PALMER TOWNSHIP BOARD OF SUPERVISORS

SPECIAL BUSINESS MEETING

MARCH 12, 2007

A special business meeting of the Palmer Township Board of Supervisors was held on Monday, March 12, 2007 at 7:00 p.m. in the Community Room of the Palmer Library with four Supervisors in attendance. Ann-Marie Panella and the Township Manager were absent. Colver convened the meeting and led those present in the Pledge to the Flag.

Colver said this is a special meeting that was advertised. We will be hearing presentations from three different fund account managers regarding management of the township police pension fund. Colver said this is strictly an informational meeting and no decision will be made tonight.

2. RYAN BECK POLICE PENSION FUND PRESENTATION

INFORMATION

Ryan Beck will make a presentation regarding management of the township police pension fund.

DISCUSSION

Dan Rome, Stephen Greenhut, Joe Battipaglia, and Jim Woodley were in attendance from Ryan Beck Company. Rohm introduced himself and said he has 23 years in the business and is retired from the Navy. Greenhut presented a packet of information to the Board. Greenhut said they appreciate the opportunity to present this evening. Greenhut reviewed similarities and differences they offer versus the current township program. Greenhut reviewed their quarterly fee structure and the portfolio structure. Greenhut outlined the steps they would take with the township to set up and monitor the township portfolio. Greenhut said Rome would attend quarterly meetings to provide updates to the Board.

Colver asked if it’s a yearly contract. Greenhut said the agreement is not time certain. You have the ability to terminate at any time. Colver asked if fees are looked at quarterly or annually. Greenhut said you have the ability to negotiate the fee. Colver asked if Mr. Rome would be the township representative. Greenhut said yes. Colver asked what returns are you currently seeing with your clients. Greenhut said we strive for above average returns and look for managers that are in the top level that provide consistency and out perform the industry benchmark. Smith asked over the past five years how do you determine your fees for the next year. Are they the same each year? Greenhut said the fees are a percentage of the assets and there is a tiered pricing structure with break points. Lammi asked when looking for managers how quickly will you take action to move a manager out and look for a new manager. Greenhut said he’s been in the business for 20 years and institutionally the window is typically three years to be able to see a manager’s full market cycle. Greenhut said we look at it on a quarterly basis. If they are underperforming for a nine month period we will put them on watch. Greenhut said 12 to18 months is typically when we may terminate the relationship. Rome said the quarterly review with the township would include evaluating the managers.

3. SMITH BARNEY POLICE PENSION FUND PRESENTATION

INFORMATION

Smith Barney will make a presentation regarding management of the township police pension fund.

DISCUSSION

Gary Guzzi was in attendance from the Easton office of Smith Barney. Guzzi said he’s been in the business for the last eight years. Guzzi said Mike Glovas was scheduled to present tonight however he had a death in the family. Guzzi introduced Chris Englebert as their pension expert. Englebert said he’s been in the business for 25 years. Englebert said Smith Barney specializes in guiding you through the world of municipal pensions. Englebert presented a packet to the Board. Englebert said we’ve been working with police pension plans for the past 25 years and he believes that is a good reason why you should choose Smith Barney. Englebert said we know the plans. Englebert said they will work with the township through all audits. Englebert reviewed their fee structure. Englebert said you would be paying an all inclusive fee. Englebert said they do not invest in mutual funds and said there are hidden costs associated with mutual funds. Englebert said you need to be aware of that when you are comparing costs so you are comparing apples to apples.

Mitchell asked if we decide to make a change is there a cost to us because you have to sell what we have and put it into new funds. Englebert gave an example of a previous client and said there isn’t an additional cost because there are no commissions for bonds being sold. I would be hard pressed to say it would cost you anything to change. Colver asked when they review fees. Englebert said they review it yearly. Lammi said if we have six million in a fund and the fund doesn’t do to well and we have to contribute, do you get a fee off of the contribution. Englebert said that is correct with any investment group. Lammi asked how quickly do you make a decision to fire or retain a fund manager based on performance. Englebert said it used to be a market cycle, two to three years, but now it is much quicker. Englebert said he typically would say one year now. Lammi asked who would be the quarterly representative at our meetings. Englebert said he and Mr. Glovas. Colver asked what kind of returns are you seeing with your current clients. Englebert said their best last year was 13.5% and there worst was at 8%. Englebert said each client is different regarding their risk factors in investing. Our worst last year is not as aggressive and did not take all of our recommendations. Englebert said we tend to be a bit more conservative with a pension fund. Lammi said your list of clients don’t include any Lehigh Valley clients. Englebert said we tend to work with township’s your size. Englebert said they used to handle the City of Allentown but the larger groups are very political.

