A primary focus of the meeting was the presentation by Brad Armstrong from GRS Consulting, who outlined the necessity of a five-year actuarial experience review. Armstrong emphasized the importance of updating economic assumptions such as investment return and price inflation, particularly in light of recent global events like the pandemic that have influenced mortality rates. He referenced recommendations from the Government Finance Officers Association, stressing the need for actuaries to validate assumptions used in pension valuations and to assist with risk management strategies. Armstrong clarified that while mortality tables would not require analysis for this study due to the adoption of Florida retirement system mortality tables, other assumptions were critical for the fund’s sustainability.

The cost of the actuarial review varied among the different employee boards, with the general employees’ system incurring the highest fee of $6,500. Police officers and firefighters followed with fees of $6,000 and $5,000, respectively. The board members unanimously approved the GRS Consulting quotes for the experience review, highlighting a consensus on the necessity of these evaluations for the fund’s health.

Another topic discussed was the financial performance of the pension fund. Despite a historical downturn starting in 2009, the fund’s current market value stands at $26.7 million, reflecting substantial growth from its initial investment of $12 million in 1987. The assumed rate of return was noted as 7.5%, and had the fund only met this assumption, it would have grown to $19.8 million.

The board also reviewed asset allocation and specific investment vehicles. The portfolio was slightly underweight in equity due to recent rebalancing efforts following negative performance. However, equities had rebounded, aligning closely with target allocations. For the year 2024, the fund achieved a return of 13.3%, surpassing the benchmark of 12.28% and placing in the 12th percentile among peers. This outperformance was noted as particularly impressive given the fund’s conservative asset allocation.

In addition to financial matters, compliance updates from the IRS were discussed, particularly regarding the taxation of duty disability pension recipients. The IRS issued guidance to ensure proper reporting of taxable portions of pensions, which had previously been vague. The board was advised to collaborate with finance to ensure compliance and avoid unexpected tax implications for recipients. A new verification process for duty disability status was introduced, prompting questions about the financial implications for recipients. However, it was clarified that this process is intended to be routine rather than punitive.

The meeting also addressed the effectiveness of the current death audit software. It was revealed that the software had identified two deceased individuals during a December audit, raising concerns about its adequacy. The current software, described as the lowest tier available, costs $600 annually for all three boards. A request for an upgrade to a more effective monitoring system was noted, with estimates ranging from $2,400 to $3,000 per year. This upgrade was deemed necessary to ensure timely and accurate tracking of recipient statuses.

To conclude, the board discussed preparations for the upcoming Florida Public Pension Trustees Association conference and resolved scheduling conflicts for their next quarterly meeting. A motion was made to adjust the meeting time from 2 p.m. to 1 p.m. to accommodate a lengthy agenda, which passed unanimously, ensuring sufficient time for discussions on financial statements, budget issues, and updates on securities litigation.