good morning Mr J are we ready to open the meeting yes can we open it at 10:01 we take the role please um Chad yes ma'am here Mark hereen here have a um Justin Campbell is no longer on the board he's resigned um and and have a someone to fill his stop yet he was going to recommend somebody so that would have to go yes ma'am has everybody had a chance to review last please remember to turn on your mics when you're talking everybody had a opportunity to review the prior minutes um I got one correction to make the very last motion me that second it so I think I think I'm one that seconded it not su su wasn't here wasn't here all thank you sir thank you m j any other questions on the minutes accept a motion to accept the minutes second motion by Mr Larry second by Mr Suman all in favor moving forward uh Mr Madrid Capital City good morning sir thank you for coming okay it's on now okay Dwayne madin Capital City trust okay and a bad accident on Highway 100 almost didn't make it big big uh pile up Pi a log truck hit a car anyhow um so I guess we got the uh on the screen we have the report for the firefighters if you page down to the first bar chart we can talk about calendar year 2023 um and the so the firefighters pension fund approximately follows the S&P 500 most of it does anyway so so that's the dark blue bar so during 2023 the returns are quite good because the economy and consumer spending was better than expected and that's a bright spot inflation moderated came back a little bit in July but after that it it pretty much uh stayed steady the Federal Reserve signaled that they were almost done or done raising rates so last fall the market loved that information and went straight up and so between October in January the market was up more than 25% but for the calendar year 2023 you'll see where um gross stocks information technology and communication Services which includes Google and Facebook did quite well returning about 57% um and then you see where value stocks or defensive stocks like health care and utilities did not do well because in a fast-moving economy invest s tend to prefer grow stocks and when the economy slows down they drift into defensive stocks like healthcare and utilities and of course banks are having a tough time with a slowing economy and some commercial real estate wow um you can see where small cap r2k the Russell 2000 um lagged behind the S&P 500 because when um there's a slow economy and a threat of recession uh small companies pull back because they are not ready to deal with higher rates and higher inflation or materials cost and uh slower demand so all in all the stock market last year uh returned about 26% which is outstanding and and it eclipsed what was lost in 2022 so the bright spot is we had a bad 2022 we made it all back last year and now we're moving forward um if you turn the page or page down please Jill we can talk about the stock market valuations this chart is a couple months old but the top line is the stock market as many people Define it and the PE is the price to earnings ratio a commonly used definition of valuation and it was a 19.2 and that's because a lot of large companies became expensive like Microsoft and Google and um Tesla Netflix and Facebook and uh um Nvidia which is a semiconductor company but if you look at the stock market equal weighted where each company has the same weight the valuation is much cheaper so the illustration here is that is the stock market expensive on a size weighted basis it is because the top 10 largest companies in America are expensive but if you pull those out the other 497 companies are not as EXP expensive so the hope is and the plan is that eventually money will rotate out of the expensive stocks and into the cheaper stocks like the banks and the health care stocks and the utilities um and that rotation is starting to happen very slowly so um is the stock market expensive depends how you define it but sure the tech stocks are expensive and that's why you see the stock market tend to slow slowing down in the past couple weeks so uh if you turn the page or page down Jill to the policy review we can talk about the the fund as it's allocated today so the the policy percentage percentage of market value is the actual so for instance large cap equities is 37.8 slightly underweight the policy of 40% but within the range so I pulled back on large cap about um couple months ago because it was starting to get expensive and intern National is a little bit underweight because their growth is slower than ours and their inflation is um more uh of a problem than ours is the rest of the uh small cap is underweighted because of the threat of a soft Landing but the rest of the fund is approximately weighted the same as the policy which is the Burgess chamber strategic model and so if there's no questions on the uh the policy stance we can move on to Performance so this is for the fourth quarter of 2023 and I've got the fiscal year-to dat numbers so the year-to date is fiscal from September to today is 10.69 off to a good start on the fiscal year the one and three and five years are the um calendar year as of 1231 so you can see where stocks return 20 .6 um behind the S&P 500 because International and small cap lagged a little bit uh if you go back to five years it's made 12.7 uh per year um and then you can see where taxable bonds fiscal year to date return 7.3 those are the high yield bonds they tend to follow the stock market because they're Equity like in nature and you can see where cash returned 4.7 over the last year your cash is now paying 5.2 in your fund pays almost as much as a bond because the Federal Reserve has rates elevated so cash is a nice defensive investment right now uh if there's no questions on that now this is just the equity portion Burgess will present the total Fund in a minute the next page over I just included January where January is was a decent month you can see where the year-to DAT number um stayed about the same stocks went up the high yield bonds went down a little bit but uh we're off to a good start this year because uh there's hopes that the Federal Reserve sometime this year will lower rates we're not sure when it could be July or September and that will help the stock market in addition what many people have noticed is that the stock market seems to be focused more on earnings earnings surprises and economic growth and less focused on what the FED is about to say because when the FED makes announ announcements the market isn't moving too much it's already pretty much priced all that in so it's looking forward to better economic growth and um the earning season that just is about to conclude had terrific news many companies outperformed and you you probably saw some of them in the news Nvidia is one of them the artificial intelligence theme is uh causing a lot of tech stocks to go up because uh there's some money to be made there and one of them is NVIDIA it's probably the fifth largest company in America now it has a semiconductor that has a patent and that semiconductor allows for great resolution on your TV screen or gaming screen but it also is right in the middle of the artificial intelligence theme so that's that's been um a big winner that stock is up about 260% and because of its size in the index it helped pull the stock market up uh so that that's all for performance if you page down Jill to the asset allocation so this is the the total fund as of February 14th um 8,913 th17 and it's 67% in equity that includes the convertible bonds as uh and um and the real estate as equity and so that's a moderate growth portfolio it's not aggressive but it it it is growth uh the rest of the report is just the Holdings of the fund which are mostly low lowcost index funds which is a good thing any questions for me all right thank you thank you good morning you want me to sit here or go up there that matter am I okay here okay uh good morning everybody uh I ask you to turn to page eight I want to give you a sense of of the Strategic change uh that occurred uh when the new policy was adopted in August of last year yeah you're okay perfect so if you look at this chart and look at the table you'll see that the domestic Equity Target allocation is 52% uh that was increased from U by 15% that's so the new policy has shifted uh more emphasis into the uh domestic equities we reduced the convertible Bond allocation from eight down to 5% the international was decreased from 15% down to uh 8% private real estate was decreased from 7 to five and fixed income was increased from um 22 to to 24 so big picture reason for this were drisking to some extent because the idea was to reduce exposure to the uh non- us companies particularly uh Europe and and Asia and uh what's happening we all know what's happening with China you know China is the second largest econ eom in the world but India is now the fifth largest economy in the world I'm not sure you knew that but India is probably uh going to be moving up uh the totem pole here over the next five years and perhaps they will Eclipse uh China at some point but China may be may have topped out they have a horrible real estate market a major collapse uh in uh bonds and and and uh Bank financing High Unemployment uh and stress in the uh global trade markets Europe has just imposed a big import uh tax a carbon tax they call it on steel products for example from from China so that that that's kind of the reason why we decided to uh Tamp down the exposure International and so far it's actually worked uh US stocks are actually doing better than uh non- US stocks at this point so that was a good move for you if you go to page seven you look at his history here and you can see depending what time period you pick uh results look Rosy and in some time periods they don't look so Rosy it's like for example the three-year return of two% per year that captures what Dwayne referenced that is 202 22 2022 was a horrible year last year 12.2% was a very solid year for you and if you look at the fiveyear average of 8.1 that makes Patrick happy uh but the 10year is right around right around 6% of course the 10-year captures quite a bit of uh es and flows in in the stock market um and that's why it's right around 6% if you go back further if you go back to years ago and go and then do the 10year from two years ago the results are closer to 7.8% so that's how much the impact 2022 had on the long-term averages so on page four are the summary remarks um this is for everything you have here including uh the assets consider under uh Dwayne's oversight and and in the bonds up and managed by Saw Grass the the program earned $824,000 99.1% uh net and you're ranked in the top 20th percentile that's fabulous and I should add that the other 80% of the market we're talking about pension plans now they have tended to invest in things that aren't doing very well they're they're heavily invested in many of them are in in private equity and uh hedge funds and they have a heavier allocation to private real estate and your program has really done very well uh compared to them because you have more beta more Market sensitivity than they have I talked about the fiveyear the 3.3 million was earned over the last five years 8.1% net and we talked about the 10year con and steers is your infrastructure manager um they had a very um nice bounce uh in the quarter um they're if you go to page um you go to page 11 you can see they're up 12% for the quarter how do they do that well um and that made up they recovered nicely from the prior returns for the year that weren't that great con and steer has half of their portfolio is in utilities very interest rate sensitive and the discussion that many of us had during the quarter this quarter about the FED probably pausing on rate increases that as Dwayne mentioned that created a lot of excitement in both stocks and bonds anything that was interest rate sensitive did very well uh during the quarter for that reason and I should go to back to page 12 and talk about your bonds for a minute you know for many years the bonds averaged on a 10year basis right around 1% and what we've seen in the just recently with this rally in the bond market the yield of maturity on this portfol now is pretty close to 6% we haven't had that kind of of positioning looking forward those return expectations in really in 20 years so the bonds are going to be more uh important in terms of delivering returns to the plan than they have in many many years I would say uh on while we're on this page we the soft spot here uh with about a 5% allocation is the American core reality product um down 133% for the Year this is all the result of marking down the value of primarily office there's some multif family and and that those marown more recently believe it or not and a little bit in industrial but it's primarily um office they don't really have a retail exposure other than anchored strip centers which have actually fared well and this environment with 18 or 19% exposure to office commercial office around the country uh that will be a area of continual stress probably for the next couple years um but I think that this product long term is will do fine for you it's just we have to get through this adjustment phase I should add that the balance sheet of the trust is very strong uh The Leverage is only about 19% uh their loans are they have they have a number of term loans nothing coming up in in the near future there's no exposure there in terms of their inability to to refinance the the debt that's in the trust that's it any questions art you have any questions since you're a banker I know you're always thinking yes well the the big the big dilemma and I know you're very in touch with this more than I am but there's an enormous amount of commercial lending that's uh that's stressed um there are loans that are coming due uh across the country uh we're talking in the you know probably close to2 trillion doll 1.4 1.6 trillion which is call it even two trillion these are these are Merchant Builders and developers that took on a lot of debt say three four five six years ago had very low rates and now they have to refinance this year next year in the year you know next two three years of refinancing and the banks don't want to make these loans some of the banks are modifying the loans giving them some extensions but they're but the the the problem is the the banks want more equity and art is an expert in this area and these borrowers just don't have the cash to put the equity down so they're walking away from these deals but there are big companies in this space uh that you know KKR Black Rock and others that are going to uh JP Morgan they're going to pounce on these deals when they get cheap So to that extent it'll work itself out but that's that's where the I think the greatest uncertainty is right now how long will interest rates stay up and the longer they stay up the more it's going to stress the commercial real estate market from a refinancing perspective would you agree with that I think that's the biggest uh Cloud on the horizon right now earnings uh as Dwayne pointed out are pretty reasonable uh and I think what Dwayne is hoping for and I and I think it's going to happen we'll see a more evenness in the overall price to earnings multiple of the market meaning the tech names that he talked about that are very concentrated right now the especially the large cap growth and the S&P 500 uh we need a little bit of a pause they need to kind of slow down their uh profile growth profiles a little bit and spread the wealth across other sectors that's my short answer I talk too much okay anything else okay we'll make a motion to accept motion by L second s all in favor thank you sir thank you Mr donlin if you will Jill May Jill may I make a statement um I want I forgot to introduce our Market president um ke Capital City Bank so I appreciate welcome thank you did you drive with him no that's you're lucky to have to drive with this guy all right so I brought with valuation reports I brought a few copies I handed out um I don't know if you're going to put it on the screen also or not but and then you guys have it in your packet or you can use the iPads either way if everybody wants to go to page six of the document so B is told me to give you good news I have Fair news I guess is what you would call it um but you know every year as of October 1 we look at the Assets in the p plan and then we project out all the future retirement and we say okay well there's not enough money to pay all those future retirement benefits so we determine an appropriate funding requirement for the next year and we always do it one year ahead so that the city can budget so the right hand p is the snapshot the valuation date October 1 2022 when we looked at it last year and that determined the requirements for the year that we're in right now so right now we're in this fiscal year ending 9:30 2024 and the total city and state requirement is 35.3% of payroll so at the end of the year we're going to say okay what was the payroll it was at a million dollar then 353,000 would be the requirement and then will take off whatever comes in from the state and that's the city requirement so right now it represents about 30.6% of pay and then the left hand column is for next year and you know B just gave you a good report and he said oh you had a good year on the Investments but he also mentioned that we had one terrible year in 2022 right everybody had a terrible year in 2022 and we use a smoothing technique with the valuation and so we don't want the city's cost to go way up and way down so we spread out those investment gains or losses so that 2022 investment loss we're still recognizing some of that and we're recognizing some of the gain that we had in 2023 so and also individual salary increases were higher than normal I think you guys have negotiated a contract a couple years ago where you got salary increases and so I said we look at the assets and we project everybody's future benefits well if salaries are higher then everybody's projected benefits are higher because your benefit is based upon your final average compensation so that created a bit of an Actuarial loss issue so even though we had a good year on the Investments all told the costs are going up a little bit so for next year the total required contribution is 42.9 members contribute six so the city and state requirement is 36.9% payroll for next year and then it'll re offset whatever comes in from the state and then the bottom line City so as of right now based on current payroll and current state Ms that's 32.2% payroll anybody have any questions about that page so I talked about the investments in well maybe I'll have you go to page 10 just a couple Pages later yeah right scroll a little bit more down so you know this is all of our evaluation results and it has statistics from last year and this year but you can see there there's assets we have market value and the market value went up quite a bit and then we have Actuarial value and that didn't go up quite as much and that Actuarial value is what we're using for this valuation you know to determine those funding requir and so you know note though that right now you're actually being helped by the smooth because the cost would be higher if we were not smoothing because that 22 loss was devastating and we're spreading it out over five years if we would have recognized it immediately then everybody's possible way so then if you scroll back to page 32 a tiny down the at the beginning of the year you guys had $8.3 million in plan that was the market value of assets at the beginning of the year and so we have a 7.4% assumption that's what we're expecting and so if you take 7.4% of that 8 million we expected to earn 621,000 this year in fiscal 2023 now BG just gave you the report for calendar basically ending 1231 but this report uses 93 September 30th and the end of the year was really good from September 30th through December 31st but for the fiscal year um you guys got 7.73% so you did beat the Assumption um so you beat it by 19485 so then in the upper left hand section there we're going to spread that $119,000 gain over five years so we're going to recognize basically 4,000 of it each year for five years but 2022 you can see there we had a $2.4 million loss because we expected 7.4 and we got like minus 16 or something like that so you know we had like a 23% loss so you know that that's the big story that you guys need to remember from last year so that that that loss were we're spreading out so if you scroll to the bottom of the page using that smoothing um we had a 3.4% return and So based on our 7.4 assumption we had an actual a loss there 390,000 so you know we're off to a good start this year which could help offset some of that but likely the next three years we're probably going to have Actuarial losses on the investment because we're still going to recognize one5 of that 2022 loss you know this is our second year of recognizing it so we have three years left to go do anybody have any questions about the then page 38 that's the turnover and um you know a lot of times things that are good for the plan are bad otherwise and and vice versa so in this case um you guys had a lot of turnover which actually helped the pension plan but the beginning of the year you had 25 firefighters you had two of them terminate bested and then you had four firefighters terminate and take refunds of their own contribution so when a firefighter terminates and takes a refund well all they get back is their own contributions so the city contributions the state monies the investment returns all that stays in the plan so it's a gain when you have more turnover and that's what happened this year and then you hir three new firefighters so you actually went from 25 to 22 I don't know if that was a temporary thing or or what but you know maybe next year when we do the 2024 valuation you'll be back up to 25 I don't know but um you did end the year lower and started at the bottom of the page is the retirees and again um you know a good thing is that all of your retirees live to see another year and collect benefits so that was actually a negative thing for the P so then I'll take you back to page 18 so this is your unfunded aial of through liability and basically on an Actuarial basis using that smooth Actuarial value of assets and your ACR liability um what's the difference between the assets and the ACR liability and last year there was $1.89 million in liabilities that exceeded the asset on an act of and but we're making a payment each year to pay that down the city is so we expected that to go to 1,522 and in the end it was 2,213 so we had a net actal loss there of 69100 that means the liabilities compared to the assets that difference grew a little bit from 2021 or 2022 to 2023 and you can see the reasons in the middle of the page so the investment return using that smoothing that created an increase in the liabilities or a reduction in the assets of 390,000 and then the fact that salary increases were higher than expected that was a loss of 393,000 and then the active decm that's the turnover that was a gain of 188,000 inactive mortality was the loss um one best terminated member retired other minor issues so we get a total there of 691 th000 but you can see it was basically all from the investment return in the salary increases so that was the big story in the report and if you go to the previous page page 17 we've got a bunch of little mortgage payments but this unfunded at liability like 2.2 million unfunded liability that we have we're paying that off over time so the $691,000 loss we had this year we're going to pay 72,000 for 15 years to pay that off so this mortgage payment is now 296,000 a year you know that that changes each year and we're paying it down but it went up you can see those last that last item they went up about 72,000 just because of the ACT L that we had this year and that's the main reason why the cost went up back on page six so if you go to page 13 so the top line on page 13 is the normal cost and what that is is that just each active firefighter they're AC crewing benefits each year right and so you know the cost for that is about 19.7% of the pay that's if all of our assumptions are met if we had exactly our investment return exactly the turnover all that it would be 19.7% this year 19.6% and then administrative expenses are our fees any education you guys get anything we pay Jill group anything like that is is Administrative expenses that's not part of the benefits so that's a separate line item and that went from 2.6 to 2.9% payroll but then the big issue is that third one that's that mortgage payment that's paying down that unfunded X acrude liability that went from 19% to 20.4% so you add those three together and that gets you your total requirement 41.3 to 42.9 the same numbers we saw back on page six something people look at is that funded ratio which is on page 11 so you know we talked about that unfunded actar through liability looking at the liabilities compared to the assets and the difference was 2.2 million well that's as a dollar amount if you look at it as a percentage taking that of crude liability divided by the assets um you went from 83.7% funded ratio to 821 1% funded ratio and plans want to be in that 80 to 100% but you're still in the healthy range of of fund how do we compare to others like us well every year we do a survey of all of our plans or most years um I can look it up real quick but the average I think was like8 seven last year maybe but but you're you're not far out of line you're you know you're in the range of most of our planes so those were kind of the highlights and low lights of the valuation report but I'd be happy to answer any more questions I've got one if you got yep so the question about the third party administrator we've been talking about what does that do to our administrative expense does that number does that number go up or down as as far as the city's portion I can't remember is the city you know donating Jill's time right now or are they being P each board is p7,000 to the city so see each board right now 7,000 to the city and that's part of those administrative expenses that I had so if your new administrators a little more than that then it's going to go up a little bit but it's not going to go from zero because you're already were paying something as a board to the city so it will go up um because you're have a third party administrator um but it won't be you know a huge issue already paying some and you are already play paying $1,500 a quarter for the um attorney that's six grand a year um but that doesn't change yeah not yet they haven't increase their fees yet but but um the actuary just increased their fees last year we have a whole new fees schedule for them um so it's the actuary the attorney um the uh conferences and things that are outside of normal expenses and um what um you pay for uh liability insurance um and trying to think if there's something else other than liability there's one more thing that you end up paying for that's all rolled up in into that 2.0% yeah the medium last last year was 88.2 but there was you know 12 plans in the 50s and 60s and you know we have some plans that are 100 so you know there's range but guys I got a question excuse me so we increased our staffing like a year ago to three more members which we haven't um hiring them yet that should significantly improve some of these numbers as far as for contributions is is on page 13 the remember how we have that mortgage came so that 2.7 or 270,000 or whatever that we have that's that we paying for the unfunded actess food liability so you know that's a dollar right it's a fixed dollar EV so it's 270,000 this year it might go up or down this year but relatively it's a dollar so um to get the percentage of payable you take that dollar amount divided by your payroll so right now your payroll um in this valuation was 1 mil 506 um you know was the payroll that we had so if you hire three new people you know that's another 150,000 in payroll or something right so now your payroll is going to be higher and so that 2 270,000 divided by that higher payroll is now a smaller percentage so that 20.4% of payroll for the unfunded X through liability payment might go to 19% of payroll next year you know if if you hired more people right so that's really where it helps it doesn't really change the normal cost you're still contributing for their pension and all that um it really helps in that one spot and the administrative expenses also so again the administrative expenses are a dollar so that 2.9% of payroll there if you had a higher payroll it would be 2.5% so both of those two lines there adding members helps thank you to that to add to that question though would be was this valuation figured on 25 or was it figured on 22 22 you know it's always whatever is there on the valuation date you know next year might be 25 or 26 but this is based on we always do a snapchot that's all we can do yes sir you know and things catch up for next year it was out L well there's there's a lot of issues they could be the benefit level I mean you know in general employee plans are on this list too it's not just fir if I limited it to fire it would probably be lower that because on average firefighters have less turnover you guys had a lot this year but in general firefighters tend to stay and general employees and even police officers have more so the pension plan if everybody makes it to retirement that's a difficult