Book 1 Page 367 02-24-2023 11:00 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 24, 2023 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Secretary Shayla Griggs, Treasurer Kelly Strickland, Trustee Robert Reardon, Trustee Barry Keeler, and Trustee Jan Thomburg. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: None. 1. CALL MEETING TO ORDER: Chair Chapdelain called the General Employees' Pension Plan (Plan) Board of Trustees Regular meeting to order at 11:00 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs. Chair Chapdelain led the Board and meeting attendees in the Pledge of Allegiance. 3. PLEDGE OF CIVILITY: 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 avoid personal attacks." 4. ROLL CALL: 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 General Employees' Pension Plan Board of Trustees Regular Meeting of January 27, 2023. Presenter(s): Chair Chapdelain. Trustee Keeler made a motion to accept the minutes of the Regular Meeting of January 27, 2023; Trustee Reardon seconded the motion. The motion carried unanimously (7-0). 7. APPROVAL OF RETIREMENT REQUESTIS): None. 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, 2022 and 2021. Presenter(s): Alison Wester, CPA, Partner, Mauldin & Jenkins. Alison Wester and Jennifer Trotter, Sr. Associate, of Mauldin & Jenkins appeared before the Board and introduced themselves. Ms. Wester thanked Pension Administration staff for their efforts which resulted a smooth audit process. Noting the opinion is clean, Ms. Wester advised that auditing standards have changed in the last year which necessitated a change to the order and content of their report. The Financial Statements begin with the Independent Auditor's Report; Ms. Wester explained each component. She noted the Management's Discussion and Analysis is unaudited but compared to the information in the Financial Statements for consistency. She reviewed the Statements of Fiduciary Net Position; on the Statements of Changes in Fiduciary Net Position, Ms. Wester explained that although the Plan's actuarial valuation uses smoothing and amortization of gains and losses, the Governmental Accounting Standards Board (GASB) requires finançial statements to recognize realized and unrealized gains and losses in the year in which they occur. Ms. Wester reviewed each of the Notes to Financial Statements. For Note 4, Rates of Return, she explained the differences between Level I, 2, and 3 investments, and added that the Plan also has some real estate funds which are valued at net asset value, in which each fund is the value of the underlying assets. Under Note 5, Net Pension Liability, Actuarial Assumptions, Ms. Wester noted that the Investment rate of Return is 6.20%; in the previous year, it was 6.55%. She explained how the Sensitivity of the Net Pension Liability to Changes in the Discount Rate highlights the volatility of the discount rate. In Required Supplementary Information, Ms. Wester reviewed the Schedule of Changes in the Net Pension Liability and Related Ratios, Schedule of Contributions, and Schedule of Investment Return, Other Supplementary Information contains the Schedule of Investment and Administrative Expenses. The Other Auditor's Report Contains the Independent Auditor's Report on Internal Controis Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, informally referred to as the Yellow Book, and, while not an opinion on internal controls, it would include any significant deficiencies or material weaknesses noted during the engagement. Ms. Wester reviewed the Auditor's Discussion and Analysis. She discussed the Independent Auditor's Report and some of the changes in audit reporting standards which reorganized financial statements and expanded auditors' disclosure responsibilities. She reviewed the Compliance Report, the Required Communications and subsections, and Complementary Continuing Education And Newsletters for Governmental Clients. To Chair Chapdelain's question, Ms. Wester discussed Mauldin & Jenkin's scope of clientele and services offered, as well as geographic presence. To Trustee Reardon's question, Ms. Wester explained the Plan is not responsible to record its unfunded liability, however the City of Sarasota is, as required by GASB 67 and 68. To Trustee Thornburg's question, Ms. Wester explained that in the Management's Discussion and Analysis, Benefit Payments change from 2020 to 2021 in the amount of $2.3 million being 20.17% appears to be a hard- coded number which was not properly updated. Pension Plans Administrator Martin explained this is an error in the information provided by Pension Administration. The Board thanked Mauldin & Jenkins and staff for their diligence and efforts in completing the audit. Book 1 Page 368 02-24-2023 11:00 a.m. Book 1 Page 369 02-24-2023 11:00 a.m. Treasurer Strickland made a motion to adopt thel Independent Auditor's Report of the Plans' Financial Statements for Fiscal Years ending September 30, 2022 and September 30, 2021; Secretary Griggs seconded the motion. The motion carried unanimously (7-0). 11. ATTORNEY MATTERS: 11.1. Presentation and Discussion Re: Purchase of Prior Military or Prior Government Service - Payroll Deduction Option (E-Z Payment Option). Presenter(s): Scott Christiansen, Christiansen & Dehner, P.A. After Pension Plans Administrator Martin noted Plan participants contribute to Social Security, Attorney Christiansen explained the E-Z Payment Option allows participants to pay for claimed service over a period of time through payroll deductions instead of, as the Plan currently requires, paying the entire cost of the claim in a single lump sum. He explained that the Plan's actuary would calculate a payment amount over a fixed period of time, typically between 3 and 5 years, and include amortized interest at the expected rate of investment return sO that the payment option is cost-neutral to the Plan. Ifa vested participant who, while paying for a service claim with payroll deduction, separated from employment before the entire indebtedness balance had been paid to the Plan, the actuary would compute the amount of service under the claim had been paid-up, and that amount would then be added to the former employee's credited service. He noted that offering a payroll deduction payment option would require a change to the Plan. Pension Plans Administrator Martin noted that, according to Mauldin & Jenkins, some plans offer payroll deduction payments on a pre-tax basis. She