2011-08-20 / Front Page


Despite choppy waters, retirement fund grows
By Amanda Long-Kisiel

An investment manager who handles the $10 million-plus employees’ retirement fund for Potter

County had the unenviable task of reporting results during the most volatile week in the history of Wall Street.

Jeff Davidek, a vice president with C. S. McKee Investment Managers of Pittsburgh, preached caution during his appearance before the Potter County Retirement Board – and his forecast that the roller-coaster ride of last week would level off was right on target.

Davidek visits the board quarterly to present recent results. He said that, despite a sluggish economy in the second quarter of 2011, the fund’s balance ratcheted upward from $10.67 million on March 31 to $10.74 million on June 30.

He added that it has grown by 19 percent since mid-2010 and –despite the market crash of 2008 – the balance has a net growth of 4.5 percent over the past three years.

Those results verify why more than twothirds of Pennsylvania’s counties and many other larger retirement fund managers engage C. S. McKee. Potter County Retirement Board members are Commissioners Doug Morley, Paul Heimel and Susan Kefover, Treasurer Krista Miller and Chief Clerk Kathleen Majot.

Davidek acknowledged some nervousness among investors over the wild market swings of last week. In fact, he conceded that the county’s fund had lost more than $1 million since July 1.

Davidek said he was confident the sell-off of last week was more of a “market correction” than a sign of impending recession. He preached caution and long-term, diversified strategies. Indeed, within two days of his meeting with the board, most of those losses had been regained.

This is important to the taxpayers of Potter County because, by law, if the retirement fund suffers, they have to make up the difference to meet the benefits paid out monthly to county government retirees. Chairman Morley pointed out that the county’s annual contribution has fluctuated from $312,000 after the market crash to $125,000 more recently.

He pointed out that the payment is based on a five-year actuarial analysis calculating the fund’s balance, the performance of stocks and bonds, the number of employees receiving benefits or likely to start drawing on the account, the number of employees hired, and other factors.

Davidek distributed a detailed report on the county’s fund and explained some of C. S. McKee’s strategies. Noting that “small cap” stocks are down, while larger companies aredoing better, he said McKee has sold off all of its holdings in the former.

“We still think this could be a positive year for stocks,” he said.

In terms of specifics, Potter County’s money has been pulled from Bank of America, Wal-Mart and AutoZone, and invested in Wells Fargo, Kohl’s, and a high-end purse manufacturer, Coach, that has seen strong sales in China.

He explained considerations for each of these decisions, based on his company’s analysis of social trends and developments in the worldwide market for everything from cars to pharmaceuticals.

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