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HomeMy WebLinkAboutCOMM - Meeting Minutes - 246 - 2-21-2013 - RETIREMENT299 Sold By !MR Limited Form 825 E70102204 1 1 1 Minute No. 246 Washington County Retirement Board Washington, PA February 21, 2013 The quarterly meeting of the Washington County Retirement Board was held at approximately 10:57 a.m. on Thursday, February 21, 2013 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 Joyce Thornburg; Director of Finance Roger Metcalfe; Director of Administration Scott Fergus; Solicitor Lynn DeHaven; concerned citizen Frank Byrd; Observer - Reporter representative Barbara Miller; WJPA representative Tony DiPalma; Lee Martin representing Peirce Park; and Gene Natali, Sr. representing C.S. McKee. Approval of Minutes Mr. Maggi entertained a motion to approve Minute No. 245 dated November 15, 2012. The motion was moved by Mrs. Irey Vaughan and seconded by Mr. Namie that the above mentioned minutes be approved as written. No discussion followed. Roll call vote taken: yes. Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — Motion passed unanimously. Public Comment None. Treasurer's Report Mr. King stated that for October 2012, November 2012, December 2012, and January 2013, 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: yes. Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — Motion passed unanimously. Retirement Allowance Report Bank Balance as of October 1, 2012 $ 111,941.56 Add: Deposits to Checking Account 582,686.14 Add: ACH Credit 121,050.38 Less: Cancelled Checks (165,936.60) Less: ACH Debits (418,584.87) Less: Other Debits (146,550.90) Bank Balance as of October 31, 2012 $ 84,605.71 Add: Transfers into Checking Account 23.11 Less: Outstanding Checks (67,818.06) Less: Retirement Check Run. (16,810.76) Reconciled Balance as of October 31, 2012 $ $ s 300 Bank Balance as of November 1, 2012 $ 84,605.71 Add: ACH Credit 713,576.16 Less: Cancelled Checks (120,990.79) Less: ACH Debits (413,791.50) Other Debits (137,079.29) Bank Balance as of November 30, 2012 $ 126,320.29 Less: Outstanding Checks (109,532.66) Less: Retirement Check Run (16,787.63) Reconciled Balance as of November 30, 2012 $ Q Bank Balance as of December 1, 2012 $ 126,320.29 Add: Deposits to Checking Account 114,119.19 Add: ACH Credit 714,179.79 Less: Cancelled Checks (168,721.26) Less: ACH Debits (412,938.99) Other Debits (344,550.55) Bank Balance as of December 31, 2012 $28,408.47 Transfers into Checking Account (2,465.54) Less: Outstanding Checks (16,008.61) Less: Retirement Check Run 9 9f 34.32) Reconciled Balance as of December 31, 2012 $ 4 Bank Balance as of January 1, 2013 $ 28,408.47 Add: ACH Credit 241,785.61 Add: Other Credits 330,112.79 Less: Cancelled Checks (86,855.10) Less: ACH Debits (427,451.21) Bank Balance as of January 31, 2013 $86,000.56 Transfers into Checking Account (4,000.00) Less: Outstanding Checks (73,017.92) Less: Retirement Check Run (8,982.64) Reconciled Balance as of January 31, 2013 $ -0- Requisitions Mr. Namie stated that requisitions for the months of November 2012, December 2012, and January 2013 totaled $1,627,277.55. It was moved by Mr. Namie and seconded by Mrs. Irey Vaughan 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. 1 1 0 Sold By IMR Limited Form milli 11 I Distributions November 2012 Check Payee Amount 629 Estate of Diane Tatar $ 217.02 630 Kathy Jo Bresnock 8,117.60 631 Jacqueline Campbell 11,255.94 632 Heather Dubina 2,024.91 633 Scott Smiechowski 11,518.10 634 Linda A. Wussick 7,128.49 635 Jackson National Life Ins. Co. as trustee of IRA of 75,429.48 David Shaw 636 Washington County Regular Payroll Escrow Account 5,800.30 637 Washington County Cash Disbursement Account 23,290.51 Transfer PNC Bank 35,479.23 Transfer Washington County Retirement Account 396,212.18 Total November 2012 Distributions December 2012 Check Payee Amount 639 Louis Mazza $ 217.39 640 Debra L. Sicilia 4,552.94 641 Ray A. Price 173.70 642 Allison Marsteller 5,128.29 643 Aaron Patterson 2,919.95 644 Gina Reese 2,873.99 645 Erin Snedeker 9,939.72 646 Washington County Regular Payroll Escrow 5,693.31 Account 647 Washington County Regular Payroll Escrow 257.64 Account 648 Washington County Cash Disbursement 22,981.13 Account Transfer PNC Bank 32,007.99 Transfer Washington County Retirement Account 394,025.37 Total December 2012 Distributions January 2013 Check Payee Amount 649 Estate of Nevada Johns $ 119.84 650 Dawn M. Dowling 11,974.83 651 Holly Christie 2,188.93 652 Fidelity as trustee of IRA of Christina Fox 6,248.13 Grasso 653 Shannon L. Gazvoda 1,763.71 654 Rhonda C. Hiller 3,917.05 655 Jennifer L. Konosky 390.08 656 Amanda B. Kraft 2,917.53 302 657 Tricia L. Maley 293.63 658 z Michelle Menozzi 39,016.66 659 James Palmer 11,952.66 660 Jessica M. Potter 469.08 I 661 OHIO PERS FBO Kimberly A. Province 3,886.97 662 Heather L. Smith 4,024.77 663 Washington County Cash Disbursement 34,447.78 Account 664 Washington County Regular Payroll Escrow 7,546.03 Account Transfer PNC Bank 44,063.72 Transfer Washington County Retirement Account 394,810.97 i Total January 2013 Distributions 570,032.37 Old Business None. New Business Mr. Maggi noted for the record an agreement with Sherril A. Stein to purchase service credit dated December 1, 1994 to February 1, 1999 in the amount of $7,435.18. Mr. Maggi entertained a motion for the adoption of the 2013 Retirement Fund budget. The budget was also approved and adopted by the Board of Commissioners. The motion was moved by Mrs. Irey Vaughan and seconded by Mr. King. 