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Home My WebLink AboutCOMM - Meeting Minutes - 209 - 5-12-2005 - RETIREMENT1115 1 1 ! Minute No. 209 Washington County Retirement Board Washington, PA May 12, 2005 The quarterly meeting of the Washington County Retirement Board was held at approximately 11:03 a.m. on Thursday, May 12, 2005 in the Public Meeting Room with j the following members being present: Commissioners Larry Maggi, J. Bracken Burns, Sr., and Diana L. Irey; Treasurer Francis King; and Controller Mike Namie. Also present: Director of Finance Roger Metcalfe; Chief Clerk Mary Helicke; Secretary Joyce Thornburg; Audit Manager Kathy Demarest; Solicitor J. Lynn DeHaven; Observer - Reporter representative Barbara Miller; WJPA representative Jim Jefferson; and I concerned citizen Bob Lusk. Approval of Minutes Mr. Burns entertained a motion to approve Minute No. 208 dated February 10, 2005. Motion 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 January 2005 through March 2005 the bank balance was reconciled to zero. It was moved by Mr. King and seconded by Mr. Namie that the report be approved. No discussion followed. E 1 Roll call vote was taken: Mr. Namie — Yes; Mr. King — Yes; Mrs. Irey — Yes; Mr. Maggi — Yes; Mr. Burns — Yes. Motion carried unanimously. Retirement Allowance Resort Bank Balance as of January 1, 2005 ($640,373.69) Deposits to Checking Account 92,043.51 Transfers from Investment Accounts 1,120,701.14 Less: Cancelled Checks (210,673.38) Less: Transfers to Investment Account (92,043.51) Less: ACH Debits ($113,936.82) Bank Balance as of January 31, 2005 $155,717.25 Less: Outstanding Checks (80,352.18) Less: Escheat Checks (100.96) Less: Void Check Lamendola (171.48) Less: Retirement Check Run January 31, 2005 ($75,092.63) Bank Balance as of January 31, 2005 $-0- 116 Bank Balance as of February 1, 2005 $155,717.25 Deposits to Checking Account 186,471.31 Transfers from Investment Accounts 615,123.09 Less: Cancelled Checks (517,065.93) Less: Transfers to Investment Accounts (186,471.31) Less: ACH Debits ($120,282.02) Bank Balance as of February 28, 2005 $133,492.39 ACH Credit 815.95 Less: Outstanding Checks (54,671.96) Less: Escheat Checks (100.96) i Less: Retirement Check Run February 28, 2005 ($79,535.42) Reconciled Balance as of February 28, 2005 Bank Balance as of March 1, 2005 $133,492.39 Deposits to Checking Account 193,543.97 Transfers from Investment Accounts A 248,480.89 Bank Error Credit 815.95 Less: Cancelled Checks (110,437.25) Less: Transfers to Investment Accounts (193,543,97) Less: ACH Debits ($130,635.24) Bank Balance as of March 31, 2005 $141,716.74 Less: Outstanding Checks (57,918.04) Less: Deposit Error (240.03) Less: Escheat Checks (100.96) Less: Retirement Check Run March 31, 2005 ($83,457.71) Reconciled Balance as of March 31, 2005 Requisitions Mr. Namie stated that requisitions for the months of February, March, and April 2005 totaled $1,271,605.90. It was moved by Mr. Namie and seconded by Mrs. Irey that the requisitions be approved. No discussion followed. Roll call vote was taken: Mr. Namie — Yes; Mr. King — Yes; Mrs. Irey — Yes; Mr. Maggi — Yes; Mr. Burns — Yes. Motion carried unanimously. February 2005 Distributions Check Payee Amount 871300 Kristina M. Alderson $163.48';' 871320 AXA Equitable as trustee of IRA of Pamela J. Wilson 7,566.84 871324 Serena Dawn Beam 1,026.03 871331 Laura Ann Boyd 627.49 I CI I Sold By IMP. Limited Form 825 Eou'±o22-.14 1 1 11 871334 Mary P. Bruno 4,896.97 871345 Capital Bank & Trust as trustee of IRA of Bradley P. Mermom 3,687.08 871351 Beverly Childers 13.97 871372 Ronald L. Diaz 181.26 871381 Lorraine M. Ealy 66.17 871383 Hans C. Ehnert 13.41 871388 Shelley Marie Faust 207.99 871395 Maranda Lee Fowler 2,013.73 871396 Franklin Templeton Investments as trustee of IRA of Leo J. 2,026.81 Trich 871403 Michelle Geho 86.81 871406 Mary K. Gibson 53.18 871413 Greek Catholic Union as trustee of IRA of Ann M. Swanson 626.21 871419 Christopher M. Hawk 1,610.14 871433 Ryan C. Hoffman 1,694.12 871445 Veronica J. Jones 50.66 871452 Cheryl L. Koscheck 4,217.32 871461 Lincoln Financial