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HomeMy WebLinkAboutCOMM - Meeting Minutes - 206 - 8-19-2004 - RETIREMENTSold By IMR Limited Form 826 E00102204 1 n J Minute No. 206 Washington County Retirement Board Washington, PA August 19, 2004 The quarterly meeting of the Washington County Retirement Board was held at approximately 10:50 a.m. on Thursday, August 19, 2004 in the Public Meeting Room with the following members being present: Commissioners Larry Maggi, J. Bracken Burns, Sr., and Diana L. Irey; Treasurer Francis King; and Controller Michael Namie. Also present: Director of Administration Scott Fergus; Director of Finance Roger Metcalfe; Chief Clerk Mary Helicke; Secretary Joyce Thornburg; Audit Manager, Kathy Demarest. Approval of Minutes Mr. Burns entertained a motion to approve Minute No. 204 dated May 20, 2004 and Minute No. 205 SP dated August 5, 2004. It was moved by Mrs. Irey and seconded by Mr. King that the above mentioned minutes be approved as written. No discussion followed. Those in favor signified by saying aye. Motion carried unanimously. Treasurer's Report Mr. King stated that from April 1, 2004 through July 30, 2004, the bank balance was reconciled to zero. It was moved by Mr. King and seconded by Mrs. Irey that the report be approved. No discussion followed. Those in favor signified by saying aye. Motion carried unanimously. Retirement Allowance Report Bank Balance as of April 1, 2004 Deposits to Checking Account Transfers from Investment Accounts Less: Cancelled Checks Less: Transfers to Investment Accounts Less: ACH Debits Bank Balance as of April 30, 2004 Deposit Error Less: Outstanding Checks Less: Retirement Check Run April 30, 2004 Reconciled Bank Balance April 30, 2004 Bank Balance as of May 1, 2004 Deposit to Checking Account Transfers from Investment Account Less: Cancelled Checks Less: Transfers to Investment Account Less: ACH Debits Bank Balance as of May 31, 2004 Less: Outstanding Checks Less: Retirement Check Run May 31, 2004 Reconciled Bank Balance May 31, 2004 $75,371.64 94,667.54 340,543.73 182,408.86 94,667.54 $144,212.28 $89,294.23 80,258.43 98,713.81 70 838.85 $--0-- $89,294.23 197,918.53 326,793.28 160,728.85 197,918.53 $16,094.05 $239,264.61 172,724.85 66,539.76 $--0— Bank Balance as of June 1, 2004 $239,264.61 Deposits to Checking Account 275,026.69 Transfers from Investment Accounts 458,000.05 Less: Cancelled Checks 144,004.45 Less: Transfers to Investment Accounts 275,026.69 Less: ACH Debits $150,493.27 Bank Balance as of June 30, 2004 $402,766.94 Less: Outstanding Checks 321,264.79 Less: Retirement Check Run June 30, 2004 $81,502.15 Reconciled Bank Balance June 30, 2004 $--0-- Bank Balance as of July 1, 2004 $402,766.94 Deposits to Checking Account 186,142.43 Transfers from Investment Accounts 305,090.34 Less: Cancelled Checks 433,186.53 Less: Transfers to Investment Accounts 183,693.95 Less: Cancelled Checks $125,273.12 Bank Balance as of June 30, 2004 $151,846.11 Deposit in Transit (2,448.48) Less: Outstanding Checks 68,263.55 Less: Retirement Check Run July 30, 2004 $81,134.08 Reconciled Bank Balance July 30, 2004 $- Requisitions Mr. Namie stated that requisitions for the months May, June and July 2004 totaled $1,009,625.24. It was moved by Mr. Namie and seconded by Mrs. Irey that the requisitions be approved. No discussion followed. Those in favor signified by saying aye. Motion carried unanimously. May 2004 Distributions Check Payee Amount 2635 Estate of Helen Solomon $101.75 2636 Craig S. Babich 8,618.94 2637 American Funds as trustee of IRA of 7,773.45 Colleen R. Butka 2638 Parker Hunter Acct G-5527-7333 as trustee of IRA of 2,971.41 Peter V. Marcoline III 2639 Marc A. Skobel 1,132.02 2640 Joan E. Bruno 27,458.70 2641 PA SCDU Arthur Couts 169-54-0923 75.00 Konecheck 2,887.22 Transfer: PNC Bank 16,272.08 2642 Washington Co. Cash Disbursement Account 2,197.85 Transfer: Washington Co. Retirement Acct. 177,046.43 Total May 2004 Distributions $246,534.85 1 1 IMR Limited Form 825 ECOt Zap L 1 June 2004 Distributions Check Payee Amount 2644 John E. Patrick $ 4,296.16 2645 Fiduciary Trust Co., N.H., Custodian of IRA 118,408.54 Account 35470453 of John E. Patrick 2646 Estate of Norma J. Wiencek 372.43 2647 Brandy L. Ayres 805.30 2648 National City Bank as trustee of IRA of Rueben Brock 2,169.46 2649 Dana L. Brown 8,041.31 2650 Nathaniel M. Burnfield 320.20 2651 Tammy Chambers 10,749.67 2652 Lindsey A. Chapko 225.98 2653 Susan E. Flowers 18,022.81 2654 Eric T. Furbee 2,933.44 2655 Scott D. Hitzfeld 676.22 2656 National City Bank as trustee of IRA of Joel R. Guthrie 654.54 2657 James E. Jones, Sr. 253.76 2658 Kelly Kronander-Hanna 9,989.95 2659 Gary D. Mucho 2,033.84 2660 Lorna Gay Plants 2,042.09 2661 