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Home My WebLink AboutCOMM - Meeting Minutes - 219 - 5-17-2007 - RETIREMENTwig Sold By IMR Limited Form 825 E00102204 Ll Ll ivir. onone noiea tnat vvasnington c;ounty nas �j goals as a tiauciary: 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 C.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. �l THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: , 2007 ATTEST: v ' 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 Helicke; Secretary Joyce Thornburg; Audit Manager Kathy Demarest; Solicitor Lynn s DeHaven; Observer -Reporter representative Barbara Miller; concerned citizen John Adams; Gene Natali representing C.S. McKee; Dave Reichert representing Hay Group, Inc.; Grant Duffield and Steve Shapiro representing PNC; Tim D'Arcy and4 Don Perault representing BlackRock; and Michael Shone representing Peirce Park. Approval of Minutes i Mr. Burns entertained a motion to approve Minute No. 218 dated March 15, 2007. The motion was moved by Mr. Maggi and seconded by Mr. King that the above mentioned minutes be approved as written. No discussion followed. :1 Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns s — yes. €a Public Comment 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. 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. 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 Add: Deposits to Checking Account $ 263,134.07 203,388.44 1 1 So;d Sy IMR Limited Form 825 E00102204 Ll 1 1 Add: Transfers from Investment Accounts 401,104.82 Less: Cancelled Checks (304,863.84) Less: Transfers to Investment Account (229,371.30) Less: ACH Debits (162,810.36) Bank Balance as of February 28, 2007 $170,581.83 Less: Investment Transfer (1,606.84) Less: Outstanding Checks (85,624.09) Less: Retirement Check Run February 28, (83,350.90) 2007 Reconciled Balance as of February 28, 2007 0- Bank Balance as of March 1, 2007 $170,581.83 Add: Deposits to Checking Account 308,913.56 Add: Transfers from Investment Accounts 215,162.88 Less: Cancelled Checks (180,293.16) Less: Transfers to Investment Accounts (205,627.79) Less: ACH Debits (159,858.56) Bank Balance as of March 31, 2007 $148,878.76 Less: Transfers to Investment Account (31,628.15) Less: Outstanding Checks (37,506.07) Less: Retirement Check Run March 31, 2007 (79,744.54 Reconciled Balance as of March 31, 2007�0- MBank Balance as of April 1, 2007 $148,878.76 Add: Deposits to Checking Account 203,861.38 Add: Transfers from Investment Accounts 384,418.03 Less: Cancelled Checks (172,450.10) Less: Transfers to Investment Account (328,854.37) Less: ACH Debits (171,003.10) Bank Balance as of April 30, 2007 $64,850.60 Add: Transfers to Investment Account 104,334.97 Less: Outstanding Checks (88,219.88) Less: Retirement Check Run April 30, (80,965.69) �2007 Reconciled Balance as of April 30, 2007 Requisitions Mr. Namie stated that requisitions for the months of March 2007 and April 2007 totaled $682,106.05. It was moved by Mr. Namie and seconded by Mr. King that the requisitions be approved. No discussion followed. Those in favor signified by saying aye. Motion carried unanimously. 1172 March 2007 Check Payee j; Amount 3102 Shelley L. Aubrey $ 12,405.79 j 3103 James Dimmack 1,4'3.45 3104 Ameriprise Financial as trustee of IRA of David J. 4,5'6.72 Holovack ' 3105 Krystal A. Lewis 1.04 € 3106 Cheryl Lynn Liebold k 5,908.99 i 3107 Brenda Lusher 4,1$3.84 3108 Jeffrey A. Nicholson 15.95 3109 Capital Bank & Trust as trustee of IRA of Charlene 3,80.05 Scherich 3110 3 Valerie Schnore 1,104.69 3111 Washington Co. Cash Disbursement Account 18,5#7.55 Transfer Washington Co. Payroll Fund 1,1�12.18 Transfer PNC Bank 15,82.59 Transfer Washington County Retirement Account 217,501.00 f t Total March 2007 Distributions s $286,80.84 i April 2007 Distributions Check Payee i, Amount y 3112 Estate of Robert Harms 29,465.32 3113 Crissy Bell 02.45 3114 Sabina Bobik f 62.13 3115 Tammy Jenkins 1,38.82 3116 Kim Kadash 8$7.39 E 3117 Joanne Longstreath 3,8�2.12 s 3118 i Beverly May 3�2.64 3119 Dawna M. Ribel 37,49.35 3120 Brooke A. Rice 6$0.89 3121 Yolanda L. Sadler 1,80.37 3122 Bobbi Jo Styperk 2,7$7.61 3123 Theresa Ann Wagner 1,4 7.49 3124 Metlife FBO Judy Zeremba 7,40.30 3125 Washington County Payroll — Copay Retirees t 1,1 2.18 3126 Washington County Cash Disbursement Account 56,9f4.76 Transfer PNC Bank 30,005.48 Transfer Washington County Retirement Account 219,5 2.91 Total April 2007 Distributions $ 395,2 2.21 Old Business None. IMR Limited Farm 825 E00102204 1713 1 Mr. Burns entertained a motion to amend the purchase of employee benefit statements from the Hay Group from a cost of $1.75 per statement to $1.85 per statement. The motion was moved by Mr. Namie and seconded by Mrs. Irey. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns — yes. Presentations Hay Group — David Reichert Mr. Reichert stated that the County's annual required contribution for 2007 is just under $1.5 million, down from a little over $1.8 million in 2006. The decrease was due primarily because of higher than expected investment gains and lower than salary increases. As of January 1, 2007, the County's plan was 95.6% nded, which Mr. Reichert stated was a very good number. C. S. McKee — Gene Nat For the quarter ending March 31, 2007, C.S. McKee outperformed both on the value equity and fixed income sides. As of the end of the quarter, the return on value equity was 1.3% and the return on fixed income was 1.5%. Year-to-date, the return on value equity is 7.7% and the return on fixed income is 2.2%. Because of Ithe market's performance, C.S. McKee is not making any changes in investment !strategy at this time. I BlackRock — Don Perault/Tim D'Arcy BlackRock has been positioning the County's portfolio very defensively in the market. Mr. Perault stated that BlackRock is underweight in credit and corporate bonds and has stayed away from the sub -prime market. In a bond market with little volatility, it is hard to make money, but, after fees, BlackRock had a 6% return for the one-year and is slightly ahead of the benchmark at the three-year. Mr. Shone asked Mr. Perault to explain why the County should not just index BlackRock's Iportion of the portfolio. Mr. Perault responded that when the market is more volatile, BlackRock historically does better and is able to find the better bonds. They feel that the market is about to change and that they are able to take !advantage of the opportunities resulting from increased volatility. Peirce Park — Michael Shone Mr. Shone began with a summary of investment performance. Stocks were up for the quarter with international outperforming domestic. Real estate and fixed income were also up for the quarter. The County had net earnings of $1.4 million for the quarter ending March 31, 2007 and $4.7 million for the year-to-date. The lCounty's total fund ranks at the 64th percentile which, while good, could be better. Mr. Shone stated that all of the investment managers were up for the quarter. 17 4 C. S. McKee struggled last year, but is now above average. Ark's numbers for the quarter are better, but they are still below their benchmark. Evergreen, Emerald, and the Boston Company were all up for the quarter and all beat their benchmarks. As noted earlier, BlackRock does better when the market is more volatile, but was still up for the quarter. Mr. Shone requested that PNC split C.S. McKee into two separate accounts for record -keeping purposes — one account for equity and one for value. Mr. Shone said that he would like to see the County up the international equities asset allocation to 12% and remove 1 % from domestic equities. The motion was moved by Mr. Namie and seconded by Mrs. Irey. — yes Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns The Board also decided to move forward with a large cap index or enhanced index manager search. It was moved by Mr. Namie and seconded by Mr. Maggi to authorize Mr. Shone to begin a search. — yes. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns It was also moved by Mr. Namie and seconded by Mr. Maggi to move C.S. McKee's large cap portion of the portfolio to their all -cap product. — yes. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns Lastly, the Board voted to move Emerald's portion of the portfolio to their mid -cap product. It was moved by Mr. Namie and seconded by Mrs. Irey. — yes. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey — yes; Mr. Maggi — yes; Mr. Burns The meeting was adjourned at 11:52 a.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: , 2007 ATTEST: t I �__ 1 1