thing it's more expensive right if everybody left after four years you'd have 100% fund ration you wouldn't need to put in any money so so that's the biggest thing probably is the fact if it's a fire or a police or general some of it is the benefits some of it is how recent benefits were changed you know if you added and multiplier for 50 years and then you increase it to 3% well now all of a sudden your liability went up immediately then your funded ratio goes down but you're going to pay that off over time right so that somebody who did that same Improvement 20 years ago has already paid it off so there's a whole lot of issues as to why the funded R higher and lower but you know let these boards need all the time and and do their investing and then we tell the city how much they need to contribute and as long as they keep making those contributions then all the plans are essentially 100% funded because the city has to make the contributions to make it act where time that help do we need to accept the evaluation report or yeah that's a separate motion so the first motion would be to approve the ACT evaluation report we make a motion to accept the evaluation report by sub second second by Mr all in favor all and then as Jill pointed out every year after you get the valuation report you're supposed to declare an expected rate of investment return for the next year the next several years in the long term there after which is kind of silly because we already do it in the valuation report but the state a long time ago asked that to do the separate motion and I'm comfortable 74 4% I don't know how feels I I would declare um an expected rate of return of 7.4% this year I mean next year over the next several years and over the long term it would remain the same all right and I believe a letter needs to be Jill are you going to handle the letter okay thank you so we would make a motion to accept the valuation 7.4 expect R return motion second all in favor since you guys have the valuation report and transition to the next topic um if you go to page 39 so I talked about you know the benefit level to the previous question and so you know you guys have for normal retirement it's earlier 50 and 7 it's basically 50 and S or 25 half and the benefit is in two pieces you guys have it's a 2.5% benefit acral rate which is what the general employees have and and then you also get this additional benefit and right now it's 0.65% of average final compensation times credited service and that additional benefit additional above the general employees is being paid for with State monies you know you guys are getting State monies every year to provide additional benefits and a long time ago you know even I've been working for foster and Foster for 26 and a quarter years and when I started we already where you guys already had this process in place in the ordinance where every year we look at the state monies and the accumulation and the earnings of the state monies then we look at the extra benefits that have been provided and we say okay what extra benefits can we provide going forward and so we've done that calculation ever since I started and um in conceptu it's very nice in that you know you're getting these State Monies to provide extra benefits for the firefighters and you guys have a general employee plan so it totally makes sense to use those Monies to pay for an extra benefit for the for the firefighters that's that's the concept but that isn't necessarily how it has to be done you know I you talked about this compar comparison with other municipalities well on this list of uh 27 PL that we have in Florida which may be 170 of them maybe or police and fire planes of those 170 police and fire planes alaka is the only one who has that exact structure you know that that you guys have with handling State monies in that way so it isn't that it's a state mandated you have to do it the way that you've been doing um it's a nice way and it's makes sense but it's not required it can be negotiated to be something different so that that's why that's the transition into the next thing and I brought with a handout could have it's also in your packet I believe but what I did is I I basically started by giving the the state law Preamble or whatever that just describes that these State monies are supposed to be used to provide adequate retirement benefits for the for the firefighters in that City in Paca in this case and then you it also outlines minimum benefits in the state law um which is a 2.75% benefit acrw rate right now and they have to have 55 and 10 and 10 year vesting you know it has different minimum benefits that have to be done in order to get these State monies inched and then I show the current structure down at the bottom of the current plan so this is your your city ordinance you know the laws of the city and so that's the section that talks about 2.5% as benefit one and then you get an extra benefit a 175% benefit uh each year and then if you go to the second page at the top you know one one issue that we have with we've always had with this which can be good or bad uh but it says the redetermined percent shall be applied prospectively to the retired members and beneficiaries of deceased retired members so basically you know it changes the retirees benefits and so that's even more unusual um you know of of of the plans that I view you know usually when someone retires and they're going to get $1,000 a month you know that's what they're expecting to get every month um so again mathematically this works fine they'll do it every year and adjust the retirees but it may not be the best practical solution so the next little section here is basically showing part of our calculation that we do each year so first of all we accumulate the all the state monies that you've ever gotten right and and then we then they get earnings whatever the plan earns so as of 101 2023 that was $7.2 Million that you've gotten from the state at least since we started tracking this um with earnings so you know that's a real nice thing that's happened you know we've gotten $7.2 million and accumulated State money's with earns and then the second column is but we've already paid these extra benefits to people right we've had people been retired for a long time and they've been getting that extra benefit at 65 multipli so the accumulation of all the extra benefits we've paid with earnings is 4.6 million so basically we have 2.6 million to to pay for benefits you know that are going to be because those retirees are going to continue to get that um and then future retirees are going to get that so that's 2.6 million so you can see that in 2020 it was 2.7 million and at that time the multiplier was um 79 so you were getting 3.29% multiplied and then in 2021 we had a good year right so that on the left hand side that accumulated statement is went from 6.6 to 7.9 so we had a nice Improvement in that in that um state so we said oh now we can increase that 3.29 to 3.35 so went from 79 to 85 and just for clarity that drives up or down the benefit that our retirees are exactly receiving each month exactly and we always do it one year ahead there too but so yeah so 101 2022 all the retirees got raas um which is nice thing you know and and so then but then we hit 2022 so 2022 now your accumulated State monies are back down to 6.6 million and you guys have gotten raises that year also so so the liabilities went up um and our accumulated State monies didn't so we had to reduce the benefit that year which took effect a year later 101 2023 and then this evaluation the one you guys just approved remember you had like 7 s or something you had just above your assumption so when we did that analysis [Music] 10123 the multiplier actually stays at 0.65 so for next on October 1 2024 there's not going to be a change for the retirees benefits up or so that's where we're at right now you know under the current structure does everybody understand how that works so some things I thought of for changes if we wanted to change it um one thing that would be easy is that you know in the 26 years I've been here we use the market value return you know whatever the plan gets that's what we apply right but for the valuation for funding the city contributions and such we use that smoothing technique right and and we started over that smoothing technique 101 2020 for the year ending 9321 you remember if you're looking at the valuation report it's on page 32 so we basically been smoothing for three years we had 21 22 and 23 that that we've been smoothing so if we said okay let's use that smoothing assets for purposes of this calculation where we determine the new multiplier for everybody so if you look on on page three then um that's the history on the left hand side go down one right there so the left hand side is the actual history using the market value so remember we were at 79 and then it went up to 085 and then it went down to 65 right and that was based on the market value of assets you know that has a lot of volatility which we see there if we used the smooth value it actually would have stayed at 79 101 2022 and then it would have went down to 75 2023 and down to 7 2024 so just like the valuation that 22 loss is going to be spread out over five years so you know this chart is incomplete here if we use a smoothing it's probably going to go down again 2025 and 2026 you know because we're still going to be recognize some of that but I think that that would be better probably than the current method you know because for the same reason we smooth it for the city's contributions we don't want the members benefit to go way up and way down each year so it would make sense to use the smoothing and we probably could do this retroactively if if the board wanted and you know and then apply it so when the members went up 101 2022 you know if they were getting extra $100 a month we could kind of take that back now but then in 2023 when they went down to 65 we could pay them back that extra we could make them whole as if we had been using the smoothing or we could just start smoothing going forward but that's one possibility question so if we started that smoothing now if we if we retroed that smoothing what would it does it cost the pension does it cost the city what does it do to our pension and then that would give them some relief uh as it stands and then we could look at other options yeah I mean you could do this option first use that smoothing instead of market value because that's not in the ordinance that's just a method that the actuary has been using right so they kind of like when you guys vote on assumptions and methods in the valuation report that's something we could could change now and it doesn't have to be done by ordinance so it could be done today if you wanted and and it would cause a little bit of an increase in the city's cost next year we wouldn't redo this valuation report or anything but we might be giving them some money these retirees so maybe we give them $5,000 you know to you from what's happened before well then when we do the 2024 valuation there's 5,000 Less in the plan right so that'll be a little bit of an Actuarial loss but that's smoothing is going to probably make the retirees benefits go down a little bit each of the next three years right because we're going to recognize that 2022 loss so it it should be a wash to to the city the wash to everybody really the it doesn't change anything in the long R it just Smooths it out so that the members don't have a big increase and then a big reduction and whatever it's just a smooth increase or reduction so it shouldn't have any negative impact on either the members or the city in the long run it's just that it's going to provide a smoother round for the members it it doesn't it's not like we're all of a sudden going to give them extra you know you know what I'm saying I don't so they're going to continue to feel the hurt for the next two or three years regardless whether we smooth it or not Lo was a big hurt if you wanna if you want to describe it that so it was a a big hurt and what we did for the retire es and the active members is we said okay we recognize well for for the valuation funding valuation that we talked about a few minutes that one we spread out that hurt for over five years right so the costs went up a little bit last year they're going up a little bit this year up a little bit next year the city's funding so that hurt is being spread out over five years right um does that make sense and so but what we did with the retirees is they got that hurt all at once so they went from 0.85 down to 0.65 so their benefit went down immediately with the smoothing their benefit would go down gradually so if you look at the right hand side of that chart right there instead they wouldn't have even gone down at all 1012 20 or they wouldn't have gone up 10120 to2 they would have only went down from 79 to 75 the next year and then they would went from 75 down to 70 101 2024 and depending on what happens you know they'll probably go down a little bit in 25 26 and 27 because we're still going to recognize some of that loss from 22 that hurt is being spread out over five years instead of a and so if we don't smooth it are we still looking at that number going down over the next three years 24 25 26 and get 12% right then that left hand side the way we're doing it now that 65 will go up you know it might go to 7 or something pulls them back out right um but on the smooth side is stay at 7 or maybe even go to 65 because we're going to spread in the 2022 loss with the 2024 game so it in the long run it doesn't change the we're still going to recognize that loss in 22 and the gain that we get this year are still going to be recognized either immediately up and immediately down or it's going to be spread out and so it it doesn't change the long-term picture so you can see there that you know in 2022 the retirees were higher and the smooth method they would be low in 2023 they were lower and the smooth method they would be higher so instead of going like this it goes like this it doesn't change the total in the L well see if we had exactly the 7.4% for the next five years then then you wouldn't have any you wouldn't have a you would still be recognizing it would take three more years to recognize that 2022 loss and then you'd be stable right but so we had a big gain this year that's going to be spread out over five years also so for the next three years this big gain would be kind of washing out that 2022 loss and then in three years when we're done recognizing that 22 loss the the the benefit would go up because we'd have this 2024 gain that we're still recognizing part of does that make sense so there's just it's always rolling smoothing so if we get good returns for five years it's going to just keep getting better if we get even returns it's going to stay FL but we right now we're recognizing that 2022 loss so if we use the smoothing there's going to be three more years of that recognizing some of that loss but if we get a gain this year and we don't smooth the retirees are going to get a benefit right away if we do smooth it's going to be gradual you have any idea what the like 20 basis points there that anyes the issue is is how much of a significant for the members was that2 drop you know from 085 to 65 and um let's see you know maybe like $180 a month is a really total rough guess you know on the retirees some get more some get less if you're getting a bigger benefit then you get a bigger hit if you're getting a smaller benefit it's a smaller hit as a Valor for some of our members it was pretty significant few hundred dollar a month so pretty significant right so that that leaves me then to the second alternative okay so the first alternative like you said we could do regardless if we want to the second alternative and like you said with that first maybe we don't want to because if we're getting a good year this year and the retires are used to that 0 65 now they're going to get a bump next year so you know it's not necessarily a right or wrong answer for the for the smoothing technique it's just an alternative way to do it so then the second alternative is um to free the retire okay so if you go back to the previous page that has that little chart in the middle that shows you know our calculation I'll go one page from that right there so our our calculation says okay we've got these accumulated State monies and we've paid out benefits so we have 2.6 million to play with for the future right Which is higher or lower than the year before well if we fix the retirees then any up and down on that that Delta there we're going to have to spread out over the active employees right the retirees aren't going to go down anymore or up anymore so if we have a million dollars that we have to spread out we were spreading it out out over the retirees and the actives now we're just spreading it out over the active employees so there's going to be more volatility for the active employees but we could keep this exact methodology you know concept where we're going to look at these extra State monies every year and see what that can buy and and over and above the general employees so we could keep the same structure um but then if someone retired they would know that's their benefit for the rest of their life which is a good thing if you ask me but when you say there's more volatility for the current employees meaning that when the state monies go down and the drop goes from when it when the calculation goes from 329 to 331 when they retire their retirement would be at that 3.1 exactly so if you go to that page four so then the retirees would be set at whatever number we we pick for the current retirees but for active employees that retire whatever the multiplier is when they retire is what they will receive for the rest of their days exactly exactly so and so the top of that page you know I redid the calculations as if we had been doing it that way starting in 21 you know because that was the first year we had changes you know the so you know the current method there on the left went from 79 to 085 65 well what would have happened if we had been using this technique the retirees would have stayed exactly the same 79 their benefits wouldn't have changed but then we had that good year right in 21 that affects the 101 2022 benefits um the that when we're looking at the Active employees they would go up 1.1 above the general employees so it would actually be a 3.6 multiplier if somebody retired between 101 1222 and 101223 and then but then now we had the loss right and so now that 1.1 would come all the way down to 045 so if somebody retired between 10123 and 10124 they would get a 2.95 multiplier and then that would be their benefit the rest of their life so the way you described it somebody retires you know it's going to be whatever the multiplier is when they retired which is going to change more often now if we freeze the retire e but again you know that's just something now that would have to be done by ordinance because right now the ordinance says retirees have to go up and down each year so that would have to be negotiated and changed in the ordinance and then the the last chart there is well what if we did both we did the smoothing and we froze the retire reach so now everything is the most stable it can be see how the retirees would stay obviously at 79 and then those actives would have less of a volatility because we're using that smoothing so they would have went from 79 to 0.9 to 08 to 65 and likely the next three years they'll come down a little bit more you know depending on how we do in in in the Investments but do everybody follow me so far I know that's a lot of information you guys have more questions yeah I I I I have another question I'm asking a bunch of them I guess but um thing I heard well no when I said you know the if we retroactively did the smoothing we would be paying those retirees a small amount I don't even I didn't do the calculation but let's say it's $5,000 you know to this plan $5,000 isn't a huge amount so we pay them 5,000 now so our unfunded act acrude liability would go up by 5,000 but then the next few years benefit would be going down right which which reduces our unfunded actual acrude liability so we'd have a $5,000 hurt right now that would be spread out and then we would have a gain the next three years when we give them those reduced benefits because of the smoothing so it it would be 5,000 now and then maybe 1500 gain next year 1500 gain the mixed here so it would not be overall increasing our our unfunded Li ility it would just be a timing issue does that make sense so then the other question I would had um is that is there a way to fix the multiplier for both current and active employees across the board yeah I mean so then now we go to Alternative four which is what um 98% of those other plans in Florida have well maybe 85% have have a share plan with the excess State monies so in those plans the benefit is fixed so their multiplier does not change so if it's 35 let's say you know our current multiplier that wouldn't change ever unless you guys do like negotiations and you work with the city and you agree the city says okay will increase the multiplier or or the members say we'll do an extra 3% member contribution to get a higher multiplier so you know whatever that multiplier can be changed but it only is done through negotiation the ordinance now would say in the ordinance that the benefit is 3.15% it wouldn't say two and a half plus some fluctuating amount it would say 3.15 and that would be fixed for eternity unless you guys negotiate some kind of a change that's the way it is with almost all of my plans both the actives and the retirees are are fixed and then with State monies you know if right now the state monies are covering that 3.15 multiplier that's what I've done this calculation right and I've said you know this is what these estate monies can buy is an extra 65 right so that that that's that's what they can buy so if we get increases in state Ms what do we do with that and so there's a a share plan so they're sharing in two ways one is you can share those increases with the city because payrolls going up the cost of benefits going up so they want to take some of that to pay for this 3.1 multiplier that you guys have um but some of it can go into a share fund so in my example you know right now you guys got 71,3 57 last year that was what you got from the state if we get 81,000 next this year well now you got 10,000 more right so let's say that that could be split 5050 with the city that's what a lot of our boards do or it could be split 8020 or Z 100 what whatever but let's say it's 5050 well then 5,000 would go into a share fund for the firefighters and that money would kind of like be accounted for separately and and it would be kind of like a Define contribution or a 401k plan 457 plan so that money would just accumulate the the the burges would invest it you know it'd be invested with the rest of the pl and so if the plan earn 10% your money would earn 10% and then when you retire you would get that money as a lump sum so that's the most common method in Florida so the benefits are fixed the defined benefits the 3.15 and then there's the share plan so if the state monies go up you know both the city and the members benefit the state money goes down you know you just don't get any money money in the share plan that year but you don't lose the monies that you've accumulated in the share but we could agree on both ends that you all the money could be used you would mutually you could mutually consent that the city could use All the Monies to fund the pension or there could be a split all right I got how long could they leave it in the share plan after they cease employment I mean generally we like to to have them take it as a Lums I mean there are plans that allow them to leave it in like kind of a postretirement investment account but you know this plan is provided to provide a retirement benefit not to really invest other people's money like if they have a $100,000 in the share plan when they leave I mean we could keep it in the plan and provide that we'll invest it for them and but that's not what most plans do it is possible but but generally we don't generally we give them to them when they leave and they can roll it over into whatever kind of vehicle that they want at that time so in the share plan you're showing 3.15 that's based on the 65% because we had a bed year in 22 like how would we actually set that you sugges that that will be say we do it fixed like that we go 3.15 because that's basing it off of because that right now way based on the monies that we have in the plan that's how much we can pay going forward with State monies right is is that we can afford to pay the 3.15 multiplier that's the whole calculation that I did we before we could afford to pay more in 2021 you know before we had that loss but we did have that loss so now we can only afford the 3.15 so that that that's what I would set if it was up to me but that can be negotiated but if you negotiate to pay 3.35 you know which you used to have if you negotiate 3.35 then I have to do the valuation and do an impact statement and say now your unfunded AAL acrude liability is higher than what it was in here and the city's costs are going to go from 30 % to 34% or whatever you know there would be an impact if we did something other than 3.15 so but this is a snapshot of a couple years for many many years the the monies were up right 3.29 the 79 was pretty well standard for about 10 years right so would we be better to look at a long-term snapshot of low and high and then take the middle so that we can make a more informed decision well like you said you guys can negotiate whatever you want you know but actu right now you know the money that we have in the plan supports the 3.15 multiplier you could clearly you could look at other cities and F FRS and say you know what do we want our multiplier to be to be competitive and you know decide that it should be three .25 or something you know that's perfectly fine but I'm just telling you that that you know I'm going to have to do an impact statement right now the city is at 32.2 it would go up a little bit and maybe that's perfectly fine you know you guys should negotiate a multiplier that's good enough for the city from a funding perspective and good enough for the members to recruit and retain good firefighters you know that that that's not really that's a negotiation issue but on an Actuarial issue right now you can afford 3.1 with the 32% City contribution rate understood then how do we get those numbers that's something you would do for us you would give us a range of numbers yeah I mean if you guys talk to the city and the union yourselves and decide you know we want to see what it would cost if we do a 3.25 I could easily get you that and then we would just go through Miss Jill to help us with that at this point correct thank you sir any further questions just wait you a yes sir yeah so there there's no vote in this case right we can just table this into the one decision you could make like I said is our very first one about the smoothing you know you do that in evaluation we could Implement that in this other calculation but that's something you could V on if you wanted to or you don't have I'm not sure how like three tires would would you want that raise up or down or would you want it smoothed out like gradually take the HPS I'm not sure when I retire how I would feel about that either I just don't the idea reti getting decreased for the next three years if you think it be decreased over time or decreased drastically then it increased I don't know that's a good because it sounds to me like because of where we're at sounds to me like because of where we're at in this point in time where the multiplier was already reduced and if we get a good year maybe you can go up a little sounds like you guys rather just wait Ono that's if we did nothing if we did nothing it stays the same if it goes up then we at least we have a chance for them to recover some any further questions can we move to the next subject let's go to the mutual consent document is my mic not even on the whole time we could hear you sounded good now now it's on but it wasn't thank you the mutual consent document uh means that you're going to continue to use the state monies as it has been um in the past for the the current year you have any questions have any questions on that if you decide to continue doing it then you would need a a motion and I will get the documents for you to sign we continue it but then we discuss it with the union and the other guys and we decide that we want to smooth it over or something does that cter like going against what we just signed like do we hold on well the mutual consent stays until there's a new one so I mean you would just we change it next meeting you could change it next meeting right any further questions entertain a motion to make accept the mutual consent document as it stands second motion by Mr Larry second by Mr Sub all in favor thank you sir oh I guess we need to make a motion to accept it all or we can go on to call go moving forward to Claus C Missa hello um just a quick update for everyone regarding the form one um it will now be filed solely online um I think it used to go through I believe the supervisor of elections um so now you will um I believe you should get an email um you'll create your login and then you will just