MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF DECEMBER 8, 2023 Present: Chair Demetri Konstantopoulos, Secretary/Treasurer Shayla Griggs, Trustee Ronnie K. Baty, and Trustee Joseph Jody" Hudgins. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: Vice Chair Johnathan Todd. 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 8:15 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary/reasurer Griggs. Secretary/Treasurer Griggs 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. Vice Chair Todd was not 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 October 27, 2023. Presenter(s): Chair Konstantopoulos. Trustee Baty made a motion to approve the minutes of the Regular Meeting of October 27, 2023; Secretary/Treasurer: Griggs seconded the motion. The motion passed unanimously (4-0). 7. RETIREMENT REQUESTS: None. 8. BOARD ELECTIONS: Book 1 Page 374 12-08-2023 8:15 a.m. Book 1 Page 375 12-08-2023 8:15 a.m. 8.1. Presentation and Discussion Re: Nomination to Police Officers' Pension Plan Board of Trustees Seat PP4. Presenter(s): Secretary/reasurer Griggs. Secretary/Treasurer: Griggs asked Attomey Christiansen to discuss the election rules applicable to the number of ballots received relative to the number ofb ballots distributed. Attorney Christiansen explained that the applicable Florida statute requires elections to, "consist of a majority of the members of the pension plan." " None of Attorney Christiansen's clients abide by this provision due to the difficulties in compelling a majority of the membership to participate in the election. Instead, the Plan's Operating Rules and most of Attorney Christiansen's clients use the standard, "a majority of the votes received," - because the State Law is too high a standard to hold productive elections. Trustee Hudgins made a motion to accept the majority of the valid votes received to determine elections; Trustee Baty seconded the motion. The motion passed unanimously (4-0). Pension Plans Administrator Martin advised that Pension Administration received 27 ballots of which 2 were received after the deadline to return ballots. Senior Pension Analyst Ferrer unsealed the ballots, Secretary Griggs read the ballots, and Pension Plans Administrator Martin and Pension Specialist Gottlieb tallied the ballots. Chair Konstantopoulos received 8 votes, Tyler Rossnagle received 17 votes, and 2 ballots were rejected because they were received after the deadline to submit ballots. Mr. Rossnagle's term will begin February 1, 2024. Chair Konstantopoulos congratulated Sgt. Rossnagle and expressed confidence that he will serve the Board and membership with distinction. 9. INVESTMENT PERFORMANCE REVIEW: 9.1. Presentation and Discussion Re: Advent Capital, Investment Performance Summary for Period Ending September 30, 2023. Presenter(s): David Hulme, Co-Portfolio Manager; Kristin Campolettano, Director, Client Advisory; Advent Capital. David Hulme of Advent Capital (Advent) appeared before the Board telephonically and introduced himself. Mr. Hulme briefly reviewed the firm overview and Convertible Market Backdrop pages of the materials, noting that while issuance levels have largely returned in 2023 to pre-COVID-19 pandemic levels at approximately $100 Billion per year, the quality of companies has increased substantially; nearly a third are investment grade issuers and issuance is at higher yields than previous years. The page titled Primary Convertible Market highlights trends in the market, including that when borrowing costs are elevated, more companies issue convertible debt to raise capital by trading a lower coupon rate for equity upside. A significant amount of high-yield debt will mature between 2024 and 2026, and Advent believes much of it will be refinanced using convertible bonds. Mr. Hulme discussed Advent's investment philosophy as stated on the Balanced Strategy page; the Convertible Price Dynamics page demonstrates how convertible bonds perform asymmetricaly as their prices change. Mr. Hulme noted that convertible bond benchmarks are imperfect comparisons because they vary in construction by being biased towards equities or bonds which changes their individual performances. Mr. Hulme reviewed the Portfolio Characteristics; the Current Yield has increased approximately 40 basis points from one year ago; he expects this to continue to increase as more issuance with higher coupons populate the portfolio and replace maturing securities with lower yields. The portfolio's delta, or equity sensitivity, has increased since October 31, 2023, to approximately 44%; the Conversion Premium is similar to that number one year ago. The Sector Diversification page shows the portfolio is well diversified. The common element amongst the Top Ten Holdings is their individual symmetries, Advent's confidence that the companies can repay their individual debts, and significant upside in the equity option within the convertible. Mr. Hulme briefly reviewed the Performance Summary, Thematic Drivers of Performance, 2023 YTD Performance Attribution, Composite Risk/Return Characteristics, and Balanced Strategy: Participate in the Upside, Protect the Downside pages of the materials. Mr. Hulme provided a market outlook. The slowing economic growth and declining inflation have allowed investors to look beyond the stock market's 7 leading stocks, commonly referred to as, "the magnificent 7," which will favor the underlying equities in the convertible market; he noted that the magnificent 7 do not have convertibles outstanding. While the potential for a recession in 2024 remains, the banking sector and labor market remain strong; many companies have been preparing for a recession by cutting costs and increasing productivity, and therefore Advent does not believe a recession will impact earnings. Considering the 2024 presidential election and recent gridlock in Congress, Advent anticipates market volatility which will benefit convertibles as options within the convertibles become more valuable. Advent remains focused on both the level and terms of newi issuance in 2024, The Board thanked Mr. Hulme for his presentation. 