November 20_ 2008 - Saint Louis County_ Missouri

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					 IT EM II          A                                                                         Page |1



                                                                               St. Louis County
                                                          Retirement Board of Trustees Meeting
                                                                            Thursday, November 20, 2008 - 10:00 a.m.
                                                                                       Division of Fiscal Management
                                                                                          8th Floor Conference Room
                                                                                                41 South Central Ave.
                                                                                                  Clayton, MO 63105


Meeting Called by:              Kirk McCarley, Retirement Plans Administrator

Type of Meeting:                Board of Trustees Regular Monthly Meeting

Note Taker:                     Sharon Jones

Members Present:                Lt. Gary Berra
                                Clayton Erickson
                                Joan Gilmer
                                Gladys Lewis
                                Bryan Pini
                                Tom Wright

Members Absent:                 Milton Wilkins

Others Present:

        St. Louis County:       Maggie Hart-Mahon, Assistant County Counselor
                                Don Rode, Chief Accounting Officer
                                Michael Schwerzler, County Auditor

        Consultants:            Kari Creighton, Summit Strategies Group

        Guests:                 Brian Bass, Retiree, St. Louis County Civilian Retiree Association
                                Janet Beasley, Retiree, St. Louis County Civilian Retiree Association
                                Det. Gary Fourtney, St. Louis County Police
                                Bob Frohne, St. Louis County Police
                                Don Marcks, Department of Revenue
                                Marian McCreary, Retiree, St. Louis County Civilian Retiree Association

Kirk congratulated Marian McCreary on her election as President of the Civilian St. Louis County Retiree
Association. Kirk also asked that the Board Members speak loud enough for our audience to hear the
discussions – as requested by Marian McCreary at the October Board meeting.


                                       PLAQUE PRESENTATION

Kirk presented a Plaque from the St. Louis County Retirement Board honoring Gary Fourtney for his three
years service as a Board Trustee. He mentioned Gary’s achievements which include the furthering of
education for Board members, and the implementation of the PLOP (Partial Lump Sum Option) as a
retirement choice for retirees.

Gary said he really appreciated the time on the Board. He had the best intentions in mind for the fund
and the employees. He also announced that he will probably retire within the next 3 – 6 months.
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II.                                         APPROVAL OF MINUTES

              A.    Regular Board Minutes of October 30, 2008

Motion / Decision   Motion made by Joan Gilmer to accept the Board Minutes as presented with the
                    following correction, suggested by Bryan Pini, to strike the last sentence on
                    Page 6, paragraph 2 which reads, “Bryan also commented that the flash report
                    was just not acceptable at this time”. Deletion is necessary because it was not
                    understood that the flash report was not replacing the quarterly report provided
                    by Summit Strategies. Seconded by Gary Berra; unanimously approved.


              B.    Investment Committee Minutes of October 30, 2008

Motion / Decision   Motion made by Clayton Erickson to accept the Investment Committee Minutes
                    as presented. Joan Gilmer seconded; unanimously approved.




III.                                        REQUESTS FOR BENEFITS

              A.    Employees Requesting Retirement Benefits

                    1. Six Civilian Requests
Motion / Decision   There being no unusual circumstances regarding these requests, a
                    motion was made to accept the Plan A Civilian Requests for Retirement
                    by Bryan Pini, seconded by Gladys Lewis, and unanimously approved.
                    Cheryl Stone’s occupation will be corrected, as suggested by Maggie.

                    2. No Police Requests


              B.    Applications for Vested Termination Benefits

                    1. One Civilian Request
                    There being no unusual circumstances regarding this request, a
                    motion was made to accept the Plan A Civilian Applications for Vested
                    Termination Benefits by Bryan Pini, seconded by Joan Gilmer, and unanimously
                    approved.

                    2. No Police Requests


              C.    Beneficiary’s Applications for Death Benefits

                    1. Five Civilian Requests
Motion / Decision   There being no unusual circumstances regarding these requests, a
                    motion was made to accept the Plan A Civilian Applications for Death
                    benefits by Bryan Pini seconded by Joan Gilmer, and unanimously
                    approved.

                    2. No Police Requests
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IV.                                            FINANCIAL REPORTS


               A.      Retirement Fund Balance Sheet from the Division of Fiscal Management
                       (email) $351,484,617.38

               B.      Jennison Associates LLC Account Reporting Package (email)

               C.      OakBrook Investments St. Louis County enhanced S & P 500 Index Statement
                       (email)

               D.      Aberdeen Asset Management Portfolio Review (email)
                           Performance Summary
                           Missouri Holdings and Unsettled Transactions

               E.      PENN Capital (email)
                           Small to Mid Cap Commentary
               F.      Gryphon International Portfolio Performance (NA)

               G.      Aronson + Johnson + Ortiz Portfolio Performance (email)

               H.      RREEF America REIT II (NA)

               I.      Sanderson Asset Management Performance Statement / Northern Trust (email)
                           Sanderson Performance Statement
                           Sanderson Newsletter
                           Northern Trust Statement

               J.      Summit Strategies Group
                           The Economy (agenda packet)
                           Asset Allocation & Gross of Fees Performance (agenda packet)
                           Penn Capital Review (agenda packet)
                           3rd Quarter Board Report (agenda packet)
                           Capital Market Review (email)
                           3rd Quarter Staff Report (email)


Motion / Decision      There being no unusual circumstances regarding the financial reports, a motion
                       was made by Bryan Pini to approve the financial reports; seconded by
                       Gladys Lewis, unanimously approved.