upload your form directly to that site so just something to keep in mind those are due July 1st that's their report that's all they had just an informational memo than yep I'll need a motion to accept these expenditures that were made between October and December um there were some uh contribution refunds from uh retire from current employees who um resigned and just the normal uh pension payments uh as you I was talking about earlier you see the uh expense for the plan administrator for the liability insurance and for postage and supplies because we do end up sending multiple letters to retirees over the course of the year um to all retirees multiple times um those are the amount of money that goes to offset the city's expenses have any further questions motion accept the corly expenses motion by suon second by all in favor public comment sir please come up hi my name is VTO Russo and I live at 415 imit Street um this my first meeting of the pinion and um I got a big learning curve and I got a couple basic questions number one this smoothing technique this is a fiveyear moving average that we're going to employ as it moves forward so we're going to project out one year in advance after another using the previous five years um essentially right it's a it's a fiveyear recognition you rolling repition right so 20 to 2024 would be projected for 2025 and then the very following year be 2021 to 2025 projected 2026 well the projection part is the projection part is the whole valuation so when we determine the funding requirements it's always for one year later that's the projection part it was mentioned that uh we should if we shift over to this smoothing technique using this five-year moving average that some of the pension benefits would reduce like by $200 a month is that correct no no no the the benefits did reduce in 2022 everybody's retirement benefit went down because of those calculations and one of the audience members asked you know in general about what effect that was and so I said like 1880 some dollars a month on average maybe but that did happen already if we used the smoothing technique then the benefit reduction would have been different less uh less of a reduction yeah but the reduction would be recogniz it would now happen over a fiveyear period rather than immediately in 2022 so that's what we were talking about do we want to change for that or not okay I understand that um these different I'm curious the the impact of the city's Budget on these different options the smoothing technique how I mean try to get a better sense of uh the impact on the city's budget none of the none of the options that letter in the side letter you know the scenarios that we're looking at changing yeah none of those have any current effect on the city's funding requirements they're all just ways we could change methodology in the future that wouldn't have any effect on the city's funding they would still be using those State Monies to give benefits to the firefighters it would just be in different ways so it would not affect the current city funding requirements other than that small if we were to do that retro payment to the retirees that we talked about you know currently we're um we don't we need to hire some more firefighters so my question is as we increase the our hiring of firefighters what's the impact on these unfunded liability it goes up or it goes down well when you hire a new firefighter they don't have any unfund acred liability they have no no acred liability when you hire them so it doesn't increase the unfunded actu acrude liability um but it does increase the payroll so that's what we mentioned earlier is that now we have some of these fixed payments in the valuation now we have a bigger payroll it'll be a smaller percentage so it can help reduce the city's costs as a percentage of payroll um if you hire new firefighters okay and my last question is uh what's are the repercussions of these uh seriously unfunded pensions like you mentioned some cities have 60% uh their liabilities are way exceed their assets so what's the repercussions of having a a situation like that I believe the state of Illinois is that way I think that they're um well the difference between Illinois and Florida is that we have a state law that says every year when I do this valuation report and it says that the city needs to put in 32% next year they're legally required to do that in in Illinois we do work in state of Illinois and when we do evaluation there you know they always had a choice you know we'd tell them hey you should put in 30% of pay and they might put in 10% of pay so that's the big difference and so you know right now the repercussion of an unfunded plan is that the city has to make higher contributions to to make that up and so that that's the repercussions now but it's not that you know we're not going to take away benefits other than this issue that we have here um but generally we're not going to take any benefits away so the Florida law is there's a certain minimum percentage requirement assets to liability is is that the case well the state law says that the board has to hire an actuary like me to do evaluation and determine how much the city should put in and and they have to use reasonable methods and assumptions so that's what this report is and we determined for next year the city needs to put in 30 point or 32% of pay so it's a requirement that they have to have this valuation report done by an actuary and then they have to make that contribution they're required to make that contribution it's not an option exactly oh all right thank you is there anyone else here for public comment seeing none make motion to motion by l i second second by second all in favor is that enough Actuarial talk for thank you it was good how are you please remember we're still being recorded all conversations are still being recorded because we're moving into our lunch and meeting now you know you know I'm just trying yeah thank you I'm not oh you're doing well very very well there's a lot yeah very pertinent questions too they're not they're not Chris's presents no thank you so to summarize again this is for the response to the RFP that was put out by our the pension attorney Adam levenson and the resource center is um going to do a presentation uh for the board members to consider and can you confirm this was the sole respondent this was the sole respondent okay with that said I think we can move directly into your presentation good afternoon I'm glad you all had a chance to get lunch first my name is Scott Bower and I have members of our team with me I'm Kyle tinle and Joseph Rivera and as we get started I just wanted to say that we're really delighted that we're here and I wanted to thank the different boards for having us um so as I go through this I'm going to not try and take a long time typically when we do these presentations we spend about 20 minutes part of that I want to spend on who we are as a firm part of it on how we do things and what we do because as a boards you would need that kind of assurance in terms of how we would be a fit for your members of your plans primarily and that's very important to us so again we're just very delighted to be here and I do want to thank everybody um the presentation on the screens will mirror what we go through um but if we go over to the next page on the presentation you know if I could spend most of our time in terms of a presentation I would really spend it on talking about who we are more than I talk about what it is that we do and the reason for that is we've been doing this for a long time so we understand all of the aspects of plan Administration very well I've been doing nothing else for 30 years and I know that Jill is retiring and from what I have heard those are going to be big shoes to fill here um because I have heard just good things about her from different people so I do want to give you that kind of assurance that we do understand the different tasks that the board would be requesting from us in relation to plan Administration but more importantly than that what I really want to tell you is that when we do the plan Administration and we'll talk about systems and resources and how we use those things what we're really here talking about are the members of your plans and that is in fact what is most important to us and how we go about doing the things that we do it's really not about all of the those other things though those other things need to be happening with some competence it's about the people that you work for and represent as trustees on these boards so I can tell you that we care very deeply about the people that we work for we're not so big that they are just Anonymous numbers or people to us but they are individual peoples at important times of their lives um particularly when we interact with them from our office um so if I could impress upon you one thing I think that would be the thing that I'd really want to tell you about who we are more than I care about the things that we do um but if you go on to the next one in terms of what we do um just briefly I will talk about two different sides to it when you talk about plan Administration and I'm sure that there are things that Jill does and other people in the city do in relation to to these plans that the boards probably don't see all of those nitty-gritty details from dayto day but when it comes to the plan Administration there's really a people side and an information side to this job um the people side really happens at the level of the board all the way down to the individual members of the plan and the information side goes from the level of the plan really in a similar way down to the individual benefit that will be earned and paid to to each person who's a member of the plan ultimately so we can talk about that people side and that information side and how we deal with those different things you want to go to the next one um when it comes to the boards there's a certain amount of administration in terms of the meetings and other tasks related to them and running them effectively and as a trustee those are the things that you guys see most frequently and most often um and they're most visible to you um in terms of how the benefits and operations and coordination take place between all of the different people that you employ and again if we're talking about it on the people side of this plan that extends all the way down to that kind of communication and interaction that ultimately happens with the individual members of the plan um so that becomes I think again for us probably the most important part of what we do in terms of how we try and fill the role that you would assign to us if we have the pleasure of working here um if you want to go over to the next one um I will tell you that the information side is equally as important and we're very very Adept at how we manage the information related tasks and again those happen all way at the plan level from things like the plan recordkeeping and the financial statements and other things that become part of the plan and part of the reports and processes for these plans annually and continually but all of that then again extends down to the individual member and the recordkeeping of the individual member and not we use different kinds of systems and mostly systems that we have owned and grown over time to assist us with some of these what I'm going to call recordkeeping tasks it's tracking down to the person every last penny that belongs to them the benefit that they've earned and ultimately the benefit that gets paid to them um so we can manage and do have the competence to manage that information side as well sometimes that information side by the way is more like your proverbial canaran a coal mine when things break down you will see it happen and really manifest in two ways first one is that sometimes there's a breakdown in communication and you also see sometimes a breakdown in the information that's used and kept particularly as it attracts to the members so sometimes when things go wrong those are the places where it shows up first and I can promise you if you do this long enough you will encounter those things here and everywhere it's not that you will never stay free of issues as you run these plans because these plans are dealing with people and they bring all their stuff with them and you have to deal with all of that on the administration it's not preventing in every case some of those things from coming up because they will it's really how you deal with them when they do come up um and that's why you're here really as boards because that's part of what you do um if you want to go to the next one um you know if we turn over to on the books it's probably um I've really covered most of what I'm going to call the recordkeeping I don't really want to get too far into those recordkeeping tasks but they're really a significant portion of what you're hiring somebody to do so the competence has to be there um but if we go over to page seven um in this handout um I want to really introduce Joseph Rivera who's our client service manager um and talk a little bit about the communication part with your members um and Kyle ultimately with some of the boards and also how we do that and manage those tasks within our office good afternoon everyone thank you for having us so as Scott was saying you know as part of of the members when they contact us and they need to they have questions we have a team that uh really responds to them immediately we we're a team of five that uh answer phones questions processes um estimates what am I looking at and then five years from now 10 years from now what do you suggest that uh that I go into the drop or what are my benefits you know things like that we turn around and give them the answers immediately um you know these are lifechanging you know situations where you know they're about to retire it's a big step and uh we try to make that as seamless as possible we do it uh matter of a couple ways you know we we do have the the um the technology where we track uh processes as well where members will get uh with the they'll get notifications as the process goes on automated uh but not only that more more towards the kind of the personto person relationship uh you know technology is not everyone's Forte you know oh not you guys I didn't mean to but uh we we we strive and and making that bond with the members uh you know speaking to them per on a personal side of of what they're doing for the rest of their life and you know as I tell members you know once we end the call with them and they're satisfied and and they're eased uh on what they're going to do in the next step of their life uh you know we're here as we're we're going to be part of you know we're going to be friends have a relationship for the rest of their life so they can reach out to us for whatever they need and we have that staff to provide that um once uh like I said they we have the technology where they'll be able to go online see statements try to run a calculation on their own uh if they have questions obviously they contact us and we all will'll provide that that ease for them so they can they make that decision or or or SE not second guess themselves but get more conrete information forther um you know our staff is there throughout the normal business hours like I said and uh by email phone and we provide that service to them no matter what so you know on my side of the on the fence they're a priority all the time and I manage to I manage that department that way okay you know one of the things on that can't see it page on page seven of the presentation I just wanted to note for you is that when we use technology we look for ways to use it to create engagement with the members not to replace engagement with the members so for instance when somebody starts a process what we're talking about is their benefit and making an application whether it's retirement they're taking a distribution or a refund or some other kind of question that comes up where really using that technology as a way to add additional engagement with the person so that they are know what's going on so I would call it something like a package delivery system as we move things through a process if we start an application for somebody to retire they're going to receive a notice from us that we have their application and it's in process when receive the data that we need if we're not getting it continuously we'll let them know when we have that when we can then turn it around to Patrick's team for a final calculation when we get that back when they should receive it when they should get paid by Capital City to when they should receive the first check so if something happens and there's a blizzard in Topeka Kansas and the package gets delayed they can get a notice and say wait a minute you know we thought we were going be finished here but your new delivery date is over here instead and they're always welcome to talk to us and call us but it's additional way because when people go through these kinds of processes they do it one time in their life and there's a lot of insecurity that people have as they walk through it they just don't do it all the time and so we want to create those ways to interact with them and to let them know what's happening as they step through it themselves and we try and do that in all of the different ways that we can um if you go over to page eight on that presentation what you were seeing on page seven was actually a view of the systems that track the communications and processing the benefits so even if I were here and you were to ask me what's going on with a particular person I would just pull up that person and see the train of communications to see where things are at and what we might be waiting on if we're waiting on something um and you know a member of our team can do the same kind of thing and we're expanding that to give members secure access to their own information as well right now we include our systems and online systems to the members and that's included with what we provide as a quote provided we can get the historical information from the city we will provide those additional services is automatically as part of what we do to the members um so that's usually a process with the city but not an overwhelming one um it depends on their payroll systems and how well and how easily but I can tell you we're very ad Dept and agile at being able to deal with things that we get from different places and different formats and working with that um so on page eight you'll see some of the other kinds of things that we do these may seem like specialized kinds of things for your plan but some of these things we do on a very large scale and then we do the same things in different places on a small scale um like a board election if you wanted us to do that online we can securely that creates an information Trail we have some very large Retirement Systems that hire us just to do their elections um and nothing else whether it's a combination of an online ballot and paper ballot but we're not so big that we can't deal with fla and the difference that your plans had because they're all individual but we have enough resources where we can do things and bring those resources to you um and that's really important to us so that just gives you a little bit of an idea the kinds of access that the members have um to that kind of information and the page nine um this page this was the conversation that Joseph has about our internal team um we have different teams internally to deal with data it payments um I know that Capital City makes your payments um we're very proficient at it not because we're here to do that job if it's being done by somebody else but we understand the mechanics of it um and typically that's the case there are different what people that have different roles than the places that we work and so we don't necessarily have to change that unless it's needed but when we're not doing something in a particular place even the mechanics of how payments get made electronically and things we're very very in tune and familiar with all of those processes because we also do them it raises our level of understanding it Rel you know raises an increases our level of confidence and how we're doing the things that you asked us to do for you um so I don't know if you wanted to say more about the team um if you get to page and now I kind of do want to wrap this part up a little bit um if you get over to page it's hard to see the numbers um 10 um the end result of that are really the people that we work for like I started off by saying um we are independent on page 11 we do nothing but what we do for you so we don't have any other jobs that we do for the plans that we serve um and that makes us independent in how we do the job for you I believe in segregation of Duties and separation of Duties is an important control if we ever really wanted to talk about and get into those things but we are independent and that adds to that segregation and good strong controls in place in terms of how we deliver what we do to you um page 13 but always important we know how to listen so it's planned Administration is a process so when things come up um we are here to listen to you and to work with you and we're really partners with you because when we talk about Administration the true administration of the plan or administrator are the boards you just hire us to do stuff and do it on a daily basis so we're really they partnering with the boards and the trustees and the role that is assigned to you by Statute um so unfortunately you you know that may or may not been the primary thing you're aware of but you all are really the administrator at the end of the day they just call us that um and you know aside from basic questions this other handout really details both a summary of The Proposal that we made to the board and also the details typically of how we would have walk through and transition and implementation of our services to you if you did indeed want to work with us um so we're very prepared and able to go through that process um and we do it in a relatively orderly way I think you have plenty of time if Joel is raining for retire in October I wouldn't wait until the last minute um but neither are you under the gun yet in terms of you know somebody who's left and now we have to figure out how to make all of the stuff work um that's actually a much harder scenario so you were actually really in the best of scenarios to be able to deal with this and to manage some of these tests from the standpoint of the board in my opinion um and with me is Kyle um you know I would like to give everybody a chance to talk and she should stand up and at least introduce herself hi my name is Kyle tinle I work with several of the communities in Florida and I'm the one who travels up and down to the meetings and attends that works closely with the boards and I'm the one a lot of the time in the office speaking to members from the client service SI they're processing it but there are some additional handholding that is necessary dealt with widows and divorces and there's a a time where somebody needs to be ready to listen and answer any questions we've gone to retirement parties and I've gone to funerals for um public servants and it becomes part of family like our company is a family to us the different boards I work with becomes family to me because it's that important that people have this major life decision that they don't feel rushed we make accommodation for after hours meeting with spouses and the um employees so that's the important part to me is recordkeeping and being accessible so that's the majority of my job is to attend the meetings and be available for the members and their families if they have any questions at any time and thank you for the opportunity I appreciate it it's a beautiful city and I'm so glad to have the opportunity to come up here thank you and I just want to thank you as well we're delighted to be here and happy to answer any questions that you have okay so with that said I think um at this point in the process we'll open up the Flor to public comment before we engage in in any Q&A and discussion are there any public comments seeing none does anybody have any questions at the so respondant and I'll remind the board members in the audience uh you too can speak on this item just please state your name and what board if you come to the podium I guess my first question is to miss um who know to pass the annual report okay for the police and fire it says a requirement the state right yes she's working on it right now anybody else my next question is why is there an extra fee to prepare that report when it's required because we knew that Patrick was the actuary and sometimes Foster does that task and is already doing that task sometimes it's done in the house at the city so we just don't know in advance and I could build it in one way or if we're asked to do it um really as for what I consider the time involved in that task another way and so it doesn't really apply to the general employees in this case um it's just the police and fire that have to file um so we it depends on the place where we do it or don't to it it's not that we're not qualified we've been doing them for 30 years and we do them probably about two dozen of them annually I know that Patrick's office is very proficient at doing them and they do a lot of them um so we're all really adep at the process I have a question you're up by the way if he wants to do it for $1,500 I'd be delighted to let him go ahead and do that for full disclosure yeah if we did it it would be slightly higher than that I was helpful um you guys are located in Palm Beach Gardens is that correct yes sir and you'll you'll be conducting these meetings or someone will be here during those meetings is that what I understood or always always okay um you also take care of the scheduling of them is that yes we will deal with all of the aspects of the meetings the tasks that come from those meetings the operation the minutes the communication with the boards the paperwork um this is a good sample um you know of what that looks like um I was I should have brought a meeting packet from another meeting um it probably looks very much like your own um with all of the documents and backup when you need to get here um we typically distribute those about a week to two weeks in advance or starting some things we get closer to the meeting so usually once we start sending all of those things out to the boards and trustees there will follow up with additional materials that we received during that time and posting a public notice so again those are all of those things and I know that you're very and need to be concerned that we're confident to handle all of those tasks and if we we can spend a lot of time talking about them but I really wanted to talk about the other stuff too I I agree we we've been very spoiled having Miss Jill and this just appears right right I just wanted to make sure it was gonna continue to appear it's like magic isn't it my question would be for you miss jul uh I don't I don't understand everything that you do so I can read their list and it seems like they do a lot but from your perspective are they covering yes uh the this the $600 um interm financials we do financials for all three boards every month I do financials for all three boards every month um so I would think you want that to continue um um there's going to be there's necessarily going to have to be more an interaction with HR get the required information so someone on staff here is going to need to be the corresponding part to a third party administator because they're not going to end up going into our accounting system to get the data that they need necessarily and there are a couple of different ways that could happen um typically we're going to have some interaction with a city clerk because of your public meetings we're going to have a bit of um interaction with finance and HR as we do what we do if you can set up to generate the payroll and contribution reports for pension related pay only and pension contributions um on an ongoing basis then for us most effectively we can use that for instance to even give members online access to their own information and calculate benefits if they want to it doesn't mean that we can't do it for them it gives them an additional resource that they can have available if that isn't available then inevitably what would happen is then we would end up requesting that kind of information person Byers when they need to apply for a benefit whether it's a refund retirement or other situation um but we would prefer to have that kind of continual information coming from the city pretty much in an automated way sometimes these things can be done automated and done securely so that when it comes time for reporting to or supporting systems calculating benefits um reporting to the actu completing the annual reports going through your annual audit processes we already have all of that stuff we're not making an additional demand and drain on steady resources because we don't have it we already have what we need to do that um so and I will tell you this plays out differently in different places but we're very very accommodating and very flexible in how we get there and then miss joas one more question is there anything in the list that they're missing that we should ask them to do for us that you currently do that they don't have listed