Pension Fund Thoughts
I spoke at the pension hearing in March when Mr. Esham from Morgan Stanley presented his recent results and I recently read the articles written about that meeting in both of our local papers. For clarity, I felt compelled to address these matters in writing.
First, for full disclosure, I have been a financial consultant for almost 40 years. At this time, I only wish to give the council a clearer understanding of its options and how they may affect our pension funds future return. No one has a crystal ball to predict what the next 15 years will bring. But if history is any guide, it is likely that we will not see the same type of market returns as we have seen the last 15 years.
As we all know, the large Wall Street firms have their proprietary products and for obvious reasons, they attempt to use these products whenever possible. Much of the time these products have higher internal costs and investors are completely unaware of what they are paying much less how these expenses compare with similar alternatives. For example, many pensions have migrated a large portion of their equity exposure away from actively managed funds to much lower costing exchange traded index funds (typically less than .10-.15% in annual management fees). Another important fact is that index funds have outperformed the Wall Street proprietary investment products a large percentage of the time (75%- 85% of the time). I will not go in to the reasons why this has occurred at this time, but the substantially lower costs have helped. Why do you think Vanguard’s assets have exploded with growth the past 10 years?
If the council selects a consultant who uses exchange traded index funds covering essentially the same areas as the more expensive firm proprietary product the annual savings could easily be on the order of 35% to 40% of the total fees. This could be a savings of up to $400,000 a year. Over 15 years that would total up to $6 million. Raising the present Ocean City funds total value by over 3%.
I have not reviewed the council’s Investment Policy Statement (IPS) but from what I understand, the current manager has underperformed the target of 7%, by (1.5%) for 15 years. The past 15 years the market has performed above its long-term averages. Either Morgan Stanly has not done a good job with their asset allocation or their investment performance is lacking or a combination of both. If the target for funding remains at 7% (which is optimistic looking forward) and the performance shortfall continues at (1.5%) per year, in 15 years there could be an additional $100 million shortfall in the two pension funds and the medical fund. This would be devastating. The other option is the town could lower the estimated gains and put in more money annually. It may be forced to do this anyway. Has the current advisor discussed these things at all?
The final point involved lack of proper disclosure. I do not believe anyone on the council understood the amount of fees being paid. Nor to my knowledge had the town ever been presented alternatives. Fees should be transparent and disclosed. When the town performs a Request for Proposals (RFP) I believe they should make it clear that they expect all submitters to disclose all fees.
Falls Church, Va.
No To Sanctuary Designation
For the last 20 years, I have been a resident of Worcester County. Although our county is not a designated Second Amendment Sanctuary, I have never felt threatened because of this. According to Sheriff Matt Crisafulli, he “stands in solidarity with the law-abiding citizens of Worcester County, in support of our Second Amendments rights.” (according to The Dispatch). I’m not sure who the sheriff is speaking for, but two years ago this subject was discussed by our citizens at a big forum at the Ocean Pines Library. Sheriff Crisafulli tabled his Second Amendment Proclamation at that time due to the large number of law-abiding citizens saying, “No” to his proposal.
Now two years later, during private meetings held due to COVID-19, this emerges again. I question the timing of the sheriff’s proclamation as citizens cannot assemble to express their concerns. Law enforcement officials in neighboring jurisdictions have already pressed their agendas upon the citizens of their counties and to be accurate, these proclamations have not been judged to be legally binding.
Do we in Worcester County want this attempt by Sheriff Crisafulli pushed upon us as well? Let’s appreciate the good fortune of having exceptional city and state police, as well as the sheriff department, as community partners and law enforcement.
The United States continues to be the leader in civilian gun ownership and no one’s Second Amendment rights seem infringed upon here in Worcester County. So as the summer is approaching, lets concentrate on welcoming our visitors and maintaining a friendly, safe community to enjoy.
Safety Issues Need Attention
I am writing to comment on your article regarding Beach Barrels in the April 23 edition of your paper.
I attended the meeting where this and other site plans were reviewed and decisions issued.
Aesthetics may have been addressed in the architectural drawings presented.
No safety issues were addressed in this proposal for an addition. No brightly painted pylons or “bumper poles” are shown on this proposal that is in a parking lot and surrounded on three sides by traffic. Review by the Fire Marshall’s Office should mandate numerous “poles” be added on the complete perimeter.
Both businesses advertise “carryout liquor and food.
Recent pictures and accounts in several papers show car driving into business that did not have poles. Fortunately, no one was injured this time by a DUI.
This is a high traffic area, close to bus stop/Fumes, etc. and very close to Coastal Highway.
Ocean City needs to update where necessary. Is this political? It has been 25 or 30 years since it was written.
Planning commissioner’s statement was true — “opening up Pandora’s Box.”
The Planning and Zoning Commission was the only board that personally visited the site to see limited parking available at this site in a residential community.
Robert R. Hemp
Facts Wrong On Wind
People like Ocean City. They like the water, except when it is coming down as rain during their vacation, or when it’s flooding St Louis Ave during high tides. People like to come here in the summer because they can bake on the beach, cool off in the ocean, and crank-up the A/C in their hotel rooms during the hot, humid nights.
Our elected officials want to protect Ocean City for future generations, but unfortunately they don’t have their facts straight. They are afraid that wind turbines 15 miles off shore will ruin the pristine view that Ocean City currently enjoys. They are ignoring the billboard boats floating by and blocking that view all summer long, along with the parasailers, advertising airplanes, speed boat tours and fishing boats, all within hundreds of feet of the beach. Those turbines at 15 miles will be barely visible to the naked eye during clear, low humidity days of early spring and late fall, and during the hazy, humid summer days will probably require binoculars to be seen.
However, to protect Ocean City involves more than just the view of the water. The ocean levels are rising with global warming as the polar ice and glaciers are melting. The streets of Ocean City are only a few feet above sea level and will become covered with water in the not too distant future unless we stop global warming.
Those hotel air conditioners need energy, which is presently generated in large part by fossil fuel generators creating greenhouse gases throughout Maryland. Those wind turbines would produce zero greenhouse gases. Burning fossil fuels also creates other byproducts which produce acid rain that kills aquatic vegetation throughout the coastal bays, where many vacationers engage in fishing, boating, sailing, kayaking and other water activities. Burning less fossil fuel will help improve the health of coastal bays and improve the environment around Ocean City.
We applaud the efforts of the elected officials to protect Ocean City for future generations, but they should understand all the facts of the matter so they can make the best possible decisions.
(The writer’s submission is on behalf of the Lower Eastern Shore Sierra Club Executive Committee.)