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Home My WebLink AboutCOMM - Meeting Minutes - 218 - 3-15-2007 - RETIREMENTSold By IMR Limited Form 825 E00102204 Washington, PA March 15, 2007 The quarterly meeting of the Washington County Retirement Board was held at approximately 1:40 p.m. on Thursday, March 15, 2007 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; Solicitor Lynn DeHaven; Observer -Reporter representative Barbara Miller; Gene Natali representing C.S. McKee; Tom Datillo representing Emerald Advisors; and Michael Shone representing Peirce Park. Approval of Minutes Mr. Burns entertained a motion to approve Minute No. 217 dated November 2, 2006. The motion was moved by Mr. King 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. Public Comment None. Treasurer's Report Mr. King stated that from October 2006 through January 2007 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 October 1, 2006 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 October 31, 2006 ,Less: Investment Transfer Less: Outstanding Checks Less: Retirement Check Run October 31, 2006 Reconciled Balance as of October 31, 2006 $270,040.83 424,110.91 356,813.38 (256,002.79) (442,114.39) ($157,774.96) $195, 072.98 (82,897.28) (35,412.99) ($76, 762.71) 164. Bank Balance as of November 1, 2006 $195,072.98 Add: Deposits to Checking Account 432,057.52 Add: Transfers from Investment Accounts 276,625.46 Less: Cancelled Checks (113,915.53) Less: Transfers to Investment Accounts (432,057.52) Less: ACH Debits ($158.977.73) Bank Balance as of November 30, 2006 $198,805.18 Less: Transfers to Investment Account (82,897.28) Less: Outstanding Checks (33,483.20) Less: Retirement Check Run Nov. 30, 2006 ($82,424.70) Reconciled Balance as of November 30, 2006 $--0- Bank Balance as of December 1, 2006 $198,805.18 Add: Deposits to Checking Account 618,842.78 a Add: Transfers from Investment Accounts i 267,317.37 E Less: Cancelled Checks (129,926.87) ' Less: Transfers to Investment Account 4 (302,613.73) Less: ACH Debits ($153.342.76) Bank Balance as of December 31, 2006 i $499,081.97 f Less: Transfers to Investment Account (399,656.99) Less: Outstanding Checks (21,416.31) I Less: Retirement Check Run Dec. 31, 2006 ($78.008.67) Reconciled Balance as of December 31, 2006 I Bank Balance of January 1, 2007 $499,081.97 Add: Deposits to Checking Account 104,642.28 Add: Transfers from Investment Accounts 463,784.03 Less: Cancelled Checks (141,699.57) Less: Transfers to Investment Account (503,768.61) Less: ACH Debits ($158.906.03) Bank Balance as of January 31, 2007 $263,134.07 Less: Transfers to Investment Account (1,606.84) Less: Outstanding Checks (184,645.16) Less: Retirement Check Run January 31, 2007 ($76.882.07) Reconciled Balance as of January 31, 2007 $� Requisitions Mr. Namie stated that requisitions for the months of November 2006 through February 2007 totaled $1,382,849.03. 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. 1 1 j 165 Sold By IMR Lim!ted Form B25 EOCA 022O4 November 2006 Distributions Check Payee Amount 3058 Richard M. Birch $ 1,072.3; 3059 Margaret R. Bridges 11,676.8, 3060 Terry S. Craft 4,740.9! 3061 Suzanne Dorsey 2.& 3062 Helen Geisler 109.6 3063 Kirk A. McCartney 10,288.9� 3064 Washington County Cash Disbursement Account 10,647.71 Transfer PNC Bank 16,806.31 Transfer Washington County Retirement Account 221,279.91 Total November 2006 Distributions $276,625.4i December 2006 Distributions Check Payee Amou 3065 James Crites II 787.7 3066 Rachelle Groves 2,868.7 3067 Shelly Harvison 2,147.8 3068 PNC investments as trustee of IRA of Paul J. Mitchell 12,309.7 3069 Kimberly A. Sobczak 247.7 3070 Marilyn Strang 870.7 3071 Washington County Regular Payroll Escrow Account 258.1 3072 Washington County Cash Disbursement Account 15,468.1 Transfer PNC Bank 11,444.9 Transfer Washington County Retirement Account 220,913.8 Total December 2006 Distributions $ 267,317.5 January 2007 Distributions Check Payee Amount 3075 Estate of Frances N. Arbuckle $ 53.20 3076 Clara Lee Barlow 5,032.70 3077 National City Bank as trustee of IRA of Clara Lee 110,177.77 Barlow 3078 Kristine Briggs 33,814.73 3079 PNC Bank as trustee of IRA of Tameka King- 7,119.54 Buchak 3080 Debbie A. Davis 621.29 3081 Citizens Bank as trustee of IRA of Candise J. 1,326.05 Kovakchuk 3082 Dolfi Funeral Home (Beneficiary of Patricia 18,116.32 Rusinack) 3083 Charlotte M. Thomas 632.96 3084 Troy C. Ware 3,619.93 .G171 ni iywI i vvui ny lidsl I LJIsumsemeni /HCCOunt 43,275.36 Transfer PNC Bank 19,579.12 Transfer Washington County Retirement Account 220,415.06 Total January 2007 Distributions $463 784 03 February 2007 Distributions Check Payee Amount 3086 Estate of Mary Patterson $283.02 3087 Raymond Bukowski 110.13 3088 Catherine Mae Bunn 2,067.27 3089 Tami R. Collingwood 775.88 3090 Howard Cummins Jr. (Beneficiary of Elizabeth 26,571.42 Cummins) 3091 Christine L. Emery 8,357.40 3092 Elizabeth Furbee 4,044.02 3093 Jenny R. Hoefler 97.25 3094 Ila R. LaPosta 627.91 3095 Brittany McWreath 196.20 