um believe in the packet that you have just a blue and Sheet a blue and a black sheet of the current uh administrator's [Music] responsibilities um if we this was with in mind that if we did not go with a third party administrator how my tasks would have to be divided between HR and finance um do you do alive and well letters to the uh retirees we do um some boards do them periodically um when we're making payments um we also use an enhanced what I will call death search we euphemistically like to call them verification letters everybody has to sign them once a year um but really it's a check to make sure that the people you're paying are still alive um so the answer to that is yes we do them and I have them right now in play just in three different plans um starting in January for us it's usually like a what I'll call a three-letter process the first round is you know you have to complete this it's a notorized form to send back notorized because we want somebody to if they're not here to actually see who it is and have some evidence that they are who they say they are they don't respond which will be about 10 or 15% of the people um then there's the second letter and then there's the last letter you know we really really mean it and we'd really like to hear from you and if we don't hear from you then we're going to suspend the benefit by the time we get to that point you guys will had a meeting in there's communication as to who it is and what it is to so we're not doing that arbitrarily um but we do go through those processes um we did what I would call a large scale audit of all of our retired members um last about 2021 about three years ago and the problem is is that you know we rely for timeliness the verification letter I'm still alive letter is a once a year process and um the Des searches that are more timely have a lot of holes in them because they like rely on the Social Security death Master file um and so that's why we've gone to additional processes to try and have very effective ways to make sure that the people that you're paying are in fact alive when they're receiving the benefits um it may not be as much of an issue in pataa because the smaller plans generally do a little bit better when I and I'm not saying that you're little by any means but you know when you have a th000 retirees or 600 retirees um in good faith depending on the number of retirees I've estimated in the past that about half to 1% of the people that you're paying are in fact deceased um and our experience in doing these has born that out um happens less when you have 50 retirees or 25 retirees than when you have 500 or thousand retirees so Mr Bower um I know the general pension board had some discussion about what we kind of call White Glove service or the face to-face interaction that we currently have um with our pension members I'm curious how you guys address that when you have individuals that don't have access to technology or more comfortable with a face-to-face interaction uh and you're not going to be here in putham County well we don't have a local office here so it's a great question um and I will tell you that it's important not to disenfranchise the members of your plan um and you will have among your retired members both an older population and even among your active members people who are just not users of that technology to the same level we do come through here and we do come up here so for the most part when we want to sit down with somebody face to face we're going to do it and we're going to schedule it um you know if and this gets back to the technology I could even do a one-on-one phas to- face Zoom meeting but you know you're going to get that more with police and fire some of your general employee members are going to be the most likely not to be users of technology to that level and we do make that effort to talk to them to accommodate them and to meet with them if it's a last minute emergency sometimes there's less time to do that um but if there is time those things can be done and done well and it's important to us in how we do that um so when I teach on planned Administration I will tell boards that you're always then dealing with the person who has the least access not the most access um and I you know we work for plans that are farther away probably the one I deal with personally most is in the city of East Point where we have even sanitation workers and public works and other people who have no access to technology they're never going to send me a facts or whatever even um and we manage it pretty well um and we just you know if you were had questions about well how does that work and how well does that work um I go there myself a couple times a year and we have other opportunities where we interact with people and it actually works itself out pretty well um but if you wanted to we'd be delighted even to give you people to talk to to say well how does that work and how does it work itself out can it really be done well no thank you for the reference um I think that's what we're looking for um so do any of the other board members have any further questions kind of a follow up on what on the uh face to face Mr J how often are you face to face with retirees or are dealing with IM was concerning retirement lands weekly weekly yeah so when we're more scheduled um people who are retired I'll tell you that these are going to be things that people will take time to get used to um and there will still be some aspect of that that'll persist because if you have a retired member and they retired from PLA and they have been walking over or coming over to City Hall um for years they're not going to just stop doing it um just because you hired us so how are you going to combat that so with communication we'll introduce ourselves we'll send them a letter we'll they'll hear from us on an ongoing basis particularly if you're doing annual verification letters and things um on some of them in some places we have created even summary information sheets as additional ways for saying this is how the plan is doing and what it's doing some of the same the questions that were covered earlier with Patrick you hear about bad things in places and you wonder if I have a pension from Paka is that at me you know is my plan doing okay those are important questions that people have and you want to be able to give them that Assurance I can tell you that we're just not going to cut people off from City Hall but we are going to try and accommodate them if somebody walks into City Hall and they need us to call them we're going to do that so if you you were selected in the beginning would you be opposed to having a physical presence um to be able to transition people into that um no I don't but if we had it on a schedule that's predictable that would be helpful if we had work days um we come up here and we do have other places some other places locally where we work and we can even that increases the number of opportunities and days that we're around where we can do that and we can allow people to schedule those kinds of things in different ways it's the Walkins that I'm talking about that are the hardest um but a Walkin can be turned around and we can talk and communicate with them and work out something that's helpful to somebody um but we can you know I can tell you when I'm in and again I'll use East Point as example they're up near Atlanta Georgia next to the airport so that for me is a good example because I do some of those things personally and no matter what my role is in this um I do all of the same things that are team does too I never stop doing them um and that's important to me um but when I go up there we have appointments scheduled and I'm doing that next late in March and I'll be there for two days and you know anybody who's coming up on retirement it's a bigger city um I will sit down with and 30 minute increments and I can tell you that they're very very efficient um but they're not impersonal um so those are two different things got to separate the impersonal from being efficient with that use of time um and when we do that there we schedule people and allow them to sign up for appointment slots online um but yet you know there are a few key people that are helpful um particularly the director of Public Works up there who's also on the Board of Trustees if one of her people come in she will help them schedule an appointment online or call us um if they need it so it's you know when I say it's a partnership it really is and the you know the task in the um goal is always not to lose that personal interaction and personal sense with people we're not huge by the way we're 20 people um not so much that we get lost or you get lost in what we do any further questions yeah if you'll just forgive the the question but from the other Professionals in the room have you guys dealt with them as a firm what do you know about [Music] them yeah definitely I worked with Scott this 26 and a quarter years that I've been here and we have a great relationship and they're perfect to work with so I have no problem Bridges I'll tell you I'm a little less than perfect but I mean well I'm his live coach no they do a great job but we've worked with them for decades and uh all over the State of Florida so there's no further discussion in yeah and Anna too but to a lesser extent I've only known Anna maybe for about five years okay yes but again no no issues on our end can you confirm if this combined board meeting was set to make a determination and ranking um and also would this combined board meeting also be in a position to deliberate and discuss the alternatives to hiring an outside consultant yes that was the intent is to discuss the RFP responses and to discuss options in addition to the RFP responses they make determination whether to go forward with u filling out a final Matrix on an evaluation of this firm and whether to decide given that we have one respondent uh we've talked about a number of options either going forward and and voting uh whether to uh see if we could get other respondents by extending the RFP reissuing the RFP uh because we do have till June um or whether the um commission and the um whether the combined boards would want to approach the commission as far as uh refunding a a um a inhouse administer if there's a possibility that that could happen Okay so we have 13 active members combined on the pension boards correct five four four yes so what would constitute a quorum is seven yes I would defer to Anna on this but I think each Board needs to make an individual decision because ultimately we would be retained by each board individually if you do move forward yes I would I would agree with that 100% each board um will need their own separate motion so if this is just noticed for one of the boards um if this is just volume sorry can you hear me no Anna can you speak up a lot there sure is that better [Laughter] no um okay Jill it's this smaller screen to your left here keep going to your left the small screen one that's frozen mind day everybody turn your hearing aids up sorry Anna go ahead um each board would need to make their own separate motion um in order to retain if that's what the boards decide to do okay so Anna as we understand it each board decided to hold this joint meeting for ranking the respondents so we can still do that correct yes correct with that said we have seven or eight active board members here can the other board members in the audience raise their arms Mark you're on a board correct they just wanted to know they each have to do it separately though do you want to sign on because I we have Mark Mark L and Chad BR we have a forum on that we have um yourself and Mr Bell and Brett Dennis so we have a quum on the general the police department we have Scott Mast and Matt newom and James Norwood so we have a quum there okay so would Anna does that wait a second and I guess what we need is Direction on if this combined board meeting should just focus on making or ranking and making a recommendation um and not remanding it but referring it back to the other boards to deliberate uh hiring an outside firm or going another route correct that's entirely up to you you're more than welcome to have a vote um you know to have disc and ultimately have a vote at this meeting since all all of the meetings were noticed so you can all you know take action during this portion if for whatever reason you know you don't want to make a decision today then then that's a different story but if you are ready to move forward then you can certainly do so what I think we ought to make a recommendation back to the boards uh individual boards so the individual boards can have that discussion because I think uh there are some things that I still have some concerns and that kind of thing as well and especially with only being one response to R so would it be helpful if we discussed the other options to make sure everybody's clear okay so Jill as I understand it we've got three options on the table that doesn't mean that there aren't others uh the first is to rank and retain a thirdparty administrator which we have a sole respondent the resource Cent LLC the second and these are in no particular order mind you is to hire a finance and pension supervisor uh which would be your replacement and assign additional pension duties to an existing HR position so this is two existing positions and then redistributing responsibilities so that would be very minimal cost increase uh to the city uh as well and probably less cost to the specific boards and the third is to hire an in-house pension administrator which you estimated at $1,993 this year because it wasn't for the full year and 95,9 for the next fiscal year yes when you add in all the benefits open it up to everybody for discussion can can I and I apologize for interjecting I want to stay long enough that I'm helpful and as long as you want me here but not so long as to make it uncomfortable for you to have a conversation if you want to do that you're welcome to stay put I don't have an issue with it okay then we will in case there are questions thank you I wanted to clarify we did have other respondents that were non responsive Miss Kaiser Yes actually let let the city clerk stay sen Grant City Clerk city of bla um to respond to that I actually did get three responses unfortunately two came in after the deadline per the city's long-standing custom if you don't meet the deadline your response gets sent back unopened so I wrote everybody cover letter said hey didn't open your response because we received it after the deadline I also made sure that the tracking uh sent to both responses indicated that it came in past the deadline is that answer your question Mr Bell yes any additional questions of Me no ma'am thank you thank you I'll go back to my place out there but I'll be listening the HR position do we have someone in staff now or that be somebody would hire Miss Jones would you like to speak to that so currently if those um additional duties came in to HR it would be the responsibility of myself or Mr Avery which is the coordinator which I would definitely have to you know get a graas of the duties coming in and understand them even if he would be the one actually performing that because so it'll be both of training module for both of us but we do have staff in there to accommodate their duties if that's the way the board just decide to go any of the board members in the audience do y'all have any questions or anything further to add to the discussion did you forget to say something yes assuming that's the direction of the city manager well played would it take for us to reopen the RFP so that we can see what the other two organizations had to offer I understand they missed their due dates but this is a this is a pretty big decision to me for all three of our boards um and I personally would like to see us look at those options because Jill's already doing the business of probably three full-time employees and so is Miss Jones and I would hate to put that responsibility on them if we have a a a good outsourced option so to do that you would basically reject uh the responses and direct uh staff uh and our Consultants to read advertise the request for proposals I think there would be very minimal changes to the RFP probably address a few things that were brought up by addendum but most likely at least in times past when we've had to do something like this it can be read vertis within a matter of weeks I would like to add to that though that um it's never a good sign when someone can't adhere to a simple deadline and instructions that are typically included in bold and red on the first or second page of an RFB when they're going to be managing multi-million dollar Pension funds that's a very good point the other question I had would was what's the transition period how long do this take if we keep if we move this to the next meeting I think that's a question uh of you sir I mean how long does it take to typically get you guys spun up over to the if you go over to the handout that I had I had a list in in detail that's really a two-month transition I will tell you that we have done this much faster when circumstances require and sometimes things that are beyond our control have taken much longer than that like making a request to the city for data and how long we would take to receive that data or whether they feel they can provide it in that manner at all so there are things in there that are subject to change and we would be communicating to the board but we've done this really fast really slow you have a lot of opportunity here to do it with Joe in a very orderly way and because she's here until October I would take advantage of that um you know it's always a good thing rather than a bad thing um you know assuming that let's say you engaged us and I I'll tell you I'm just honored to be here no matter what assuming that you engaged us then you would probably sign agreements unless you're going to have a special meeting and your May quarterly meeting um so I'm thinking you're towards the end of May and so you're really looking at a process that would play out over the summertime did you have something Norwood yeah one of the things that I guess I'm concerned with is making sure that during the transition period that our members our current uh retirees are informed of the transition that's going to take place and they would no at some point no longer just be able to just walk in and talk about their retirement plans or and their benefits and that type thing to wherein they would have to schedule and and but also uh if we decide to go with this company uh that that's an important part because I want our retirees to be comfortable with uh uh talking about their retirement plans and being and having access to that individual uh in a Tim and manner as will chill when is our next scheduled meetings June 4th that would be the drop dead date based upon a two Monon transition yes because then it's August is the time the next meeting and that's really right I don't want to speak for everybody but I'm not comfortable waiting until June one one other thing I would hope that in placa if a retiree walks in they're always welcome here and if you know we're not here when they come in um which is the likelihood you know would be simply why the person you want to see isn't here today but you know we can work that out or set that up but I never want them to come here and not feel like this is still their home in some way I don't want them to be taking up your time because that's what they're you're hiring us to do um but I I wouldn't want to lose that I guess one of the things that I'm very cogniz of is our demographics uh and the people in this community they like face to face they like developing relationships with individuals that are work are providing the service for for them I want to make sure that they understand that that type of service at some point will go away and I don't you know I don't want to uh have them to believe that it was all it's going to be the same it's going to always be the same and that type of thing we're going to start that transition period uh at some point then I think the more information that we can give them about the changes that's coming up early on would be better for uh the uh those individuals yeah I don't know the geographic demographics of your retired members yet um if that comes to play um we would typically start with a letter but you know I'm always willing to think outside of the box if enough of them are close by and they all still live here you could even just set up a time and do a meet and greet or something um where they could just come on over and if they wanted to um I don't know if they would actually do that or not but you know I haven't done that before but I'm always willing to do something new so I I have a question for you guys um and the other communities that you guys provide services to when those communities have their board meetings their pension board meetings and y'all staff is on scene do you ever meet or have you ever met with retirees during TH or post those meetings because it seems like to me this is a simple fix of we notify our retirees our meetings are posted anyway and if you guys were willing if our retirees had questions of you guys they could talk to you post the meetings that but of course that the the answer is frequently um to either meet with people before or after or the day before or the day after or if I were driving to Stark the day before or after I'm in Stark or whatever that is we're not you know I always look for opportunities to do that efficiently because that's how I need to run an operation um but not in personally and so you know there are ways to make that happen um but we work for you and we're willing you know what we would want to do is engage you in that discussion about how to make that happen best but the answer is absolutely that would be the place to start and Jill a question for you would be you said that retirees come in kind of weekly to to see you are they scheduling appointments with you or are they just stopping in and you're stopping what you're doing stop in unannounced this is PL well I I know but I mean it's it's almost like we need to change the way we do some of our business so that more efficent we get that in Palm Beach Gardens too but probably fewer people from pla in Palm Beach Gardens but I will say this is weird it's easy for you and I to say that well we need to change and that when individuals been retired for 20 years or 10 years or what have you and this is what that this has been the norm for them this is a drastic change for them right no I agree I agree can ask a question again about the HR piece if we were to decide to go with the HR direction will this create a new job or this is going to be split between existing staff split not creating on top of what you're already doing you're going to be able to do this and effectively because I don't mean any any disrespect not this HR team but in the past insurance payments didn't get paid and some things happened that that were frustrated to PGA and and again not to paint you in any direction but well that would be a concern for me Brett I mean it's a concern for me too but I can go back even prior to that and say that we had a finance director who also administered the pension and we had one person in payroll we didn't have an HR and we did not have those issues so you know just it's the staff person it's not the number of Staff yeah Mr levenson did you have something to add sure so trustees um Anna has to step away so you're stuck with me for the rest of the meeting and then the other boards but I wanted to give a little bit of flavor and I don't want to prolong the meeting because I was involved with HR or with with the city clerk rather uh to put together the RFP so I wanted to make clear for everybody some of the the context so number one not only did I send the RFP to the What I Call The Usual Suspects which is the administrators that we work with in Florida and can everybody hear me by the way let me ask that first can everyone hear me yes okay so I I emailed copies to the administrators who work in Florida who we know from the the various plans we work with the second thing we did is the city clerk published did in the paper so it was it was communicated to the community at large through a newspaper publication and they could speak to that and the third thing we did is we contacted the fppa and some of you may know the fppa is the Florida public pension trustees Association and if any of you have not gone to meetings of the fppa then I encourage you over time to look into that so the fppa is is the professionals and the trustees around the State of Florida so it was noticed and put on their bulletin board uh which was an electronic Bulet board for fppa the community so that was the third way that it was advertised uh that that's gives you the idea of how we tried to widely cast a wide net and the other point I wanted to make is unfortunately I was hoping that Foster and Foster and I like all the ones that we work with so I don't have any favorites but Foster and Foster might have been a good fit because and we could argue pros and cons because they're your actuary and they also have an administrative arm Unfortunately they have a turnover issue right now and they lost an employee and they made the conscious decision that they did not want to take on new business and here it would be three new plans if they're having turnover and they couldn't accurately and confidently bring in the new clients so that's why Foster and Foster did not submit a response so if you were to do this again in a year or a couple years from now and hopefully if you make a decision you know then you won't have to make any future choices in the future you'll be with whoever you choose but the point is that Foster and Foster who normally is at the top of the list with with Scott and the the pension Resource Center made the conscious decision which I give them credit for because they didn't want to take on new work if they didn't have the resources for it and that's an important point which is that uh you know when you hire an administrator hopefully you'll be with that administrator and they've got big shoes to fill as we pointed out with Jill but you know they're professionals they know what they're doing and the last point is that it takes time to train somebody and it takes time for a transition as you were talking about and uh you the good news is you're taking it seriously and you're asking good questions and we want to make sure you get those answers so those are my highle observations so with that said we're here we're either going to make a decision if we're going to move forward with a third party administrator uh and if we're not we need to entertain a motion to that effect too if we are uh it would be simply uh confirming uh that the sole respondent is qualified um and putting that to a vote what's the pleasure of boards did want to make one comment um OB it I'm new to this position and this role um I would say that uh this is not the only job that Miss Kaiser does right um I believe that staff is highly capable of being able to assume the work and responsibilities however I would be disinclined at this point in time being new to the world to want to move that direction I would feel more comfortable bringing an individual who has that knowledge and expertise already um as a single individual that would give us the ability to be able to do the face to face however it doesn't guarantee that the the amount of the each of the pension client is paying now will be the same so that's there's no guarantee that that would be the same like looking at this proposal represents approximately $5,000 increase per Pension Plan and there's no guarantee that that's not what you would experience if we were to go out and hire another individual to be on TI and to do this on a more or less uh full-time basis so just food for thought consideration at just want to make sure everyone knows this is U Mr Bell Troy Bell a new city manager who just came on board weeks ago what's the pleasure of the boards I'll remind you I can't make a motion got your light on there and oh I have one other thing too I agree with you I have been involved in RPS and RPS for many many years and um when you have respondents that do not meet the requirements that's one thing failing to meet the deadline or failing to uh provide your response to the right address the right location is a red flag when evaluate yeah it's not a a regularity we typically wave yeah Mr chairman yes sir I move that we accept the so uh we make a recommendation to to the boards to accept the so RFP response there's a motion on the floor is there a second I have a second is there any further discussion before I call for a vote Joe can we do a roll call considering we have some members in the audience yes or you want me to go all in favor and see if we're all in favor first go ahead okay all in favor say I I all opposed motion passes unanimously all right next steps Miss Kaiser um I don't believe we need to do anything with the U Matrix given that we only have anything the votes been taken um that's really the end of the agenda for the lunch meeting okay the police meeting with five minutes M chairman one question when will we uh have to get back to understand the results of what all the pension boards actually voted on concerning uh the hiring of an administrator we we do have two pension