Advisors as trustee of IRA of Dana 6,146.52 Cook Baer A/C #BT6-998761 871463 Thomas M. Lococo 154.34 871464 Carolyn Mae Loew 680.10 871467 Richard R. MacFarlane 108.35 871468 Eric P. Maga 392.76 871473 Charlotte Make[ 175.07 871485 Barbar J. Megysey 117.85 871508 Nora R. Miller 107.22 871510 Michael R. Mills, Jr. 103.49 871513 Angela M. Moore 5,986.75 871518 National Financial Services Corp. as trustee of IRA of 1,307.58 Melissa J. Wilk 871521 NFS/FMTC Rollover IRA as trustee of IRA of Andrew G. 22,923.17 Baechle A/C #B 36-039071 871552 Principal Financial Group as trustee of IRA of Krista J. 3,971.12 Humphreys 871558 Scott E. Rabe 155.73 871567 Martin E. Roupe 204.01 871568 Michelle N. Roupe 1,021.27 871581 State Farm as trustee of IRA of Karen Ann Walters 23,150.35 871585 Donald M. Stutzman 162.60 871592 Donna Marie Terrett 19.15 871599 Eva R. Thompson 5,333.70 871600 Thrift Savings Plan as trustee of IRA of Bradford C. 372.16 Hunter 288-44-6235 871605 Trustee of Paychex FBO Lysle J. Kapp 871619 Tina M. Victor 871621 Lesley Eugene Vinyard 871648 Kelley M. Weaver 871656 Gary F. White 871657 Michelle R. Williams 871659 W M Group as trustee of IRA of William Matsko 871662 John Michael Yankovich 871663 Michael J. Zibrida 2792 PA SCDU Arthur Couts 169-54-0923 2793 Washington County Cash Disbursement Account Transfer PNC Bank Transfer Washington County Retirement Account Total February Distributions March 2005 Distributions Check Payee 2795 Kathleen Y. Braddock 2796 First Investors Corp as trustee of IRA of Angela M. Bukovinsky 2797 PNC Investments as trustee of IRA of Margo R. Epstein 2798 Dennis L. Gump 2799 Carla A. Kunsman (fka Carla A. Kotwica) 2800 Richard P. Whiting (Beneficiary of Karen M. Whiting) 2801 Kelli A. Schell (Beneficiary of Karen M. Whiting) 2802 Veronica G. Furmanek 2803 David Gump 2804 Lois A. Hamberger 2805 Mark J. Sivie 2806 PA SCDU Arthur Couts 169-54-0923 2807 Washngton County Cash Disbursement Account Transfer PNC Bank Transfer Washington County Cash Disbursement Account Total March Distributions 2,565.311` 197.02i 79.18' 59.45,',' 88.11`'; 683.25; 1, 364.76 185.561 4.87 75.00 69,851.53 16,330.62 190,308.23': $385.215.W Amounj 90.54'' 7,386.21 5,995.90 87.54 73.98.' 1,605.10 if 2,006.11.1 5,409.95i 620.13l 1,479.42` 14,335.79'' 75.00- 2,377.62i 13,921.62 193 015.9 4 4 .9 ' 1 �I J 1 Li 1 �J Sold By IMR Limited Form 825 E00102204 April 2005 Distributions Check Payee Amount 2809 Toni L. Sabo $23,313.31 2810 Estate of Helen M. Butka 90.15 I 2811 American Express Trust Co. as trustee of IRA of Angela J. Alampi 73,893.00 2812 Mary D. Hicks 205.70 I 2813 David P. Hunt 4,743.02 2814 Derek S. Johnson 2,451.79 2815 Tera Securities as trustee of IRA of Eric S. Mamula 4,678.31 2816 Brian d. Mechling 2,906.45 2817 Ronald T. Moore, Jr. 2,457.36 2818 Kimberly Ann Norton 197.08 2819 PNC Investments as trustee of IRA of Bonnie E. Pattison 34,824.34 2820 Suzanne Coleman Robinson 108.53 2821 Elizabeth A. Gonzales 359.68 2822 Thomas C. Kennedy 6.69 2823 Eric J. Seighman 382.00 2824 Michelle E. Sherman 5,582.93 2825 Sheryl K. Thornburg 218.08 2826 Brian R. Uniejewski 63.86 2827 Jeanna C. Ward 227.88 2828 PA SCDU Arthur Couts 169-54-0923 75.00 i 2829 Washington County Cash Disbursement Account 40,562.75 Transfer PNC Bank 18,897.28 Transfer Washington County Retirement Account $191,756.72 Total April Distributions $408�001.91 Old Business None. New Business Mr. Burns entertained a motion to ratify an MOU dated March 8, 2005 for Angela Alampi to buy back unpaid leave of absence time from 12/21/93 to 06/30/94 in the amount of $1,883.49. Motion moved by Mrs. Irey and seconded by Mr. Maggi. Roll call vote was 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 Paul Alvarez agreement to purchase service credit dated 01/01/01 to 07/07/04 in the amount of $4,165.31. 