4. FULTON FINANCIAL ADVISORS NOTICE REGARDING RESTATED COLLECTIVE TRUST DOCUMENTS

INFORMATION

Celeste Rau will explain the notice to the Board.

DISCUSSION

Celeste Rau said her office is in the Lehigh Valley and she had worked with Bill Barrett over the past seven years who used to handle the township account. Rau said she works with the retirement plans in the Valley. Rau said the letter that the Board received was a restatement of our collective trust document. Rau said over the years there were many changes made to the document and this restatement is to clean up all of those changes.

5. FULTON FINANCIAL ADVISORS POLICE PENSION FUND PRESENTATION

INFORMATION

Fulton Financial will make a presentation regarding management of the township police pension fund.

DISCUSSION

Rau said she’s been in the Valley for seven years. Rau said Fulton Financial is associated with Lafayette Ambassador Bank and said Fulton is the second largest banking organization in Pennsylvania. Rau reviewed the packet she presented to the Board regarding the relationship they have had with Palmer Township. Rau said they currently pay eleven current retirees from the Township. Rau said they currently have six pension funds in the Valley and have a great working relationship with Conrad Siegel actuaries.

Rau introduced Elizabeth Peris from the Fulton Financial office in Lancaster. Peris said she started in 2005 with Fulton Financial after 25 years of experience in prior investment firms. Peris said she is also a chartered financial analyst. Peris said they emphasize on long term investing for the plan. Peris reviewed their proposal with the Board. Peris said currently the township is investing in 50% bonds and 50% equity. Last year we increased the international investments and decreased the small cap, and overall returns have gone well. Peris said we are currently evaluating adding high yield allocations and adding separate mid-cap allocation managers and possibly adding active and passive market managers for international investments. Peris reviewed the average returns over the past seven years with the Board.

Colver asked about the fees. Rau said they are fee based and reviewed the schedule. Rau said she heard other presenters talk about the cost of mutual funds. Rau reviewed the mutual funds they purchase and stated the cost is very minimal. Rau said they feel they have done a good job managing the township funds. Colver said now that we are talking to our current consultant can you break down some of the fees and charges. Rau said an investment manager will charge a market base fee. Rau said Smith Barney said they would charge 75% in a year’s time. Rau said you take the seven million dollars times the 75%. Rau said in hearing the other proposals she feels you are getting an apples to apples comparison. Rau broke down the fee structure in their proposal. Rau said the most efficient way to get exposure in these parts of the market is through mutual funds. Lammi asked about replacement of fund managers and asked how you handle terminating a manager when it is a subsidiary of your company. Peris said we put them on watch as we would anyone else. Lammi asked if the senior management backed them on that decision. Peris said they have backed us this far. Lammi asked who makes the decision for a change in allocation. Peris said they have one person that is dedicated to that but we have others who assist and we also have software tools. Rau said regarding the township allocation - the township committee, actuary, and Fulton make the decision. Smith said if we want to do better than what you’re projecting as a return would you come to us with a recommendation of where we should be investing to get better results. Peris reviewed a chart that was in their packet with the Board.

6. PUBLIC COMMENT

None

7. REPORTS

Supervisors

· Colver asked the Board for their opinion on the Public Services Directors letter regarding closing Carbon Street at the Highland Park Project. The Board agreed to keep Carbon Street open and to continue to re-evaluate if it becomes a problem.

· Colver had a temporary construction easement for Helen Stelzman of Pike Street related to the Highland Park Project. On motion by Smith, seconded by Mitchell, and agreed by all, the Board authorized the Chairman to sign the agreement.

On motion by Smith, seconded by Lammi, and agreed by all, the meeting was adjourned at 9:15 p.m.

Respectfully submitted,

Robert G. Anckaitis

Township Manager