Comprehensive Annual Financial Report for the Year Ended Dec
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Comprehensive Annual Financial Report For the year ended Dec. 31, 2004 TEXAS COUNTY & DISTRICT RETIREMENT SYSTEM On the shelf in the county clerk’s office — among the records of marriage licenses, births, deaths and court proceedings — sits a tall, thick book with antique binding. The long columns on the yellowed pages are filled with drawings of livestock brands and the owners’ 1 names written in flowing penmanship. In county court- houses around the state, the brand and mark record book is a heraldry of the plains, telling a history of an industry and of families. After centuries of use, livestock brands are an enduring tool of the ranching industry. The most desirable brand is one of 2 simple design that can easily and quickly be placed on the animal, can be seen at a distance, is not easily confused with a brand of a neighbor and not easily altered by rustlers. We would like to thank the Texas and Southwestern Cattle Raisers Association, especially Dalton Hoffman and Paula 3 Archa, for opening their photo library and explaining how the registration of brands is done. Unless otherwise noted, all of the photographs used in this annual report were pro- vided by TSCRA free of charge. Lee Riedel, county clerk for Gonzales County, and her friendly staff provided invaluable assistance in our research of cattle brands. On this page and the inside back cover are a small sample of 4 the thousands of brands registered in Texas. 1. Circle Dot — Quanah Parker 2. Y O — Charles Schreiner 3. 26 Bar — John Wayne 4. Half Circle H — William Randolph Hearst 5. B R Connected — Cal Farley’s Boys’ Ranch 5 6. Hat — Bill Witliff 7. Cross H — Garza County Judge Giles W. Dalby 8. Rocking W — President George W. Bush 9. Circle J — Leon Jaworski 10. Quarter Circle R — Governor Rick Perry 11. T L J — Tommy Lee Jones 12. Golden Arches — McDonald’s Corp. 6 13. V Z Connected — Sam D. Seale, executive director, Texas Association of Counties 14. W 3 — TCDRS board member Bob Willis Front cover illustration by Rob Bishop 15. N Bar R — Nolan Ryan Back cover photo by Gerald McLeod Comprehensive annual financial report for the year ended December 31, 2004 Prepared by Texas County & District Retirement System 901 MoPac South • Barton Oaks IV,Suite 500 • Austin,Texas 78746 Gene glass Vincent prendergast Alan Adams Bob Will Director Comptroller Assistant Chief Investment Investment Officer Accountant Publications Department Gerald McLeod Leah Nelson Rodney Crouther Rob Bishop TABLE OF CONTENTS INTRODUCTORY SECTION INVESTMENT SECTION Certificate of Achievement for Excellence in Financial Investment Consultant’s Report . 76 Reporting and Public Pension Standards Award. 2 The TCDRS Act and Investment Policy . 77 Letter of Transmittal. 3 Investment Philosophy and Strategy . 77 Organization Chart . 6 Asset Allocation . 77 Board of Trustees . 7 Asset Classes, Investment Styles and Staff and Advisors . 8 Investment Managers . 77 Staff . 9 Investment Results . 79 Member Counties and Districts Lists of Largest Holdings . 81 as of Jan. 1, 2005. 12 Results of Securities-Lending Activities . 82 FINANCIAL SECTION Fees and Commissions . 82 Independent Auditor’s Report . 18 Asset Growth of the System . 83 Management’s Discussion and Analysis . .19 Investment Summary . 84 Glossary of Investment Terms . 85 Basic Financial Statements Statements of Plan Net Assets . 24 ACTUARIAL SECTION Statements of Changes in Plan Net Assets . 25 Actuary’s Certification Letter . 88 Notes to the Financial Statements . 26 Summary of Actuarial Assumptions and Methods . 89 Required Supplementary Information Summary Actuarial Data . 92 Notes to the Required Summary of Plan Provisions. 95 Supplementary Information. 36 Summary Actuarial Valuation Results. 97 Funding Progress . 36 Actuarial Valuation Results by Employer . 98 Employer Contributions . 36 Footnotes for Selected Participating Actuarial Methods and Assumptions . 37 Employers . 155 Glossary of Actuarial Terms . 156 Other Supplementary Information Changes in Plan Net Assets by Fund STATISTICAL SECTION and Interfund Transfers . 38 Summary Financial Data . 160 Changes in Endowment Fund . 40 Plan Benefit Information . 162 Changes in Interest Fund. 41 Retirement Plans of Participating Employers Administrative Revenues and Expenses . 42 as of Jan. 1, 2005. 164 Investment Expenses . 43 Retirement Plans of Employers With Professional/Consultant Fees and Services . 44 Reduced Participation as of Jan. 1, 2005 . 190 Changes in Employees Saving Fund. 45 Changes in Subdivision Accumulation Fund . 