MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES ANNUAL MEMBERSHIP MEETING OF MARCH 20, 2017 Present: Chair Barry Keeler, Vice Chair Ryan Chapdelain, Secretary Pamela Nadalini, Treasurer Kelly Strickland, Trustees Gretchen Schneider (arrived at 12:02 p.m.) and Kari McVaugh (arrived at 12:02 p.m.) Others: Attorney Scott Christiansen, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Lois Belle Absent: Trustee Bonnie Wagner 1. CALL MEETING TO ORDER: Chair Keeler called the meeting to order at 12:01 p.m. 2. PLEDGE OF CIVILITY: Chair Keeler read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Boards Meeting Protocols and Pledge of Civility." Trustees Schneider and McVaugh arrived at 12:02 p.m. 3. ROLL CALL: Secretary Nadalini called the roll and a quorum of the Trustees in attendance was noted. 4. PUBLIC INPUT: None 5. APPROVAL OF THE MINUTES: 5.1. Approval Re: Minutes of General Employees' Pension Plan Board of Trustees Regular Meeting of February 13, 2017 AI motion was made by Vice Chair Chapdelain, seconded by Trustee Schneider to approve the minutes of the General Employees' Pension Plan Board of Trustees Regular Meeting of February 13, 2017. Motion carried unanimously (6-0). 6. BOARD APPOINTMENTS: 6.1. Presentation and Discussion Re: Nomination and Election to the General Employees' Pension Board Presenter(s): Secretary Nadalini Secretary Nadalini presented details concerning the seat currently held by Trustee McVaugh and indicated that the seat term is expiring June 30, 2017; that iti is a seat elected by members oft the Plan; that her office will be sending out election information to members of the Plan to solicit interest; that the material is for informational purposes only does not require approval by the Board. There were no questions from the Board. Book 1 Page 55 3/20/17 12:00 P.M. Book 1 Page 56 3/20/17 12:00 P.M. 7. BOARD OF TRUSTEES' REPORTS: 7.1. Presentation and Discussion Re: Attendance Report Presenter(s): Secretary Nadalini Secretary Nadalini presented the Attendance Report to the Board; that it is a requirement that annual Attendance Report is presented to the Board and the members of the Plan; that based on the records and as reflected in the approved monthly Board Minutes throughout 2016. 7.2. Presentation and Discussion Re: Highlights of Pension Activity for 2016 Presenter(s): Secretary Nadalini Secretary Nadalini presented the highlights of Pension Activity for 2016 of notable highlights of the Board to the Membership; Secretary Nadalini stated she wished more Members were in attendance but that it is difficult with a mid-day meeting as many of the Members are working. There were no questions from the Board. 8. APPROVAL OF RETIREMENT REQUESTIS): 8.1. Approval Re: Normal Retirement Request of Charles Deubert Presenter(s): Senior Pension Analyst Ferrer Senior Pension Analyst Ferrer stated that Charles Deubert requested a retirement date of March 1, 2017; that Mr. Deubert is 65 years of age, has 12.16 years of service, and elected the Lifetime Option. Ar motion was made by Trustee Schneider, seconded by' Vice Chair Chapdelain for the Board to approve the retirement request of Charles Deubert. Motion carried unanimously (6-0). 8.2. Approval Re: Normal Retirement Request of Roger Maikranz Presenter(s): Senior Pension Analyst Ferrer Senior Pension Analyst Ferrer stated that Roger Maikranz requested a retirement date of March 1, 2017; that Mr. Maikranz is 66 years of age, has 22.59 years of service, and elected the one-time Lump Sum Distribution Option. A motion was made by Trustee Schneider, seconded by Trustee McVaugh for the Board to approve the retirement request of Roger Maikranz. Motion carried unanimously (6-0). 9. INVESTMENT PERFORMANCE REVIEW: None 10. UNFINISHED BUSINESS 10.1. Continued Discussion Re: Operating Rules and Procedures Presenter(s): Attorney Scott Christiansen, Christiansen & Dehner Attorney Christiansen stated the Operating Rules and Procedures of the General Employees' Pension Plan Board of Trustees have been discussed over the course of several meetings and asked how the Board would like to proceed with the continued discussion. Treasurer Strickland requested Attorney Christiansen go page by page and Attorney Christiansen asked if there were any questions or issues with regard to page one. In response to a question from Treasurer Strickland asking if "Plan Administrator" could be left in paragraph 1, Attorney Christiansen stated that the Board does not have the authority to