3096 Prudential Mutual Fund Service as trustee of IRA of 2,646.28 Lee A. Myers 3097 Jeff Nicholson 132.25 3098 Beth A. Ross 14,993.15 3099 Sharon L. Zets (Beneficiary of Theodore Zets) 21,034.46 3100 Washington County Cash Disbursement Account 50,279.73 Transfer PNC Bank 23,501.45 Transfer Washington County Retirement Account 219,404.14 Total February 2007 Distributions 375,121.96 Old Business None. New Business P Mr. Burns noted for the record that the 2007 Retirement Fund budget was $4,239,308.00. Mr. Namie noted for the record that the Audit of the Financial Information of the Washington County Employees Retirement Fund for the year ending December 31, 2005 has been received and that there were no findings or comments. Mr. Namie stated that per County Code, a cost of living adjustment for Sold By IMR Limited Form 825 E00102204 *e irees must be discussed every three years. In light of this requirement, Mr. Burns asked for a motion to grant a cost of living. In the absence of a motion, a cost of living adjustment will not be granted at this time. Mr. Burns entertained a motion for the purchase of Employee Benefit Statements from The Hay Group at a cost of $1.75 per statement for a total approximate cost of $1,813.00. The motion was moved by Mr. Maggi and seconded by Mrs. Irey. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns — yes. Mr. Burns entertained a motion to ratify an MOU dated February 20, 2007 for the approval of a disability pension request from Lucinda K. Pushey. Mrs. Pushey was approved to receive a Social Security Disability Pension effective September 2006. Her County Disability Pension would be effective March 1, 2007. The motion was moved by Mr. Maggi and seconded by Mrs. Irey. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns — yes. Mr. Burns noted for the record the following: Active military contribution on behalf of Joseph McMillan for the period 1 01/25/05 to 07/05/06 in the amount of $3,128.43. Active military contribution on behalf of Thomas Jess for the period 09/14/05 Ito 02/23/06 in the amount of $1,903.04. Presentations IC. S. McKee — Gene Natali, Jr. Mr. Natali began by stating that the portion of the County's money managed by C.S. McKee increased from $46, 018,000 at the beginning of the fourth quarter to $48,516,000. On the value side for the quarter, C.S. McKee caught the benchmark, 7.78% versus the Russell 1000 Value at 8%. On the fixed income side, C.S. McKee outperformed the benchmark, 1.47% versus the benchmark of 1.24%. Mr. Natali explained that on the fixed income side, C.S. McKee tends to bet m short duration. If bond prices rise, the County will not realize as much of an ncrease, but if bond prices fall, the County will not be hit as hard. C.S. McKee's 3oal is to gain on the yield -to -maturity, a strategy that has worked well in the past. )n the equity side, C.S. McKee's strategy in the current market environment is to )uy as much growth within the confines of being a value manager. Mr. Shone Mr. Natali if he could discuss the differences between C.S. McKee's core core proau C.S. McKee to buy names that they are unable to buy in the value product. The core product allows them to buy both value and growth, at their discretion, within confines of a 60-40 cap in either direction. Mr. Shone said that he would like to discuss the possibility of C.S. McKee becoming Washington County's core mane as a part of his investment policy presentation. Emerald Advisors — Tom Datillo Mr. Datillo stated that for the 4th quarter of 2006, Emerald came back to their', benchmark and, although this essentially resulted in a neutral return for the year, Emerald's return of 13.33% was significantly better than the actuarial assumption. He also stated that small cap is the most volatile asset class on Wall Street. Addin active management makes it even more volatile. Mr. Shone asked Mr. Datillo to elaborate on why the County should continue to invest in small cap growth since it has not done well for the past seven years and why the County should choose Emerald as their small cap manager. Mr. Datillo responded that the County should continue to invest in small cap growth because historically small caps have been the leaders of all the asset classes and that Emerald manages to the mandates to which they were hired. Mr. Shone stated that one of Peirce Park's recommendations will be that the County switch to Emerald's mid -cap growth product instead of their small cap. Mr. Namie asked Mr. Datillo to respond to Mr. Shone's recommendation. Mr. Datillo agreed that a very strong argument could be made that mid -cap growth can produce the majority of the same returns as small cap with a lot less risk. Peirce Park — Michael Shone Mr. Shone began with a summary of investment performance along the market sectors and a discussion of traditional real estate investment trusts (REITs) versus indexed REITs. Historically, fixed income has been up over the past 10 years. On the equity side, value has historically outperformed growth. The