9.2. Presentation and Discussion Re: Garcia Hamilton, Investment Performance Summary for Period Ending September 30, 2023. Presenter(s): Janna Hamilton, Partner; Jeffrey Detwiler, Partner, Portfolio Manager; Garcia Hamilton. Janna Hamilton and Jeffrey Detwiler of Garcia Hamilton appeared before the Board and introduced themselves. Ms. Hamilton advised that a new person will soon be joining the fixed income team; a non-compete agreement with Invesco, which will be released in approximately 1 week, prevents Garcia Hamiliton from providing more details at this time. She acknowledged that Garcia Hamilton's performance has lagged, but asserted it tends to be early in some trades and are now seeing indications of a market shift which will reward its positioning. Mr. Detwiler reviewed the 3Q 2023 Performance. The portfolio underperformed relative to the benchmark because of the portfolio's longer duration and underweight to credit, as well as the view that the yield curve would steepen as the Federal Reserve (Fed) concludes its short-term interest rate hike cycle. Approximately a year ago, Garcia Hamilton took the position that the Fed would cease raising short-term interest rates; it maintains that position today. In Q3, 2023, analysts tended to agree that the Fed would maintain higher interest rates for a longer period of time than previously anticipated to continue to constrain the economy to reduce inflation, as well as that the economy could achieve an economic "soft landing;" Garcia Hamilton believes these are mutually exclusive positions, and the Fed's pause in interest rate hikes at its November 2023 meeting, softer inflation data, and weaker economic data indicate the market is coming to grips with those terms. Through December 6, 2023, the portfolio's Quarter-to-Date return is 5.17% while the bond market's is 4.43%. To Trustee Hudgins' question, Mr. Detwiler explained that the Fed can either reduce short-term interest rates to achieve an economic soft landing or maintain higher rates which will preclude a soft landing. He suspects the Fed will stubbornly maintain higher rates because it was late to address rising inflation, and that it is now over-correcting byi insisting on seeing data to confirm the results ofi its strategy. He analogized the Fed's actions to navigating a car by looking in the rear-view mirror, however that will likely crash the economy into recession. Returning to the presentation materials, Mr. Detwiler advised the portfolio, Year-to-Date, is up 2.84% and the benchmark is up 3.17%. Although still currently behind the benchmark, Garcia Hamilton believes there is more alpha to be generated in the future, as well as strong performance in the bond market. Mr. Detwiler reviewed the Scenario Analyses on pages 5 and 6 of the materials. Page 5 predicts, if yields return to average levels and inflation gets to 2%, the portfolio will outperform the benchmark by 4% to 5%. More realistically, if yields decline to those at year-end in 2018, as seen prior to the trade wars in China, the portfolio should outperform the benchmark by an estimated 3.3%. Mr. Detwiler reiterated thathe expects Book 1 Page 376 12-08-2023 8:15 a.m. Book 1 Page 377 12-08-2023 8:15 a.m. yields to come down because the Fed is coming to the end of its rate hike cycle, inflation is under control, and the economy is beginning to lose momentum. Turning to the Money Supply Long Term Growth page, Mr. Detwiler discussed the history of how money growth affects inflation. The money supply's explosion at the beginning oft the COVID-19 pandemic to a 75- year high was a signal that inflation would similarly rise. Today, money growth is negative and at a 75-year low; Garcia Hamilton asserts a weaker economy and lower inflation should be anticipated. He reviewed the page titled Low Money Supply Growth Suggests Lower CPI/Rates, noting that the Consumer Price Index (CPI) has historically lagged money supply growth by 91 to 12 months, however the lockdowns in response to the COVID-19 pandemic constrained velocity, and stretched that lag time to 16 months. On the page titled Supply Chain Pressure Easing, 0 indicates normal delivery times and supply rates, positive numbers indicate the existence of supply pressures, such as longer delivery times and product shortages, and negative numbers indicate faster delivery times and inventory surpluses. As supply chains have reopened, shipping companies are receiving less orders; anecdotally, the third largest trucking company in the United States filed for