choose the Plan Administrator which is the responsibility of the City Auditor and Clerk's office, as per the City Charter. Discussion ensued about the Board's scope of authority with regard to Plan Administration which is different than Plan Administrator. Secretary Nadalini stated on the record that the document being discussed is the General Employees' Board of Trustees Operating Rules and Procedures and, whatever is adopted today or in future, that this document cannot interfere or negate the City Auditor and Clerk's procedures. Attorney Christiansen asked if there were any questions or issues with regard to page two and stated that section 1.6, will be moved to section 1.10. There were no further changes to page two. With regard to page three, Attorney Christiansen stated that he would make language consistent throughout the document. Treasurer Strickland requested that "she" be added as well as "he" in all applicable spots. Discussion ensued about the scope of potential nominations for Trustees as designed by location and if that should be expanded but the language is taken from City Code; that any changes would need to start with Ordinance. Discussion ensued around if there are any issues with regard to certain unions going into the Defined Benefit Plan and Stacie Mason, Human Resources Director, came before the Board to state that no issue exists; that the Defined Benefit Plan is closed and any new hires are enrolled into the Defined Contribution Plan only. In response to a question from Chair Keeler asking where the new Parks and Recreation Department falls with regard to representation, Attorney Christiansen stated that the Board does have a catch all seat to ensure all members have representation. Discussion ensued about revisiting the Ordinance based on the fact that the Plan is a closed Plan which narrows the pool of eligible candidates to serve as Trustees. Secretary Nadalini stated that her office would follow up on this; that she is already in conversation with the City Attorney's office with regard to updating these ordinances. Attorney Christiansen asked how the Board felt about electronic ballots. There was Board consensus to remove this item as it is not in-line with past practice and not all members have access to voting electronically. Attorney Christiansen stated that section 1.11 is being added to all Operating Rules and Procedures; that the Operating Rules and Procedures should be a document as to how the Board operates the Plan as well as pertinent information for how a Trustee should perform his or her work. In response to a question from Vice Chair Chapdelain asking if the Plan Administrator will maintain Florida Public Pension Trustees Association (FPPTA) membership dues, Secretary Nadalini stated that the Plan Administrator will continue to pay the Board membership dues but that Trustees are responsible for individual travel requests and maintenance of individual membership requirements; that the Pension Plans. Administration Division is available to assist. Secretary Nadalini cautioned the Board against expectation that the Pension Plans Administration office be responsible; that it is the responsibility of the Trustee to ensure his or her individual dues are paid. Discussion ensued around timing of when the Board should expect to receive meeting materials and the feasibility and potential issues of putting in hard deadlines. There was Board consensus to put in a three day deadlines if administratively possible. Section 2.5.B of the Operating Rules and Procedures specifies a Records Management Liaison Officer. Attorney Christiansen stated that his office will prepare a resolution to add Pamela M. Nadalini as the Board's Records Management Liaison Officer. Book 1 Page 57 3/20/17 12:00 P.M. Book 1 Page 58 3/20/17 12:00 P.M. Board consensus to continue discussion at the April meeting. 