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Home My WebLink AboutCOMM - Meeting Minutes - 257 - 12-3-2015 - RETIREMENTSold 6y ]MR Limited Form 825 E00102204 Minute No. 257 Washington County Retirement Board Washington, PA December 3, 2015 The quarterly meeting of the Washington County Retirement Board was held at approximately 10`43 a.m. on Thursday, December 3, 2015 in the Public Meeting Room v ith the following members being present: Commissioners Larry Maggi, Harlan hober, and Diana Vaughan, Controller Michael Namie, and Treasurer Francis L. King. lso present: Secretary Paula Jansante, Solicitor Lynn DeHaven, Director of Finance oger Metcalfe, Director of Human Resources Kathleen Bali, concerned citizen Frank 6rd, Barbara Miller representing the Observer -Reporter, Lee Martin, Ph.D. r.-presenting Peirce Park, and Gene Natali, Jr. representing C.S. McKee. Approval of Minutes Mr. Maggi entertained a motion to approve Minute No. 256 dated August 13, 2 )15. The motion was moved by Mr. Namie and seconded by Mrs. Vaughan that the a )ove mentioned minutes be approved as written. No discussion followed. F oll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes; Mr. T laggi — yes. Motion passed unanimously. Public Comment None. T'lreasurer's Report Mr. King stated that for August, September, and October 2015 the bank balance v, as reconciled to zero. It was moved by. Mr. King and seconded'by Mr. Shober that the n:port be. approved. No discussion followed. Foll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — ves; Mrs. Vaughan — yes; Mr. ts,[aggi — yes. Motion passed unanimously. I etirement Allowance Report Bank Balance as of August 1, 2015 $ 45,762.31 Add: Deposits to Checking Account 142,807.36 Add: ACH Credit 811,568.33 Add: Other Credits 19,154.64 Less: Cancelled Checks (169,584.85) Less: ACH Debits (544,917.50) Less: Transfers to Other Funds (869.50) Bank Balance as of August 31, 2015 $ 303,920.79 Less: Transfers to Bank (40.67) Less: Outstanding Checks (271,657.89) Less: Retirement Check Run (32,222.23) Reconciled Balance as of August 31, 2015 $ -0- Bank Balance as of September 1, 2015 $ 303,920.79 Add: Deposits to Checking Account 135,183.76 Add: ACH Credit 535,170.07 Add: Other Credits 177,905.01 Less: Cancelled Checks (314,290.06) Less: ACH Debits (550,061.54) Bank Balance as of September 30, 2015 $ 287,828.03 Less: Transfers to Bank (169.59) Less: Outstanding Checks (264,105.67) Less: Retirement Check Run (23,552.77) Reconciled Balance as of September 30, 2015 $ -0- Bank Balance as of October 1, 2015 $ 287,828.03 Add: Deposits to Checking Account 399.27 Add: ACH Credit 826,100.68 Less: Cancelled Checks (376,969.14) Less: Other Debits (9,698.10) Less: ACH Debits (534,314.50) Bank Balance as of October 31, 2015 $ 193,346.24 Less: Outstanding Checks (159,899.98) Less: Retirement Check Run (33,446.26) Reconciled Balance as of October 31, 2015 $ -0- Requisitions Mr. Namie stated that requisitions for the months of August, September, October, and November 2015 totaled $3,229,888.54. 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. u 1 1 37 Sold By IMR Limited Form 825 U'0102204 Maggi — yes. Motion passed unanimously. Distributions August 2015 Check Payee Amount 1061 Terry Morgan $ 514.51 1062 Mary E. Tucker 122.48 1063 Krista Almo 2,819.13 1064 Shnesha Bout 16,075.45 1065 Camryn Carter 8.05 1066 Zoe Crawford 264.33 1067 Donald Freas 3227.78 1068 First Niagara as FBO Ashley Hahner 4,538.41 1069 Ashleigh Holmes 3,344.97 1070 Ashley Johnson 3,204.96 1071 Thomas Keller 1,941.63 1072 Terry Lesjak 30,641.27 1073 Allegheny Health Network FBO Jonathan Madaras 10,699.75 1074 Julie McGee 2,742.16 1075 Charles Schwab as trustee of IRA of Sarah Pagan 4,009.39 1076 Joshua Ringer 547.74 1077 First Niagara as trustee of IRA of David L. Scott 165,802.45 1078 PNC Investments as trustee of IRA of Matthew Smith 914.24 1079 Melissa Mruk 15,380.61 1080 Genevieve Price 118.41 1081 Washington County Cash Disbursement Account 102,299.42 1082 Washington County Regular Payroll Escrow Account 103142.35 1083 Washington County Regular Payroll Escrow Account Bagay PA SCDU 975.00 Transfer IPNC Bank 56,237.19 Transfer Washington County Retirement Account 517,763.34 Total August 2015 Distributions S 954.335.02 September 2015 Check Payee Amount 1085 North American Life as trustee of IRA