meetings yet today the police pension and the general pension the fire pension has already made a meeting uh had their meeting so we would have to like schedule a special meeting yes can that be scheduled today or is it too late I don't you wouldn't meet the noticing requirement yes so it would have to be at a later date but you're saying we could take up that discussion at the um meetings this afternoon yes I would I would almost yeah Mr lenson trustee so the good news is that there are two more board meetings today so those two boards can approve moving forward with the contract assuming that's what they want to do and I encourage Scott to stick around for as long as he's able to do that uh the other point though is on the fire meeting which was this morning so it is true that they would have to have another board meeting which could be a very special purpose meeting where they would just vote to hire the contract if that's what they want to do to sign authorize the chair to sign and the good news is that if the police and if the general employees vote to move forward we can have the contract uh turned around pretty quickly and Scott begin can begin the transition process uh getting records and he walked you through I believe the things that have to go on behind the scenes so he can start doing that once the contract is signed so we're not rushing to you know to to do it at the last minute so that gives plenty of time for police and for General and then for fire it's not urgent that they meet immediately because we can start the transition for the other two boards but I would welcome setting a fireboard meeting and there doesn't have to be a huge amount on that that agenda and perhaps and I'm not sure how many of the fire trustees are in the room they might want to revisit and go into further detail with the actuary on the item which they're studying so they could do two things at that special board meeting they could vote on the contract if that's what they want and they could also delve back into the the weeds of of the pending ordinance issues having to do with the plan design so that's all I wanted to say only question Mr chairman is for the police pension board meeting is that a part of our agenda today to talk about the rfbs so so trustees this is levenson it seems to me that that would fall under the attorney's report so even if isn't even if it isn't listed as a separate Standalone item I have no problem including it under the attorney's report and voting on it because I think it's all subsumed in the discussion that you had during this lunch meeting and I think it would be counterproductive to unnecessary thly stretch things out uh when you want to eventually move forward sooner rather than later with the transition I just want to make sure we didn't get into an advertis advertisement issue thank you for that clarification U so Jill I think we will leave it to you and the chairman of the fireboard uh to schedule a special called meeting for those two items with that being said is there a motion to adjourn not yet sorry I'm sorry with all of us in here I know the attorney said that we had to vote independently as boards but could each board vote in here now on this independently be discussion question well that's what we just spoke about we have two board meetings coming up this afternoon he's saying that we can take it up under the attorney's report the fire pension will still have to call a special called meeting but they also have another item they need to deliberate and discuss in more details so they've got two reasons to call a special qu meeting motion to motion to adjourn thank you sir I like to go and call I Pion order it's 130 she's be heading down cutting down up so just giving you an option given the I will but then you're talking about I don't like to make that choice yeah because you know I will s around for the other two meetings and not worry about time I get home and I still have a way to get back my car it's only four minutes four minutes off of5 appreciate you guys thank you apprciate you know I'm really excited I know it's hard to get excited about a pension meeting but dep all right we are in the meeting now the re Scott Nast here Matt here mayor carer Sams um and James Norwood presid uh you should have an opportunity to read the minutes is there a motion to accept those minutes motion to accept the minutes second we moved then second that we accept the accept the minutes of the uh C if like a police office retirement plan for my last meeting uh is there a is there any discussion all in favor I all oppos motion carries uh Capital City trust DNE Mr cheriff I could excuse me yeah we have mron on the line trustees can everybody hear me yes I have a question which is did Scott Bower Le or he is he still in the room he is still here okay so what I'm going to suggest and this is entirely up to the board is if he is sticking around and I don't know that he wants to stay for the whole meeting I would have no objection to moving the attorney's report up that way the board could vote if they wanted on signing the contract and and moving ahead with the contract while it's still fresh in your minds and I I also wanted to know did any more trustees come or we have the same group that was there for the lunch meeting because it's possible that uh some some more police trustees showed up no this is the same ones so it is then up to the trustees if you want to continue in the regular flow of the agenda or if you wanted to make a motion to move up the attorney's report and as I said at the end of your your last lunch meeting I have no objection under the attorney's report to moving ahead if that's what the board wants to do with the pension Resource Center contract and then at your next meeting we'll ratify that so you'd vote on it today if you want and you could ratify it at the next board meeting and that's entirely up to you but I do want to make sure any of Scott's questions or any questions you have for him get answered if it pleases The Bard and Adam Kyle and I are here to stay through the end of the day essentially so we don't plan to leave unless it's really not the pleasure of the board that we should be here I would think that we would stick with their regular uh agenda since everybody's going to be anyway okay okay okay all right good afternoon Dwayne madin Capital City Trust Company before I get started I want to introduce Keith Jensen he's the Palatka president for Capitol City Bank thank you being here Keith and I'll get started with a little bit of a background on the um investment uh Arena if you page down to the bar chart which is the first there we go so I'll talk a little bit about what happened in calendar year 2023 uh it was a great year for stocks and you can see a lot of the um bars on the leftand side are growth stocks Information Technology communication Services which includes Google the NASDAQ um up close to 50% the S&P 500 about 26% um small company stocks are R 2K Russell 2000 lagged a little bit because in hard times or slowing economies small stocks don't perform as well as big as large companies and then Banks uh did not do as well because of commercial real estate W and a threat threats of a slowing economy healthc care and utilities which are defensive stocks lagged as they normally do when uh risk appetites are high so uh um all in all it was it was a great year in 2023 um the economic growth and earnings growth were better than many people anticipated unemployment was low um consumer spending was good if not great uh so and bonds started coming around um because interest rates stopped going up and the Federal Reserve signaled that they were in a position to quit raising rates and maybe lower rates so between October and January the market went up almost 25% so uh the returns for 2023 um gained more than you lost in 2022 so we had a bad year in 2022 2023 was much better and looks like 2024 is shaping up to be a decent year so far there's no questions I'll go on to the next slide and this is um a Peak at Market valuations so the top line is the S&P 500 Index and the the higher the line is the more expensive stocks are but this the line below the blue line is an equal weighted S&P 500 Index that means each stock in that index has the same weight the one the top one is Cap weighted or size weighted why is it so much more expensive because the large companies in the US have done very well and they're they are getting expensive Microsoft Google um Apple um Tesla even um Netflix so those companies are and Nvidia those companies are so large they're able to drive the stock markets nine of them actually seven The Magnificent Seven but there's there so that's what's been going on large large companies have done so well especially with the artificial intelligence theme that they've dragged the stock market up and it's gotten expensive but if you remove those seven to 10 stocks out of the index you'll see that the other companies are much more fairly valued so what we're hoping to see is a rotation out of the large Tech grow stocks into utilities and Banks and health care which are fairly cheap so that we think that rotation is about to happen um because the growth that we've seen between October and now is just not sustainable it it's it's all being pulled up by um excitement from artificial intelligence so I think it'll be a good year but I'm hoping that the market will be more broad instead of focused uh if there's no questions we can go on to the policy review so this is the pension plan um the actual position is is under the column that says percentage of total market value you can see large equities at 38.6 are underweight because large stocks are getting expensive you can also see that small cap is underweight because small companies have a hard time when there's a threat of a recession and um the rest of the uh asset classes are pretty close to the policy percentage and they're all within range of the policy operating ranges by the way cash is now paying 5.3% which is almost as much as a bond so it doesn't hurt to hold cash so we'd have 5.9% in cash and if the market pulls back a little bit I may add some to stocks there's no questions there I'll move on to the performance page six pleas this is the equity side it's not the bonds so this is a fiscal year-to date number by the way from September till now the mar the the pension plan is up 10.6% outstanding stocks are up 11.67 meeting the S&P 500 because small cap stocks and intern and international stocks have done better as the dollar got a little weaker um taxable bonds are high yield bonds they tend to follow stocks because they're Equity like in nature and then you see where cash return 1.26 but over the last 12 months cash returned 4.7 and you can see the each of the last three years the equity side returned 5.3 which is a lower number because the 2022 number is in that three-year column and each of the last five years 11.86 that is a pretty good return um so as far as the fiscal year goes we're off to a terrific start um and so hopefully that will uh bring uh return turns up over time and the next page over page seven is just the return snapshot at the end of January where uh stocks had a good month in the month of January and but um bonds fell back a little bit but still fiscal year to date at the end of January 10.8% um on track to beat the 7.4% Target and then the next section of the report is the asset allocation 69% equities at this point and the market value is 11,178 511 then you see the index funds which most of your plan most most of your plan is made up of low fee index funds with the exception of two or three money managers and in specialty asset classes where you need active money management and uh that's all I have to say are there any questions no questions is there a motion motion to accept the capital city report as presented second we move in second that we accept the capital city report as presented is there any discussion all in favor I all oppos motion carries thank you Virg thank you Mr chairman good afternoon everyone um I'd like to take you to page um eight in my materials just to review a the Strategic uh recommendation that I made back in August of last year that was implemented and I want to just give you a sense of what what was what was done and why uh you can see under the table under perc Target for domestic Equity 52% previously it was 37% so we we increased the uh focus on equities domestically uh to do that we raised money from from International 7% we took away from International we took 3% away from convertibles we took 2% away from private real estate and we eliminated the re completely and so as it turns out um so far for example this year um eliminating the reat was a good idea because the reats are down about 5% and the large caps are up about about 6 and a half perc so that was a nice move and um and we added a little bit to bonds up 2% so up to to a new Target of 24 from 22 as I mentioned to you last time bonds are are actually pretty exciting right now because the the yield of maturity is about six% and the last 20 years the bonds have averaged about 1% per year so we the rising rates that occurred uh with fed policy has allowed the bonds to be repositioned into higher coupon or higher yielding Securities that's very very good I'll take you to the uh summary remarks sorry on page four Clark comes back she can get me back to where we belong but there we are okay what page where you want now um did we just go over page eight yes okay any questions on that okay and I and I while we're still there can you go back to eight I I skipped something what I mentioned back in August was a concern that we had regarding International uh we had a 15% Target in international and uh you know as I said it was dropped uh to eight so it was dropped by seven percentage points that's a significant drop we're concerned about China China is the second largest economy but I'm not sure they're going to stay in that position you know India is now the fifth largest economy and China may be at their Peak uh they have a lot of unemployment and they have a huge real estate problem they have major real estate operators have defaulted on their bonds or uh and their uh bank loans so they've got they're challenged and Europe is challenged uh because of the high cost of energy so that was the main reason for this shift away from risk into US stocks and I I think so far it's serving you well all right so miss Joe if you could take us please to page four first I got one question yes sir and the question is domestic equities what makes that up well so I think we talked about some we're gonna I'm gonna take you right to it let's go to page 11 oh page 11 illustrates 6 million in domestic equity and the 75% of that is invested in the Vanguard institutional index fund that uh Dwayne handles and um that is all of the household names you can think of whether it be drug companies manufacturers insurance companies Banks Tesla is even in that index high-tech whatever everything is it's a big conglomerate of large US companies and many of them are multinational corporations John Deere caterpillar they're all in it so it's a very good representation of the US economy now to while we're on page 11 uh Dwayne commented about small caps you do have an allocation there it's relatively small now it's 680,000 and he's he's right that smaller companies uh have more difficulty getting Capital than the big companies in fact the bigger companies seem to have better balance sheets and the larger companies are performing very well in this market outperforming more recently both mid and small cap that answer your question all right back to page four the quarter was outstanding uh you you earned a million dollars uh 9% net uh the program ranked in the top 21st percentile I meaning that you outperformed most of your peers um 79% of your peers and I should mention that many of your peers have a higher allocation to private real estate which is struggling right now because of office exposure and many of them have exposure more and more have exposure to private uh equity which you have no exposure to uh which is having more and more of a we'll call it a valuation debate and transparency concerns so you're not in those kinds of Investments uh everything except for American realy which is private real estate is liquid the best performer for the quarter was small cap and Then followed by midcap and I mentioned to you that small and mid is struggling right now because of rates there was a Euphoria in the fourth quarter which we're talking about that the FED likely had ceased its tightening policy and that they would hold rates level and perhaps begin lowering rates during the first quarter that we're in right now they have not chosen to do so it appears that their their rhetoric is that they're going to keep rates where they are for the time being that has scared those uh folks who were concerned about interest rates and that's what's put pressure to push down the relative performance of small and mid but for the quarter those two areas did very well an example of interest interest sensitivity is how the smaller and midsize companies respond to rates rates go up they tend to fall faster rates come down they tend to rise faster than large caps the one-year number of 1.4 million earned is also impressive Patrick doesn't seem that impressed but uh it's okay um result I know he's a good man a he but 12.4% take that any day you're uh bogy is what 7.4 I believe 7.5 7 .5 okay and the top performers were the uh the Vanguard institutional is what we talked about a little while ago that's where you have three qus of your domestic Equity followed by International and the uh you remember I told you that do we rolled the money into domestic because away from International remember I told you that you can see the domestic did considerably better than International for the one-year period the the unfortunately the three-year average captures the deum 2022 when all of these pension plans uh were crushed both on the equity side and and fixed income side which is highly unusual extremely unusual in fact I've never really seen it happen like this in my career but the fiveyear is still pretty impressive at 8.4 net uh given the fact that um he had that that it went through the 2022 period the 10-year average of 6 point of 6.8 million or 6.1% net uh captures these a couple of very difficult years if you go back two years ago and show the same 10year illustration your 10year average was pretty close to 8% so it's amazing what one year can do in spoiling the the longer term averages I'm almost finished here uh con and steers uh infrastructure um is a is a pretty uh Rock Solid investment program and I'll show you on back on page um let's see if you go to page 11 they experienced the return for the quarter of 12% and this is a very conservative portfolio half of which are utility stocks utility companies but utility companies are very sensitive interest rates rates go up utilities get crushed rates go down utilities rally and back to that theme of falling interest rates created that huge 12% return uh for the con and steers uh the convertible uh index is where you have uh exposure to the convertible bond market uh had a great five-year average uh compared to bonds and that was in inserted in there some years ago as a as a bond substitute it's a bond but it has an equity optionality component sort of a Turbocharger if you believe that interest that interest rates are likely not to be favorable but the equity markets are going to be favorable the convertibles do very well europacific has been coming back act nicely as they rotated away from out of China and move their Asian positions more towards Japan and with that um I'll open up for questions or comments or oh I skipped the U private real estate on page um 12 um we are receiving the uh the income um from the private real estate it's actually coming back to the plan it's not being reinvested we don't have a large position here if we did want to do a full Redemption um uh it would take quite a while to get the money back we did get out of the reach so we' we've reduced the considerably reduced the uh real estate exposure from 10% down to five by way of getting out of the re this product it has a good balance sheet only about 19% is is debt uh and their most of their U debt financing is term based over a number of years there's nothing on the horizon that uh concerns us about their balance sheet but for the next couple years pressure will continue with the um marking down of their of their private uh of their commercial real estate holdings Office Buildings by the way my office lease is coming up in a year in a couple months and I'm we're downshifting our uh Space by 50% so a lot of people like me don't need the space because people don't want to work in the office every day and um so that's going to be going on for quite some time and I guess that concludes my remarks for today any questions for a motion thank you motion to accept the burgest chambers report is perced second and move the second that we accept the burg chamber report is there any discussion all in favor I all oppos motion carries Foster and Foster all right got i pads here but I think you guys have it in your packet evaluation report are these a GI uh Christmas presents not for you all right Patrick is this the same report that you went over and the um I think they have the fire meeting well specific specific to us okay I heard mention of the fire meeting and and you know on the agenda for this meeting I believe you know we have a couple different items but the first one is the valuation report this is the report that I do every year as of October 1st and so if you go to page six of that report Patrick it's levenson can I jump in real quick sure I understand we may have at least one new truste today and I'm not sure if that new trustee has been through evaluation before so um I'm just going to point out that trustees in my opinion as an attorney one of the most important reports you review every year is the Actuarial valuation and whenever we have a new trustee I know Patrick works hard to make sure he's not using jargon and making it understandable especially for new folks and my quick observation is especially for a new trustee we view the fiduciary duty as as really asking questions and making sure you get answers to questions which is why I like to say that when you're dealing with an actuary there is no such thing as a dumb question only a dumb answer uh so with that said Patrick again I don't know if our our newest trustees have been through evaluation before but keep that in mind as you introduce the subjects all right hopefully I won't give any dumb answers but but basically the whole idea of this report we actually had a question when we had the fireboard meeting and somebody said you know you know I've heard in Illinois and other places where these plans are defunct and and what's the issues and but basically in Florida the state law says that every board has to hire an actuary you know which is me and we have to do a evaluation every year we have to look at the Assets in the plan and then we project out the future retirement benefits and we determine in a a a minimum funding requirement for the next year and the difference between Illinois and Florida is that the state law says that the city is legally obligated to make that contribution so so that's what this is on page six you know looking at the assets and the liabilities you know we've determined that the total funding requirement for the current year is 31.6% of payroll and next year it'll be 30.9% of payroll so it actually went down slightly which is obviously a good thing the members make 6% contributions of their salary so that leaves the bottom line city and state going from 25.6% for this year to 24 9% of payroll for next year and then they get to offset whatever comes in from the state so last year the state monies came in at 99,8 and that represented about 5 and a half% of payroll you know it's not going to be exactly that this year you know the state monies might come in a little higher hopefully but the payroll might be different so you know it might not represent exactly five and a half percent of payroll but right now that's our expectation so that means the city right now this year is at about 20% of payroll and next year it'll go down to about 19 and a half so it it was a good overall valuation um you know snapshot that we look at so I said we look at the assets and the liabilities so on the assets side we had a good year but for this Actuarial valuation where we determine this Actuarial funding requirement we're allowed to use a smoothing a smooth value so that's on page 32 so basically at the beginning of the year you guys had 11 million in the plan and Burgess already mentioned we have a 7 and a half% assumption that's what we're expecting and so we expected to earn 87,000 on that money and we actually earned $894,000 so we had a return of 8.27% which beat our seven and a half so that that was a good thing but the smoothing that I talked about is in the upper leftand side so we're going to take that $77,000 gain this year and we're going to spread it out over five years so that the city's cost don't go way up or way down but you can see there 2022 um we we had a net loss of 3.2 million and we're recognizing um 1 fth of that each year for five years so that 2022 loss was much more significant than our 2023 gain so using that smoothing we had a loss of 481 th000 this year mostly by recognizing some of that 2022 loss now um the good news is we're off to a good start and you know maybe we'll have more gains to to work in this year but does anybody have any questions about that fiveyear smoothing and we basically started it over 10120 we said going forward we're going to start a new smoothing so that's why you only see 2021 2022 and 2023 on there after a while you'll have five years in this in this smoothing so it's not they don't so we're not using the one year would drop off and another year comes on for the five years moveth are you just well we still it's it's similar to that because in five years we're no longer going to be recognizing well in three years we're no longer be recognizing that 2021 right so that that will drop off and it'll be replaced with whatever gain we get in say 2025 so it will still be kind of that same method it's R exactly exactly it's just a slightly different method but very similar to that old one okay so then on the on the um but still one more second on that page because it deals with something we're going to talk about later but you know that 2022 that huge loss that we had if we would have not been smoothing the city's cost would have went way up that year you know and then it would start to come down as we get games but we'd rather have it spread out so I just wanted to point that out in fact Patrick uh before we went to the smoothing it used to be uh the city would have those huge ups and downs and whatnot I think we went to the smoothing back in was it [Music] 2007 okay so yeah I mean it it's it reduces the volatility for the city so the city has not experienced those ups and downs and it's been more of a uh it's them easier it it it makes it much easier for them to plan the budget exactly exactly correct okay so page 39 then is the turnover and you guys do keep keep um you know having turnover here at the beginning of the year you had 21 non-rop police officers remember drop people are like retired so we had 21 five people terminated and took refunds of contributions and then you hired actually 10 new police officers so you went from 21 to 26 which is a good thing um as far as we'll talk about that in a minute but the higher payroll actually helps the percentages a little bit um so that that was the top of the page the bottom of the page sadly you know as an actuary it helps when people uh pass away and you had nobody pass away this year is how many uh of the new police officers that uh they hire how many of them are actually enrolled in the pension fund all of them it's it's a requirement okay okay correct yeah in order to get that 185 State monies it has to be required for all participants so then I'll take you all the way back to page 18 Patrick this levenson just a quick clarification can you hear me yeah just to to further put more context on the last question all of the sworn police officers have to be in the plan but if you're not a police officer if you're working in the department as a community service Aid or if you're working in a secretarial non-sworn position then you're not in the police plan but Patrick is absolutely correct that all police officers with Badges and blue uniforms at least that's the color I think it is these days they should be in our members of the plan but those non sworn officers has the opportunity to get involved in the uh General g f right yes sir so we've talked about assets and liabilities already today and so the difference between those is what we call the unfunded Actuarial acrude liability so last year it was 1,682 and we we're making a payment each year that's part of the city's fund requirements um so we're we expected it to go to 1,465 and in the end it was 2,198 and so the biggest reason for that increase in the unfunded liability was that smoothing technique with the assets so that was a loss of 481 th000 then the second line is salary increases so individual salary increases were larger than normal nor Al expected I think you guys did some contract changes or or what have