11. NEW BUSINESS: 11.1. Presentation and Discussion Re: Independent Auditor's Report for the Fiscal Year Ending September 30, 2016 Presenter(s): Alison Wester, CPA Partner, Mauldin & Jenkins, LLC (via teleconference) Alison Wester, CPA Partner, Mauldin & Jenkins, LLC, came before the board via teleconference to present the Independent Auditor's Report for Fiscal Year ending September 30, 2016 and stated that the audit results were a "clean opinion". Ms. Wester presented the various components of the report and stated that this year there are new disclosures on the fair value measurement and how the different investment products are measured in terms of fair value hierarchy. Ms. Wester stated that required supplementary information was also included in presentation material to the Board; that with regard to the internal control over financial reporting the next opinion stated there were findings this year; that there was a significant deficiency related to the actuarial reporting and two material weaknesses in relation to financial reporting, the first weakness was in financial reporting and the second weakness was in investment reconciliation. In response to a question asked by Treasurer Strickland asking about the significant deficiency, Ms. Wester stated the cause was due to the actuarial database not being closed out properly; that the recommendation is to ensure data is kept current (within 60 days) throughout the year. Secretary Nadalini assured the Board that both she and Staff will be working closely with Gabriel Roeder Smith and Company going forward. Ms. Wester stated that audit criteria is essentially that internal controls should be in place that ensure the financial statements properly present the financial position and results of operations of the Fund in accordance with Generally Accepted Accounting Principles (GAAP) and that all the fund transactions are reported in the proper period; that the Auditors detected several misstatements during the audit which gave rise to the findings, entries either not recorded or recorded erroneously aggregated to approximately $571,000. Recommendation for management to review corresponding detail to ensure accuracy of financial records. In response to a question asked by Treasurer Strickland asking the reason the professional opinion designated two material weaknesses versus significant deficiencies, Ms. Wester stated the classifications were due to both the dollar amount and qualitative nature of the error identified that required adjustment. Ms. Wester discussed best practices going forward and Secretary Nadalini concurred with the Auditor's findings and recommendations and stated that this is not a structural issue rather a personnel matter that she is working through with the City Attorney and Human Resources; that she and Staff are committed to resolving issues going forward; that she has brought in a Certified Public Accountant to reconstruct the books and accounts and introduced Cynthia Akersloot. Ms. Akersloot came before the Board and provided a brief overview of her qualifications. Secretary Nadalini stated that the additional cost of bringing in Ms. Akersloot will be paid out of the City Auditor and Clerk's budget, not the Fund. In response to a question asked by Chair Keeler asking if there is anything the Board can do to ensure material misstatements do not happen again, Secretary Nadalini stated that she and Staff will work to address these concerns. Ms. Wester concluded her presentation with a request to the Board to submit an additional invoice for fees due to the extensive nature of the Audit's findings. The Board acknowledged and requested Ms. Wester submit an invoice for review at the April meeting. A motion was made by Treasurer Strickland, seconded by Secretary/Treasurer Nadalini to accept the Independent Auditor's Financial Statement for the Fiscal Years ended September 30, 2016 and 2015. Motion carried 6-0. 11.2. Presentation and Discussion Re: Certificate of Tax Exemption Presenter(s): Attorney Scott Christiansen, Christiansen & Dehner Attorney Christiansen stated that the Board currently uses the City of Sarasota's Tax Exemption Certificate when traveling on business; that there is no issue with current procedures; that the Board qualifies for its own certificate but it is not necessary. Treasurer Strickland suggested the General Employees' Pension Plan Board of Trustees get its own Tax Exemption Certificate. There was Board consensus to discuss at the April meeting. 12. ATTORNEY MATTERS: Attorney Christiansen stated that Ordinance No. 16-5185 is scheduled on the City Commission Meeting Agenda for March 20, 2017 for second reading. 13. OTHER MATTERS: Chair Keeler asked about the status for the Projected Retirement Income Statement and stated that he is receiving questions from Members regarding. Secretary Nadalini stated that she will into the matter. 14. ADJOURN. Chair Keeler adjourned the General Employees' Pension Plan Board of Trustees Annual Membership Meeting at 2:08 p.m. BAPAPKccee C.P.P.T. MMS GO Chair Barry Keeler Secretary Pamela Nadalini Book 1 Page 59 3/20/17 12:00 P.M.