MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JUNE 19, 2019 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer: Shayla Griggs, Trustee Charles Joseph and Trustee Scott Snow Others: Attorney David Robinson, Pension Plans Administrator Debra Martin, and Senior Pension Analyst Anthony Ferrer Absent: 1. CALL THE MEETING TO ORDER: Chair Hartley called the meeting to order at 9:00 a.m. 2. PLEDGE OF CIVILITY: Trustee Joseph read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitied "City Commission and Advisory Board Meeting Protocols and Pledge of Civility." 3. PUBLICINPUT None 4. APPROVAL OF MINUTES: 4.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of May 22, 2019. A motion was made by Trustee Joseph and seconded by Vice Chair Roberson to approve the Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of May 22, 2019. Motion carried unanimously (5-0). 5. INVESTMENT PERFORMANCE REVIEW: 5.1. Presentation and Discussion Re: Cushing Asset Management Investment Performance as of March 31, 2019 Presenter: Paul Euseppi, Portfolio Manager & Partner Cushing Asset Management Mr. Euseppi came before the Board and introduced himself. Mr. Euseppi provided an overview of the firm; Cushing Asset Management is a midstream energy investment manager. Mr. Euseppi noted year to date the Portfolio, Net of Fees, is up 12.18%; the Alerian MLP Index TR is up 13.95%; Book 1 Page 148 06-19-19 9:00 a.m. Book 1 Page 149 06-19-19 9:00 a.m. since it's initial investment in 2015, the Portfolio is down 7.17% net of fees. Mr. Euseppi gave an overview of investment strategies and performance; presented a brief market update, and discussed the structural evolution of the midstream company asset class. Chair Hartley asked for a historical summary of the Portfolio since inception in 2015, to include the initial investment, gains and losses noting the Portfolio has not done well since inception. Euseppi responded the information will be provided with a breakdown of gains, losses, dividends and expenses. In response to a question from Chair Hartley on the Portfolio's poor performance and why should the Plan not reallocate, Mr. Euseppi replied the space has gone through the worst of the poor performance; the fundamentals are much stronger, the companies are stronger and safer, dividends are growing again; production and exports in the U.S. are hitting an all-time high. Trustee Joseph asked if the ending market value of 6.2 million; with an initial investment of 6.7 million also includes the additional investment made in 2017, Mr. Euseppi responded yes, it includes any contributions that have been made; the account is down 7% since inception. Trustee Snow posed a question to Senior Pension Analyst Anthony Ferrer for confirmation that a total value of approximately 7.8 million from the Fund was invested in MLP's Mr. Ferrer replied yes. Chair Hartley asked if there have been any recent changes in the firm and Mr. Euseppi noted only one portfolio manager left in 2018-year end to start his own business. Trustee Snow inquired on tariff impacts and Mr. Euseppi noted there is an effect on high quality steel pipes used for pipe lines, there is some cost inflation and there is impact on the businesses. Further discussion ensued. In response to a question from Chair Hartley asking for clarification on the percentage the portfolio is down in the second quarter; Mr. Euseppi replied he would review the figures and provide a response back to Pension Plans Administrator Debra Martin. The Board thanked Mr. Euseppi for his presentation. 5.2. Presentation and Discussion Re: Oak Ridge Investment Performance as of March 31, 2019 Presenter(s): Brent Troy, Vice President & Regional Director, Rob McVicker, Executive Vice President and Senior Portfolio Manager, Oak Ridge Investment Mr. Troy and Mr. McVicker came before the Board and introduced themselves. Mr. Troy gave an overview of Oak Ridge Investment and discussed the firm's management of small mid growth; the goal is to provide high quality U.S. domestic growth exposure; goal of providing high risk adjusted returns over full market cycles; a review of 2017-2018 fiscal year performance net of fees, with a return of 30.09% and that from the end of last fiscal year through the end of May, net portfolio was down 11.15%. Mr. McVicker discussed the philosophy of Oak Ridge Investment Management, reviewed the