bankruptcy. The imbalance between an abundant money supply and high supply chain pressures led to higher inflationary pressures; that imbalance is now correcting, and inflation is moderating. The charts on the page titled Inflationary Pressures Moderating similarly demonstrate this correction in housing, gas, car, and food prices. The page titled Home Affordability Has Declined Significantly shows that interest rates and new home prices have disproportionately increased compared to the median household income between 2020 and 2023. Accordingly, new home sales have declined substantially, which is thel Fed's goal. The page titled Alarming Delinquency Rate Despite Low Unemployment shows the negative impact of high interest rates on consumers' household balance sheets. Looking at the bond market, Mr. Detwiler discussed the page titled Credit Looks Tight Given the Weakness in LEI, and shows corporate spreads, which are the additional yield received for buying a corporate bond versus a treasury bond. He pointed out that, while the economy shows signs of weakness, corporate spreads remain contained. He added that the Leading Economic Index (LEI), which is invertedly scaled on the left vertical axis and currently -6.7%, has ever been as lowwithout the economy entering into recession. This indicates a sizable gap exists between corporate spreads and economic fundamentals. When this happened previously, spreads widened; Garcia Hamilton believes spreads will again widen, and the portfolio is therefore underweighted to this sector which they believe is overvalued. Garcia Hamilton is finding value in mortgage-backed securities (MBSs). Referencing the Mortgage Option Adjusted Spreads (OAS) page, Mr. Detwiler noted that mortgage spreads are wider than their historic averages, although that is affected by the dollar price, as indicated on the page titled MBS Market is Trading at Historically Low Prices. Low interest rates amidst a refinance wave in 2020 and 2021 led to productions of MBSs at very low coupons. Rising interest rates and rising inflation drove MBS prices down, which Garcia Hamilton recognizes as investment opportunities. Because principal will be repaid at par, or 100%, while Garcia Hamilton is buying MBSs in the mid-80% range, every principal payment becomes a windfall. Garcia Hamilton expects increased home sales, and therefore loan payoffs at 100% of principal which it has purchased at a considerable discount. To Trustee Hudgins' question regarding how Garcia Hamilton factors in prepayment speed, Mr. Detwiler explained that even if no mortgage in the security paid off early, which is the worst-case scenario, the spread would still be approximately 20 basis points (BPS) above treasuries. The Conditional Prepayment Rate (CPR) is typically around 3% which produces a spread of6 66 BPS; if the CPR increased to 5% or 10%, the spread increases to more than 100 BPs. In that context, there are significant benefits for increased rates of early payoffs, however even if no early payoffs occur, MBSs are more attractive than treasuries. Further, the historical corporate spread is approximately 150 BPS while the MBS spread is approximately 50 BPS. Currently, corporate spreads are 120 basis points while MBS spreads are close to 70 BPS; in that context, MBSs offer a more attractive government-Dacked security at a more attractive spread, both historically, and relative to other sectors. Mr. Detwiler reviewed the Fixed Income Portfolio Characteristics. The portfolio's duration exceeds that of the benchmark with the expectation that yields will decline. While he recognized Garcia Hamilton was early in this trend which significantly impacted performance in Q3 2023, however it believes the market and investor sentiment is turing, and that its positioning is already beginning to be rewarded with strong performance in Q4 2023. Mr. Detwiler added that, in addition to a lack of valuations in the corporate sector, there may be a significant liquidity issue in corporates as well. A similar event took place at the beginning of the COVID-19 pandemic when investors were looking to leave the market, and corporate spreads widened by 300 basis points in approximately 4 weeks. This took approximately a year during the financial crisis because balance sheets were constrained, and dealers willing to put up money for corporate bonds dropped dramatically. Similar concerns exist now in the event another liquidity crisis occurs. Ms. Hamilton and Mr. Detwiler concluded their presentation by asserting the poor performance in Q3 2023 has begun to rebound in Q4 2023, and that in November 2023, the bond market was up 4.5% while the portfolio was up 5.5%, which is remarkable for a high-quality fixed income fund. They expect this trend to continue and ask for the Board's patience as performance begins to improve. The Board thanked Mr. Detwiler and Ms. Hamilton for their presentation. 