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Home My WebLink AboutCOMM - Meeting Minutes - 241 - 2-16-2012 - RETIREMENTSold ev IMR Limited Form 825 EQ0102204 2715 Minute No. 241 Washington County Retirement Board Washington, PA February 16, 2012 The quarterly meeting of the Washington County Retirement Board was held at approximately 10:38 a.m. Thursday, February 16, 2012, in the Public Meeting Room with the following members being present: Commissioners Larry Maggi, Harlan Shober, and Diana Irey Vaughan; Controller Michael Namie; and Treasurer Francis L. King. Also present: Chief Clerk Mary Helicke; Secretary Linda Belcher; Director of Finance Roger Metcalfe; Director of Administration Scott Fergus; Solicitor Lynn DeHaven; concerned citizens Frank Byrd and John Adams; Observer -Reporter representative Barbara Miller; Mark Gensheimer and Bob McGee representing C.S. McKee; and Lee Martin representing Peirce Park. As per Act 96, County Pension Law, the oath was administered by the chief clerk to all members of the board including newly elected commissioner, Harlan G. Shober Jr. Approval of Minutes Mr. Maggi entertained a motion to approve Minute No. 240 dated November 17, 2011. The motion was moved by Mrs. Irey Vaughan and seconded by Mr. Shober that the above mentioned minutes be approved as written. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Mr. Shober abstained. Motion passed. 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 November 2011, December 2011, and January 2012, the bank balance was reconciled to zero. It was moved by Mr. King and seconded by Mrs. Irey Vaughan that the report be approved. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. Retirement Allowance Report Bank Balance as of November 1, 2011 $ 121,605.1 Add: Deposits to Checking Account 609,602. 276 Less: Cancelled Checks (118,608.211) Less: Transfer to Investment (172,783.6(1) Less: ACH Debits 374 012.7 Bank Balance as of November 30, 2011 $ 65,803.2"� Less: Outstanding Checks ?f (43,947.2{) j Less: Retirement Check Run 21 856.0 Reconciled Balance as of November 30 2011 - - E. Bank Balance as of December 1, 2011 $ 65,803.2 Add: Deposits to Checking Account 489,789.4 Add: Transfers from Investment Account 108,627.3 Less: Cancelled Checks (152,196.7) Less: ACH Debits 399 221.0 Bank Balance as of December 31, 2011 $ 112,802.3 Less: Outstanding Checks (92,880.54) r Less: Retirement Check Run 19 921.7 Reconciled Balance as of December 31, 2011 $ -0- t �7 Bank Balance as of January 1, 2012 { $ 112,802.3 ° Add: Deposits to Checking Account i{ 236,053.0 Transfers from Investment Account 254,367.5' 8 Less: Cancelled Checks (128,936.6 sjg) Less: ACH Debits f 390 593.9 Bank Balance as of January 31, 2012 $ 83,692.2' Less: Outstanding Checks (68,912.5 ) Less: Retirement Check Run 14 779.7 Reconciled Balance as of January 31, 2012 $ -0- Requisitions Mr. Namie stated that requisitions for the months of November 2011, December 2011, and January 2012 totaled $1,525,656.47. It was moved by Mr. Namie and seconded by Mr. King that the requisitions be approved. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. November 2011 Check Payee Amount 471 Jeffrey Ammons $ 353.26 472 Karen Keyser Cappeluti 1,845.09 473 Sarah E. Gossett 1,320.26 1 7 2717 Sold By IMR Limited Form 825 E00102204 474 Eva P. Hershey 4,017.98 475 Arieal S. Jones 440.19 476 Rainya Kennedy 1,555.25 477 Legg Mason as trustee of IRA of Jennifer Kita 8,063.79 478 Carol J. Lockett 23.07 479 Susan A. Melzer 63.99 480 Brian Patnesky 908.69 481 Michael P. Pest 201.53 482 American Funds as trustee of IRA of Timothy E. Morrell 5,165.83 483 Victor F. Lipari 8,000.00 484 Washington County Regular Payroll Escrow Account 5,560.94 485 Washington County Cash Disbursement Account 18,028.66 Transfer PNC Bank 26,463.60 Transfer Washington County Retirement Account 354,806.94 Total November 2011 Distributions S 436,819.07 December 2011 Check Payee Amount 486 Pamela Matthews $ 59,799.81 487 UPMC Savings Plan FBO Janet Wessel 8,316.18 488 Cara Andrews 1,442.02 489 Cynthia Bush 21,553.41 490 PNC Investments as trustee of IRA of Angelina A. East 28,315.60 491 Charles Schwab as trustee of IRA of Andrew Egut 10,798.59 492 Lisa Harden 14,634.41 493 Joshua Haskins 3,018.42 494 Louis C. Otto 2,332.57 495 Teresa Williams 14,700.89 496 Washington County Regular Payroll Escrow Account 5,320.35 497 Washington County Regular Payroll Escrow Account 257.32 498 Washington County Cash Disbursement Account 20,615.72 Transfer PNC Bank 51,449.35 Transfer Washington County Retirement Account 355,862.18 Total December 2011 Distributions S 598,416.82 January 2012 Check Payee Amount 500 Washington County Cash Disbursement Account 11,561.44 501 Estate of Ronald R. Smith 55.92 502 Aaron Barnes 424.16 503 Mary E. Bilitski 1,415.26 504 Grant M. Cooper 2,525.67 505 Kathleen G. Hill 185.12 506 Chelsea L. Lampe 199.78 • -- w 507 Jonathan V. Mattozzi 508 Kelley A. Miller 509 Dennis P. Popojas 510 James P. Rega II 511 Steven M. Toprani 512 Washington County Regular Payroll Escrow Account Transfer PNC Bank Transfer Washington County Retirement Account Total January 2012 Distributions Old Business None. 419.42 2,110.001 s 8,201.51 10,671.86 40,234.47 5,911.891 38,400.351 368,103.73 $ 490,420M New Business Mr. Maggi entertained a motion to approve a request from Nella Naccarato to buy back unpaid leave of absence time from July 16, 1994 to August 18, 1994, July 9, 1997 to August 1, 1997 and October 24, 1997 to January 1, 1998 in the amount of $774.05. The motion was made by Mrs. Irey Vaughan and seconded by Mr. Namie. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. Mr. Maggi entertained a motion to ratify an MOU dated February 9, 2012 for the approval of a disability pension request from Bryan B. Latkanich. Mr. Latkanich was approved to receive a Social Security Disability Pension effective August 2010. His County Disability Pension would become effective retroactive to February 8, 2012. The motion was moved by Mrs. Irey Vaughan and seconded by Mr. Shober. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. Mr. Maggi entertained a motion for the adoption of the 2012 Retirement Fund budget. As required, the budget was also approved and adopted by the Board of Commissioners. The motion was moved by Mr. King and seconded by Mr. Shober. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. 0 1 2 719 Sold By IMR Limited Fcrm 825 E00102204 Mr. Maggi entertained a motion for the purchase of Employee Benefit Statements from the Hay Group at a cost of $1.85 per statement for a total approximate cost of $2,127.50. The cost per statement remains unchanged from 2011. The motion was moved by Mrs. Irey Vaughan and seconded by Mr. Shober. No discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. Presentations C.S. McKee — Mark Gensheimer/Bob McGee Mr. Gensheimer began by stating that the expectations for 2011 had been that of modest economic growth and recovery. Unfortunately, after a relatively positive first quarter, market performance in the second and third quarters was much worse than expected. The market came back strong in the fourth quarter with U.S. companies growing at about 10%. C.S. McKee's performance in the equity market, however, lagged a bit due to stock selection. At this point, Mr. Gensheimer turned the presentation over to Mr. McGee to discuss performance details. Mr. McGee stated that a large portion of C.S. McKee's underperformance in 2011 came in the fourth quarter, mostly due to the active decision to emphasize growth over dividend yield. On the health care side, both Pfizer and Merck, both names not in C.S. McKee's portfolio, have high dividend yields, but no growth potential due to a lack of new drugs. C.S. McKee's decision not to own them in the portfolio because of this hurt in terms of yield. Going forward, Mr. McGee feels that C.S. McKee's stock position will lead to double digit returns. Mr. Gensheimer asked Mr. McGee to address sector allocation with the Board. Mr. McGee stated that C.S. McKee's largest underweighting is in the financial sector, a decision based on a slow growing economy, flat interest rates, and increasing regulations on financial institutions. The biggest overweighting is in industrials and technology, areas that C.S. McKee feels have the largest growth potential. Mr. Shober asked Mr. McGee to compare C.S. McKee's performance versus the market for 2011. Mr. McGee responded that for the one year, C.S. McKee was below median and also below benchmark. However, Mr. McGee reiterated the belief that C.S. McKee's market positioning will add value over the long run. Peirce Park — Lee Martin Mr. Martin began his presentation with a year-end overview, stating that 2011 was a very volatile, "risk on, risk off' type of year. With this type of market environment, indexing tends to beat active management. Indexing finished in the top quartile for the year, proving why it is important to diversify and include both types of management styles in a portfolio. All things considered, the U.S. is much better off performance -wise than the rest of the developed world and is in a prime position for growth. Unemployment is still a little high and it will probably be another year before there is significant improvement, but things are moving in the right direction. As for the performance summary, the County's total fund was up 6.5% for the quarter, a gain of about $6 million. Through January 2012, the portfolio was up another 4.2%, bringing 180 the total plan value to about $103 million. Mr. Martin stated that the Board's decision to rebalance to the policy index has definitely paid off and that over the last three years, the County's fund has performed in the top quartile of all public funds. Looking at the individual managers, Twin Capital finished in the top decile for the year. C.S. McKee's large cap product struggled, finishing about 11/2% behind the index. C.S. McKee's smid-cap product is much more concerning; it finished behind the benchmark every quarter of 2011. Emerald didn't have a great year, but is still up about 1 % a year over index since inception. Real estate is up over 22% a year, on average, over the last three years and continues to do well for the County. On the global side, American Funds continues to do well. Because of a value tilt, Dodge and Cox struggled for the year but is about 2% above the index for the three-year period. Both fixed income managers, Federated and C.S. McKee, went short on duration in 2011 on the assumption that interest rates would rise. Federated finished the year at index and C.S. McKee finished above index. Because the County's portfolio is made up of approximately 60% equities, Mr. Martin wanted to discuss with the Board an option to reduce volatility through the use of a global tactical asset allocation manager. The Board asked Mr. Martin to send some reference material before the next meeting. The meeting was adjourned at 11:33 a.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: 2012 .�. ATTEST: 'f7 t ` 1 1