as trustee of IRA of Arnie L. Zeli $ 2,693.01 Transfer: PNC Bank $ 15,813.72 2372 Washington Co. Disbursement $ 1,983.00 Transfer: Washington Co. Retirement Acct. $156,077.22 $279,775.49 0 Sold By IMR Limited Form 825 E00702204 March, 2002 Distributions Check No. Payee Amount 2374 Timothy Harrison $ 84,177.49 2375 Carolyn Shuman $ 24,926.37 2376 John F. Prebag, Sr. $ 27,353.24 2377 Estate of Anna Mae Penderville $ 29.18 39 2378 Parker Hunter Inc. as trustee of I IRA of Diane L. Rusak $ 17,033.46 2379 Bethany Waggett $ 1,150.44 2380 Winford B. Larue, Jr. $ 6,227.63 I !'! 2381 Carl J. Martin $ 277.48 i� 'E Transfer: PNC Bank $ 40,578.30 2352 Washington Co. Disbursement $ 31,508.82 Transfer: Washington Co. Retirement Acct. $154,669.41 I� $387,961.82 April, 2002 Distributions Check No. Payee Amount 2384 Estate of Margaret Stajduhar $ 43.97 �i s 2385 Nicholas M. Mandich $ 1,614.30 I� 2386 Toni O'Korn $ 242.49 I! 2387 MLTC trustee CONSOL Investment Plan 3� Is fbo Mark A. Thomas 186-58-74 $ 7,347.01 1 ansfer: PNC Bank $ 6,411.10 2361 Washington Co. Disbursement $ 48,418.07 ansfer: Washington Co. Retirement Acct. $154,197.47 $218,274.41 Roll call vote taken: li Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Burns - Yes; Mr. Bevec - Yes. Motioned carried unanimously. Old Business None New Business To Be Noted For The Record: John M. Victor agreement to purchase service credit dated 03/13/2000 to 05/03/2001. Cost - $1,356.45. Moved by Mrs. Irey, seconded by Mr. Burns. Roll call vote taken for the above: Mr. Namie — Yes; Mr. King — Yes; Mrs. Irey — Yes; Mr. Burns — Yes; Mr. Bevec — Yes. Motion carried unanimously. Investment Managers 4th Quarter 2001 Portfolio Presentations Yanni Partners Investment Managers Frank Domeisen began by discussing the statistics of the equity market and the mixed results that were seen. He stated that the S&P Index was up following thq', fourth quarter which had rebounded after 9/11. He then mentioned that March had been a strong month for all stocks showing signs of an economic recovery. Mr. Domeisen stated that small cap stocks were up, outperforming the larger cap'! stocks. The S&P Index ended the first quarter showing materials and energy as the strongest sectors, while telecommunication services and information technology were the two weakest sectors. The international index showed positive results, leading the large cap domestic stocks slightly for the quarter. Thr Federal Reserve left the interest rates unchanged for the quarter. But the Treasury yield curve moved up due to the fear of potential federal tightening and the accelerated pace of the economic recovery. Also, the corporate sector did better for the quarter than the Treasury because of the increased confidence of an economic recovery. April has shown to be a tougher month, with equity and the S&P Index being off; growth stocks showed to have underperformed the value stocks. Mr. Domeisen stated that CS McKee, the Value Manager/Value Tilt, had outperformed the index for the quarter CS McKee showed strong numbers over;; Soid By [MR Limiied Form 825 FC0102204 1 the last year while the three to five year numbers are well ahead of the benchmark on an absolute basis. The RRZ portfolio had underperformed for the quarter with growth stocks down. Mr. Domeisen then expressed having great concern with RRZ and possible strategies to turn things around. He noted that Emerald, the small cap stocks, have not been in favor as the value stocks in the small cap category. Mr. Domeisen then stated that he recommends the Board begin a search for a small cap value manager. Moved by Mr. Burns, seconded by Mr. King, to further discuss the issue in regards to the performance of RRZ and options the Board may have. The Board then discussed the issue and what action they should take. Mr. Namie asked Mr. Burns to explain his motion prior to making his vote. Mr. Burns explained that the Board is voting for (1) a recommendation from Yanni Partners as to the asset allocations with the expectation that there might be a slight change in the allocation of small cap and large cap stocks; and (2) to seek a recommendation on a small cap value manager. Roll call vote taken: Mr. Namie — Yes; Mr. King — Yes; Mrs. Irey — Yes; Mr. Burns — Yes; Mr. Bevec — Yes. Motion carried unanimously. Mr. Domeisen then stated that the information requested will be sent to the Board prior to their next quarterly meeting. Mr. Bevec mentioned that if needed a special meeting could be held to discuss the findings. Mr. Domeisen then noted that the international Invesco, a value oriented portfolio, is ahead of the international index, although the fixed income for the quarter was slightly negative. CS McKee showed to be ahead for the fixed income, while RRZ was right in line. Mr. Domeisen stated that when looking back over the last year, one reason the RRZ portfolio was underperforming was due mostly to the Enron issues. Mr. Domeisen said that if the Board does not see a turnaround in the next quarter they should look at that side of the portfolio and make some changes. Otherwise, the Board should seek out another manager after the next three months. CS McKee Norm Allan began by stating that he would not review the same numbers that Mr. Domeisen did but would answer any questions that the Board may have for him. He noted that CS McKee is very fortunate to have outperformance in a very significant fashion. He explained that the economy had begun to rebound and they saw a strong increase in the growth domestic products; noting that most of '4 the growth is attributed to businesses restocking their inventories and an increass in defense spending. He does anticipate