1120 Secondly, Angela Alampi agreement to purchase service credit dated 10/05/81 to 12/28/81 in the amount of $217.48. E Thirdly, active military duty retirement contribution on behalf of Robert Stewart for;; the period 08/07/04 to 11/14/04 in the amount of $527.13. C. S. McKee — Norm Allen The year is off to a shaky start in the financial market. The quarter started off at $40.4 million. $339,230 was taken out for paying benefits and granting refunds. The net change in dollar market value for the quarter was $450,974. We are seeing a f= negative performance in the bond market which is not uncharacteristic when the interest rates increase. For the one-year trailing, we were up 2.06% versus the market at 1.15%. A letter should have been received recently by the Board stating that we are holding GMAC bonds. General Motors and Ford Motors were downgraded to junk E status. According to the County investment plan, we are not supposed to hold junk bonds. The County does not have any Ford bonds but there are GMAC bonds which represent only a little over .4 of 1 % of the total portfolio. It is C.S. McKee's desire to hold on to this for at least a couple of months. Mr. Burns asked if this requires a motion to dispense with our policy. The response was to wait to hear from Frank Domiesen of Yanni Partners. Mr. Allen continued stating that the equity side was a little better. Value continued to do better than growth. The Russell 1000 Value Index was up .09% versus 1.92% which is what C.S. McKee generated for the portfolio. For the trailing one-year, we are beating the index which generated 13.17% versus 13.74%. We are still doing well in a relative basis but on an absolute basis, there are concerns that this will be a less than stellar year in terms of overall investment performance. Rising interest rates and oil prices will have a distinctive impact on the economy. Investment wise, this could be a weak year. In the April 18t" issue of Pensions & Investments, there was an article titled The Looming Retirement Disaster. Corporate defined pension plans have declined 73% in the last 18 years. Defined contribution plans are being created today in place of defined benefit plans. Berks County has sent a -mails trying to solicit some support right now in approaching legislators to enable counties to freeze their defined benefit plan and create 401 K plans for all new employees. The belief is that you can get a better handle on the amount of money that is being contributed on an annual basis. The defined benefit plan depends on how the various financial markets are doing. In the 401 K plan, being a defined contribution plan, the benefit is whatever is there at the end of the employee's work time. It is urged that the County stay on top of this. Mr. King asked Mr. Allen in regards to the equity market if he thinks we will hit our benchmark. Mr. Allen stated that the probability in achieving the 7.5% rate of return in 2005 is slim. The fixed income market had a strong rebound in April, but there is an expected further weakness. 1 1 1211 Sold By IMR Limited Form 825 E001o2204 1 1 PNC Advisors — Pete Ferrise PNC Advisors are the owners of BlackRock serving as a fixed income manager. From a credit quality standpoint, this portfolio is being run at the highest quality, AAA rated. BlackRock is approximately 4% underweight the benchmark on the corporate sector and overweight in the commercial mortgage backed sector. The overweight seen in treasuries/cash is actually more to the cash position. The Lehman Aggregate has a portfolio duration of approximately 4.4 years while this particular portfolio is being managed with a duration of about 3.65 years. If you do not like bonds, the way you implement that in your portfolio is a short duration. With the inverse relationship between bonds and interest rates, the way to mitigate the risk of rising rates is by having an average duration which is shorter than the benchmark. There has been some level of inflation but nothing to be concerned about right now. As far as performance goes, this has been a difficult market for bonds. In a relative sense, this particular product has been able to generate a strong performance, both outperforming its' benchmark and the peer group. Having managed this portfolio for approximately 18 months now, the portfolio is up to the annual rate of 3.7% versus the Lehman Aggregate which is up an annual rate of 2.8%. 