Thrivent Financial as trustee of IRA of Dale A. Rhome 3,348.13 2662 Chad E. Scrip 14,516.22 2663 George M. Suhon 10,059.54 2664 PA SCDU Arthur Couts 169-54-0923 75.00 2665 Estate of Bertha Dutch 203.27 2666 Washington County Cash Disbursement Account 35,648.93 Transfer: PNC Bank 27,861.90 Transfer: Washington County Retirement 84,291.36 Total June 2004 Distributions $ 458,000.05 July 2004 Distributions Check Payee Amount 2668 Shauna S. Tretinik (Bene. Susan E. Cook) 18,874.21 2669 Danyel Braun 1,138.20 2670 Sarah D. Cox 358.11 2671 Jodie L. Hamilton 3,346.39 2672 Seth D. Kelley 839.20 2673 Deanne L. Montgomery 17,804.50 2674 Linda R. Moore 217.81 2675 Sherri D. Piatt 844.25 2676 Trustee of Transamerica FBO Renne' M. Porada 3,675.54 2677 Susan R. Roule 4,058.52 2678 Robert Roux 316.06 2679 Leann D. Sutterfield 7,821.76 2680 Rachel Taylor 5,393.08 2681 PA SCDU Arthur Couts 169-54-0923 75.00 2682 Washington County Cash Disbursement Account 38,297.19 Transfer: PNC Bank 19,883.00 Transfer: Washington County Retirement Account 182,147.52 Total July 2004 Distributions $ 305 090.34 Old Business None. Note by Chairman Burns Congratulations are extended to Controller Mike Namie for being elected as Third Vice -President xi of the Pennsylvania State Association of County Controllers. New Business Ratification of MOU dated June 24, 2004 permitting Doris Wylie to buy back unpaid leave of absence time from May 15, 1992 through March 25, 1993 in the amount of $1,779.28. It was moved by Mrs. Irey and seconded by Mr. Namie to ratify. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. Motion carried unanimously. To Be Noted For The Record Donald George has entered into an agreement to purchase service credit dated October 7, 1968 to February 23, 1970 in the amount of $384.97. Tom Jess has entered into an agreement to purchase service credit dated May 21, 2001 to December 29, 2001 in the amount of $1,037.60. John T. Lloyd has entered into an agreement to purchase service credit dated March 26, 1996 to July 1, 1996 in the amount of $252.04 Georgiann Wilson has entered into an agreement to purchase service credit dated September 16,1? 1985 to August 13, 1993 in the amount of $11,713.12. This amount will be repurchased through payroll ;E deduction in $90.00 bi-weekly installments. Helen M. Swarrow has entered into an agreement to purchase service credit dated July 15, 1985 to May 22, 1992 in the amount of $11,387.64. This amount will be repurchased through payroll deduction`; in $80.00 bi-weekly installments. Washington County Retirement Fund Audit i The Washington County Retirement Fund audit for the period ending December 31, 2003 noted no comments or findings. Hiring of International Equity Manager Three candidates were interviewed for the International Equity Manager position (see Retirement E Board Minute No. 205 SP.) It was moved by Mr. Namie and seconded by Mrs. Irey to hire the Boston Company. Roll call vote taken: Mr. Namie - Yes; Mr. King - Yes; Mrs. Irey - Yes; Mr. Maggi - Yes; Mr. Burns - Yes. Motion carried unanimously. C. S. McKee - Gene Natalie As far as changes are concerned, there is nothing dramatic to report. We are still looking at 52% i 4 equity and 46% fixed. As a result of rising interest rates, the fixed income ending June 30, 2004 represented the worst quarter that has been seen since 1980. The performance that was once positive during the first three quarters has now gone negative. The good news is that the Lehmen Aggregate has E rebounded to positive numbers, up 1.25%. For the quarter ending June 30, 2004, the benchmark Lehman Brothers Aggregate Bond Index was down 2.44% and Washington County was down 2.29%. The year-to-date ending June 30, 2004 was positive .39% and the Lehman Aggregate was positive .15%. C. S. McKee believes the fixed income returns will hover around 4% for the next five to seven years. C. 1 Form 825 E00102204 McKee has also been investing fixed income portfolios in range accrual notes. These notes have as uch as a 300 basis points yield advantage over treasuries. There is no credit risk to these securities as they are government agencies. For the quarter ending June 30, 2004, equity was positive but still underperforming at .81 % for Washington County vs. the Russell 1000 at .88%. The year-to-date ending June 30, 2004 shows 3.48% for the County and the Russell 1000 at 3.94%. Admittedly, there were two mistakes made this year. AT&T was considered to be the best of a bad bunch but ended up being the worst performing stock in both May and June. However, July and August did see a rebound. We will continue to hold this security for the sole reason that AT&T has a lock on the corporate long distance market and they may be a candidate