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 purchase of Employee Benefit Statements from the Hay Group at a cost of $1.85 per statement for a total approximate cost of $2,020.20. The cost per statement remains unchanged from 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 addressed the required Cost of Living Adjustment with the Board. There was no discussion and no action was taken. Presentations C.S.McKee —Gene Natali, Sr. Mr. Natali began with a performance review stating that although large cap value was up 16% for the year, performance was negative relative to the benchmark of 17.51%. All of C.S. McKee's underperformance came in the 4'f' quarter, primarily due to market uncertainty over taxes, 3013 R Limited Form 825 E00102204 I 1 the flight to quality on the bond side, lower quality stocks not owned in the portfolio paying higher dividends, and slow growing companies, also not in the portfolio, advancing dividends to take advantage of the tax situation. C.S. McKee's goal has always been to pay less for higher future earnings; this strategy did not work in the 4th quarter of 2012. Performance on the fixed income side remained very strong, up 4.52 for the year against the benchmark of 3.89. Unfortunately, Mr. Natali does not feel that fixed income returns of this magnitude will continue into 2013. Instead, he believes that equities, primarily domestic equities, are the place to be going forward. Because of the flat performance expected on the fixed income side, returns from equities will be especially important for defined benefit plans such as Washington County's. Mr. Shober asked Mr. Natali if he felt that the improvement in the housing and construction market was an indicator of economic recovery. Mr. Natali stated that he did not feel that in and of itself it was a reliable indication. There has been no increase in real wages nor in the employment rate to support any long-term projections based on the housing market. Mr. Martin observed that in the past, C.S. McKee has always done a good job protecting in a down market on the equity side. However, over the past 3 years, the portfolio now moves with the market, capturing all of the upside and also all of the downside. He asked Mr. Natali to explain if there was a fundamental change at C.S. McKee causing this or if it was because of the market cycle. Mr. Natali responded that because of where the economy currently is in the market cycle, active managers such as C.S. McKee are being punished. However Mr. Natali also believes that we are at the end of this cycle and that things will begin to improve. Peirce Park — Lee Martin Mr. Martin began with a synopsis of the past year, stating that Washington County's performance was very strong with the total portfolio up 13.6%, the highest among Peirce Park's County clients. Also over the past year, the Board added managers, thereby increasing diversification and reducing volatility, rebalanced back to targets, and added Peirce Park's Consulting Plus option for future rebalancing. One of the goals looking forward is to prepare for GASB 67/68 accounting changes and the extra volatility that may be associated with their implementation. . For the year, the U.S. Market was up 16.4% and Europe was up 21.3%. For 2013, early positive indicators are growth in the housing market, consumer spending, and to a lesser extent, employment. Concerns are the economic weaknesses in Europe, U.S. exports continuing to drop, a lack of business investment in the U.S., and a rise in interest rates. Because of this potential rise in interest rates, Mr. Martin recommended that the policy index be amended to allow for a shorter duration for fixed income. Currently, the policy allows for 25% greater or lesser than the average duration of the benchmark. Mr. Martin recommended 25% greater or 50% lesser of the average duration to help to immunize against the shock of spiking interest rates. Mrs. Irey Vaughan made a motion to amend the policy index to reflect this change. The motion was seconded by Mr. King. No discussion followed. Roll call vote taken: yes. Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Irey Vaughan — yes; Mr. Maggi — Motion passed unanimously. Moving on to performance, the portfolio was up 1.4% in the O quarter, gaining $1.65 million for a total gain of $13.6 million for the year. To date, the fund value is just under $120 1 t 3 i0 4 million. Also for the year, the portfolio finished 0.7% above policy index and ranked in the top 15fl' percentile of all public funds. On the equity side, C.S. McKee was behind its benchmark by 2.2% for the quarter and 1.3% for the year. Twin Capital was on benchmark for the quarter and year but is ahead of benchmark by 1.4% since inception. Emerald was behind for the quarter but matched benchmark for the year and Wellington had very strong performance, up 80 basis points since inception. Both global and international managers had outstanding performance for the quarter with American Funds New Perspective and Dodge and Cox International up 1.4% and 2.6% over index. Looking at the relatively newly added GTAA, MFS was behind a bit in the 4t' quarter but at benchmark since inception. On the fixed income side, both C.S. McKee and Federated Investors outperformed for the quarter by 0.2%. Mr. Martin stated that in a rising interest rate market, fixed income is not going to be able to provide the yield necessary for the fund. With 68% of the portfolio already in equities, adding more equities is not without risk. To this end, Mr. Martin suggested looking to real assets. Real assets will provide protection in a rising interest rate and rising inflation rate market. Real assets are tangible, such as real estate, farmland, gold, and timberland. Securities can also be linked to real assets, such as energy, infrastructure, and natural resources. Real assets can provide purchase power protection against inflation and help to offset the real return losses associated with increasing inflation. Peirce Park is looking at the best fit of what real assets to include, when to include them, and how much to allocate before a formal recommendation is made to the Board. The meeting was adjourned at 12:10 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: 2013 ATTEST: C 1 1 1