90 basis points may not seem like a lot in the way of out performance but the fact is that in the fixed income world, 90 basis points is very significant. Francis King asked whether we should hold onto GMAC. Mr. Ferrise stated that we should wait until we get the price appreciation back to a level where we think it is fairly valued. Ark Asset — Bob Norton Ark Asset has been on board for less than 2 years. Ark Asset manages approximately $15 billion and is a 100% privately owned organization. Ark Asset manages large cap growth stock in a portfolio of approximately 50-75 stocks. We manage against the Russell 1000 Growth Index and hold no more than 5% or double its index weight. The goal is to beat the market by a minimum of 2%. At the end of March 2005, the portfolio was 98.2% invested in common stocks. Ark Asset is holding less than 2% in cash equivalent. The portfolio had a market value of $13.4 million. In May 2003, when Ark Asset began working for Washington County, the portfolio had a market value of $11 million. In 2004, the portfolio was up a little over 7%. By comparison, the Russell 1000 Growth Index was up 6.3%. We are building a portfolio that replicates the market and the goal is to do this by buying stocks that are going to perform better than the market. The County made 11 % on our money and 22% in two years. We are over -weighted in consumer discretionary stocks. We are focusing on hotel chains and they are doing well. We are underweighted in health care and modestly overweighted in technology. 12 2 Yanni Partners — Frank Domeisen As far as the equity market goes, the S&P was off. The trailing one year shows a 6.7% return. It appears that over the last 5 years, value stocks have out -performed growth stocks by 16 percentage points. Energy and utilities were in the bottom of the sector at the end of the 4th quarter last year and now they are at the top. Currently at the bottom of the sector, we are seeing financials, information technology, and telecommunication services. It appears that managers could be doing everything right on stock selections in every category but be slightly overweighted or underweighted. Ark has an equal rating in energy, is underweighted in healthcare and over -weighted in consumer discretionary. C.S. McKee has underweighted healthcare and underweighted information technology. Emerald had a good quarter. BlackRock and C.S. McKee are both underweighted in corporate. That was a favorable attribute. They focus on the higher end of quality which is also favorable. BlackRock is overweighted in mortgage backed securities and that was off only .1 %. Treasuries are equal rated. The exact reverse was true in the 4t" quarter of last year. The overall Lehman Aggregate yield of that portfolio was 4.8% versus the intermediate at 4.4%. Looking at the modified duration is a way of looking at interest rate sensitivity. If interest rates rise 100 basis points, what percent will the price of the bond fall? The intermediate fall 3.7%, the aggregate falls 4.5%. Even if you give up a little yield, the real difference is about 40 basis points. Lehman Brothers is changing as of July 1. They are now adding a third rating agency which is Fitch. Now you will need 2 out 3. i As a result, between now and July, they will take the lower of the 2. This is the split rating. Regardless of what happens before the GM downgrade, we want to align the policy and recommend that it be consistent with the new standard. Look at the 3 and follow the same criteria. The benchmark criteria is changing and it is suggested that you allow the discretion of the managers to make this decision. Mr. Burns asked if the Board will be given the correct verbiage to change the policy in accordance with the new standards. Mr. Domeisen stated this would be done Mr. Burns asked if a motion should be passed to this effect. Mr. Domeisen stated that technically, they are in compliance. Discussion is made by Mr. Burns and Mr. Namie regarding the policy. Mr. Burns asked if there could be an additional downgrade later in the afternoon which would require the managers to change