you so the average was slightly higher than our expectation and so if everybody's salaries are a little bit higher well their projected benefits at retirement then are a little higher than we expected last year so that that's a little bit of an Actuarial loss 100,000 in this case turnover was pretty neutral inactive mortality like I said was a little bit of a loss um you had some rehires um and then so all in all an increase of 732 th000 then the previous page 17 is basically how we're going to pay that down that $2.2 million liability well we're going to make a payment each year to pay that down to get it to zero so right now the payment is 27600 ,000 so you can see that almost the last line there that $732,000 increase this year we're going to pay 77,000 a year for 15 years to pay that down and so our total payment there is 276 but then if you go to page 13 the this is where that increase in the number of employees helps so your your payroll went up also this year right you hire the new police officers so your payroll actually grew at the same rate as the unfunded Actuarial acrude liability payment so those three are the how we get the total funding requirement the normal cost is just every police officer earning one more year of benefit so that stays stable 133% 12.7% this year that that that's an annual cost of everybody acre benefits and then the administrative expenses that's our fees and Jill's fees and all that well when your payroll goes up you know then that's a smaller percentage so that went from 2.8% of payroll to two and a half and then the third line is that payment required to advertise the unfunded that mortgage payment well that went up as a dollar amount but so did your payroll so it actually represents about the same percentage 15.8% last year 15.7% this year so that's why your total funding requirement went down slightly from 31.6% of payroll to 30.9% of payroll so the the firefighters today asked me you know what happens does it help if we hire new firefighters and it did help you guys this year that you hired new police officers um people talk about the funded ratio you know I talked about the acred liability and the assets and that unfunded liability well from a p percentage perspective that's on page 11 and towards the bottom it says it went from 88.4 % last year to 85.4% this year because the liabilities increased with salaries and the assets didn't grow as much using the smoothing technique So Adam wanted me to go over it you know fairly well and hopefully I did because I know we have more Actuarial topics today but I'd be happy to answer any more questions about the annual evaluation report correct I mean the your goal is to be in that 80 to 100% funded ratio and you're at 85.4% so you're in that healthy range Patrick it's levenson can everybody hear me yes I want to bring us to page six of the summary and building on the question that was just asked which was how does our funded ratio compare so here the question is how does the city contribution compare and I will tell everybody that one of the plans that uh that we have that's in litigation has a employer contribution of a 100% And your contribution meaning the city on page six is basically 20% of pay so I'm wondering if you can put some context for that 20% and I want to say that the F FRS and I'm ballparking is is around 33% so just if you could answer the question how does the city contribution to fund this plan compared with other Foster and Foster police or fire plants um sure you know every year most years in the summer we come do a list of all of our plans and both the funded ratio is on there and the city contribution rate so I'm pulling that up now but you know based on the 2022 valuation last year's the median funded ratio was 88.2% and you guys I think were at 88% last year so you were right at the average of all of our plans in the state as far as the funded ratio and then City contribution rate that the median was 23.8% of payroll last year and you guys were at 20.1 and this year you're going down to 19.4 so your city contribution rate is on the lower half of of our plans in Florida meaning that the average city pays more than than you do for the contribution requirement does that answer the question Adam it does which demonstrates that the plan is running a tight ship and the the trustees and the uh the staff Etc are to be commended because you don't want to have a high employer contribution they're usually uh either investment losses or negative experience so the actuary and the finance department can smile when the city contribution is heading in the right direction and is on the lower end so that answers the question thank you motion to accept the valuation report as presented second discuss 185 right color so we were we were earlier on page six of the valuation report remember we had a total required contribution and then the members contribute 6% and then we had a city and state requirement um and then we had another line after that and it was state contributions and so what that is is that 0.85% of everybody's basically car insurance premiums that that gets collected by the state and then they send it back to the plan to help provide additional benefits for the police officers in patka and um so there's been a long history of of how to handle how to use those State monies and Paka was kind of ahead of the curve in a in a sense and as long as I've been here 26 and a quarter years the city ordinance has provided a a methodology and it basically says that the police officers get the same benefits as the general employees which is a 2.5% benefit rate and then they get an extra benefit that's paid for with accumulated statements um you know those premium taxes and right now that that multiplier is um 0.55% so you know right now the total benefit for the police officers is 3.05% times their average final compensation times their years of service well not every city uses that same method Adam mentioned you know this chart that I have with all of our plans well you guys are the only PAC of police and fire are the only of those you know 200 plans that uses that exact methodology so it's something that can be changed if we want to and part of the reason that you may want to change it is the fact that retirees benefits can change so you know you guys are maybe going to hire Scott Bower here in pension Resource Centers and and they're going to be in charge of mainly interacting with the membership right the retirees and making sure their benefits are paid and all that so if we do this valuation and their benefit goes down you know they're going to wish they weren't hired because those police officers are going to call and say what the heck I was getting you know $2,000 a month and now it's $1900 a month so you know most plans don't have a benefit for the retirees that can change so that's something we talked about at a previous meeting and you said to come back with you know ideas of things we could do differently and so the first idea on this page is on page two or actually page page two kind of shows the calculations and we talked about this at the last meeting but page three I guess is where the real Alternatives start but one of which is to use smoothing when we're calculating this multiplier for the retirees and the active members you know we do that already in the valuation you said we started it in 2007 so we've never started it for the this calculation where we look at the assets and how much the state monies can pay for so that would be one possible change that we could do and so if you look on the top of Page Three you know with the market value method no smoothing you know the multiplier was 6 and then it went to 0 65 and then it went down to 055 so it went up and then down you know because the market went up and then the market went down and so with the smoothing it actually would have remained at six all of those years if we had been using the smoothing method to do this calculation now the cavat there is that that 2022 loss that we talked about that's going to be in the smoothing the next three years so it's possible that that 60 that we'd have right now could go down each of the next three years so the smoothing you're still going to have ups and downs it's just going to be more gradual does anybody have any questions or about that so the second method would be to keep the same methodology we're going to look at the state monies and see what it can buy um going forward but we'll fix the retirees benefits so now if we have a investment loss or a gain right right now it's shared between the actives and the retirees so if we have a loss and everybody's goes down the retirees go down and the actives right if we freeze the retirees and we have that loss now we've got to spread that out over only the actives so you're going to have more volatility and so on the second or the page four at the top it shows what would happen under that scenario so the members would the retirees would have stayed at the point six in that middle column they would have just stayed there because your benefits would be Frozen when you retire but now the benefits for the active employees they're more sensitive to that investment so it would have went from0 6 to 0.9 to 04 to 045 if we had said okay we're we're going to take those Market losses or gains and spread them out only for the active employees so that that you know that's probably better than what we have now because then the retirees can count on their monthly benefit when they retire it's just that it's going to depend on when they retire so you know if you retired in that this scenario and in h April of 23 well you're going to get a good multiplier you're going to have that 3.4 multiplier if you're retired a year later April of 24 then you're going to have that 0.4 so you're going to have a 2.9 multiplier so it's going to be dependent on when you retire what your benefits are going to be I don't I don't think you would make this retroactive you know we could do the smoothing retroactive maybe but this is an ordinance change and and I don't think you would make this retroactive well no they would stay at whatever their current benefit is we we we would exactly but we wouldn't go back and say well what was it the year they retired we we wouldn't change it to that we would use whatever it is right now that would be their their benefit going forward well because because well up until now the ordinance has said we have to look at the state monies each year and the retirees are adjusted so so right now based on the money that we have right now that's their benefit remember it was fluctuated on purpose but we could we could freeze it now and say going forward we're not going to fluctuate their benefit but I otherwise there would be a loss I mean I if we're going to give the retirees let's say they retired with the the point65 and we're going to say now we're going to bring you back up to the0 65 we could do that there's nothing illegal about it but it will cause an increase in the city's funding because right now the requirement I showed you on the valuation is based on a 3.05 multiplier yeah we could do that you know it's not GNA make a it's not GNA make a huge difference because a lot of the retirees retired under the0 6 and now it's at 0.55 so bringing you up to the point six isn't going to have a huge impact but you're right we could do it that way it would be negotiated you know all all of us maybe we shouldn't have had this discussion before you guys sign the dotted line there yeah but I think doesn't this Patrick doesn't this change for everyone every time that there is a change whether it's high or low right now it does right now it does yeah but if we were to freeze everybody everyone that's retired right now is making the same rate whether it's someone that retired 20 years ago or someone that retired five years ago that's what we're doing right now yeah should be getting the better rate because our new ordinance will say you get the rate at retir yeah I I see what you're saying the the ordinances frequently say as of date they'll say and as you know as of this date this is the change that's going to happen so you don't have to go back and refigure everything because yeah there will be some lower rates yeah yeah my vision was that they'd stay at the current but but I understand your question and and as far as legally Adam's got his hand up so I'll let him talk so trustees I'm not sure how many of the police that are here were were sitting in on the fire meeting so I'm not sure if they're aware that the fire board decided to uh to table it because they want to study it further and I'm pointing out to you that there's a lot to think about and I appreciate that Patrick put the time into writing this detailed summary so it's important we understand all the moving pieces and unfortunately I have a new moving piece to add into the conversation and the Florida legislature is a variable and there is a bill this year and we're probably going to prepare a memo and I think the league of cities may also have a memo at some point and I'm going to tell you about Senate Bill 774 and also house bill I think it's 7073 and you know it's hard to predict the future and we don't know if this will be adopted but we think a lot of our pension friends will be opposing this bill which would effectively lower the amount of Premium taxes so let me take a step back for a second so the system that we've had in place for many years has worked very well as long as the premium taxes were going up over time and what we saw uh about a year or so ago the premium taxes fluctuated and that's what brought this to your attention and that's why the trustees asked you to do this study and that's why we're looking at this so there was a you know fall off with regard to premium taxes about a year ago so that's why we're talking about it but if Senate Bill 774 gets adopted or House Bill 7073 gets adopted we expect that the premium taxes will be lowered by the legislature so that's why this is a good time to have this conversation and for us to get into the weeds of of what this means and it's hard for attorneys we don't want to give our opinions and attorneys want to make sure we're telling you you know the law allows you to do this and the law allows you to do that so we give you parameters but we shouldn't really tell you what you should do but in that context U retirees don't like it when the benefits go down and um you know and it's the job of the attorneys to make sure you're following the law and you have followed the law because you've had your ordinance and your ordinance is totally legally acceptable but the the new and again we don't know if this change will be adopted but there is a proposal that would effectively it's it's diverting some of the premium tax is for other purposes so there would be less money from Tallahassee to fund the benefit which ultimately if it goes through would lead to a lowering of uh of this exact issue this this this adjustable rate that's why this is a good time to have the conversation so then maybe that's a good segue into well alternative three is just a mix of the two we would use the smoothing and freeze the retirees so then you can see that the actives doesn't have as much of a sway when you do the smoothing you know it's more smooth there's not as much sharp up and sharp down so that would be alternative three um but alternative four is what most of our plans have in Florida and for them the multiplier is fixed it's in the ordinance like right now it says 2.5 plus something else the ordinance would say the multiplier is 3.05% or 3.15% or whatever the multiplier is and that would never change unless you guys negotiate with the city and and decide to change the benefits and and so most places have a fixed benefit for retirees and actives and then with the regards to those State monies they basically draw some kind of a line in the sand like you guys would probably draw the line at whatever you got this year the the 79 or the 999,000 you know you would say okay the 999,000 is paying for these benefits that we have and now any increases we can share with the city um so either share 5050 100 Zer whatever you can share it with the city and then those monies then go into a pot for the police officers and it's almost like a defined contribution that grows whatever whatever earnings happen and then when they retire they get a lump sum kind of like the drop in a way and and so that would actually be good from I mean I hate to say if Adam's right you know I I guess that's why we don't like attorneys because they give us bad news but let let's say they the state monies go down next year well then you know it doesn't affect the benefit you just wouldn't get an allocation to your share balance but your balance you had previously would stay in there and grow you just wouldn't get a contribution that year and then if two years later the legislature kicks it back up then you would get an allocation that year each police officer and then that would grow so it it would help you know we wouldn't have to worry so much about the volatility in state monies if we had a share plan but this would never have right ideally it has no effect on the ideally well the only argument that the city could say is if if we're getting $100,000 in state monies and our payroll is million that's 10% of payroll you know that $100,000 in state Mony 10 years from now might only be 5% of payroll so it may not be providing the full benefit that it was 10 years ago so to answer that most plans share those increases so if the state money goes up $10,000 the the city gets to go up five and the members get five so that that way the increases in state money keep up with the increases in payroll so the city wouldn't have that argument um does that make sense this would have to be negotiated because the ordinance is clear right now you know of the benefits and you don't have a share plan but that doesn't mean it couldn't be negotiated as you're talking I'm reading it and listening to talk so if the officers were to elect and then to the commission for approval would cost Associated an additional cost Associated to the city offic negotiate if the multiplier is not 3.05 then then there would be an impact there would be a cost and like you said let's say we give all the retirees whatever they retired with before then some people might get a little bit of a raise right so the share plan has no effect because right now the city is getting 100 or 99,000 right and assuming you you decided to share future monies above 999,000 then then it wouldn't affect the city's cost at all if you said instead you know we're going to keep our 3.05 multiplier and we're going to only let the city use 50,000 each year and everything else goes into the share plan well then now I would do an impact statement and say okay City instead of 19.4% of payroll based on that 5.5% from the state it it it would go to 21.4% because the members are taking some of that state so my vision was is you'd negotiate that future increases in state monies would go into the share plane and that would have no impact on the city's funding to answer his question we already they'd be using that money they have now the 999,000 a year to pay for that benefits we have right now the 3.05 multiplier so negotiating a share plan that uses future increases does not impact the city well there was a decrease in 185s like Adam said it's going to hurt them either way right right now they get 999,000 if next year we get 89,000 well then they have to make up the difference so right right right right the state would be smaller and that the city has to make that up and and in our case you know the retirees have to eat some of it you know because whatever the state money is but we're really not we're looking mostly at the accumulation of State monies with interest so if it's a little less next year it's not going to affect our calculation very much long term it will if every year it's smaller then then that accumulated State money is in our calculation is smaller and that that would cause me that would cause me to say okay now the multiplier has to be reduced a little bit so but if you did the if you negotiated where the benefits would be Frozen at the 3.05 or whatever then then any increases or decreases in state monies would hurt the share plan and it would hurt the city's bottom line funding but it would not change the benefits the defined benefits of the members Patrick what would happen in any of these plans and I guess maybe it would be different in every one of them I don't know if the officers were to contribute more meaning I think right now we contribute or the officers contribute well I guess we because I'm one of them we would we contribute 6% if they were to contribute 78% does that just mean that they're contributing more to the fund and then their portion is growing or would that also require the city to contribute more because they're contributing more or does that have any impact at all on any of this that we're talking about well like for the let's say the multip if we keep if we don't do the share plane well even if we do do the share plan generally either the members negotiate to increase their contribution to help offset the city costs so if you were at a city Adam mentioned we're in a legal battle or whatever with some city that has 100% a payroll right so they might through a union negotiation say okay we're willing to bump up our contribution by 2% to help the fact that you have a high contribution rate so it could be just that but usually if we're increasing the member contribution rate it's because the members want an increased retirement benefit so if it's 3.05 now you know some places will say members will say I want to increase my contribution so I can get a 3.15 multiplier when I retire so generally increases in member contributions are associated with the a new benefits of some sort increased multiplier or a 20 and out or something that the members want to pay for generally that's how it works with member contributions so it doesn't really affect any of this in a in a sense except that that you know if we freeze the benefits of 3.05 and go to a share plane if the members would really rather have the 3.15 you know then they can negotiate with the city and say okay we'll put in an extra 2% make your 6% up to 8% and we'll get a 3.15 instead of 3.05 and the city will say okay if that's the cost of this increased benefit and it doesn't hurt the city there fine you know that's how sometimes it works so out of and and I think I might be jumping the gun a little bit with this question but out of all these plans that you've you're presenting to us today under this shared plan on page five it says share uh letter A it says the most common method used in the state is is this the one that you would recommend that we were to go with well that when I say most common method used in the state that's plans that do have a share plan once you decide you're going to have a share plan then you have to decide how to share it among the members right so we get this $5,000 $10,000 into the share plan now you have to share that with each member and so the most common in the state is you get 25 shares if you've been here for 25 years if you've been here two years you get two shares and I mean I would again like Adam said it's up to the membership but but I would be that would probably be my recommendation because this PO whole purpose of this pension plan is to reward long service right that that's why you have this 185 pension plan and so keeping with that same philosophy then you would say oh let's share the state monies in that same fashion so but but you could do equal everybody could get an equal share it doesn't have to be that way but in the shared plans the top one on page five is the most common yeah I would say 90 some percent of 90% of my plans that do have a share plan based it on their total credited service that would be the other 10% I mean we do have a couple of 13th check plans but that that's on one hand so in your experience with making changes to plans like this if you were to make a recommendation from an educational perspective for us what would you recommend because the way I'm looking at this is the assistant chief is I'm gonna have to go back and Lieutenant mass is gonna have to go back and we're gonna have to have independent conversations with some of our staff and I don't have the training and experience or knowledge that you have on this so when I go back and I try to talk to our officers especially those that are within the union about this I really need advice on what to give them guidance on so is there a specific one of these that through your training and education and experience would be more valuable to them I know you're giving us a bunch of options right right right right right well the the state monies have almost always gone up as Adam mentioned so the issue with the retirees and the investment has always gone up you know for the most part so the issue with the fluctuating benefits for retirees hasn't been an issue the 26 years I've been here until recently you know and so so but I do see it as an issue that could happen more and more so if you want my my opinion is we should go you should try to negotiate to do something any of these starting with alternative two anything that freezes the retirees I think would be beneficial and and the even alternative two for the active employees where it can still fluctuate quite a bit I I'd almost if I was a membership I would rather alternative four you know some sort of a share plan because that way if the state monies go up you can get some more money in your share plan if they go down you get nothing in your share plan but you don't have to worry about that multiplier that benefit that you've worked hard for and and you were promised I mean if you hire somebody today you know as the assistant chief you hire somebody you're telling them you're going to get a 3.05 multiplier you work here 25 years you're going to get 25 time 3.05 well under the current structure you're going to have to say that with a grain of salt you know because it could change and and if they go anywhere else they're going to be guaranteed that benefit so I think from even from the city's perspective if you want to recruit and retain you would be better to be like all the other cities and have a fixed monthly retirement benefit for the actives and the retirees so that's what alternative four does best you know but right now you know the city shares any big investment losses or anything with the members so from the city's perspective they might be like oh I like the way we have it now you know but I I just from a member's perspective I like alternative four and and and I think if the city looks around at all the other plans and see if that's what everybody else does you know hopefully they're okay with alternative for you know they they share an increases in state monies too thank you but like Adam said I am not to give you guys advice on benefits you know I'm the actuary that values the benefits so there's State there's an ordinance and it says here's the benefits and I have to do with that valuation each year and when people retire I have to do that calculation and I have to use whatever is in the plan as far as negotiating what's in the plan that's not something I should do yeah no no no I understand that I was just asking from a from your experience what do you see basically what do you see others doing yeah that I can answer alternative four is far more common than any of the other ones thank you trusty it's levenson can you hear me yes yes yes so again it's not my job to to tell you what you should do but we like to give advantages and disadvantages and to give context so the first bit of context is right now you're an outlier and it's worked well over the years because you've been able to raise it but there's the possibility that it may actually have to start coming down as it did last year so the question is do you want to join the majority of other plans that fix the monthly benefit and there are good reasons to fix a monthly benefit because that way a retiree you know they have a certain standard of living and if the benefit goes down uh and fluctuates in the downward direction that causes hardship potentially for retiree so there are certainly advantages of fixing it that certainty is an advantage and it deals with expectations so those are advantages another consideration is keeping it simple right that's the kiss principle you don't want to have things necessarily uh super complicated so Patrick I'm wondering if you can walk through you know advantages and disadvantages and ultimately um you know the actuary can be a resource our office can be a resource for trustees uh and for the union and for HR Etc so that you can understand these options and I also encourage any of the trustees if you want to speak to Keith Brinkman up in Tallahassee he won't charge you you can speak to him for free and he'll tell you uh you know that this bill uh potentially would if it gets adopted would have a big Financial impact especially in year two and year three down the road so we're dealing with a lot of uncertainty but you know like some of the other professionals who have an hourly fee and again we're always happy to talk to you feel free and his name is Keith Brinkman he's the head of the local retirement section and he can tell you what he likes and doesn't like about the bill and he can also share with you you know what other