9.3. Presentation and Discussion Re: Burgess Chambers & Associates, Quarterly Investment Performance Review for Period Ending September 30, 2023. Presenter(s): Larry M. Cole, Executive Vice President, Burgess Chambers & Associates Larry Cole of Burgess Chambers & Associates (BCA) appeared before the Board and introduced himself. Mr. Cole noted that he believes, in contrast to Mr. Detwiler, that the Fed will maintain higher interest rates for a longer period because of the market's favorably reaction to the most recent Consumer Price Index (CPI). While the lower CPI is largely a result off falling energy prices, the core CPI, which removes food and energy, is still at 4%, yet the Fed's goal is 2% to 2.5%. In this context, Mr. Cole doubts the Fed will be eager to lower interest rates, although signs that the economy is slowing suggest the Fed's efforts may be working. He cautioned that, typically when a war breaks out in the middle east, oil prices rise dramatically, however they currently are declining. This indicates either that the global economy is slower than forecasted, or energy prices and the CPI will soon go up and the Fed will maintain higher for longer interest rates. Mr. Cole added that economists more likely agree with Garcia Hamilton's assessment than with his. Turning to the presentation materials, Mr. Cole asserted that what the portfolio lost in Q3 2023, it recovered to date in Q4 2023; he informally estimated that the current performance numbers are approximately 4% higher than as of September 30, 2023. The equities and bonds in general declined in Q3 2023, although the trailing 1-year returns will no longer include 2022. Although bonds and equities have traditionally performed inversely to each other, in the current cycle, their performances have correlated directly. There are no compliance issues to address. He reviewed the Actual VS. Target Asset Allocation, noting that although real estate is underweighted, the Plan has a $10 million redemption request in process with JP Morgan, of which approximately only $600,000 has been paid out; he expects more delays in the redemption queue in the current rate environment. He reminded the Board of a similar circumstance in 2008 and 2009, when, by the time the fund manager was ready to pay the Plan's redemption request, real estate investments were again attractive, and the Plan cancelled its redemption request. He suspects the commercial office space within the real estate sector may be the bottom of that market cycle. Occupancy remains in the 70% to 80% range in New York City, although lease rates remain in the 90% range. To Trustee Hudgins' question, Mr. Cole confirmed real estate fund managers internally appraise their properties quarterly, and externally appraise their properties annually. He added that he asks all of his real estate fund managers, when they sell properties, how their property valuations compared to the final sales price; JP Morgan's are consistently within 1% or 2%. The Fed's next action or inaction on interest rates will determine what happens in the real estate sector. Mr. Cole reviewed the Asset Allocation & Performance Gross and noted that the portfolio was in the lowest 84th quartile, quarter-to-date, meaning in the worst performing 16% of its peers. Mr. Cole discussed the market's concentration in the magnificent 7, noting that, although they are high quality companies, their valuations have become too extreme for prudent investors. Allspring and Granite, the Plan's large cap growth managers, both struggled relative to their index, the Russell 1000, because Apple and Microsoft comprise 25% of the benchmark's allocation; while Allspring and Granite also have positions in those 2 stocks, their weightings are not as concentrated, and the fund managers underperformed relatively. Mr. Cole noted that the difference between growth and value stocks is approximately 30%, which is the largest Book 1 Page 378 12-08-2023 8:15 a.m. Book 1 Page 379 12-08-2023 8:15 a.m. disparity since the late 1990s. Mr. Cole asserted the magnificent 7, despite being high quality companies which are unlikely to fail, are overvalued due to the perception that theywill benefit from artificial intelligence, and that investors will eventually shift their focus to some of the remaining 493 companies in the S&P 500, which, he added, will also benefit from artificial intelligence and have more attractive valuations. Informally, Mr. Cole believes that rotation may be beginning to occur, and therefore he advises against leaving Granite or Allspring, or investing in either the magnificent 7 or index funds which are heavily concentrated in the magnificent 7. Trustee Hudgins asked Mr. Cole if the presentation materials could show actual dollar amounts versus relative percentages sO that increases and decreases would more clearly describe the portfolio's ongoing performance. Mr. Cole suggested the Growth of Investments page of the materials may already have that information; the blue line represents the total portfolio dollar value, and the green line is net contributions, meaning amounts being paid into the Plan less the amounts being paid out. Trustee Hudgins expressed interest in seeing the just the investment returns to be better able to evaluate investment performance. Trustee Hudgins and Mr. Cole estimated that since the portfolio's peak that, after withdrawals, it lost approximately $17 million as of September 30, 2023; over a 5-year period, the portfolio gained approximately $50 million. They agreed that the actuarial valuation includes a more granular description of the portfolio's value, however that is provided less frequently. Mr. Cole continued, noting that although the Quarter-to-Date performance was negative, the portfolio