Book 1 Page 60 4/17/17 8:30A.M. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF APRIL 17, 2017 Present: Chair Barry Keeler, Vice Chair Ryan Chapdelain, Secretary Pamela Nadalini (arrived at 8:33 a.m.), Treasurer Kelly Strickland, Trustees Bonnie Wagner, Gretchen Schneider and Kari McVaugh Others: Attorney Scott Christiansen, Senior Pension Analyst Anthony Ferrer, Senior Pension Accountant Cynthia Akersloot and Pension Specialist Lois Belle Absent: None 1. CALL MEETING TO ORDER: Chair Keeler called the meeting to order at 8:30 a.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." 3. ROLL CALL: Chair Keeler requested Senior Pension Analyst Ferrer call roll in Secretary Nadalini's absence; Senior Pension Analyst Ferrer called the roll and a quorum of the Trustees in attendance was noted. 4. PUBLIC INPUT: No one signed up to speak. 5. APPROVAL OF THE MINUTES: 5.1. Approval Re: Minutes of General Employees' Pension Plan Board of Trustees Annual Membership Meeting of March 20, 2017 A motion was made by Trustee Schneider and seconded by Treasurer Strickland to approve the minutes of the General Employees' Pension Plan Board of Trustees Annual Membership Meeting of March 20, 2017. Motion carried unanimously (6-0). Secretary Nadalini arrived at 8:33 a.m. 6. BOARD OF TRUSTEES' REPORTS: 6.1. Presentation and Discussion Re: Treasurer's Report for Period Ending September 30, 2016 Presenter(s): Treasurer Strickland Treasurer Strickland presented the Treasurer's Report to the Board; that revenue showed a major difference in investment income from Fiscal Year ended 2015 and that carried into positive net income for the Fiscal Year ended September 30, 2016; that investments did very well and that the total portfolio was $139,499,859; that the actuarial accrued liability was 71.4%; that the net investment return for the Fiscal year was 7.89%; that this is a closed plan with 639 total participants. In response to a question from Trustee Wagner asking about the considerable cash increase from 2015 to 2016, Treasurer Strickland stated that the report was a snapshot as of September 30, 2016; that the cash position fluctuates. A motion was made by Vice Chair Chapdelain and seconded by Trustee Schneider for the Board to approve the Treasurer's Report for the Period Ending September 30, 2016. Motion carried unanimously (7-0). 7. APPROVAL OF RETIREMENT REQUEST/S): 7.1, Approval Re: Early Retirement Request of Don Hawkins Presenter(s): Senior Pension Analyst Ferrer Senior Pension Analyst Ferrer stated that Don Hawkins requested a retirement date of April 1, 2017; that Mr. Hawkins is 57 years of age, has 26.96 years of service, and elected the Lifetime Option. A motion was made by Secretary Nadalini and seconded by Treasurer Strickiand for the Board to approve the early retirement request of Don Hawkins. Motion carried unanimously (7-0). 8. INVESTMENT PERFORMANCE REVIEW: 8.1. Presentation and Discussion Re: Franklin Templeton Investment Performance as of December 31, 2016 Presenter(s): Donald Graham, Director, lempleton Separately Managed. Accounts Donald Graham, Director, Templeton Separately Managed Accounts came before the Board. Mr. Graham provided an overview of the portfolio as of December 31, 2016; that Franklin Templeton does not do as well in strong emerging markets due to a more conservative approach; that Franklin Templeton was wrongly positioned for Brexit vote but were well positioned for Trump victory. Mr. Graham discussed Franklin Templeton's financial strategy and shifts in portfolio holdings into less cyclical markets; that Franklin Templeton has added Asian insurance companies and has continued to increase healthcare and energy positions. In response to a question from Trustee Wagner asking about the rationale of investing 11% in France given the current political environment there, Mr. Graham stated that while a Le Pen victory is a risk she has very little representation in the lower house; that even if she was victorious she likely doesn't have enough support for France to succeed from the European Union. There were no further questions from the Board and Chair Keeler thanked Mr. Graham for his presentation. 9. UNFINISHED BUSINESS 9.1. Presentation and Approval Re: Additional Invoice for Auditing Services Presenter(s): Alison Wester, CPA, Partner, Mauldin & Jenkins, LLC (via teleconference) Alison Wester, CPA, Partner, Mauldin & Jenkins, LLC came before the Board via teleconference. Ms. Wester stated that as discussed by the Board in the March 20, 2017 meeting, she provided an additional invoice for auditing services incurred during the audit for Fiscal Year ended September 30, 2016. Book 1 Page 61 4/17/17 8:30 AM. Book 1 Page 62 4/17/17 8:30. AM. In response to a question from Chair Keeler asking if $7,500 represented half of the overall incremental fee, Ms. Wester stated that $7,500 is half of the total incurred incremental fees; that the hours involved were based on Partner and Management rate not Staff rate which is why Mauldin & Jenkins provided a 50% discount to the incurred incremental fees. In response