cities are doing and unfortunately you know this is something where um you know the situation may be changing a little bit depending upon what gets adopted in Tallahassee and the final observation so you've got uh certainty taking off variability is a good thing the other option and the other idea is keeping it simple and and I think Patrick talked about that the third thing I threw out to you is speak to the folks in Tallahasse and make sure you understand it and make sure the members understand it because you're always going to have people this is what lawyers worry about people who aren't happy and they always blame The Grass Is Always Greener but if people understand it and you do a good job of making sure there's transparency then you can't be blame because you can't predict the future and you've done your job which is putting options on the table helping everybody understand those options and the actuary and our office can play a constructive role in that process and also feel free to reach out to other cities right feel free to speak to unions in other cities and speak to police you know Chiefs and HR departments in other cities see what they like what they don't like and if you go to some of the conferences uh don't talk to each other about this because this is you know this is a board level Sunshine but you can talk the police trustees can speak to the fire trustees you know you can speak to someone who's not a trustee obviously and you can speak to other cities so the the the bad news is at some point a decision has to be made but the good choice is or the good the good news is that you have options you have resources and we want to help but also they also but also we could also use the Florida League of cities because that when this bill was implemented they're going to do some research and come up with some recommendations on how to handle it anyway yes sir well we don't have to so really I mean the board can't even necessarily make any decisions on this other than this first one about smoothing um you know we can do that but the rest is more educational like Adam said you know you guys talk to the members and and you administer the pension plan so I don't think the board has to do anything today but this was informational yeah but that makes a lot of resource that we could actually use in order to help us bring bring us to the right decision M Jill did the fire department um board did they discuss having a presentation of any kind done before the the fire Services concerning this no they didn't not at all yeah but I mean I'd be happy if if you know through the process you know if the membership or anybody wants to get together and go over these options you know Adam and I and or you know we'd be happy to come and make a presentation you know Adam can you hear me um so the reason I asked that question is the police department has just recently unionized officers that are eligible to be in in in the union and as such we are in kind of uncharted waters for for us because I've been with the city for going on 29 years and we've never well we were Union for about six months and then we we vacated um so knowing that this is a negotiation kind of thing with the commission with the city our board only has so much power in this I'm wondering if it wouldn't be best for my staff for us to plan um a meeting opportunity um because to be totally honest with you I personally am not comfortable with trying to meet with staff and discuss something that I don't have the knowledge base that the two of you guys have yeah definitely I welcome that question and workshops are a wonderful thing sometimes cities hold workshops the city commissions sometimes it's a joint Workshop between the city commission and a board sometimes it's a um you know a membership Workshop where the union gets invited HR gets invited and you talk about options and um I'm all about the education and I respect that that these are complex issues and none of us have the right answers but we can bring it information and I I think this is something where homework and that's how I'll answer the question homework is important and uh you want to make sure that you're thorough because uh people can always uh you know not be happy because they can second guess but if you put the information in front of people and you help guide them and you you engage in a conversation and the actuary can do that very well and our our office can also participate and I'm wondering is is bower in the room yes sir okay so I don't want to put him on the spot but he happens to work with a good number of plans and I think he'll tell you there are advantages of keeping things simple because he administers Share Plans and Scott administers you know the all the different flavors in Florida so I don't want to put him on the spot but I'm curious if he has any thoughts on um you know whatever wisdom he wants to share or doesn't want to share making the point that it's a conversation what I don't like about the share option is that if it represents a half percent increment in multiplier it's about a one sixth increment that shifts the defined benefit to a defined contribution type benefit for the retiring members and so it assumes that everybody will manage that well but the reality is is that for some they will end up with a additional amount at retirement that won't last and they'll have a smaller benefit thereafter so you also have a drop plan that turns about 25% of your benefit potentially if somebody were to do a career and drop for five years that turns about a 25% of your benefit also into a lump sum in combination with a monthly benefit so taking that share or one chapter 185 money and turning it into a share plan is turning a much greater proportionate share of your overall monthly benefit at retirement into a defined contribution alternative a little bit more than makes me comfortable that's my feedback but only because we interact with a lot of those retirees and understand that there are means and circumstan ances are limited but a lot of time they do better over a longer period of time with a greater monthly benefit than they do with something that gets spent and doesn't last that's being a little bit paternalistic too I get that but you asked for my opinion and that's my very can I can I react a little bit Scott to to flesh it out and I'll do this in a minute I won't go more than a minute yesly so what what Scott is pointing out and I I agree with his his issue that's a good issue to raise if you only have a share plan and you're not locking people in at a higher multiplier in other words if you're putting you know all your eggs or many of your eggs in the share plan basket the reality is a lot of retirees when they leave they're going to have a big share share plan they're not going to have a very high monthly benefit and a lot of people burn through the money quickly because they're not good at um you know phasing it in and and living off of it uh which is an issue which has to do with the way retirees and I'm not blaming anybody this is just human nature people tend not to be good investors because often they um they buy high and they sell low and they spend more than they think they need so what what it boils down to is now there are advantages in locking in a a livable monthly benefit and I think that's one of this the points Scott's making is that from a retire and I'm here I'm referring to retirement perspective from a retirement security perspective uh there there are definitely advantages to locking in a benefit and and um sure the share plans are good but you don't necessarily want to put too much into your share plan basket and I'm hoping that makes sense for everybody yes yes and that that was the point Thank you so how would going to a shared plan what would that do for people that are currently retired or would that do anything for them at all uh normally the share plan is only for active employees active employees this well and you may if we're going to do that uh maybe we can at least coordinate with the firefighters you know it doesn't necessarily have to be the same meeting because I know you guys have different issues but maybe if we're going to Adam and I going to come here on you know June 10th you know let's try to do it we'll do the meet with the police officers in the morning and the firefighters in the afternoon or something like that like you said to save on expenses that would be a good thing yes sir make that decision I'll work on that with uh assistant chief franford and with Jill to put something together on that you guys awesome we do have one remaining issue with the valuation report and that's the rate of return oh yeah the state every year tells you to do that Declaration of your expected return for the next year the next several years in the long term thereafter it's a separate motion and Burgess was okay with 7.4 for the fire so I'm sure he's okay with 7.5 for you guys so you could just make that motion that's a separate motion exactly no this is different okay a motion that we keep the rate of return set at 7.5% second 7.5 that's actually we're joint on that but had you made a decision on the share plan today then that would changeed the mutual consent document but if we agree to continue sharing the money from the state in the same way as you currently share it it can be changed later on in the year but I need a document now saying that we have a mutual consent right now that says it's going to be shared just like it has in the past and if you vote that then I'll get you the pick what to sign keep that well that's what the firefighters did this morning I mean it's in place now it can be changed we're talking about changing it but right now that's the situation I motion that we sign the mutual consent document keep things as they are right now at least until a change can be decided and make second all Adam it's your turn have my mic on Adam sorry so um the good news trustees is we have a short attorney's report and I want to welcome any new faces that I can't see on the screen so um I'm filling in for Anna today and the short attorneys report is really two things the first is to summarize the change in the law dealing with form ones and how form ones work and some of you may already be very familiar with this so wave at me and say move ahead Adam but what the memo talks about and does everybody have a copy of that memo or everybody know what I'm talking about it's a one-page memo from our office everybody have that so I'm wondering and it has our uh palm tree logo on it so if you see the palm tree logo then you're looking at the right document so what we're doing here is we're letting you know that everybody already knows that you know however long you've been in a position of being on a board you've always had to do your form one so for you your form one's not going to change but the way you file it is going to change so in the past there are I think 63 or 62 counties in Florida so every member from the different County would file it with the supervisor of elections in your county and you do this every year and the year you leave you do what's called The Form 1 F so now what's happening is you're going to be filing your form ones instead of with the county it's going to be centralized up in Tallahassee with the commission on ethics so there's a a new website and everybody will file their form forms on the new website and you have to start doing that in June and we want to make sure you do it by Jun June 30th and we'll remind you at the next board meeting so are there any questions about the website that you're now going to have to use to file it up in Tallahassee instead of in the at the county level any questions so far no so thank you so the next part of the conversation as some of you may have heard on the radio or on the news depending upon local media that some people are not happy about the new change because for certain elected officials there are additional requirements uh that deal with their personal assets so these new more detailed reporting requirements don't apply to police and fire or general employee trustees but they do apply to elected officials and Mayors and City commissioners and there are examples of Mayors saying that this ain't worth it I'm not going to run for office I'm going to resign because it's nobody's business you know what art I have on my wall and how valuable my my jewelry collection is because it gets more into the weeds of personal property so what I'm just pointing out to you that that those other requirements don't apply to you what does apply to you is that you have to file it in Tallahassee and we'll talk about this more at the next meeting and we're available to answer any questions and then Scott uh I'm going to point out to everybody uh some cities the clerk's office will do this and in some cities it's probably going to have to be the pension administrator so in order for the website to work the different entities so the different agencies so each of the pension boards is a agency a different entity has to appoint a coordinator and the coordinator's job and it's fairly simple is to let Talahassee know who the trustees are so that way Tallahassee can find people if you don't fill out your form ones so every board every city commission has to have a coordinator who really plays a ministerial function letting Tallahassee know through the website who the trusties are or who the elected officials are in some cities the clerk's office is doing it for everybody and in other cities they want the pension administrator to do it for the respective pension boards uh so that's just something to look forward to and you can't as a trustd input your form one unless somebody either from the city or the pension office is serving in that role as the coordinator for the website with Tallahassee and let me pause to answer any questions because I threw out a lot of information uh currently it's our city clerk because we have so many boards it um she is the coordinator so I'm thanking Sunny for what she does and she does a great job it's just different cities do it differently uh so unless there are any other questions the second topic for the attorney's report if we want to vote on it and I'm comfortable so let the minutes make clear I am comfortable that this is really the continuation of the lunch meeting and if the board wants to vote on pension Administration you absolutely can do that and the motion would be to authorize the chair to sign the contract that I'll prepare and Scott and I have done so many of these and again we've worked with all the administrators so it'll be the standard contract based upon the quoted fee so if you want to vote on it you can and then at your next board meeting we'll put on there to ratify that vote that way we're covering all our bases but I'm comfortable if you want to vote on it today and as I think everybody understood there are reasons why you don't want to rush to do a transition so that gives plenty of opportunity especially for three boards if they're all moving together within the same year so I have no objection if the board wanted to move forward and I want to thank Scott for skipping for staying here to answer any further questions and um I I think that uh you will be well served uh if the board does decide to use the pension Resource Center you're you're not leaving to I told correct and if we did if we authorize the ass the pension attorney to um execute the contract uh when would the contract um begin well it h it would have to the next meeting would be to ratify it right so it would be effectively in June it just I guess and the reason I'm asking that particular question is because I want to make sure there's adequate time for us to uh I guess for the current pensioners to make the adjust make the adjustment to someone not being available when they walk in and want to talk about their pen and that kind of thing uh but we know eventually it's going to come to that but we need to make sure that they're prepared to for that so that we don't as trustees get accused of just changing everything that in they can they no longer can have that opportunity uh to do that Mr Jill do you have a list of retirees that are currently on I mean I know you do yes is that a is there a way for me to get a copy of who it is and what they're showing their current addresses because what we can do between Chief Shaw and I is we can send a letter out letting them know that the board is moving forward with having an independent administrator and who that administrator would be effective October one or effective whenever our um contract would be official yeah I can get you that but also in that in that letter to should be uh that the need if the need arises they should schedule schedule appointment SCH appointments with the administrator correct so that they could meet with them discuss whatever concerns they may have is there a motion then to uh to move forward will execute a contract uh for the resource center to become our management PR um I make a motion that we authorize our attorney to move forward with drafting the contract to hire the resource center to run our administrative program of our uh retirement program a second we moved in second that we asked the uh pinion attorney to execute a contract with uh Resource Center in order to uh administer the police um pension yes sir is there any discussion all in favor I I all oppose motion carries PR that concludes the attorney report that concludes the attorney's report unless there are any other questions thank you sir quarterly expenditures the example of the quarterly expenditures is in your packet it's also up here on the screen uh you had one uh retire or one uh resignation and taking out their money their contributions retire payments are pretty normal uh October November December if you look on closely you'll see the liability insurance the postage and supplies and the pension administrator that's what you are currently being charged this year for pension Administration um that makes up when Patrick was showing you the 2.5 and 2.9% of the pensions that's um those expenses as well as the attorney's fees as well as the actu Fe is there a motion to P these expend expenditures motion that we accept the quarterly report is presented than motion about to die about a second second uh it's been mov sorry that we uh that we accept the uh accept the expenditure report is there any discussion all in favor all all opposed cares uh public comments no public comments is there a motion is there any other business any meeting dates yes reminder that the next meeting date is June 4th and it will be earlier it will not be at the 1:30 because of a conflict with this room so it's going to be at noon anything else any other viness comeing before this pension buard if not is there a motion to adjourn motion to adjourn Cann thanks everybody thank you they might be that's a good thing it is hope it's not after five o'clock talking about the ad hoc evaluation report yeah yeah um I mean the other meetings have both Dwayne and vergis no but you have to talk about the cola the cola study he did no don't you can push it to another meeting because you do only have an now unless you can talk to bird just make sure his record is short good this is for hour hey are you oh I gotta get all the new reports hold on most I thought this is all five there I got my my emails I just gotta get my new furner set up I get my emails now I saw I saw all these things that came in great but I haven't had a chance to look at them yet d yeah a long day downhill now right well title is I'm going home and to where know what that's why I got so doesn't like that you know it doesn't bother me when I leave today fews next qu are really I didn't I said Bell you want me to go to his office I don't not he's not in his office let's get started all right yeah who's his office my old office I sit right there during the day if you need to find me so's down PG with all right that well let's get this show on the road folks I think some of us got places to be all right so we'll call the General employees retirement plan pension board meeting to order roll call um Brett Dennis here um Jonathan Griffin present Troy Bell absent will show up and um Mr Bush all right we have a quorum have thank you so board members in your packet we have the meeting minutes from the November 28th meeting has everybody had a chance to review the minutes if so is there a motion to approve I'll make a motion to approve the minutes there's a motion on the floor is there second second any further discussion seeing none all in favor say I I opposed Right Moving On item number three Patrick all right my evaluation report should be in your P you want to go to six everybody's kind of sick of the ACT today so I'll be pretty short I also have look you know every year we look at the assets and the liabilities and we determine an appropriate funding requirement for the next year and the cost went down slightly so the total required contribution for the current year is 36.8% of payroll the members contribute six so the city is at about 30.8% of payroll and for next year it'll go down to 29% of payroll it went down by 1.8% of payroll and the main reason for that you actually had unfavorable experience you had a smoothed investment loss and you had larger than expected salary increases so all of that would say oh your costs should go up but your payroll went up quite a bit you had salary increases and you hired some additional employees so now our mortgage payments some of those fixed costs are now a smaller percentage of payroll that's the main reason why the costs went down on on page six but on the investment side that's on page so we have an assumption of 7.4% that's what we're expecting to earn every year on our investments and we actually we very similar we earned 7.45% this fiscal year Burgess is going to give you a good report because he's looking at calendar year um so remember the last three months of the year were really strong as was the beginning of the year but the September quarter was a bad quarter um so anyway we pretty much met our assumption but we're using a fiveyear smoothing technique now so in 2021 we had a great year 2022 we had a horrible year and we're recognizing some of that 2022 loss so at the bottom of the page on an actual word basis using that smoothing we had a 2.95% return and so that was an Actuarial loss there of 935,000 so that's what I said most of my plans have a little increase in their funding this year but yours was offset by that increase in payroll does everybody understand that fiveyear smoothing there so then turnover is on page 30 37 so this page wasn't a big deal this year um you didn't have big gains or losses on turnover because we expect a certain number of people to leave and we expect sadly a certain number of people to pass away so if you look at that page the main thing I guess is at the top you had 87 non General employees you had 20 people leave you know before retirement you had one retirement two drop members and you hired 28 new employees so you went from 87 to 92 so that's what I was saying about your payroll went up and that actually helped you at the bottom of the page you had sadly you had four of your retirees pass away but two of them had survivor benefits you know either a joint annuitant or a 10e certain beneficiary um and you had one of your beneficiaries pass away so all told on that page you know it was really kind of similar to what we would expect it's not a big gain or loss on that page so then if you go back to page 17 you know I said we look at your assets and your liabilities and the difference between those as of October 1 2022 was 6,619 and but we're making a payment each year to pay that down you know that's part of the city's funding requirements that 30% of payroll on page six so we expected it to go to 5,779 and it actually was 7,192 so we had a net Actuarial loss there of 1,413 but 935,000 was that smooth investment return that we talked about earlier and then this year average salary increases were higher than we expected I think there was negotiations and some salary increases so everybody's projected benefit then is higher than we expected the year before so that increases the liabilities so that was an Actuarial loss there of 47,000 so really it was just those first two items the investment smooth and the salary increases so then if you go to page [Music] 16 15 and 16 but page 16 shows you you know that loss we had this year that 1.4 $ million we're going to pay 148,000 a year for 15 years to pay that down so you know your costs would have went up back remember on page six but that 1, 667,000 now go to page 13 or 12 I'm sorry page 12 so this is the funding requirements the top line is the normal cost and that's just every General employee earning one more year of benefits so that stays pretty stable went from 11.6 to 11.9% of payroll and then the administrative expenses that's Jill's fees our fees the attorney's fees well if your payroll goes up now it's a smaller percentage of payroll so it went from 1.1 to 1.0 and then your payment required to advertise the unfunded that mortgage payment that went actually from 24.1% of payroll last year to 22.1% of payroll this year because your payroll was higher um so I know you have people that need to leave at a certain time so those were kind of the highlights of the report but I'd be happy to answer any questions anyone has any other board members have any questions Brett I guess this is good news I mean it goes to 29% of a payroll for next budgeted year is that correct correct and so even though payroll went up and the smoothing hit us it's because there's more payroll that we have less of a percentage the have today ex that exactly I mean as a dollar amount yes the cost might be a little higher yes right right but our contribution requirements are determined as a percentage of payroll so so they're going to put that 29% in for all the employees so since payroll went up that's giving you a larger Dollar Man and this is the number we can use for budgeting for next year 29% correct that's fixed great percent Facebook the dollar amount have 29% of the payroll next year so when you're doing your budget if you want it as a dollar amount the first step is to say what do we expect our general employee payroll to be next year and that's how you could get the dollar amount correct so if the board's happy then it needs to formally approve the report and that'll make it official for the city just to be clear the the contribution we've had to do in the past has been much higher 33% it seemed like that number's been much higher in the past right um I believe so let me I have last year's report here also so the year before that it was 33.6 yeah and then it went to 30.8 and now it's 29 so this really is good news as as far as a percentage of payroll yes I mean like I said you did have an Actuarial loss right you know but now you can spread it over a larger payroll right 22 was a rough year right and we're spreading that out over five years so you might still have losses the next three years you know but we're off to a good start this fiscal year maybe we'll wash out some of that 2022 if there're no further questions we'll entertain a motion to accept the valuation report make a motion to accept it there's a motion on the floor is there a second second any further discussion seeing none all in favor say I I all opposed motion passes Patrick do you want to do the Declaration of returns yeah you know every year the state tells us we have the board has to make a declaration of their expected investment return for the next year the next several years in the long term thereafter and it's kind of silly because you know we already do that in the valuation report but they want you to do this extra declaration and I'm comfortable with 7.4% let's see what Burgess says I'm comfortable with I expect 7.4% next year over the next several years and over the long term and Jill will prepare a letter to that effect so the board has to make another motion they basically so moved so just for the sake of understanding what would be some logic in either decreasing or increasing that expected return well um you just said that the costs stay that they went down a little bit right well it's all based on how we do compared to how we expected we would do right that's what makes it go up or down each year so you want that assumption to be as accurate as possible so if we think we're really going to earn 9.4 every year then what would happen is is that we'd keep beating it and the cost would go down down down it wouldn't be stable um but if if in other words if but if we think we're going to earn 5.4 and we always get 5.4 and our assumption is 7.4 well then every year it's going to go up so we want our assumption as good as possible but if you were to raise it then your cost would go down right now because we would say okay we expect we're going to earn more on our investments we can put less money in right now and vice versa what did we State last year what' you say what did we State last year as our PR we kept it the same at 7.4 yeah I mean you've been you've been at you were 8% for a long time and there was a steady but you know 6/10 of a percent decrease in 10 years is a nominal decrease and it falls within the the expected return based on the modeling that we do so I'm comfortable with 74 the state actually asked us to lower a little bit didn't they the state is putting pressure on everybody to come down towards into the