of Judy Bollinger $ 160,676.48 1086 Sylvia Cavallo 1,295.77 1087 Rhonda Hiller 701.02 1088 Tosha Hubbard 47,015.84 1089 Amy Jenkins 575.39 1090 Becky McQuillen 23,254.61 1091 Sean McKnight 2,660.28 • 1092 Ashley Miller 8,267.08 1093 Eliza Pushey 1,252.18 1094 Gina Straffin 515.40 1095 Washington County Regular Payroll Escrow Account 10,099.46 1096 Washington County Regular Payroll Escrow Account Bagay PA SCDU 975.00 1097 Washington County Cash Disbursement Account 20,000.00 Transfer PNC Bank 57,328.05 Transfer Washington County Retirement Account 513,513.36 Total September 2015 Distributions S 848.129.92 October 2015 Check Payee Amount 1099 Jordan Huseman $ 7,193.63 1100 Jolene Diethorn 9,628.01 1101 Naadia Dates 1,471.41 1102 VOID - 1103 Washington County Regular Payroll Escrow Account 9,900.82 1 104 Washington County Regular Payroll Escrow Account Bagay PA SCDU 951.00 1105 Washington County Cash Disbursement Account 98,297.29 1106 NSS Life as trustee of IRA of James S. Michelucci 105,717.95 1107 James S. Michelucci 19,069.62 Transfer PNC Bank 41,416.35 Transfer Washington County Retirement Account 521,543.02 Total October 2015 Distributions S 815.189.10 November 2015 Check Payee Amount 1108 Mary Corbett $ 109.74 1109 Courtney Bonner 2,178.04 1110 Keith Gembarosky 2,936.01 1111 Dieon Irey 173.13 1112 Sarah Miller 117.06 1113 Marsha O'Hare 177.77 1114 Stephanie Rodgers 2,580.39 1115 Warren Sullivan 787.74 1116 Charlotte Turner 6,976.20 1117 Trischa Winters 4,332.02 1118 Washington County Regular Payroll Escrow Account 9,779.60 1119 Washington County Regular Payroll Escrow Account Bagay PA SCDU 951.00 1120 Washington County Cash Disbursement Account 15,375.39 Transfer PNC Bank 42,184.28 1 1 Sold Ey IMR Limited Form 825 E00102204 Transfer Washington County Retirement Account 523,576.13 Total November 2015 Distributions S 612.234.50 Old Business None. New Business Mr. Maggi noted for the record an agreement with Elizabeth Meeks to purchase service credit for the periods April 21, 1980 to January 3, 1984 and July 5, 1984 to July 9, 1984 in the amount of $2,594.60. Mr. Maggi entertained a motion for the approval of a request from Samantha Meek to purchase unpaid leave of absence service credit for the periods February 14, 2009 to July 2, 2009, May 13, 2011 to October 17, 2011, and January 28, 2013 to March 19, 2013 in the amount of $4,324.38. Ms. Meek's request has been approved as required by the Board of Commissioners. 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. Mr. Maggi entertained a motion for the approval of a request from Tim Dunkle to purchase per diem service credit for the period July 31, 1995 to May 26, 1996 in the amount of $1,116.14. The motion to approve was made by Mrs. Vaughan and seconded by Mr. Namie. 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. Mr. Maggi entertained a motion for the approval of a request from Shawn Blumer to purchase part-time service credit for the period May 15, 1995 to May 25, 1996 in the amount of $1,215.91. The motion to approve was made by Mrs. Vaughan and seconded by Mr. Namie. 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. 7 3170 Presentations Peirce Park — Lee Martin, Ph.D. Mr. Martin began his presentation with an overview of the 2014 Annual Pennsylvania Database Report, highlighting Washington County among the other reporting counties. Washington County is right in line with the majority of counties in assumed rate of return and salary increase and mortality assumptions. Also like the majority of counties, Washington County chose not to have a cost of living adjustment in 2014. Unlike the majority of other counties, however, Washington County uses 5- year smoothing as opposed to Act 44 for asset valuation. Utilizing the smoothing method has resulted in better funding ratios and declining future annual contributions. Looking at returns, Washington County is near the top in 5-year returns and mid -range for 10-year returns. Washington County's ratio of active pensioners to active employees is about 55%. Ideally this number should be lower, but is not overly concerning. Finally, looking at benefit class, Washington County is very conservative at 1/80 resulting in lower pension amounts and lower liabilities. The majority of Pennsylvania counties are in the 1/60 benefit class. Moving on to performance, the