HomeMy WebLinkAboutCOMM - Meeting Minutes - 251 - 5-15-2014 - RETIREMENT329
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Minute No. 251 Washington County Retirement Board
Washington, PA May 15, 2014
The quarterly meeting of the Washington County Retirement Board was held
at approximately 10:48 a.m. on Thursday, May 15, 2014 in the Public Meeting Room
with the following members being present: Commissioners Larry Maggi, Harlan
Shober, and Diana Vaughan, Controller Michael Namie, and Treasurer Francis L.
King. Also present: Chief Clerk Mary Helicke, Secretary Joyce Thornburg, Director
of Administration Scott Fergus, Director of Finance Roger Metcalfe, Solicitor Lynn
DeHaven, Director of Human Resources Kathleen Bali, Chief Clerk Secretary Paula
Jansante, concerned citizen Frank Byrd, Barbara Miller representing the Observer -
Reporter, Lee Martin, Ph.D. and Sarah Wilson representing Peirce Park, and
Geoffrey Gerber, Ph.D. representing Twin Capital Management.
Approval of Minutes
Mr. Maggi entertained a motion to approve Minute No. 250 dated February
20, 2014. The motion was moved by Mrs. 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; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
Public Comment
None.
Treasurer's Report
Mr. King stated that for February, March, and April 2014, the bank balance
was reconciled to zero. It was moved by Mr. King and seconded by Mrs. Vaughan
that the report be approved.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
Retirement Allowance Report
Bank Balance as of February 1, 2014 $ 59,425.50
Add: Deposits to Checking Account 3,876.54
Add: ACH Credits 257,687.25
Add: Other Credits 439,240.84
Less: Cancelled Checks (102,046.24)
Less: ACH Debits (459,311.53)
Bank Balance as of February 28, 2014 $ 198,872.36
Less: Transfers into Checking Account (652.52)
3 !3 0
Less: Outstanding Checks
Less: Retirement Check Run
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Reconciled Balance as of February 28, 2014
Bank Balance as of March 1, 2014
Add: Deposits to Checking Account
Add: ACH Credit
Add: Funds Transferred In
Less: Cancelled Checks
Less: ACH Debits
Bank Balance as of March 31, 2014
Less: Outstanding Checks
Less: Retirement Check Run
Reconciled Balance as of March 31, 2014
Bank Balance as of April 1, 2014
Add: ACH Credit
Add: Other Credits
Less: Cancelled Checks
Less: ACH Debits
Bank Balance as of April 30, 2014
Less: Outstanding Checks
Less: Retirement Check Run
Reconciled Balance as of April 30, 2014
(177,346.90)
(20,872.94)
$ A=
$198,872.36
43,858.06
253,331.43
361,387.56
(252,237.64)
(473,298.60)
$ 131,913.17
(15,049.12)
(116,864.05)
$2
$ 131,913.17
258,511.21
627,410.45
(181,281.36)
(478,126.54)
$ 358,426.93
(334,723.21)
(23,703.72)
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Requisitions
Mr. Namie stated that requisitions for the months of February, March, and
April 2014 totaled $2,243,786.27.
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. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
Distributions
February 2014
Check Payee Amount
845 William Carter $ 1,775.42
846 Robin L. Powell 1,775.42
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847
Etrade Clearing as trustee of IRA of Vanessa
1,310.38
Borkowski
848
Danielle M. Colbert
4,049.92
849
Christopher Erickson
4,280.05
850
Capital Bank & Trust Co. as trustee of IRA of
117,847.79
Jacqueline J. Forte
851
Aaron Pascazi
442.36
852
Leslie Pescatore
886.86
853
Sandra Wagner
41,561.99
854
Washington Co. Regular Payroll Escrow Account
7,624.18
855
Washington County Cash Disbursement Account
35,853.04
Transfer
PNC Bank
39,724.92
Transfer
Washington County Retirement Account
441,837.04
Total February 2014 Distributions
S 698.969.37
March 2014
Check
Payee
Amount
856
Washington County Cash Disbursement Account
$ 49,619.82
857
Melinda A. Jones
148.39
858
Ameriprise Brokerage as trustee of IRA of
56,950.07
Denise Calabro
859
Frances Chappel
6,877.54
860
Megan Beekman
1,997.75
861
Katy S. Dawkins
483.74
862
Melissa Finney
9,368.40
863
Vanguard Fiduciary Trust Co. as trustee of
3,756.59
IRA of Joshua C. Hausman
864
Ernest Heinrich
141.07
865
Conor Malinowski
3,572.44
866
Lilianne Snyder
1,949.42
867
Todd Snyder
6,858.03
868
Michelle Stoner
530.82
869
Christina Tatar
15,404.23
870
Sherry L. Wilk
8,326.38
871
Washington Co. Regular Payroll Escrow Account
7,688.86
Transfer
PNC Bank
41,363.19
Transfer
Washington County Retirement Account
444,192.83
Total March 2014 Distributions
$ 659.229.57
April 2014
Check
Payee
Amount
872
Katy S. Dawkins
$ 492.60
873
Brenda Saver
59,719.37
3132
t 874 Capital Bank and Trust as trustee of IRA of 54,642.94
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FBO Deborah L. Stacy
E
875 Diane E. Terrant 7,716.22
876 Primerica Shareholder SVC as trustee of IRA 47,677.07
of George Winter
877 Citizens Bank as trustee of IRA of Thomas Welsh 163,975.83
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i 878 Washington Co. Regular Payroll Escrow Account 7,665.66
879 Washington County Cash Disbursement Account 44,338.01
Transfer PNC Bank 45,475.93
Transfer Washington County Retirement Account 453,883.70
Total April 2014 Distributions $ 885.587.33
Old Business
None.