V.                                           HEAR VISITERS


Marian McCreary distributed copies of correspondence with Charley A. Dooley regarding the request for
consideration of a COLA (Cost of Living Adjustment) for retirees. Distributed to the Board for their
information.
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VI.                                     MANAGER PRESENTATION


       Penn Capital Presentation
             Jason Galbraith, Marketing, Vice President
             Paulo Silva, Lead Risk Manager, Senior Port Folio Manager


       Penn Capital is 100% employee owned. Portfolio managers, senior traders, and senior
       operations people are also partners in the firm. Their bonuses are invested in the product in
       which we are invested. In the past eighteen months they have increased their staff by 25%.

       At this time in the market, the lowest quality smallest market cap companies were the best
       performers. They out-performed the larger cap companies by 20%. There has been 70 – 80% in
       redemptions. Penn Capital feels that the failure of Lehman led to a great deal of selling in the
       market. They believe that we are 80 – 90% through the down swing of the market.

       Penn Capital said that their guidelines require their cash amount to be around 5%. Since
       inception in October, our account is down 36.5% while the market is down 25%. For the current
       month, the market is down 27% and Penn Capital is down 22%. Year-to-date, our account is
       down 52%.

       The companies in the portfolio are in great financial shape. In a normalization period, the
       companies will bounce back – hopefully beginning in January. A leading indicator will be when
       credit spreads start narrowing on corporates. Clayton Erickson asked if they were doing much
       manipulation in the portfolio now. They said there is about a 90% turnover in the portfolio. Penn
       Capital has been in business 21 years. They are not changing their strategies but are
       reconfirming their market stance.



VII.                                         OTHER BUSINESS


       A.      Retirement Proposals / Corrections submitted by Ed Reiss.

               The Board has decided that no action will be taken to change the two year limit of
               absence provision that currently governs the retirement benefits.

               The Plan Improvement Committee shared with the Board some priorities they have
               set that can be implemented when the stock market improves. They are as follows:
                     1. COLA for Retirees (approximately $2.4 million cost)
                     2. Other possible changes
                            a) Removing the one year waiting period for a pre-retirement serviving
                                spouse. Maggie Hart-Mahon was asked to review this for us.
                            b) Increase the retirement benefits provided to spouse and family of
                                employees killed in the line of duty, Civilians and Police. Maggie said
                                that an accidental death benefit has been added to the current life
                                insurance policies of employees. She said that she will look into what
                                constitutes an accidentally death. Kirk will ask Steve to review costs for
                                this change.
                            c) Increase the disability benefits that are currently given to Civilians and
                                Police retirees.
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                Maggie said that three changes, submitted by the Board, were approved by the County
                Council. These changes were made in anticipation of applying to the IRS to maintain our
                qualified status. We are due for a review in 2009. The changes were not substantive –
                they just let our plan be within the IRS guidelines. The ordinance changes made were as
                follows:
                      204:092 – regulations for how soon payouts must be made. The proposed and
                         final were not any different.
                      204:094 – provides for eligible rollovers as of 2005. Most of the rollovers we
                         already had.
                      204:060 – limitation to the plan would affect only plan participants who receive an
                         annual benefit of over $185,000 yearly. (This does not apply to anyone in our
                         plan.) This will adjust to the IRS compliance.



VIII.                                            CORRESPONDENCE


        NONE



IX.                                              PRESENTATION


        Kari Creighton, Summit Strategies
        (please see hand-outs)

        Kari said that we are currently in a position in which we need to rebalance. The following
        proposal (see handout) was submitted:
            1. RREEF redemption request of $23 million (currently a queue of $1.5 billion)
            2. Transfer cash in closed accounts to internal cash account – includes Missouri
                 Valley, Batterymarch, and Wellington.
            3. Request $2 million from Aberdeen to transfer to internal cash account
                 We need approximately $9 million in 2009 from our asset managers to help fund
                 the benefit payments. This would include all income from Aberdeen ($150,000 -
                 $200,000 monthly), all income from RREEF ($550,000 quarterly), $750,000 monthly
                 from our five domestic managers and one more, besides Aberdeen, fixed income
                 manager – Oakbrook, Aronson, Jennison, PENN Cap, IronBridge, and Western
                 (each about $100,000)
            4. Postpone funding of Small Cap International and Emerging Markets until next year.

Motion / Decision

        Bryan Pini made the motion that the above proposal, submitted by Summit Strategy, be
        accepted, and that the proposal be reviewed each month for changes. Gary Berra seconded the
        motion; unanimously approved.

        Kari said she would check with RREEF to ask if we could pull-out of the queue at different times.

        Clayton Erickson said he would like to talk about “market timing” next month. Tom Wright said he
        is not sure he knows anyone smart enough to do this. Clayton feels this is something the Board
        needs to discuss. Kari said she gave some information to Tom that discusses “market timing”.


Investment Performance Review

        (please see hand-outs)
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       Fixed Income markets are down 28% year-to-date. Equity markets are down 40% year-to-date.
       Emerging markets are down 58% year-to-date. Financial Services is the worst performing sector
       of the market, down 55% year-to-date.

       Bryan said he had seen a graph, a few years back, comparing our present situation to Japan’s
       1990’s market. The markets, without the time lag, are responding similarly. He asked if Kari had
       seen any information comparing the two market situations. Kari said she would look for more
       information.

       Kari reported the bad news that the market has lost $33 trillion. Summit believes we are in
       the fourth quarter of an actual recession. The good news is that our fund is structured perfectly
       for a rebound in the market.

       Bryan Pini commended Summit Strategies for being brave enough to actually put on paper their
       recommendations and predictions for the market.




X.                                              NEXT MEETING


       The Board will meet at 10:00 a.m. on Thursday, January 29, 2009.




XI.                                             ADJOURNMENT

Motion / Decision
       Bryan Pini made the motion to adjourn the meeting; Gary Berra seconded the
       motion; unanimously approved.




                                                        Thomas Wright, Chairman

				
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