MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 20, 2025 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Secretary Shayla Griggs, and Jan Thornburg. Others: Attorney Stuart Kaufman, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: Treasurer Kelly Strickland, Trustee Robert Reardon, and Trustee Barry Keeler. 1. CALL MEETING TO ORDER: Chair Chapdelain called the City of Sarasota (City), General Employees Pension Plan (Plan) Board of Trustees Regular meeting to order at 10:32 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs. The Board and meeting attendees stated the Pledge of Allegiance. 3. PLEDGE OF CIMILITY: Presenter(s): Chair Chapdelain. Chair Chapdelain stated for the record, "We may disagree, but we will always be respectful to one another. We will direct all comments to issues, and we will not engage in personal attacks." 4. ROLL CALL: Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin called roll. Treasurer Strickland, Trustee Reardon, and' Trustee Keeler were absent. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the General Employees' Pension Plan Board of Trustees Regular Meeting of January 23, 2025. Presenter(s): Chair Chapdelain. Vice Chair Nicholas made a motion to approve the minutes of the January 20, 2025, Regular Meeting; Secretary Griggs seconded the motion. The motion passed unanimously (4-0). 7. APPROVAL OF RETIREMENT REQUESTIS): 7.1. Presentation and Discussion: The DROP Retirement Request of Dennis Kennedy. Presenter: Debra Martin, Pension Plans Administrator. Book 1 Page 474 02-20-2025 10:30 a.m. Book 1 Page 475 02-20-2025 10:30 a.m. Pension Plans Administrator Martin advised that Mr. Kennedy requests to enter the DROP with 19.66 years of service at age 65, effective February 1, 2025; he selected the 100% to joint annuitant option. Trustee Thornburg made a motion to approve Mr. Kennedy's request; Secretary Griggs seconded the motion. The motion passed unanimously (4-0). 8. INVESTMENT PERFORMANCE REVIEW: None. 9. UNFINISHED BUSINESS: None. 10. NEW BUSINESS: 10.1. Presentation and Discussion Re: Mauldin & Jenkins, Financial Statements for the Fiscal Years Ending September 30, 2024, and 2023. Presenter(s): Daniel Anderson, CPA, Partner; Jennifer Trotter, Senior Manager; Mauldin & Jenkins. Daniel Anderson and Jennifer Trotter of Mauldin & Jenkins appeared before the Board and introduced themselves and their presentation. Mr. Anderson briefly reviewed the Auditor's Discussion and Analysis, noting that the opinion is unmodified, which is the highest assurance an auditor can render; the audit was performed under generally accepted auditing standards as well as Government Auditing Standards, although management remains responsible for the financial statements and accounting practices. In the Other Auditor's Report section of the financial statements is the compliance statement which discusses the auditor's tests and concerns over internal controls with respect to laws, rules, and regulations; this section only lists negative findings and deficiencies identified in the course of the audit, which Mauldin & Jenkins found none in the 2024 audit. He briefly reviewed each of the Required Communications listed on pages 5 and 6 of the Auditor's Discussion ard Analysis, highlighting that the fair value of investments and the actuarially determined employer contributions, the 2 most sensitive accounting estimates, were reasonable and in accordance with accounting standards. Turning to the financial statements, Mr. Anderson explained that the Management's Discussion and Analysis provides comparative data from the current and prior fiscal years, as well as management's narrative of activity which resulted in changes in the statement of net position. On the Statement of Changes in Fiduciary Net Position, Mr. Anderson noted the net position increase of $32 million for fiscal year 2024 from the prior fiscal year was largely due to annualized investment gains. As stated in Note 5. Net Pension Liability, the net pension liability in Fiscal Year 2024 was $27 million less than in Fiscal Year 2023 resulting in a fiduciary net position as a percentage of the total pension liability of approximately 84%; he asserted that actuaries consider a plan to be healthy when its funded ratio is above 70%, provided that plan is able to make its required payments. The Discount Rate section of Note 5 shows how net pension liability changes when the expected rate of investment return is increased or decreased by 1%. Regarding the expected rate of investment return (EROR), Mr. Anderson commented that the Plan's declared EROR of 6.2% is conservative compared to the Florida Retirement System's (FRS's) rate of 6.7%; at least 1 of his clients has an EROR of less than 6%. Attorney Kaufman added that an EROR between 6% and 6.2% is reasonable for closed plans. Mr. Anderson noted that the Schedule Of Changes In The Plan's Net Pension Liability And Related Ratios helps to contextualize the expected rate of return as being analyzed over a long period of time. Secretary Griggs made a motion to accept the Financial Statements as presented by Mauldin & Jenkins; Vice Chair Nicholas seconded the motion. The motion passed unanimously (4-0). 