59 Texas County & District Retirement System INTRODUCTORY SECTION How to read brands rust everyone, but brand your cattle,” was the motto of Brewster County Jus- identifying mark must be re-registered in the county “ tice of the Peace Hallie Stillwell. Before she passed away in 1983, the clerk’s office at the beginning of every decade. indomitable “Queen of the Big Bend” also worked as a teacher, journalist and The Texas and Southwestern Cattle Raisers Association maintains a statewide registry of Tauthor, and was the matriarch of the Stillwell Ranch outside of Marathon. Descendents brands. The association has more than 700,000 of Hallie and Roy Stillwell still run the 4-L brand on their spread on the boundaries of active brands registered in their data base. Ranchers Big Bend National Park. have developed other methods of identifying their Just when the practice of branding livestock as a tering, livestock brands is left to each state. Texans stock, including using freeze brands, ear tags, ear means of identification began is subject to some register their brands at the county clerk’s office in bobs, tattoos and even computer chips. Despite debate. There is evidence that the ancient Egyptians the county where the stock is located. The same changes in technology, branding of livestock remains branded their oxen and the practice was widespread brand can be, and is, used in different counties by one of the best ways of determining ownership. in Europe by medieval times. Hernando Cortez proba- different ranchers. Sometimes the same brand is American brands have a language all their own. bly introduced branding with a hot iron to the New used, but in a different location on the animal to sig- That lexicon, like any other, follows certain rules. World in the 16th century, when he brought cattle nify a different owner. It is illegal to have a branded Brands are composed of letters, numerals, pictures and horses to Mexico marked with his three crosses animal in a county without registering the mark, but and characters. The ability to read these symbols is brand. As an old cowboy said, “A brand is some- you don’t have to own a single cow to register a referred to as “callin’ the brand.” Generally, brands thing that won’t come off in the wash.” brand. Brands are often passed through the genera- are read from left to right, top to bottom, or outside Establishing the rules for registering, or not regis- tions in wills or sold with a ranch or herd. The to inside. Callin’the brand Here are a few examples of different styles of brands. Lazy — letter lying on its side. Hanging — Letters on top of each other; Symbol — often the name of Lazy S read from top to bottom. the ranch. Rocking — resting upon and YO Ranch Pitchfork Land and Cattle Company connected to a quarter circle. Walking — short bars added to the Initials — no doubt of who owns Rocking R bottom of a symbol. the cow. Bar — a dash. Walking S Lauro F. Cavazos Bar K Tumbling — a leaning letter or character. Flying — short curved strokes or Connected — two characters Tumbling R “wings” added to the top of a letter share a common stroke. Running — changing the short bars or character. Gov. John and Nellie Connally added to the bottom to curves. Flying B JN Connected Running M Post Office Box 2034 Tel 800•823•7782 Austin, Texas 78768-2034 512•328•8889 • • 901 MoPac South Fax 512 328 8887 SECTION INTRODUCTORY Barton Oaks IV, Suite 500 Austin, Texas 78746 www.tcdrs.org LETTER OF TRANSMITTAL June 10, 2005 Achievement for Excellence in Financial Reporting and the Public Pension Coordinating Council’s 2004 To: The Board of Trustees Public Pension Standards award, this letter of transmit- Texas County & District Retirement System tal, organizational information and a listing of participating employers. We are pleased to present the Comprehensive Annual Financial Report (CAFR) of the Texas County & District 2. Financial Section: Contains the report of the inde- Retirement System (TCDRS or system) for the year pendent auditor (KPMG LLP), management’s ended Dec. 31, 2004 — the 37th full year of operations. discussion and analysis, financial statements including TCDRS management is responsible for both the accuracy notes, required supplementary information and other of the data and the completeness and fairness of the pres- supplementary information. entation within this report. We hope that this CAFR will 3. Investment Section: Contains a report on investment help you and the members of the system better under- activity from Wilshire Associates, followed by a presen- stand your public employee retirement system — a tation of investment policies, investment results and system that continues to maintain a strong and positive various investment schedules. financial future. 4. Actuarial Section: Contains a certification letter from the system’s actuary (Milliman), the results of the The Texas County & District Retirement System is a annual actuarial valuation and related information. statewide, agent multiple-employer, public employee 5. Statistical Section: Contains general statistical retirement system created in 1967 by the State of Texas. information pertaining to TCDRS participants and TCDRS is administered by a nine-person board of finances. trustees appointed by the Governor with the consent of the State Senate. The board appoints a director, who is This CAFR was prepared to conform to the principles of charged with the responsibility for all day-to-day opera- governmental accounting and reporting set forth by the tions other than investment operations, and an Governmental Accounting Standards Board (GASB).