characteristics and positioning of the portfolio; year to date return, net of fees, 14.89%, while the benchmark Russell 2000 returned 17.14% and the Russell 2500 returned at 18.99% Chair Hartley asked if the Russell 2500 is a better index for the smaller companies Mr. McVicker stated of the Russell 2500, the 500 names that are above the Russell 2000 are 50% of the market cap of the total Russell 2500 growth index. Chair Hartley inquired about Omnicell, Mr. McVicker replied Omnicell provides bingo card-type prescription medication carts that are used in hospitals. Chair Hartley asked if there were any staff changes in the company and Mr. McVicker noted no changes in the past twenty-four months. The Board thanked Mr. Troy and Mr. McVicker for their presentation. 6. UNFINISHED BUSINESS: None 7. NEW BUSINESS: 7.1. Presentation and Discussion Re: TMI Trust Company Acquisition of Salem Trust Presenter: Mark Rhein, Chief Executive Officer Salem Trust Mr. Rhein came before the Board and introduced himself. Mr. Rhein reviewed the change in ownership in Salem Trust; Tony Guthrie was involved with a management group that attempted to buy Salem Trust in 2006; since that period, conversations have ensued with the previous owner of Salem Trust, USFS, by Tony Guthrie and his companies to buy Salem Trust; the change of ownership does not mean a change in strategy or focus because the direct relationship that Tony has had with Salem Trust through the years in his continued effort to buy Salem Trust. Mr. Rhein stated the acquisition, technically, was not approved by state regulators; the regulators did not object to the acquisition; Salem Trust and the new company, TMI holding, still reports up to the Florida Office of Financial regulation in Tallahassee; the regulatory oversite and the guidance associated with the regulatory entities has not changed; when this acquisition was brought to the regulators attention, it was given a scrupulous review and there were no objections for the acquisition to move forward. Mr. Rhein noted this represents a change of ownership, it does not represent immediately a change of systems; Mr. Rhein stated he is still part of the executive management team; TMI is looking to grow the business; the same systems will be in place however, some of the processes such as money movements will change at some point in time. Vice Chair Roberson posed the question if any point in time the system aspect is expected to change, would there be advanced discussion Mr. Rhein replied there is a contract in plaçe with the same systems provider that currently supports Salem Trust; TMI in the process of putting together a transition plan; a change to systems provider would likely be an event that need not be disclosed; the goal is to ensure clients remain informed; TMI will move from current systems provider Advantage FIS, to the new: system in February. Vice Chair Roberson posed the question if there are issues with data security Mr. Rhein stated none. Attorney Robinson asked if there were to be any changes in services or fees Mr. Rhein replied no. Attorney Robinson noted the contract would be reviewed to ensure no changes are necessary. The Board thanked Mr. Rhein. 7.2. Fiduciary Insurance Coverage Current Limits Book 1 Page 150 06-19-19 9:00 a.m. Book 1 Page 151 06-19-19 9:00 a.m. Presenter: Debra Martin, Pension Plans Administrator Ms. Martin presented the current insurance limits and insurance quotes for the next renewal period moving forward: Documents labeled 7.2.A Commercial Insurance; covers office, equipment, business personal property (includes Accounts Receivable and Valuable Papers coverage; 2018-19 Premium $851.85; 2019-20 proposed premium by the same provider is $856.85 Attorney Robinson noted regarding property held in the building, posed the question does the Board own the computers or are the items City property. Consensus for staff to review this for all Plans. Ms. Martin presented document labeled 7.2 B Crime; covers employee theft; 2018-19 Premium $798.00; 2019-20 Proposed Premium $798.00 and document labeled 7.2 C Umbrella; Excess coverage (pays on behalf of the insured those sums in excess of the retention - i.e.: deductile),2018-19 Premium $1,465;2019-20 Proposed $1,465; aggregate limit four million; Ms. Martin noted that the Firefighter Pension Plan is the only City Defined Benefit Pension Plan that has the