11. ATTORNEY MATTERS: Attorney Kaufman advised that he is reviewing the Summary Plan Description as required to be done every 2 years and will present an updated document at the Board's meeting on March 27, 2025. Attorney Kaufman and Secretary Griggs reported that the City Commission approved the proposed ordinance liberalizing the Board's investment authority on first reading and with no comments or questions; the second reading will be at the City Commission's March 3, 2025, meeting. Attorney Kaufman reported a circumstance in which a DROP participant inquired as to whether they could resume participation in the Plan after leaving the DROP. He explained that the Plan allows participants to resume employment after retiring, as well as to receive in-service distributions.. Under the Internal Revenue Service Regulation, a 72(t) distribution allows participants who are at least age 55 vhen they separate from service to not be subject to a 10% early-withdrawal penalty. Attorey Kaufman clarified that the Plan's DROP provisions do not allow distributions until after termination, and there would need to be a break in service; he suggested the Board could amend the controlling provisions. Attorney Kaufman brought the matter to the Board's attention to determine if there was interest in addressing the circumstance. The Board, Attorney Kaufman, and Pension Plans Administrator Martin discussed the matter further. City ordinances prohibit employees who separate from service and are then rehired by the City from rejoining the Plan as a member, and instead must join the FRS. The participant in question has been a long-term City employee and their 5-year DROP period concludes at the end of 2025, which will be prior to the participant reaching age 59.5; the participant expressed interest in remaining employed for the City, however the current controlling Plan provisions prohibit them from receiving their pension benefits until they separate and reach age 59.5. While the Board could take no action, it could make a single-event exception to allow an in-service distribution, or it could amend the controlling provisions to apply to all participants. Senior Pension Analyst Anthony Ferrer appeared before the Board and advised that he spoke with both the participant in question and the participant's manager; both would like the participant to remain employed with the City after the participant's DROP period ends on January 1, 2026. The participant has been employed with the City for over 34 years and will be 57 years old as of January 1, 2026. The participant and the participant's manager estimate the participant could remain employed for an additional 3 to 6 years after the DROP period ends. Attorney Kaufman suggested the Plan could extend the maximum DROP period to more than 5y years; Secretary Griggs and Pension Plans Administrator Martin noted that the FRS extended the DROP period for police officers to 8 years, however the maximum DROP period for the City's Police Officers' Pension Plan is 5 years. Informally, the Board expressed reluctance to amend the Plan for the benefit of a single participant, especially considering the Participant did not request a distribution of their benefits prior to age 59.5. a To Trustee Thornburg's questions, Attorney Kaufman advised that, to effectuate a distribution of retirement benefits, an employee would need a bona fide break in service with no pre-agreement for re-employment. Because the IRS allows in-service distributions, the employee could return to work right away. Chair Chapdelain suggested that Pension Administration advise employees before they enter the DROP that they would not be able to take monthly distributions prior to age 59.5. To Pension Plans Administrator Martin's and Senior Pension Analyst Ferrer's questions, Attorney Kaufman advised that the participant is able to take a distribution of their DROP funds after termination and rehire; the DROP funds would need to remain in the Plan until the employee separated from service or rolled the funds into another qualified retirement plan. Book 1 Page 476 02-20-2025 10:30 a.m. Book 1 Page 477 02-20-2025 10:30 a.m. Attorney Kaufman asked if the Board would consider starting its March 27, 2025, Membership meeting at 10:00am as he has travel plans which could conflict if that meeting were to run long. The Board informally agreed. Chair Chapdelain and Secretary Griggs expressed their appreciation to Mauldin & Jenkins for its diligence and service. 12. OTHER MATTERS: 12.1. Presentation and Discussion Re: Asset Allocation as of February 13, 2025. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Asset Allocation as of February 13, 2025; the Board had no questions. 13. ADJOURN. Chair Chapdelain adjourned the General Employees' Pension Plan Board of Trustees meeting at 10:57 a.m. Sh Chair MOnye Ryan Chapdelain Secretary Shayla Griggs