for acquisition by possibly Verizon or SPC or Bell South. The equity side turned negative just about everywhere. The value component of the equity market is measured by the Russell 1000 value d this is still positive. ere are some mixed signals in the economy. We are starting to see some consumer confidence and inufacturing is starting to increase their investments. On the other hand, the thinking is that the equity )rket is going to trade in a range of -2% to +2%. Growth is constantly being estimated downward due a difficult economy. The Fed will probably raise rates and the belief is that short term rates will go up )re than long term rates. Actuary numbers will be a very difficult thing to hit both this year and next. e fundamental aspect of the market right now is that people are managing their expectations down for growth in company earnings. Investments are made not for what companies are doing right now but what is perceived will happen. Next year the thought is that the numbers will be much closer to the ioric average of about 6%. The growth of the economy is not quite as bad as what people might think. ni Partners - For the first quarter in five quarters, we saw large cap stocks outperforming small cap stocks. Last year and through the 1 st quarter of 2004, small cap stocks outperformed larger cap stocks as the economy was strengthening. This may suggest that we are in the latter part of an economic recovery. The leadership is shifting from small cap back to large cap. Within large cap, the value stocks did better pthan the growth stocks for the quarter. The underperformance of the financials was responsible for 2/3 of the underperformance of the market. International was up .2% for the quarter, being the first quarter out of the last five. During the month of July the S&P was off 3.5%, growth was off 5.5%, value was off 1.5%, and international was off 3%. The period ending June 30 was the worst bond market in several decades. 111n July, return was approximately 1 %. The Lehman Brothers Aggregate was off 2.5%. Treasury was off .2% and corporate was off 3.4%. Your portfolio was off .2%. The -.2% was in line with the benchmark and ust below the median peer group. We want to be in the top half of the universe and beat the benchmark; ive have hit one out of two. Our policy calls for a three year basis and according to the risk/return analysis, we are above the median outperforming six out of ten. This is happening with the same risk as he median peer group. Report highlights show C. S. McKee with a .8% return versus the benchmark. :or the one year and beyond, performance is in the first decile of the peer group, outperforming nine out )f ten. The newer manager to the line up, Ark, is up 2.3%, beating the benchmark. On a peer group )asis for the quarter, Ark was in the 2nd decile outperforming eight out of ten. Evergreen's performance E as up 4.6%. E A notice was sent to the Board stating that the FCC is investigating Evergreen for market trading issues. One issue involves short term trading in 2003 by a former portfolio manager in the precious ,metals fund. Evergreen did identify that there was some short term trading by the former manager and he was let go before the FCC started these investigations. Evergreen has refunded $73,000 to date. This has nothing to do with the institutional segment of the business - Washington County was not holding the affected fund. This short term trading was in the retail segment and has since been reversed. Also, a broker was engaging in short term trading on behalf of a client. This was discovered by Evergreen's compliance and monitoring activity. The Board was notified and took action. In this case, Ithe broker was not an employee of Evergreen. Evergreen took it upon themselves to rebate the fund that was impacted by approximately $400,000. This was done on their own, before the investigation had started. Emerald's performance for the quarter was poor; down 2.3%. The overweighting and poor stock f selection is the primary reason and not so much due to sector weighting. About five stocks really underperformed. The calendar year return for 2003 was up 50.6%; 2002 was an average year; 2001 was a slightly positive year; 2000 was a very weak year; 1999 was a very strong year. The batting average is f still above 50-50. The performance is +8.4% versus the benchmark of 2.5%. The long term numbers have been strong. is International, the Barclay Fund outperformed the median. BlackRock also outperformed its I benchmark. s As far as asset allocation, we are right on target at close to 60-40. The meeting was adjourned at approximately 12:15. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: /0 , 2004 ATTEST: SECRETARY rl J f