our current policy. Mr. Domeisen answered yes. Mr. Burns announced that he would entertain a motion to grant an acceptance to the money managers on this particular issue until the policy is revised. Motion was moved by Mrs. Irey and seconded by Mr. Maggi. Roll call vote was taken: Yes Mr. Namie — Yes; Mr. King — Yes; Mrs. Irey — Yes; Mr. Maggi — Yes; Mr. Burns — Motion carried unanimously. F 1 1 1 213 Sold ev IMR Limited Form 825 E00102204 1 1 Yanni Partners — Jim Gnecco Sr. Consultant Total portfolio for the quarter had a negative return of .5%. Even though it is a negative return, it outperformed the target market index of -1.6%. TMI is the return that we would have gotten if each one of the managers had performed right at benchmark. As a group, they have outperformed that. They added value relative to the benchmark. This is shown at the one year return of 6.2% versus the TMI at 5%. At the three year return, it was slightly ahead and at the five and seven year returns, it is trailing a bit. The changes the Board have made over recent years have worked. The 6.2% return does not match the 7.5% return that we are looking for, but it is ahead of the TMI. Absolute return or relative return is one issue; risk is another issue. We want to be in the northwest quadrant and that is exactly where we stand. We are to the left of the TMI which means less risk. On a reward basis, we are positioned well. For the quarter, we are around the 25th percentile in the universe; the one year period, we are around 35th percentile; two year period, just above medium; three and four year period, around the 30th percentile. We are well -positioned relative to other funds. Ark had a relatively weak quarter, down 4.5% versus the index at -4.1 %. On a one year basis, they are ahead 2.4% versus 1.2%. On the small cap side, Evergreen had a very good quarter with a positive return. The benchmark was actually 4% and they had a positive return. Emerald had previously been a problem last year with negative returns. It had a negative return again for the quarter at -4.8% but that was well ahead of benchmark. It is still lagging for the one year period. Looking at Emerald in 1999, they had a great start. Since then they have done well up until 2004. Mr. King asked what may have caused this downfall. Mr. Gneccho answered that they were in high beta stocks and the earnings just did not do well. The meeting was adjourned at approximately 12:10. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: 2005 ATTEST: 12 4 Minute No. 210 Washington County Retirement Board Washington, PA August 25, 2005 The quarterly meeting of the Washington County Retirement Board was held at approximately 11:06 a.m. on Thursday, August 25, 2005 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 Mike Namie. Also present: Director of Finance Roger Metcalfe; Chief Clerk Mary Helicke; Secretary Joyce Thornburg; Audit Manager Kathy Demarest; Solicitor Mary Lyn Drewitz; Observer - Reporter representative Barbara Miller; and concerned citizens Abe Nasim, Bob Lusk, Harry Sabatasse, John Adams, and Phil Ames. Approval of Minutes Mr. Burns entertained a motion to approve Minute No. 209 dated May 12, 2005 Motion was moved by Mr. Maggi and seconded by Mrs. Irey that the above mentioned minutes be approved as written. No discussion followed. Those in favor signified by saying aye. Motion carried unanimously. t Treasurer's Report Mr. King stated that from April 2005 through July 2005 the bank balance was reconciled to zero. It was moved by Mr. King and seconded by Mr. Maggi 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, 2005 Add: Deposits to Checking Account Add: Transfers from Investment Accounts Less: Cancelled Checks Less: Transfers to Investment Account Less: ACH Debits Bank Balance as of April 30, 2005 Add: Bank Error Less: Outstanding Checks 4 Less: Deposit In Transit Less: Stale Dated Checks Less: Retirement Check Run April 30, 2005 Bank Balance as of April 30, 2005 $141,716.74 186,064.90 408,001.91 (141,160.76) (93, 522.79) ($126,719.70) $374,380.30 655.86 (201,289.87) (92,542.11) (100.96) ($81,103.22) 1 1 1