County's fund was down 5.3% for the quarter with a loss of $7.7 million. Since the end of the quarter to date, the fund is up 5.1%, almost a complete rebound. Looking longer -term over a 7-year period, the fund has gained $56 million, averaged a return of 7.9% a year and about 30 basis points above benchmark, and ranks in the top quartile of all public funds. Highlighting some of the individual managers, C.S. McKee's large -cap value was down for the quarter and the year, Twin Capital was up for the quarter but lagging for the year, and Emerald was down for the quarter but ahead for the year. Wellington had outstanding performance for the quarter and the year, up 11.4%. Positive performance also came from American Funds, Dodge & Cox, and the GTAA. On the fixed income side, the fund lagged the benchmark slightly but was still well above median. Mr. Martin reminded the Board that the new investment policy guidelines needed to be approved allowing a 5% allocation to be made to private core real estate. Mr. Namie made a motion to approve the addendum to the Investment Policy Statement as contained in the informational packet as provided by Mr. Martin. The motion was seconded by Mrs. Vaughan. 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. 1 1 1 37 Sold 6y IMR Limited Form825 EOG102204 C.S. McKee — Gene Natali, Jr. Mr. Natali began his presentation stating that the C.S. McKee's fixed income product is about 100 basis points ahead, contrasting to the large -cap value product being about 100 basis points behind. That being said, large -cap value has been performing better, on a relative basis, going from 10% behind to 3% behind year-to- date. Fixed income is up 2.5% year-to-date. Although C.S. McKee realizes that the Board is not pleased with the performance on the equity side, Mr. Natali thanked the Board for their patience and reiterated that they are committed to their investment discipline. Peirce Park — Lee Martin, Ph.D. Mr. Martin presented the Board with information concerning C.S. McKee's large -cap value product and performance. In the last few years, there has been significant turnover not only in accounts and assets, but also within the investment team. The underperformance itself can be attributed to stock selection. Mr. Martin stated that the Board is almost driven by the investment policy to place C.S. McKee on the watch list. With this in mind, Mr. Martin suggested three options: 1.) C.S. McKee's performance be monitored over the next few quarters and a decision be deferred to a later date based on their performance; or 2.) In light of the upcoming allocation to private core real estate and future global manager search, C.S. McKee's allocation be reduced and a decision be deferred to a later date based on their performance; or 3.) C.S. McKee be terminated as the County's large -cap value manager. Mr. Shober made a motion to add C.S. McKee to the watch list, to reduce C.S. McKee's percentage of the total portfolio to 9%, and to move said assets to the Vanguard Institutional Index. The motion was seconded by Mr. King. A brief discussion followed. Roll call vote taken: Mr. Namie — yes; Mr. King — yes; Mr. Shober — yes; Mrs. Vaughan — yes; Mr. Maggi — yes. Motion passed unanimously. Mr. Martin presented the Board with some options to consider for the global manager search. One option would be to switch Dodge & Cox from international to global. Long-term, Dodge & Cox has proven to be a solidly performing global manager. Two options for global low -volatility managers are Acadian and Morgan Stanley. On the international side, Mr. Martin suggested Morgan Stanley and Schroders. After discussing each firm and their investment strategy and fees, Mr. Martin recommended moving Dodge & Cox to global and adding Acadian to the portfolio. Based on this, he would work out some allocation options for the Board and present them at a future meeting. Mr. Martin will also contact Acadian to bring them in for a presentation. 3172 Lastly, Mr. Martin discussed OPEB fund performance stating that return was down 5.2% for the quarter but still beating the benchmark by 60 basis points. Since inception, OPEB has gained about $1 million with a return of about 6.8%. The meeting was adjourned at 12:27 p.m. THE FOLLOWING MINUTES SUBMITTED FOR APPROVAL: jjZOtFn- 3 ,e- :31 , 2015 ATTEST: / 1 1 1