other umbrella insurance, Attorney Robinson stated trustees who serve as employee trustees may be covered by the city's workers compensation plan; any trustees who serve and are not necessarily employees, there would be no coverage without Umbrella Policy. Chair Hartley posed the question are the limits appropriate Attorney Robinson replied if something were to occur, often there would be high value losses, so the amounts are appropriate and reasonable. Ms. Martin presented document labeled 7.2 D Fiduciary Insurance; 2018-19 Premium $29,027.00 ($5m limit) Proposed Premiums: $28,854.00 with $5m Limit and $50,000 deductible $25,953.00 with $4m Limit and $50,000 deductible $23,747.00 with $3m Limit and $25,000 deductible $19,374.00 with $2m Limit and $25,000 deductible Attorney Robinson noted if the Board was to make an error that caused a loss to the Plan, then the Fiduciary Insurance would cover the claim. The most obvious error that could happen is an investment error, if the Board decided to invest in a company with a huge investment loss and it was found that was an unreasonable decision to invest that would be a covered error; that is quite unlikely to happen as there are consultants and investment managers who are giving recommendations, the attorney advises to never go against the recommendation of the consultants or investment managers, sO if there were some investment error that occurred than the Board would have recourse against the consultant or the manager who made the recommendation therefore, it is difficult to foresee a situation where the Board would have liability for an investment error that wouldn't be covered by one of the professionals. Attorney Robinson discussed the other possibility for loss is the calçulation of benefits, particularly if the Fund overpays benefits. If the Fund underpays, that is easily cured, it is not an investment loss or loss to the Fund, the Plan will just pay the right amount of the benefit. If the Fund overpays then have taken money out of the Fund that should not have been taken out of the Fund and put money in someone's pocket who is not entitled to it. The question is what the process for calculation of is of benefits as most Boards have the actuary perform the calculation. There is some difference from Board to Board as to what information the actuary is in control of and what information is first calculated by the Board. Depending on how much the Board is involved in the calculation of benefits, it is important to have solid insurance coverage. Discussion ensued. Chair Hartley left Chambers at 10:26 a.m. and returned at 10:30 a.m. Attorney Robinson noted a closed Plan with all participants retired, looking almost exclusively with errors related to investments which would almost certainly be recoverable from one of the advisors; the Board may be better served with a lower retention option. Discussion ensued. Consensus from the Board to renew the Crime and Umbrella Insurance, review the necessity of the Commercial Insurance (for all Boards) and staff will get additional quotes for the Fiduciary insurance at two million with a $ 5000 retention and three-millon-dollar coverage range with a $5000 retention. The new quotes, along with current quotes will be presented at the. July meeting. In response to a question posed by Chair Hartley at the May meeting regarding the city allocations number reported in the prior year, Ms. Martin stated earlier in the prior year, there were temporary employees that were paid by the City and then the Pension Plan reimbursed the City the proportionate share for the expense. 8. ATTORNEY MATTERS: Attorney Robinson reminded the Board the Form 1 Financial Disclosures are due on July 1, 2019 and can now be submitted online. Attorney Robinson noted The Firefighters Cancer Presumption Bill will not have any impact as the Plan is closed. The ten-year reach back concemns the employer, not the Pension Board, as the reach back states if the employee continues to remain covered under the employer's health insurance, then the employer is obligated for a ten-year period to pay the benefits under the Firefighters Cancer Presumption Bill. 9. OTHER MATTERS: 10. ADJOURN: Chair Hartley adjourned the Firefighters' Pension Plan Board of Trustees Regular Meeting at 11:05 a.m. Bbnlid Chair Michael Hartley Vice Chair Shelia Roberson Book 1 Page 152 06-19-19 9:00 a.m.