noted participants with both pre-and post-tax contributions are more difficult to administer because those benefits, upon retirement, have both taxable and non-taxable portions which must be individually reported. Attorney Christiansen noted that employees who pay for service claims with post- tax monies, as currently allowed, are in this circumstance. He stated he would need to confirm ifp pre-tax payments were possible; his clients which offer payroll deduction typically make the deductions on a post-tax basis. Pension Plans Administrator Martin advised, that if the Board were to adopt the payroll deduction payment option, its implementation would be delayed until after the City implemented the new Enterprise Resource Planning (ERP) system. To Trustee Thornburg's question, Pension Plans Administrator Martin stated she has not seen a request for a service claim in the Plan in the last 41 years. As thel Plan was closed in 2011, most employees who were interested in purchasing service have inquired by now. Trustee Keeler noted that because service claims must be paid in their entirety, employees may not have had sufficient funds amassed in a 457(b) account to pay the claim earlier in their tenure. To the Board's questions, Attorney Christiansen reiterated that this would be a change to the Plan which would require the City Commission to approve a change to City Ordinances; however, because its revenue neutral, there is no reason for the City Commission to disapprove the request. Further, the payroll deduction option is not a benefit enhancement, but a payment option, and the City Commission would not likely need input or consent from labor unions before approving. The Board discussed the frequency with which employees may claim service. Trustee Keeler noted that, at the time the Plan closed, many employees purchased service to become eligible to enter the DROP. To Attorney Christiansen's question, Pension Plans Administrator Martin noted there are no employee participants who have not yet vested. He noted that the Board is not obligated to offer the payroll deduction option. Chair Chapdelain and Trustee Thornburg appreciated the option being available, but expressed reluctance to change the Plan if there was little employee interest in it. Pension Plans Administrator Martin stated she would advise the Board if she receives requests regarding the payroll deduction option. 11.2. Presentation and Discussion Re: Avoidance of Benefit Overpayments. Presenter(s): Scott Christiansen, Christiansen & Dehner, P.A. Attorney Christiansen noted that he reminds his clients about avoiding overpayments when he is asked to recover an overpayment, but that he was not aware of any current overpayments in the Plan, although they have occurred. He noted overpayments often occur when a participant elected a 10-year certain retirement options and died before the end of the 10-year certain period; while the beneficiary's payments should stop at the end of the 10- year term, payments instead erroneously continue beyond the 10-year certain period. Similarly, if the Plan is not made aware of a retiree's death, and erroneously pays a retiree's 's full benefit to the survivor who is entitled to only a percentage of the retiree's benefit. Pension Plans Administrator Martin explained that Pension Administration subscribes to CertiDeath, which reports on a weekly basis any benefit recipient's death as identified in searches of the Social Security Death Master File and other publicly available records. In most cases, Pension Administration has already been notified of a participant's death individuals. Pension Administration is tracking benefits for 2 retirees who elected the 10-year certain option; in one case, the participant died before the 10-year certain period ended, and Pension Administration properly terminated the payments to the survivor at the end of the 10-year certain period. She added that Pension Administration provides Gabriel, Roeder, and Smith (GRS), the Plan's actuary, with the benefit option selected by each recipient so that GRS can calculate the Plan's projected costs, and it would notify Pension Administration if a payment amount was not appropriate for the selected payment option. To Trustee Thornburg's question, Pension Plans Administrator advised the Plan has used CertiDeath since early 2019. To Attorney Christiansen's question, Pension Plans Administrator Martin confirmed she sent formal notification to the State of Florida that, at its January 27, 2023, meeting, the Board had declared an expected rate of investment return. To Chair Chapdelain's question, Attorney Christiansen advised there is no pending state legislation filed to date which could directly affect the Plan. There is a proposed bill which would add city attorneys to the list of positions whose occupants' personal information, such as home address and telephone number, is considered protected. Currently human resources and other positions within the Plan, as well as Police Officers and Firefighters, are exempt from public disclosure of protected information. 12. OTHER MATTERS: 12.1. Presentation and Discussion Re: Administrative Budget Analysis for October 1, 2022 through December 31, 2022. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Administrative Budget Analysis. She noted that the items which are close to 100% expended are accrued on a cash basis and not indication the items were under- budgeted. The Board had no questions. 12.2. Presentation and Discussion Re: Check Register for October 1, 2022 through December 31, 2022. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Check Register. She noted that the payments to Staples are on behalf of all 3 defined benefit pension plans with the City, and the other 2 plans will reimburse the Plan for their share of the expenses. Book 1 Page 370 02-24-2023 11:00 a.m. Book 1 Page 371 02-24-2023 11:00 a.m. The Board had no questions. 12.3. Presentation and Discussion Re: Asset Allocation as of February 14, 2023. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Asset Allocation for the Board's information. Trustee Thornburg asked for an item to be added to the next meeting agenda to discuss virtual attendance and voting at Board meetings. Chair Chapdelain asked for the item be placed on the agenda for the March 27, 2023, Membership meeting. 13. ADJOURN. Chair Chapdelain adjourned the meeting at 11:35 a.m. Chair Ryanchapdelain* SéeretaryShayla Griggs/ S5AL