growth in the gross domestic products to, be about three percent on an annualized basis, but he does not look for that kind of growth to be continued. He stated that there is a lot of uncertainty in the market which could be impacted by the uncertainty of the Middle East and the 3j ti increase of oil prices. Mr. Allan explained that any uncertainty in that area causo$ concern, which is not a good thing for the market. He said they are not hopeful the fixed income will generate positive returns in 2002, which is due to the 11 federal rate reductions. He does not see a strong rebound in the stock market. H feels that it is possible that this may be the third time in the past 102 years that wj could see a negative market. What concerns him the most if this does happen is the aftermath, stating that the succeeding years will be very difficult. Mr. Allan encouraged the Board to listen to Mr. Domeisen and look at possible allocation adjustments. He feels it is possible they are looking at a prolonged period of underperformance, particularly in the stock market. Mr. Allan mentioned once f= again that he feels 2002 will be a tough year. Mr. Allan then ended by saying th* after listening to their clients, they took the steps they felt were necessary to turn: things around. He feels the changes they have made showed positive results due to the excellent talent that CS McKee has on board. RRZ Investment Frank Bumette began by explaining that RRZ looks at their figures on a monthly; and quarterly basis. He then stated that he believes the market runs in cycles. HO stated these cycles can last anywhere from one year to possibly even five years. Mr. Burnette feels that over time RRZ's figures will average out. He explained that RRZ is currently looking for new employees, stating that some are very 1 LJ [-I Form 825 N 1 1 promising candidates. He said that RRZ is trying to respond to their clients' feedback. Mr. Burnette noted that the past 18 months, which is shown by the Russell 1000 Growth Manager, demonstrated that the largest cap stocks have trailed the market. Mr. Burnette feels that it is only a matter of time before corporate profits will take a stand. He stated he does not believe that the economy is as bad as some may believe. He feels the economy is on an upward trend, but they are still not able to determine whether or not they will regain their previous numbers. He then stated that corporate profits will be the last item to emerge from the market. He is not pessimistic in regards to long-term results, but he does feel that we are currently in a recession. He noted that a normal recession lasts for about 2 %z to 3 years, which is about where RRZ is right now. He does not believe this recession will be a severe one, stating it is showing a relatively normal, consistent economic pattern. Mr. Burnette then pointed out that the fixed income was up for the quarter in question. He then ended by stating that RRZ is very committed to getting the organization in line with what is going on in the market place. RRZ is making sure that they are properly staffed throughout the organization, from the top down. He feels the situation they are in has to do primarily with the market's cycles and trends, but he is sure that over time this will correct and resolve itself. Adjournment There being no further business, Chairman Bevec declared the meeting adjourned at approximately 11:45 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: �IlAfg / 12002 ATTEST: SECRETARY i g ii z, 3 8 si Minute No. SP-192 Washington County Retirement Board Washington, Pa., July 3, 2002 The special meeting of the Washington County Retirement Board was held at approximately 9:00 a.m. on Wednesday, July 3, 2002, in the 7th Floor Conference Room, Courthouse Square Office Building, Washington, If Pennsylvania, with the following members being present: Commissioners John P. Bevec and J. Bracken Burns, Sr., Treasurer Francis King and Controller Mike r Namie. Absent being: Diana L. Irey. Also being present: Catherine E. Kresh, Administrator/Chief Clerk; JoAnn Metz, Executive Secretary of Commissioner Irey; Roger Metcalfe, Budget Director; Angela Lemmon, Secretary; Frank Domeisen and Bill Marris of Yanni Partners; Linda Metz, Observer -Reporter. Frank Domeisen of Yanni Partners, the County's investment fund f monitors, began the meeting by updating the Board members on RRZ's performance. In the first month of implementing performance strategy and staff changes, RRZ has shown its first equity fund improvement in the past five quarters. The changes implemented in May, reflect RRZ's decision to return its focus to a more conservative, long-term growth approach. According to Mr. Domeisen, RRZ was ahead of its benchmark. Mr. Domeisen stated that if RRZ continues this progress, losses could be recouped within a year. Even with this in mind, Mr. Domeisen questioned whether RRZ could sustain this growth in the long term. As such, he was unwilling to make a recommendation as to whether the County should retain RRZ for equity investments. In regards to RRZ's changes to its fixed -income strategy, Mr. Domeisen does not feel that the changes made will be effective. He pointed out that fixed income is much more difficult to recoup than equity. As a result, Mr. Domeisen recommended that the Board consider its alternatives, including the possibility of looking into another investment manager for the County's fixed -asset portfolio. After Yanni Partners' presentation of RRZ, the Board members openly discussed their views on the situation. The Board asked that Yanni Partners present any updated information at the next Retirement Board meeting on 0 u d