HomeMy WebLinkAboutCOMM - Meeting Minutes - 231 - 11-19-2009 - RETIREMENT2215
Investors and C.S. McKee have added value to the portfolio as expected. On the international 1
side, Alliance Bernstein performed poorly all of last year as well as lagged for the first half of
this year. Their performance is up slightly for the quarter, but Peirce Park is still recommending
that they be replaced. In addition to performance concerns, Mr. Shone noted that their CEO has
left and over $24 billion has also left the firm, usually a sign that the institutional players have
lost confidence in them. Looking at Artio Global, their performance is up 12% for the year vs.
their benchmark of 24.5%. While this appears to be a lot of underperformance, Artio's
investment strategy is very defensive which results in steady performance without drastic highs
or lows. Artio has no other underlying issues, which is why Mr. Shone is recommending staying
with them but making a change out of Alliance Bernstein. Peirce Park has narrowed their list of
replacements to 3, from which the Board will choose at the next meeting.
In other new business, Mr. Maggi entertained a motion to remove the tobacco restriction
from the investment policy statement. It was moved by Mr. Namie and seconded by Mr. Maggi
that this change be made. At this time, Mr. Burns took the opportunity to address the Board
expressing his opposition to this move, quoting numerous statistics on the dangers of cigarette
smoking and its cost to society. Mr. Namie responded that, for the record, Washington County is
already invested in tobacco, as this restriction cannot be imposed on mutual funds. Removing
this restriction would simply be a housekeeping procedure that would allow the investment
managers to invest as they see fit. Mr. Maggi agreed, stating that the Board would not be
advocating tobacco use, but would in fact be allowing the investment professionals to do their
job.
Roll call vote taken:
Mr. Namie — yes; Mr. Burns — no; Mr. Maggi — yes.
Motion passed.
The meeting was adjourned at 11:47 a.m.
THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL:
, 2009
ATTEST: �
22 6
Minute No. 231
Washington County Retirement Board
Washington, PA November 19, 2009
The quarterly meeting of the Washington County Retirement Board was held at
approximately 10:40 a.m. on Thursday, November 19, 2009 in the Public Meeting Room with
the following members being present: Commissioners Larry Maggi, Diana Irey, and J. Bracken
Burns, Sr.; Controller Michael Namie; and Treasurer Francis L. King. Also present: Chief Clerk
Mary Helicke; Secretary Joyce Thornburg; Director of Finance Roger Metcalfe; Audit Manager
Kathy Demarest; Solicitor Lynn DeHaven; Director of Administration Scott Fergus; Observer -
Reporter representative Barbara Miller; concerned citizen John Adams; Gene Natali, Jr.
representing C.S. McKee; Dave Reichert representing Hay Group; and Lee Martin representing
Peirce Park.
Approval of Minutes
Mr. Maggi entertained a motion to approve Minute No. 230 dated August 20, 2009. The
motion was moved by Mr. Namie and seconded by Mr. King that the above mentioned minutes
be approved as written.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Ms. Irey — yes; Mr. Burns — yes; Mr. Maggi — yes.
Motion passed unanimously.
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.
Treasurer's Report
Mr. King stated that for August, September, and October 2009, the bank balance was
reconciled to zero. It was moved by Mr. King and seconded by Ms. Irey that the report be
approved.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Ms. Irey — yes; Mr. Burns — yes; Mr. Maggi — yes.
Motion passed unanimously.
Retirement Allowance Report
Bank Balance as of August 1, 2009 $ 353,498.19
Add: Deposits to Checking Account 544,248.15
Add: Transfers from Investment Accounts 657,899.52
Less: Cancelled Checks (360,726.95)
Less: Transfer to Investment (450,237.52)
Less: ACH Debits (231,697.15)
Bank Balance as of August 31, 2009 $ 512,984.24
1
1
1
221
825
Less:
Outstanding Checks
(418,886.03)
Less:
Retirement Check Run August 31, 2009
(71,344.65)
Reconciled Balance as of August 31, 2009
$ 2
Bank Balance as of September 1, 2009
$ 512,984.24
Add:
Deposits to Checking Account
1,160,271.30
Add:
Transfers from Investment Accounts
354,520.42
Less:
Cancelled Checks
(511,772.83)
Less:
Transfer to Investment
(1,141,717.02)
Less:
ACH Debits
(226,778.60)
Bank
Balance as of September 30, 2009
$ 147,507.51
Less:
Transfers to Investment
(53,998.48)
Less:
Outstanding Checks
(13,546,38)
Less:
Retirement Check Run September 30, 2009
(79,962.65)
Reconciled Balance as of September 30, 2009
$ Q
Bank
Balance as of October 1, 2009
$ 147,507.51
Add:
Deposits to Checking Account
680,922.01
Add:
Transfers from Investment Account
522,090.43
Add:
Other Credits
27.51
Less:
Cancelled Checks
(165,579.26)
Less:
Transfer to Investment
(734,920,49)
Less:
ACH Debits
(265,009.14)
Bank
Balance as of October 30, 2009
$ 185,038.57
Add:
Transfers to Investment
(12,585.36)
Less:
Outstanding Checks
(114,755.31)
Less:
Retirement Check Run October 30, 2009
(57,697.90)
Reconciled Balance as of October 30, 2009
$ -0-
Requisitions
Mr. Namie stated that requisitions for the months of August, September, and October
2009 totaled $1,645,070.94. It was moved by Mr. Namie and seconded by Mr. Burns that
the requisitions be approved
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Ms. Irey — yes; Mr. Burns — yes; Mr. Maggi — yes.
Motion passed unanimously.
