Owosso Employee's Retirement System Minutes

March 18, 2004 - 8:00am

PRESENT:       TRUSTEES WILLIAM G. BLANCHETT, JOHN C.M. DAVIS, WILLIAM HORTON, STANLEY P. JELINEK, LINDA L. ROBERTSON AND JAMES R. TREADWAY.

ABSENT:         CHAIRMAN PAUL K. HOOD.

Also in attendance:  City Attorney William Brown; Marie Vanerian, Merrill Lynch representative; and City Treasurer Ronald Tobey.

CALL MEETING TO ORDER

Trustee Jelinek called the meeting to order at 8:06 p.m.

APPROVE MINUTES OF DECEMBER 18, 2003 REGULAR MEETING

Motion by Trustee Treadway to approve the minutes of the December 18, 2003 Employees Retirement System Board Regular Meeting as presented.

Motion supported by Trustee Horton and concurred in by unanimous vote.

APPROVE PENSION CHECK REPORTS

Motion by Trustee Horton to approve the Pension Check Reports as follows:

Ø      December 2003 $84,681.03

Ø      January 2004                $85,176.42

Ø      February 2004  $85,176.42

Motion supported by Trustee Robertson and concurred in by unanimous vote.

APPROVE STATEMENTS

Motion by Trustee Horton to approve the following statements:

Ø      Chemical Bank and Trust Company

December 2003-February 2004

Ø      Fifth Third Bank

      December 2003-January 2004

Ø      Tom Johnson Investment Management, Inc.

      Period ending 12/31/03 

Motion supported by Trustee Robertson and concurred in by unanimous vote.

PAYMENT AUTHORIZATIONS

Motion by Trustee Treadway to approve the following payment authorizations:

Ø      Chemical Bank and Trust Company

Management Fee

For Period 12/01/03 through 02/28/04                 $7,998.00

Ø      Fifth Third Bank

Management Fee

For Period 10/01/03 through 12/31/03                 $9,338.10

Ø      Tom Johnson Investment Management, Inc.

            Management Fee

            For Period 10/01/03 through 12/31/03                 $9,119.34
Motion supported by Trustee Robertson and concurred in by unanimous vote.

COMMUNICATIONS

The following communications were received for file:

Ø      Ronald J. Tobey, City Treasurer – Report of Checks Written

Ø      Sandra W. Rodwan, Rodwan and Nichols Consulting Company – Announcement regarding Denise Jones

Ø      MAPERS 2004 Pre-Conference Information

Ø      MAPERS Pension Scope – Winter 2003 Newsletter

The following publications and conference announcements are on file with the City Clerk – if you would like to read them, please contact her:

Ø      Gabriel, Roeder, Smith & Company- December 2003-February 2004 News Scan

Ø      Boston Partners Quarterly Review – Third Quarter 2003

Ø      Thomson Financial Research

Ø      TJIM Quarterly Insight – 4^th Quarter 2003

Ø      Miscellaneous Conference Announcements

OLD BUSINESS

There was no old business.

NEW BUSINESS

Request for Checking Account at Chemical Bank

Motion by Trustee Horton to authorize the City Treasurer to establish a checking account for the City of Owosso Employee Retirement System at Chemical Bank and Trust Company as follows:

Be it resolved that the Chemical Bank and Trust be and is hereby designated as a legal depository of all monies belonging to the City of Owosso, County of Shiawassee, and State of Michigan, and that all monies belonging to said City shall be deposited in said bank from time to time in the name of said City, said deposit to be limited to a total sum of (no limit) at any one time.

Motion supported by Trustee Blanchett and concurred in by unanimous vote

Request for Direction – Retirement Ordinance Section 2-427 A Post-Retirement Benefit Increase

Ronald Tobey, City Treasurer, requested direction whether to administer the post-retirement benefit increase to disability retirees.  There was Trustee discussion regarding this issue.

Trustee Davis arrived at 8:15 a.m.

Motion by Trustee Robertson that the Board interprets this ordinance to allow disability retirees to elect to receive post retirement benefit increases not to exceed a total of 10 years as applied to disability retirees and normal retirees.

Motion supported by Trustee Horton.

Roll Call Vote.

AYES:              Trustees Blanchett, Horton, Jelinek, Robertson, and Treadway.

NAYS:              None.

ABSTAIN:         Trustee Davis (felt he should abstain because he was not here for the whole discussion).

Request for Transfer of Funds to MERS – Larry Arbogast

Motion by Trustee Robertson to authorize the City Treasurer to release Larry Arbogast’s funds to MERS when arrangements have been made for them to accept his account.

Motion supported by Trustee Treadway and concurred in by unanimous vote.

Discussion:  Fifth Third Bank representatives regarding investment policy and where small cap/international funds should be

Brian Lee and Kristi Tice were not in attendance.  Kristi Tice called the City Clerk on Wednesday afternoon to say that Brian Lee had the flu and they would not be attending the meeting.  She requested to be part of the agenda for the next meeting.  The City Clerk will contact Fifth Third Bank representatives to let them know when the next meeting will be.

Trustee Treadway commented regarding Dr. Abbott no longer being the City Physician as related to the Pension Board.  Trustee Jelinek commented that he will address that issue when a permanent replacement is made.

INVESTMENT MANAGERS REPORT

Merrill-Lynch:  Fourth Quarter 2003 Executive Summary Report

Marie Vanerian, Merrill-Lynch representative, reported a total ending market value at $29,399,200 as of 12-31-2003. Large cap Equity portfolio had a value of $13,227,530.00; Small cap Equity portfolio had a value of $2,527,980.00; International Equity portfolio had a value of $826,010.00; and Fixed Income portfolio had a value of $12,095,150.00.

She commented regarding the positives and uncertainties of the market.  Positives include synchronized global recovery; weakening us dollar helps exports; and continued government spending.  Uncertainties include Geo political activity/terror incident, higher oil prices, and rising interest rates.

Ms. Vanerian also commented regarding her concerns with the amount of trading being done by Fifth Third Bank.  She also commented regarding trading being done by Bob Luckey, Fifth Third Bank representative.  In a conversation with him, she said he indicated that he did not know that he was supposed to be trading with Merrill Lynch unless it was advantageous to our Pension System to trade elsewhere.

There was Board discussion regarding not paying the $4,325 fees from our account when they didn’t follow our preference for trading. 

Motion by Trustee Horton to have the City Attorney draft a letter to put Fifth Third Bank on notice that the Board will reduce payment by $4,325 on the next statement because of Fifth Third Bank’s failure to follow directive of the Pension Board.  City Attorney Brown will indicate in the letter that the problem has been resolved.

Motion supported by Trustee Robertson and concurred in by unanimous vote.

Marie Vanerian will investigate the high amount of trading and let them know that we feel something has changed.

Merrill-Lynch:  Status Update on Custodial Account Transfer

Ms. Vanerian reported that everything but two mutual funds has been transferred.   City Treasurer Ronald Tobey commented regarding the lag in reporting transactions with huge increase in loss but they are made up the next time.  Ms. Vanerian explained process that takes place.

City Attorney William Brown left the meeting at 9:24 a.m.

SET NEXT BOARD MEETING

Motion by Trustee Horton to set the next meeting for Thursday, June 17, 2004 at 8:00 a.m.  Motion supported by Trustee Davis and concurred in by unanimous vote.

ADJOURNMENT

Motion by Trustee Horton to adjourn the meeting at 9:26 a.m.  Motion supported by Trustee Davis and concurred in by unanimous vote.

                                                                        __________________________________________________

Gail L. Schultz, Owosso City Clerk