County's retirement plan made approximately $4 million dollars in the 4tn quarter of 2006, translating to a 4.4% return before fees. For the year, the plan was up approximately $8.1 million, a return of 9.6% before fees and 9.1 % net of fees. Since the actuarial assumption of 7.5% was exceeded, the County's funded status is improved and the amount of contributions is reduced. As for individual investment manager performances, both fixed income managers, BlackRock and C.S. McKee, have performed very well. On the international side, The Boston Company has consistently beat their benchmark. Ark Asset Management's poor performance in 2006 wiped out all of their good years. Likewise, Emerald's small cap growth performance for the last 3 years has not been stellar, but Mr. Shone stated that one of his recommendations will be for the County to consider Emerald's mid -cap growth product. At this time, Mr. King excused himself for a prior commitment. 1 1 rMENG mil Sold By IMR Limited Form 825 E00102204 goals as a riauciary: -i. securing the benefit promise; 2.) minimizing the County's contributions; and 3.) minimizing the County's annual contribution volatility. One of the main considerations in achieving these goals is the mix of stocks and bonds in the long- term asset allocation. Other considerations are the mix of U.S. stocks and international stocks, the mix of growth versus value stocks, and how much will be allocated to fixed income. After a discussion of the above among Mr. Shone and members of the Board, Mr. Namie made a motion that the asset allocation be reflected as 53% in domestic equities, 11 % in international equities, 32% in bonds, and 4% in real estate. The motion was seconded by Mrs. Irey. Those in favor signified by saying aye. Motion carried unanimously, noting the absence of Mr. King. Mr. Shone stated that he will draft an investment policy statement, noting the County's policy against investing in tobacco products, and present it at the next meeting for the County's solicitor's review. Mr. Shone began a discussion of the implementation issues. Because value has been outperforming growth for so long, Mr. Shone said that he has reservations about the timing of moving towards a two-thirds value and one-third growth portfolio. He suggested that the County might want to slowly work towards this goal. He stated that he would also like to see the County add indexing to the large cap value and/or large cap growth area. He reiterated that he would like to see Emerald become the County's mid -cap growth manager and G.S. McKee become the County's core manager. As for Ark, he feels that there is justification to either replace them or, at the very least, significantly trim back their portion of the portfolio. In Mr. Shone's discussion with Ark, they indicated that they are willing to accept less than their normal investment amount of $10 million in order to keep the County's account. If the County were to drop Ark, Mr. Shone would definitely recommend moving C.S. McKee to a core manager and add an indexer fund to large cap value. Mr. Shone provided the Board members with a list of implementation strategies, including those discussed above, so that the Board could reach a consensus before the next meeting. The meeting was adjourned at approximately 4:15 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: , 2007 ATTEST:�� 7 Me �3 €j 3 Minute No. 219 Washington County Retirement Board Washington, PA May 17, 2007 The quarterly meeting of the Washington County Retirement Board was held at approximately 10:55 a.m. on Thursday, May 17, 2007 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; Deputy Controller Randy Vankirk; Chief Clerk Mary i Helicke; Secretary Joyce Thornburg; Audit Manager Kathy Demarest; Solicitor Lynn ; DeHaven; Observer -Reporter representative Barbara Miller; concerned citizen John Adams; Gene Natali representing C.S. McKee; Dave Reichert representing Hay j W Group, Inc.; Grant Duffield and Steve Shapiro representing PNC; Tim D'Arcy and { Don Perault representing BlackRock; and Michael Shone representing Peirce Park. Approval of Minutes Mr. Burns entertained a motion to approve Minute No. 218 dated March 15, ,k 2007. The motion was moved by Mr. Maggi and seconded by Mr. King that the 3 above mentioned minutes be approved as written. if No discussion followed. xt i Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns — yes. t Public Comment s Mr. Adams requested that the Commissioners consider rescinding their annual cost of living raises as this in turn will result in higher pension costs. Mr. i Burns thanked Mr. Adams for his comments. Treasurer's Report Mr. King stated that from February 2007 through April 2007 the bank balance was reconciled to zero. It was moved by Mr. King and seconded by Mr. Maggi that the report be approved. r' No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns — yes. Retirement Allowance Report Bank Balance as of February 1, 2007 $ 263,134.07 Add: Deposits to Checking Account 203,388.44 1