mid sixes yeah right they they've they've sent letters but the letters that most boards get and the letter that you got said hey we'd prefer you guys lower that assumption there's only been a few where the board the state has said no you must lower your assumption so this year really quick this year I got three letters and they were all at people that had 7.75% so if you had 775 you might get a letter from the state re ecting but you're at a comfortable you're okay with 7.4 Mr Bell I believe you had a question yes so the Assumption last year was projected um 7.4 right and what was realized just about the same we we got like 7.45 was our actual return so you guys did perfect on your assumption last year that's never going to happen again but you did perfect last year you never know is there any reason why we wouldn't go ahead and lower it and me what would the impact be on the percentage of contributions then well usually about a 0.1 reduction so if you went from 7.4 to 7.3 would be about 1% of payroll increase for the city's contribution so the 29 would go back to 30 if you wanted to lower it by aent but and really quick so Burgess and I are on the same page here that in the past the state was saying you need to lower it everybody was lowering it and that was because we couldn't get anything out of our fixed income right if you're going to get 10% in stocks and 1% in your fixed income it's going to be hard to get that seven and a half or 7.4 but now we're getting like 5% on our fixed income so so if we get 10% in stocks and 5% on fixed income and we've got 65% in stocks we're going to make that seven and a half so I'm not as concerned about lowering that assumption at this moment well what's the pleasure of the board we accept the report well the Declaration now is what we expect on our investment return and we're proposing is so 7.4 yeah is there a motion on the floor to that effect there's a motion on the floor to keep the expected return at 7.4% second that motion thank you Brett any further discussion seeing none all in favor say I I all opposed motion passes than you could I give a minute of just uh more context 30 seconds so Tallahassee wants you to have this conversation every year and the minutes reflect that you just had the conversation and in future years you know you'll continue having this conversation based upon the direction of interest rates and if you have a really good year you know if this return continues for the balance of the year it'll be less expensive next year uh to lower it but over time Tallahassee wants to see you do it to lower and uh you know the context is that the F FRS has lowered a lot so over time you may continue to to lower there's no urgency to do it this year no urgency to do it next year so it's a conversation and every year the actuary and the consultant Burgess uh will will bring it up and uh and you'll revisit it so there's nothing forcing you to take any action in fact most of my boards are doing the status quo which is exactly what you did thank you Mr levenson burges good afternoon there's another item for me Burgess sorry maybe I did that intentionally all right item 3B go quick we go quick but this is uh I think you guys have this in their packet too right so here you go but you know you guys last time talked about the fact that the retirees are on a fixed income and there's been inflation and you said you know what would happen if we gave them a onetime increase so that's what this study is it just basically says that if we gave everybody a one-time 5% increase then that 29% would be 31.1% of payroll for the city and if we gave everybody a 1% per year retired with a cap of 10 so if somebody's been retired 15 years they would get a 10% increase if somebody's been retired two years they would get a 2% increase so that that scenario would be a little more expensive because most of your retirees have been retired more than five years and that would increase the cost from 29% to 32.4% of payroll and then you guys had the good idea to say well how would these really affect the members and and so that the last two pages shows you each current retiree we decided not to put their names in there but it just shows when they retired and their current benefit and then what their benefit would be under each of those two scenarios so how was that Burgess that was pretty fast perfect so Jill this may be for you or Mr levenson uh is there anything in the creation documents for the pension that speaks to a cola or the term define benefit so let me take the first stab and I welcome Jill's input so what is the job of a trustee and the answer is the job of a trustee is to administer the plan that's the central job of the trustees now if you want you can always make recommendations to the people who can amend the plan because you do not have the ability to amend the plan your job is to administer it and to take into account you know recommendations and the community and everybody else but your job is to administer and you can always make recommendations so in the environment the last couple years with a lot of inflation the same question you're asking has come up with other cities which is what can we do and the answer is you can do studies uh you can put uh you know proposals on the table for the elected officials and the elected officials have to decide priorities if the elected officials want to um you know help retirees they can but you can't do that alone so really it's a conversation whether or not the board wants to make a recommendation to the city whether or not the city has money in its budget to to help retirees and uh you know it's also a political conversation because retirees can go knocking on the doors of elected officials and retirees can explain the fact that it has not been easy the last couple years to to be a retiree and I'll also point out to you that you know there was no right answer because different people are going to have different opinions and there are different priorities and different budgets and different cities do things differently and there are some cities that have never put in place a cola and would never consider a cola because these are retirees you get what you get there are other cities that do what they can cuz people live in the city because these are communities uh and they want to make sure that people have a standard of living based upon their career of service so there's no right answer and uh that's why um you know lawyers can't tell you what to do how does everybody feel about it so there's no question concerning the GI to public funds looks like he's Frozen no he's not all right is there any question concerning this uh regarding the gift of public funds excellent question so the Florida Statutes this is chapter 112 says you can't increase the regular benefit for retirees but when it comes to Cola benefits you can so you are allowed to have a cola adjustment and uh you would be in good company if the city has the money and can afford to do it and remember what the process has to be the board can't make a change at best we can make a recommendation and if uh the city commission wanted to do it then we would amend the ordinance we would give them we would draft it they would have to vote on it and I'm assuming that it's five Commissioners so you would need three Commissioners to vote to do an enhancement and they may welcome your your input here they may want the board to make recommendations on what they can do and some cities will come up with a dollar amount that we can spend X other cities aren't going to give a dollar amount they're going to say what is the iion board suggesting to us uh and they may you know may may be going back and forth but the the legal answer is you are absolutely allowed and lots of cities do it uh to increase Cola benefits for retirees okay is that in your experience typically a one time or is it uh consistently a cola benefit going forward so excellent question there are multiple ways of doing colas and what the actuary will tell you if you think it's going to be a one time but if there's a pattern of increasing it consistently then it gets more expensive because then the actuary has to fund it and let Patrick talk about this as a as a more expensive regular benefit you if if it's a one time then he can fund it a little bit differently but um you know these are these are the reasons why you don't get paid and why you get to make the tough choices and again there's no right answer retirees are going to want you to do something and I would agree with them that that's Absolut if I were a retiree I'd want you to do something too uh but at best you can just make a recommendation and uh you know you can have City staff if they have further questions consult with the actuary and the board can make our actuary available which we've already done with the the study he's done uh but you know he can also be available by phone calls and other consultations uh especially if there's new city management who may have other questions thank you well and um the the board the city has four times in the past I'm looking at the city code and they increased benefits one time in 1986 in 198 1993 1999 and 2003 and they haven't done anything since well October 1 2004 sorry 2004 is the last time that they've done a change so to Adam's point I don't have to put this in the valuation that oh you guys are going to do it every year it's not something the city does every year but they do do it periodically you know based on this it's it's not done every year but that the percentage continues forward right if they went up 5 perc it's GNA be 5 per. right if their benefit was a th and now it goes to 1,50 it stays at 1,50 that's right okay so it's not just a one time right true it doesn't increase every year just right one time increase right exactly yeah MOS you got have any thoughts no I I had asked with this a while back and he came out with a report you all see what's happened out there in the market everybody's amount is shrinking that's retied we their to fix so I'd like to see as much as we can do but not overboard so there was a cola increase and that would in increase the city's contribution right you're going to increase the retirees benefits so that liability goes up and it has to be made up with contributions and earnings so that's what this calculation did it said how can we maintain those higher benefits the city would have to increase their contribution right now 29 back to 33 if we did the if we did the the 1% per year retired the city would be at 32.4 and that's similar to what we said it was two years ago yeah are you talking Cola now well I'm I'm talking about the cola if we did the onetime increase equal to 1% per year retire then the city's cost would be a 32.4 for for next year and this board can't make a decision anyway we can only recommend yep so I I can tell you how I've felt about it so thank you for the information about when we've done it previously I've always understood our retirement um plan as exactly what it says is a defined benefit uh plan so when I've thought about this I've kind of been a little bit um unwilling to consider a cola because I thought the hus was on the employee to consider other retirement Investments to kind of diversify and Safeguard yourself against these inflationary pressures that we're seeing now um but it really is only an additional depending on which one you take into account 100 or $170,000 annually correct correct how does everybody else feel about it sorry I missed that how do you feel about it I think that we I wouldn't go into an automatic Cola that raises at a certain percent each year take it back to this board each year like we've done in the past there's a president there and continue that yeah he's not I suggest whether or not we give an increase well I guess the the options are we recommend not doing a cola right or we recommend to the commission to consider AA and which one or we make no recommendation at all which is option number one I just too many cities that they put a cola in effect and they get they regret it after a few years I don't know I'm kind of on the other side of the fence now you're you're on the side of the getting benefit yeah you're on here somewhere aren't you were you trying to figure out which one you were yeah I I would like to see us make a recommendation uh to offer the 5% Cola I think that a lot of retirees are suffering um yes they they should know that it was a a a fixed payment but they paid with dollars that are more valuable than the dollars we're paying back with right now and over the last five years I've looked at it and and there's been an accumulative effect of inflation 23% just in those five years Alone um I personally would like to see that I and and I throw that out there as somebody who hopes that someone will do that for me when I'm when I'm in that position but i' I'd like to see that happen say five 5% the 5% the option number one but that's for drop mov right yeah they would be included because they're treated as retirees in this plan versus number two would be be a 1% increase well number two is just that everybody would get a different increase depending on how long they've been retired so if you've been retired for two years you know you haven't had that full 23 3% yet so you would just get a 2% increase if you've been retired a long time you would get a 10% increase so it's 1% per year retired up to a maximum of 10% so not everybody would get 5 perc in the first scenario everybody gets 5 per. and what would be the increase in the city's contribution that you estimate going 29 if we did the 5% the 5% onetime increase that still stays with them but it's a onetime increase um the the new city contribution requirement for next year instead of the 29.0% of payroll it would be 31.1% and So based on your current payroll that that was estimated to be about $100,000 percentage pable last [Music] year so the for the current year you know it's uh it's 30.8 and last year it was 33.6 so if we kept it at 30.8 it would be something less than 5% yeah if you did a 4% increase let's say then then you'd be it would be you know roughly that same contribution you had this year so you want to stick with five or no I think you're making a good point that we we remain at at what our contribution is now and they get a slightly lower Cola but we've satisfied we we've helped the retirees out and we' stayed at the status quo I think it's a good a good plan I know it's not part of your study that you did but well I mean let let me just do the math really quick because because it does it is linear if you're doing a an ad hoc sure Cola like that sure so I I can calculate it yeah it would be one about 1.7% so you'd be at 30.7% of payroll and this year you're at 30.8 if if you did a onetime 4% increase for all of your reti it's a workable plan yeah I like it so related to this because we keep talking in percentages so when you do your valuation report do you take into account expected pay increases for that employee well the whole valuation when I project everybody's benefits has an assumed salary component we assume you're going to get salary increases each year we have that assumption when we project all your benefits but then when we come up with a total funding requirement this year as a dollar amount you know we divide it by the current payroll to get the percentage so does that make sense it does so I believe there was some discussion about an alternative scenario that would leave us at 30.7% of payroll if so is there a motion I'll make a motion that we uh that we offer the uh 4% in inrease the cola on a on a one time to recommend to the commission sorry yes recommend to the commission that that we' like that yeah okay there's a motion is there a second second there's a second any further discussion seeing none all in favor say I I I all opposed motion passes pron if you can hear me sorry Mr levenson's got something go ahead yes afternoon everyone um let's go to page 13 I'm sorry Burgess if I could just make a quick observation it might be useful for City staff if the actuary can you know do a cover letter and this is a suggestion summarizing what the board's recommendation so that it's easier for uh City staff and the Commissioners to understand the recommendation and that's just a suggestion yeah I can do that especially since the letter doesn't have the 4% on there so I'll do I'll do a letter that says with 4% um onetime increase and I can even do your stat of 23% or whatever and then say that the cost to the city would be X dollar I got my numbers from Department of Labor and statistics you can find it online so yeah can we take the approach to say that uh can we take the approach to say that if if the city maintained 30.8% contribution then that would allow us to do a 4% Cola increase good I know it's tomato tomato but details okay ready yes sir all right this is my third time at B so here we go um thank you and I'd like to take you to page um 13 uh and revisit what we did um when we made these changes to the investment policy the big picture is that we you look on page 13 we uh increased the domestic Equity allocation from 37% to 52% so that's a 15% increase and we reduce the exposure to International by 7% convertible bonds by 3% private real estate by 2% and we increase fixed Inc income by 2% so what we're doing here is drisking away from I would say the the uh the asymmetry that's evolving globally with trade with China uh and what's happening in Europe shifting money back into the us and that was the that was the purpose of it and the timing has actually been very good and if you look at the the horizontal bars there the the blue and yellow bars you can see that at the end of December as a result of this great stock market rally uh we were overweighted in uh equities um 57.9 versus 52 in February 14th we moved 2 point we moved 1.2 million out of uh domestic equity and dropped it down into fixed income so now the fixed income which you see was underweighted the blue versus the yellow we've now pushed that blue line across it's now at 24% and we brought the equity back to uh 52 so there's a a nice EX example of rebalancing and the the beauty of this is that as Patrick uh suggested we are now getting roughly a 6% yield of maturity on the bonds we haven't gotten those kind of returns in Bonds in over 20 years look at the 10-year average return for the bonds it's been around 1% it's been dismal and that's the one of the reasons why the state was pushing these plans to bring their expected returns down was because was the bond market and I think Patrick did summarized that well a few minutes ago so that's something we did um I think it's it's useful and we're we're trying to be proactive if you go to page 16 these numbers are a little dated uh but that's okay uh you can see that we have a significant amount of money now in the S&P 500 Index it's permitted in the in the new policy so we have in the large cap space uh we have a $3 million core position we have now roughly uh roughly $3 million in large cap value I'm giving you some updated numbers roughly three million in large cap growth so we have across the large cap Spectrum value core en large and growth it's an even uh balance and then within the midcap space uh we have a midcap allocation of 1.3 million through the Fidelity index within below that where you see con and steers Global infrastructure that's essentially a proxy for midcap uh value and the I shares convertible Bond blend is also a proxy for midcap growth so we have a nice balance now uh in the large cap midcap and then we have the rounds out with a small cap allocation of 1.3 million um if you go to page the next page page 17 I'll go to the summary just a minute um we've seen a nice Rebound with International and American uh europacific they move they're rotating out of China moving more money into uh the Japanese theater the soft spot we have right now regrettably is is is private real estate with American uh it's roughly represents about 5% of the program all of the income that's being generated from those properties is coming back to the bank and we're using it here we we are not reinvesting back into more units why with roughly 19% of the uh of their portfolio in office and the projected uh difficulties in that space over the next several probably next three years uh we're just going to have to ride that out now as the rest of the portfolio grows the equities and the fixed income the private real estate will become a smaller and smaller portion of the overall mix um we still have some money allocated to uh to high yield which is actually done well relative to the core uh Total Bond Fund and um you can see historically the high yield has has added significant percentage value okay talked about rebalancing we've talked about how things look let's go to page um let's go to the summary I'll wrap it up for you so you guys can make get home on page five we had a very good quarter my goodness um nine you earn $1.8 million um 99.3% net almost right over top of the Strategic model and you're ranked in the top 14th percenti now that's very impressive and uh I should point out that there are a lot of pension plans around the country that are in my view they've been overly engineered they have way too much going on in in in private equity and they have Commodities they're doing all kinds of wild stuff you're not doing that you you every 95% of this pension plan is liquid and we know what we have we know what it's worth and I can tell you there are a lot of plans out there that don't know what they've got they're not really sure where they what they're going to do Elizabeth Warren bless her heart is trying to get tighter scrutiny on in this whole scheme with trying to get more regulation of private Equity uh huge push back is going on right now the the SEC is trying to get pushed forward with some improvements in transparency especially with the the way they're compensated and the lobbyists they're all lawyers by the way Adam uh are doing a wonderful job representing their clients and TR trying to prevent any change in terms of reg regulating private uh equities the fiveyear uh so for the one-year return of of of uh 11.9% uh very good return a little bit behind the model but that has to do with some some of the balancing that took place in europ Pacific's one-year returns um and Voya but relative performance the fiveyear average was 7% 6.4 million was earned and that's pretty close to the uh 7.4% Target a lot of rebalancing was done in October uh to get us in line with the new IPS investment policy statement and I just gave you an update on what happened in in a few weeks ago um so that's about it uh are there any questions don't believe so 1.8 million one quarter pretty good huh yeah that's good sounds like a a bedding parlor someone asked me earlier what do I think's going to happen uh where's where the dark clouds on the horizon you know there's one and a half to2 trillion dollar in commercial loans they're coming due uh there it's already happening but during the next several two to three years there's going to be a lot of stress in the in the mortgage commercial mortgage Market you're going to see defaults you're going to see bankruptcies you're going to see and you're going to see other institutions pouncing on these revalued properties whether it be uh in San Francisco or uh you know the rikeman family very famous family uh real estate family is uh jumping all over the San Francisco uh properties that have gone down 40 50% so we'll come through it we've been through the these Cycles before uh the final note on American core their balance sheet solid they only have about 181 19% debt uh a lot of it's term debt and so if you look at the term sheet if you go out the next three four five years there's nothing on the horizon that that I'm concerned about in terms of their ability to sustain the trust and that's it well there are no other questions do we need to accept the report I'll make a motion to accept the report as given there's a motion and second on the floor any further discussion seeing none all in favor say I I I all opposed motion passes Mr lson I believe you're up good afternoon trustees two real quick items the first item is a memo in our in your packet which probably has our office logo on it which is the the the palm tree and it deals with form ones and trustees who've been on the board for a while you know every year you file your form one and in the way you've done it in the past is you filed it with the supervisor of elections in the county where you reside and Florida has I think 63 counties 62 counties so this was decentralized and what the legislature decided this year which is new is from now on you're going to file it with the up in Tallahassee with the uh Commission on ethics so all of the forms will be available able for people to review online and it'll be easier for people to see them so I'm just reinforcing it's important to take it seriously make sure if you have any questions we're happy to answer any of the questions and um we'll remind you about this at the next meeting because it's due uh in June and we'll make sure you don't fall between the cracks so that's part of the update the other part of the update is that for certain elected officials um the the forms are a little bit different and they have to provide more transparency on their assets and there's a little bit of controversy because some elected officials and mayors are saying I don't want this is nobody's business and I'm resigning but that does not relate to the regular pension trustees the additional requirements are for uh certain elected officials Etc so are there any questions about the form one and uh we're always available behind the scenes to take calls as long as there are no questions on the the changed methodology for filing the form one and the only other item is the the issue and I'm not sure if he's still in the room because I can't see but uh everybody who's aware of the the lunch meeting we had where we spent a lot of time walking through uh the capabilities of the pension resource center and why it's a very important function and you don't want to have to do this more than you need to you want a long-standing relationship with someone that's going to be a fiduciary so uh to let you know at the police meeting they decided to hire to authorize the contracts to be finalized and then they're going to vote on that and ratify it at their next board meeting and the firefighters this morning um you know their meeting was before the lunch so they're going to do a special board meeting and what I'm telling you is if you want to vote on it today I encourage you to do that I encourage you to ask any other questions that you might have and if you vote on it today we'll proceed with the contract and then you'll vote to ratify the contract at your next meeting and it's always good to have plenty of time for the transition so that way there are no surprises and everything runs smoothly so that will conclude the attorney's report unless you have any questions so Mr Bush I know you weren't here um but what Mr levenson said is accurate we had a joint meeting um and the vote was um to in essence refer it to the different pension boards um for a decision on hiring um an administrator and they're here um so with that said unless you have any questions or those of us that were in attendance have any additional questions i' entertain a motion so there's a motion on the floor motion to hire motion to hire a third party administr yes sir yes just just any administrator or I'm just trying to make sure I'm clear well we we only had one response yeah I'll second the motion okay good clarification sir all right there's a motion second on the floor any further discussion all in favor say I I all oppos motion passes all right moving on to quarterly expenditures Miss Kaiser you don't know what from memory nothing unusual expenditures um see if it'll uh this computer we need to get more memory on it noted um nothing unusual you should have it in your packet be able to take a look at the quarterly expenditures um you will see expenditure yes it looks like that um you will see the expenditures for the year for post and supplies for the pension administrator and for liability those are the on Patrick's report it said 1% of payroll is to admin expenses that's those EXP expenses plus the attorney expenses plus the actuary expenses that's what man and any conferences or that you might go that reminds me when is the conference coming up there's one in Fall um in June I I haven't seen any information yet they have the dat but no registration that brings up another question we've always gone through you for going to those we'll be going through you guys not going forward is that correct it's a is yes to get your hotel right okay just just trying to get the the details here so that's how it work going forward there you go yeah okay make a motion to accept theend I'll make a motion that we accept the financial report as given there a second second there's a motion in a second any further discussion seeing none all in favor say I I I all opposed motion passes any public comments seeing none we'll entertain a motion to adjourn uh one one other business uh meeting dates on June 4th is our next meeting and because this room is occupied at 4:30 I believe we had to move our meeting up um to 2 o'clock instead of starting at 3:30 it'll start at 2 o'clock but I'll put notices on your cers thank you for that motion to adjourn stay adjourned thanks everybody