INVESTMENT SUBCOMMITTEE
MEETING MINUTES

Date: September 19, 2012 Time: 2:00 p.m.
X Regularly Scheduled __ Special
Attendees: Was a quorum present? Yes
Commission: Other Attendees
Charlie Casella Anthony Camp, ING
Steven Greatorex Kathleen Carey-Reid ING
Sandra Fae Brown Bill Cottle, Milliman, Inc (by phone)
Robert Baus (by phone)
James Dzurenda
Michael Carey
Comptroller's Office
Thomas Woodruff, Director, HPBSD
Margaret Haering, Assistant Director, HPBSD
Brenda Halpin, Director, RSD

Matters Discussed: The Stable Value Fund crediting rate remains the same for the fourth quarter of 2012. Tony Camp discussed the impact of increased cash flows into the Stable Value Fund by ARP members. The Intermediate Aggregate portfolio, which gets all new money flowing into the Stable Value Fund, now has more than 30% of the total fund assets. The required rebalancing of the portfolio back to 25% of the fund total has been temporarily suspended to guard against a situation where securities might have to be liquidated quickly if large numbers of participants transfer to the Hybrid Plan at the same time. Tony Camp stated that it would be most advantageous for the health of the Stable Value Fund to have the Hybrid Plan transfers completed as quickly as possible. The Committee recommended that a priority be set on the order in which ARP participants seeking transfers should have their calculations processed. The Committee agreed that in general it would be better to process those near retirement age first and then to process those with large account balances next so that more funds would be transferred out of the Stable Value Fund sooner. It was also recognized that the Retirement Division should have leeway to make administrative decisions regarding order of processing if an application for an employee with an uncomplicated service history could be processed quickly. The Committee will continue to monitor this situation closely in order to prevent the large cash build up from negatively affecting the Stable Value Fund's crediting rate or impacting members who are not transferring to the Hybrid plan.

The committee members reviewed proposed changes to the plan investment line-up, to add a new fund that would offer inflation protection in the portfolios managed under the Morningstar program and to replace the Growth Fund of America. No decision was reached on fund additions or replacements. The committee asked our consultant, Bill Cottle, to provide additional information about the funds under consideration.

Materials Reviewed:
ING 4th quarter crediting rate review for Stable Value Fund
ING Cash Flow Analysis (Stable Value)
August 14, 2012 memo re suspension of rebalancing
Milliman, September 2012 memos re fund recommendations
Milliman, Deferred Compensation Plan Review, April 2012

Decisions voted upon:
The Committee agreed to suspend the rebalancing of the Intermediate Aggregate Portfolio in the Stable Value temporarily to provide ING with the flexibility needed to accommodate the ARP members who may be transferring their account balances to the Hybrid Plan.

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