to a question from Trustee Wagner asking if there are negotiated rates for work beyond scope in the contract, Ms. Wester stated that there are no negotiated rates for work that extends beyond the contractual agreement which is why the work was discounted 50%. In response to a question from Trustee Wagner asking what the contract specified, Attorney Christiansen read the contract provision which states Your fee for the services will be our standard hourly rate not to exceed $9,000, the about fees are based on the anticipation of cooperation from personnel and will be discussed with you prior to incurring the costs.' : Ms. Wester stated that she discussed additional charges with Secretary Nadalini; Secretary Nadalini stated she recommended that Ms. Wester see approval from the Board to authorize the additional fees. Treasurer Strickland stated that the audit was provided in a timely manner and that she would like to make a motion to approve the invoice for additional fees and Secretary Nadalini seconded. The motion carried 6 - 1 with Trustee Schneider voting no. Vice Chair Chapdelain stated that as the Board continues to work with Mauldin & Jenkins that it is preferred that Ms. Wester attend Board meetings in person, if at all possible. 9.2. Continued Discussion Re: Certificate of Tax Exemption Presenter(s): Attorney Scott Christiansen, Christiansen & Dehner Attorney Christiansen stated that his notes from the March 20, 2017 meeting indicated the Board was interested in pursuing a Certificate of Tax Exemption for the General Employees' Pension Plan. In response to a question from Treasurer Strickland asking what is the correct procedure, Attorney Christiansen advised that the State recommends each entity file a Certificate of Tax Exemption. A motion was made by Treasurer Strickland and seconded by Trustee McVaugh to file a Certificate of Tax Exemption for the General Employees' Pension Plan. Motion carried unanimously (7 - 0). 9.3. Continued Discussion Re: Operating Rules and Procedures Presenter(s): Attorney Scott Christiansen, Christiansen & Dehner Attorney Christiansen stated that he would begin at Rule 5; that he was in receipt of Treasurer Strickland's requested changes and asked ift there were any comments from the Board. Secretary Nadalini requested the Board move to postpone the Operating Rules and Procedures; that the Operating Rules and Procedures is a document for the Board of Trustees not for the Office of the City Auditor and Clerk; that she recommends that Attorney Christiansen discuss with City Attorney Fournier or Assistant City Attorney Warren; that the level of scrutiny the Board is suggesting with the changes will infringe on The Office of the City Auditor and Clerk's internal operations and controls. Secretary Nadalini stated that the comments from Treasurer Strickland are not accurate; that Staff processes invoices through several levels of review and internal controls; that this body cannot adopt procedures that interferes with the internal procedures and controls of The Office of the City Auditor and Clerk. In response to a question raised by Trustee Schneider asking what is the Board's Fiduciary responsibility regarding Pension Staff, Attorney Christiansen stated that the Board of Trustees is solely responsible for the administration of the Pension Plan; that the City Auditor and Clerk pursuant to the Charter acts as the Pension Plans Administrator for the Plan and that those two processes must work together. Discussion ensued around the Board's Fiduciary responsibility and how that works within the internal processes of Pension Plan Administration. Secretary Nadalini stated that an annual budget is presented to the Board for approval; that part of that annual budget is the operating budget for expenses that the Board has already approved; that as Secretary to the Board she provides support services from The Office of the City Auditor and Clerk, including personnel. Treasurer Strickland stated as the Treasurer it is her responsibility for Fiduciary oversight and a motion was made by Treasurer Strickland and seconded by Trustee Schneider to approve changes brought forth to section 5.2 for processing payments of expenses other than retirement benefits. Discussion ensued around how other Boards Attorney Christiansen assists typically handle payment activity Secretary Nadalini requested an opportunity to again speak with the City Attorney before the Board approves changes to ensure that the changes are consistent with internal controls. Board consensus to continue discussion at the April meeting. The motion made by Treasurer Strickland and seconded by Trustee Schneider to approve changes brought forth to section 5.2 for processing payments of expenses other than retirement benefits was voted on. Motion carried 6-1 with Secretary Nadalini voting no. Treasurer Strickland stated section 5.4c requesting quarterly financial summary and highlights of any discrepancies. A motion was made by Trustee Schneider and seconded by Treasurer Strickland to approve. Motion carried unanimously (7-0). Attorney