MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JANUARY 27, 2023 Present: Chair Demetri Konstantopoulos, Vice Chair Johnathan Todd, Secretary/Treasurer Shayla Griggs, and Trustee Ronnie K. Baty. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: Trustee Joseph "Jody" Hudgins 1. CALL MEETING TO ORDER: Presenter(s): Chair Konstantopoulos. Chair Konstantopoulos called the regular meeting of the Police Officers' Pension Plan (Plan) Board of Trustees to order at 8:16 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Chair Konstantopoulos. Chair Konstantopoulos led the Board and those in attendance in the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: Presenter(s): Chair Konstantopoulos. Chair Konstantopoulos stated for the record, "We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks." 4. ROLL CALL: Presenter: Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll. All trustees were present. 5. PUBLIC INPUT: None. 6. APPROVAL OF MINUTES: 6.1. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Regular Meeting of December 9, 2022. Presenter(s): Chair Konstantopoulos. Trustee Baty made a motion to approve the minutes of the Regular Meeting of December 9, 2022; Vice Chair Todd seconded the motion. The motion carried unanimously (4-0). 6.2. Approval Re: Minutes of the Police Officers' Pension Plan Board of Trustees Special Meeting of December 19, 2022. Presenter(s): Chair Konstantopoulos. Book 1 Page 328 01-27-2023 8:15 a.m. Book 1 Page 329 01-27-2023 8:15 a.m. Trustee Baty made a motion to approve the minutes of the Special Meeting of December 9, 2022; Vice Chair Todd seconded the motion. The motion carried unanimously (4-0). 7. RETIREMENT REQUESTS: 8. INVESTMENT PERFORMANCE REVIEW: 9. UNFINISHED BUSINESS: 10. NEW BUSINESS: 10.1. Presentation and Discussion Re: Presentation and Discussion Re: Actuarial Valuation Report for Fiscal Year Ended September 30, 2022. Presenter(s): Peter Strong, FSA, EA, MAAA, FCA, Senior Consultant and Actuary, Gabriel, Roeder, Smith & Company. Peter Strong of Gabriel, Roeder, Smith & Company (GRS) appeared before the Board and introduced himself. Mr. Strong discussed the Reconciliation of Plan Assets page of the materials and compared the values of assets as of September 30, 2021 and September 30, 2022, noting the substantial difference in investment income from year to year; when combined, the Plan gained $8 million over 2 years, however that is less than thei investment assumption. He reviewed the Development of Actuarial Value of Assets, noting the difference between the Actuarial Value of Assets at the beginning of 2022 and the Market Value End of Year 2021 was nearly $40 million. He explained that the difference between the Actual Market Total of Investment Income and the Assumed Amount of Return, shown on line E4, will be phased into the valuation at 20%, or approximately negative $14.25 million, for each of the next 5 years. He reviewed the remaining amounts being phased in from prior years investment experiences, which, when smoothed, result in the Plan recognizing in 2022 a negative $3.4 million and an Actual Rate of Return of 5.3%. Turning to the Actuarial Valuation Process section on page A-2, Mr. Strong discussed the Observed Experiences including the City of Sarasota's (City's) approximate employer contribution requirements, the funded ratio based on actuarial value of assets and liabilities, and the elements of the experience. The Plan experienced an approximate $2.9 million loss due primarily to salary increases and fewer retiree deaths than anticipated. While these caused the actual dollar amounts of unfunded liability payments to go up, as an expression of percentage of pay, the payments are 2.1% lower than otherwise expected. Mr. Strong discussed the Actuarial Assumptions and Methods, noting the temporary assumption change regarding salary increases due to inflation, and Relationship to Market Value, and explained how actuarial smoothing gains and losses reduces volatility in the contribution rates when compared to using straight market values. He reviewed the page titled Chapter Review. In response to Chair Konstantopoulos's question, Mr. Strong estimated the amount of State Chapter Money the Plan receives may exceed $773,572 in 2023. Regarding the Contributions to Finance Benefits of the Pension Fund, Mr. Strong pointed out that the Total Normal Cost, which is the cost of benefits being earned in the current year, is relatively unchanged from the prior year. While it had been trending down, because benefits for participants hired after 2012 cost less than benefits for participants hired prior to 2012, it increased slightly due to the assumption changes. He reviewed the Unfunded Actuarial Accrued Liability and reiterated that, although the dollar amounts increased, the percentage of covered pay went down. Mr. Strong noted that the City's Total Contribution Requirement is the Total Contribution Requirement less 8%; if the actual Chapter 185 Portion received is less than 4.6%, the City's requirement will accordingly increase. Mr. Strong Reviewed the Unfunded Actuarial Accrued Liability and how the Funded Ratio is computed. On the page titled History of Investment Return Rates, Mr. Strong noted that the Average returns of all years shown, which includes 2022, and 2008, remains 6.4% while the Plan currently assumes it will be 6.5%. Trustee Baty asked Mr. Strong to compare the Plan's health to similar pension funds. Mr. Strong noted that all of his clients but 1 had investment losses in 2022 exceeding 10%; the 1 which had single digit losses was heavily invested in alternatives and real estate. Approximately 25% of his clients, including the Plan, had funding ratios greater than 100% in 2021, and as of 2022, the Plan is still nearly 90% funded. He considers plans with funded ratios between 80% and 100% to be healthy. Trustee Baty made a motion to accept the Actuarial Valuation for Fiscal Year Ended September 30, 2022; Vice Chair Todd seconded the motion. The motion carried unanimously (4-0). 10.2. Presentation and Discussion Re: GASB No. 67 Plan Reporting and Accounting Schedules for Fiscal Year Ended September 30, 2022. Presenter(s): Peter Strong, FSA, EA, MAAA, FCA, Senior Consultant and Actuary, Gabrie!, Roeder, Smith & Company. Mr. Strong reviewed the Schedule of Changes In The Employer's Net Pension Liability And Related Ratios. He noted that this schedule uses straight market value without actuarial smoothing, however it is not used to determine contribution requirements. 11. ATTORNEY MATTERS: Attorney Christiansen asked the Board to, at its February 24, 2023, meeting when its investment consultant is in attendance, declare an expected rate of investment return; this is required when the Plan approves an actuarial valuation. Attorney Christiansen advised he completed updating the contracts with Allspring and Newton and is awaiting the fund managers' signatures. In the matter of BobbieSue Patrick, Attorney Christiansen explained that the assigned physician at Workers' Compensation has changed and has provided a response to the Independent Medical Examination physician's requests; a special meeting is scheduled for the Board to continue discussion of the matter on February 24, 2023, at 2pm. All trustees are anticipated to attend in person. Chair Konstantopoulos asked if the new Workers' Compensation physician was provided with the entire case file; Attorney Christiansen advised he would confirm which records were presented to the Workers' Compensation physician, noting that physician is not contracted by the Plan. 12. OTHER MATTERS: Vice Chair Todd nominated Ronnie Baty to continue as the Board's 5th trustee; Secretary/Treasurer Griggs seconded the motion. The motion carried unanimously (3-0). 12.1. Presentation and Discussion Re: Asset Allocation as of January 17, 2023. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Asset Allocation for the Board's information. 13. ADJOURN. Chair Demetri Konstantopoulos SérelafTigagurer ShaylaGriggs Book 1 Page 330 01-27-2023 8:15 a.m.