New Business
Mr. Maggi entertained a motion for the approval of a request from Jay S.
Green to buy back per diem time dated March 25, 1996 to July 7, 1996 in the amount
of $346.21. The motion to approve was made by Mr. Namie and seconded by Mr.
Shober.
No discussion followed.
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Roll call vote taken:
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Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
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Mr. Maggi — yes.
Motion passed unanimously.
Mr. Maggi entertained a motion for the approval of a request from Joan
Haines to buy back per diem time dated July 24, 2006 to February 13, 2007 in the
amount of $837.44. The motion to approve was made by Mrs. Vaughan and
seconded by Mr. Shober.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
Presentations €
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Peirce Park - Lee Martin, Ph.D.
Mr. Martin began with an economic overview, stating that although GDP was !
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up last year, it dropped for the 1 st quarter of 2014 leading to a slowdown in the
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markets. However, the U.S. is expected to have the highest growth this year in the
developed world. Car sales are up, personal consumption is up; both are indicators
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that people are spending again. Job growth is also expected to be up for the year.
For the quarter and the year, the U.S. market outperformed most of the rest of
the world, up 22.6%. Emerging markets were negative for the quarter and also for
the year. Interest rates went down and the yield curve flattened during the quarter,
meaning that longer duration bonds outperformed for the first time in a while.
Moving on to the County's portfolio, the fund gained just under $3 million
for the quarter, up 2.2%, outperforming the benchmark by 1.8% and putting the fund
in the top 9th percentile of all public funds. Over 5 years, the fund has gained over
$71 million, more than half the fund's total value.
C.S. McKee's large cap value was down, not unusual in the current market
environment and not overly concerning. With the projected market trend,
performance is expected to improve. Twin Capital and Wellington outperformed by
more than 1% since inception, Emerald and MFS Global outperformed by 2% since
inception, American Funds outperformed by 3% since inception, and Dodge & Cox
has outperformed 5% since inception. Real estate has come back strongly, 10% for
the quarter and 13.7% for the year-to-date. Both fixed income managers have also
performed above their benchmarks.
Looking forward, there are a few areas that Mr. Martin feels would be
beneficial for the Board to address. One is the future asset class return assumption
and revisiting the asset allocation of the fund. The second is addressing the amount
of cash in the portfolio and having a cash flow management plan. The third, due to
asset growth, is the completion of the required paperwork to switch the County to
the institutional share class of real estate. This switch will save a few basis points, or
about $1,000, annually. The final item is switching Twin Capital's mandate. Twin
Capital has a low volatility product which could potentially bring the County's beta
in line to where it should be. To discuss this product, Mr. Martin turned the
presentation over to Mr. Geoffrey Gerber.
Twin Capital Management — Geoffrev Gerber, Ph.D.
Mr. Gerber began his presentation illustrating how the risk of an investment,
or standard deviation, affects the value of the investment assuming the same rate of
return. Lowering the standard deviation with the same return will add more value to
the investment, resulting in a higher compounded rate of return. Twin Capital has
developed a low volatility product, Dividend Select, which will not only provide
dividends but will also provide protection when the market fluctuates. Dividend
Select will add value, but not outperform, when the market is up, but will also add
value when the market is down. Mrs. Vaughan made a motion to move the money
currently invested in Twin Capital's Prime Strategy to Twin Capitals's Dividend
Select at the new fee schedule. The motion was seconded by Mr. Namie.
No discussion followed.
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Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
Peirce Park — Lee Martin, Ph.D.
Mr. Martin wanted to discuss asset allocation with the Board, beginning with
a summary of future market expectations. Over the next 10 years, fixed income
returns are expected to average 2.5%, U.S. equity returns 7%, international equity
returns 9.5%, REITS 6.5%, and inflation is expected to be 2.25%. Using these
assumptions, the County's return is predicted to be just under 6% over the next 10
years. Right now, the actuarial assumption for the County is 7.5%. Considering the
market, there is not a lot that the County can do to close this gap on the asset side.
On the liability side, the County can consider reducing the assumed rate of return.
This will result in a higher actuarially required contribution (ARC) in the short run,
but is more fiscally responsible in the long run.
Mrs. Vaughan made a motion to reduce the County's assumed rate of return
from 7.5% to 7%. The motion was seconded by Mr. Shober.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
In conjunction, Mrs. Vaughan also made a motion to change the current asset
allocation of 48% domestic equities, 16% international equities, 32% fixed income,
4% real estate, and 0% cash, to 46% domestic equities, 18% international equities, R
31 % fixed income, 4% real estate, and 1 % cash. The motion was seconded by Mr.
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Shober.
No discussion followed.
Roll call vote taken:
Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes;
Mr. Maggi — yes.
Motion passed unanimously.
The meeting was adjourned at 12:05 p.m.
THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL:
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ATTEST:
,2014
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