Christiansen stated he has some concern regarding lack of clarity on Plan document and would like to add language to the Operating Rules and Procedures to provide consistency. In response to a question by Chair Keeler asking what needs to happen regarding to the union, Attorney Christiansen stated he is not sure of next steps with updating the City Code. Secretary Nadalini stated she cannot support adding any language of calculations but rather the City Code adopted by the City Commission must address calculations. In response to a question by Treasurer Strickland asking if code is silent on specific policies and procedures can the Board add policies and procedures that are not contrary to the code but expand the code, Attorney Christiansen stated that it is the Board's role to interpret the code. Secretary Nadalini stated that this Board had already identified ambiguity within the code and has brought suggested changes up before the City Commission; that the Union and the Actuary were working together to provide clarity on City Code provisions suggested; that the Board is due an update on that; Chair Keeler will reach out for status update. Attorney Christiansen asked if any questions or issues with Section 5.4, Senior Pension Analyst Ferrer stated that Section 5.4 of the Operating Rules and Procedures is not consistent with Section 24.99 of the Code. Attorney Christiansen stated that the Operating Rules and Procedures is the approval process. Secretary Nadalini stated that Pension Staff follows the City Code adopted by the City Commission, not the Board's procedures. Attorney Christiansen asked if any questions or issues page 13; no changes. Book 1 Page 63 4/17/17 8:30 AM. Book 1 Page 64 4/17/17 8:30 AM. Attorney Christiansen asked if any questions or issues pages 14 through 17; he provided clarity on Section 9.2. and why the language is as such; no changes. Attorney Christiansen move to page 18 and talked about change to State reporting; Page 19 had no changes; some sentences moved around to be more consistent; Section 10.11 and 10.12 added; no comments to changes noted throughout the rest of the document. In response to a question by Secretary Nadalini asking if disability meetings could be "shade", Attorney Christiansen stated that the Florida Statute does not allow disability meeting to be "shade", must be public forum but material not posted; that either the City or the participant must request confidentiality. Attorney Christiansen reviewed Rule 16 and asked Staff about current process for Death audits periodically. Senior Pension Analyst Ferrer confirmed that Staff currently has processes in place to conduct death audit processes periodically. There was consensus noted by Board for Attorney Christiansen to make updates as proposed and discuss suggested updates with City Attorney Robert Fournier prior to bringing before Board for final approval. 10. NEW BUSINESS: 10.1. Presentation and Discussion Re: Proposed Annual Budget for Fiscal Year 2017 - 18 Presenter(s): Secretary Nadalini Secretary Nadalini presented the Proposed Annual Budget for Fiscal Year 2017 = 18; that some line items were adjusted based on actual fees incurred prior year; Insurance has increased and is adjusted annually; Accounting and Auditing increased by approx. $1,800 but she does not foresee that happening again; Special Services increased $9,500 to cover actuarial costs; Equipment was increased $600 to cover copy rental fees; Legal increased $9,600 to cover any unexpected legal costs; that budget presented in the amount of $257,000 is a more realistic figure and additional moneys requested ensure we are adequately covered. A request was made by Vice Chair Chapdelain to increase Travel to $20,000. In response to a question by Chair Keeler asking what happens to unused funds, Secretary Nadalini stated that, once approved, the budgeted money is allocated to a Cost Center; that the money remains in the Pension Fund. A motion was made by Vice Chair Chapdelain and seconded by Treasurer Strickland to accept the Proposed Annual Budget for Fiscal Year 2017 -18 with change as discussed to increase Travel to $20,000. Motion carried 7-0. 12. ATTORNEY MATTERS: Attorney Christiansen stated that Ordinance No. 16-5185 was adopted by the City Commission and requested confirmation that the adopted Ordinance No. 16-5185 was sent to the State for filing. Secretary Nadalini stated she would confirm filing. 13. OTHERI MATTERS: Chair Keeler asked about the status for the Projected Retirement Income Statement and Senior Analyst Ferrer stated that Gabriel Roeder Smith and Company has confirmed they are on target to deliver Projected Retirement Income Statements late May. Secretary Nadalini reminded Board members that Financial Disclosure Statements are due in June. Vice Chair Chapdelain requested a copy of the Financial Disclosure Statement memorandum. 14. ADJOURN. Chair Keeler adjourned the General Employees Pension Plan Board of Trustees Regular Meeting at 10:39 a.m. - Baenl Keupe CPRT Y Chair Barry Keeler Secretary Pamela Nadalini Book 1 Page 65 4/17/17 8:30 AM.