Check
Payee
Amo#nt
122
Gloria Graff
$ 9.86
123
Kenneth Ferri
4 .42
124
Mary Kostelich
8 .18
125
First Niagara Bank as trustee of IRA of Jeffrey L. Dykstra
181,52�.63
126
Jeffrey L. Dykstra
4,14.77
127
Prudential Annuity Service as trustee of IRA of John R.
Penderville
173,45.05
128
Stifel Nicolaus as trustee of IRA of Diane L. Adams
i;
6,98''.47
E
129
i
Traci Fedrick
s
18,12 ,96
130
i
Diane K. Miller
8,931.83
131
Merrill Lynch as trustee of IRA of Susan Robinson
3,55.69
132
Traci Skolyak
16,534.51
133
Kristen A. Trussa
ri
7695
134
Alexis Williams
3,08;.16
135
Michelle Zediker
r�
14.69
136
Washington County Cash Disbursement Account
°I
17,90.43
137
Washington County Regular Payroll Escrow Account
2,34145
Transfer
PNC Bank
21,99109
Transfer
Washington County Retirement Account
i
308 84 ii OS
Total August 2009 Distributions
S 768,4661,09
September 2009
Check
Payee
Amou
139
Estate of Helen K. Jollick
$ 27.5
140
Ralph Eric Burwell
1,263.1
141
Andrew W. Rutt
1,663.1
142
Jessica D. Smitley
3,129.5
143
Ameriprise Trust Co. as trustee of IRA of David Fuchs
3,330.3
144
First Niagara Bank as trustee of IRA of Miranda King
2,598.1
138
Washington County Cash Disbursement Account
15,515.0
145
Washington County Regular Payroll Escrow Account
2,364.3
Transfer
PNC Bank
11,841,21,
Transfer
Washington County Retirement Account
312,787.9.
Total September 2009 Distributions
October 2009
Check Payee Amoun
146 Lauren M. Applegate $ 1,891.74
147 William A. Congelio 1,985.78
148 Jeffrey J. Embert 20,417.82
149 Michael W. Jackson 1,070.49
150 PNC Investments as trustee of IRA of Marcie Legler 39,502.69
1
1
E
221s
Sold By [MR Llrrdjejt form 825 E00102204
152
National Slovak Society USA
as trustee of IRA of Darla Mikulicz
34,551.63
153
Leanna Napolitan
28951
154
Sharee Palmer
5,47059
155
Teri L. Smith
7,65005
156
Washington County Disbursement Account
74,099
68
157
Washington County Regular Payroll Escrow Account
2,36435
Transfer
PNC Bank
20,007
01
Transfer
Washington County Retirement Account
312 426
14
Total October 2009 Distributions
$ 522.090
43
Old Business
None.
New Business
Presentations
C.S. McKee — Gene Natali, Jr.
Mr. Natali stated that the market is very strong compared to where it was 6 months to a
year ago. For the year-to-date, the County's large cap equity return is up 34% compared to
25%, and small cap equity is up 25.5% versus 22.2%, translating to a total equity return of 33%.
Fixed income is up over 10% versus 6.1 % for the year-to-date. The theme for the quarter was
that if you took risk, you were paid. Financials remain the worst performer, a trend that C.S.
McKee feels will continue. Ms. Irey asked whether or not the market's current strong
performance would mean a faster recovery than originally projected. Both Mr. Martin and Mr.
Natali stated that it is too early to tell.
Dave Reichert — Hay Group
Mr. Reichert stated that the County's 2009 Annual Required Contribution (ARC) is $2.4
million, which is about 6% of pay. The usual assumption is 7% of pay for 1/801h class counties.
Washington County has done a good job of managing liabilities and the investment managers
have done a good job managing the investments. Because of this, the ARC is less than what
was expected. Mr. Martin asked Mr. Reichert how Washington County's funded ratio stood
compared to other counties. Mr. Reichert responded that Washington County's ratio is 89%,
which is above average. Mr. Reichert also stated that the County's average salary only went up
3.4% as opposed to the assumed 4.0%, again attributable to good management.
Mr. Reichert also discussed the recent Act 44 legislation and how it introduces an asset
valuation method that may be used to calculate ARC. Hay Group will look at what is available
and calculate the best option for the 2010 Valuation Report.
23 0
Mr. Martin stated that the County's total fund was up 13.8% for the quarter, adding $10
million to the portfolio. Since the end of the quarter, another $3 million has been added,
bringing the year-to-date total added to $16 million. The County ranks in the top 2% of all
public funds for the quarter, and with a year-to-date return of 23 %, ranks in the top 12% of all
public funds for the year. The total fund at present is $87 million.
As for the individual managers' performances, on the equity side, Twin Capital and
Evergreen were above benchmark for both the quarter and year-to-date, C.S. McKee matched
benchmark for the quarter and is above benchmark for the year-to-date, and Emerald matched
benchmark for the quarter but is behind year-to-date. On the fixed income side, both Federated
Investors and C.S. McKee matched their benchmarks for the quarter. Real estate is up 22% year-
to-date and is continuing to rise. Artio was slightly behind for the quarter and the year-to-date.
Alliance Bernstein is about on benchmark for the year-to-date, but with the exit of their CEO and
other professionals combined with the exit of a sizable amount of client money, there is still
enough uncertainty to justify looking elsewhere for an international manager. Peirce Park has
narrowed the list of candidates to three: Dodge & Cox, Harbor International, and DFA. After a
brief overview and discussion of each of the three firms, Mr. Burns made a motion, seconded by
Ms. Irey, to hire Dodge & Cox.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Ms. Irey — yes; Mr. Burns — yes; Mr. Maggi — yes.
Motion passed unanimously.
The meeting was adjourned at 11:40 a.m.
THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL:
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ATTEST:
1
1
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