is up on a fiscal year basis and over longer time frames. Garcia Hamilton had the worst returns amongst its peers, both quarter-to-date and over the trailing 1-year, however that sector has an extremely tight range sO that a 10 to 20 BP difference could move a manager's performance from the 100th percentile to the 50th; Garcia Hamilton repositioned its portfolio which appears to be starting to be rewarded. Mr. Cole reviewed the Fiscal Year Rates of Return page, noting the extreme volatility from 2020 through 2023 was unprecedented and has caused significant challenges in evaluating managers. On the Total Fund page, Mr. Cole reported that the portfolio ranked in the top 28h percentile amongst its peers over the trailing 5y years; this is the first and only time in the last 5 years the Plan was not in the top 25th percentile, although, due to the nature of reporting, it's possible for revised performance numbers to shift rankings. He noted that the peer group includes approximately 1100 public pension plans in the United States. Referencing the Actual VS. Target Asset Allocation and Asset Allocation & Performance = Gross pages of the materials, Mr. Cole explained that the portfolio is underweight in fixed income while higher interest rates have made that an attractive asset class. He recommended the Board consider liquidating $2 million from Am Funds EuroPacific Growth, $2 million from Granite Large Cap Growth, $2 million from Allspring Large Cap Growth, and $4 million from Newton US Dynamic Large Cap Value, and investing $5 million in NIS Core Fixed Income and $5 million in Sawgrass High Quality Core Fixed Income. He reviewed the recommendations NIS provided at the September 22, 2023, Board Meeting, including allowing BBB or better grade bonds in the portfolio, which will provide considerably more yield with only slightly more risk. NIS's recommendations are incorporated into the Proposed Amendment to the Investment Policy Statement (IPS) in Item 11.1. Mr. Cole added that Garcia Hamilton stays in the higher-grade space and that adding to Garcia Hamilton's allocation would not take advantage of the more permissive investment standards which he will address in item 11.1., and therefore he recommended adding only to NIS's and Sawgrass's allocations. Mr. Cole repeated his recommendation and clarified that he would like to reduce thei international exposure due to risk, as international markets are slow to reopen from the COVID-19 pandemic as well as the war in the middle east. Further, Newton is performing well, and that reducing its balance is not due to lack of confidence in the fund management. The recommended rebalancing would increase the fixed income allocation from approximately 19% to approximately 22% to 23%, which is closer to that target. If rates stay high, or the Fed raises them even more, he will make a similar recommendation at a future date. Trustee Hudgins made a motion to liquidate $2 million from Am Funds EuroPacific Growth, $2 million from Granite Large Cap Growth, $2 million from Allspring Large Cap Growth, and $4 million from Newton US Dynamic Large Cap Value, and investing $5 million in NIS Core Fixed Income and $5 million in Sawgrass High Quality Core Fixed Income. Trustee Baty seconded the motion. The motion passed unanimously (5-0). Trustee Hudgins discussed his concerns for identifying the portfolio's performance in the context of the Plan's financial needs. He asked Pension Administration to request Gabriel, Roeder, and Smith (GRS), the Plan's actuaries, include in the annual valuation report to be presented at the February 23, 2024, meeting, al historical account of the Plan's funded ratio compared to its rates of investment return. He offered to be part of any conversation with GRS to clarify his request, and advised he plans to attend the February 23, 2024, meeting. He discussed the difficulty in predicting with certainty the Plan's future needs. Mr. Cole and Attorney Christiansen discussed the actuarial assumption process and how frequently GRS evaluates its assumptions. Mr. Cole noted that the expected rate of investment return is the minimum amount needed to pay the Plan's obligations and therefore actuaries will measure the annual gain or loss to the assumed rate of investment return. In this context, in 2022 when the Portfolio returned -16.36%, the loss is should be measured to the expected rate of investment return, which is currently 5.9%, sO that the actual loss is the difference between 5.9% and -16.36%), which is -22.26%. Similarly, the reported gain in 2021 was 23.67%, sO the portfolio only gained the difference of 17.77%. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: 11.1. Presentation and Discussion Re: Proposed Amendment to Investment Policy Statement Presenter(s): Larry Cole, Executive Vice President, Burgess Chambers & Associates Mr. Cole reiterated this was prompted by NIS's recommendations to update the Board's Investment Policy. With Mr. Cole's confirmation, Attorney Christiansen advised that paragraph 1 should have been underlined, and the paragraph it replaced should have been shown and lined through. They agreed that the proposed changes are within the existing City Ordinances. Trustee Hudgins made a motion to approve the changes to the IPS and addenda as presented; Secretary/Treasurer Griggs seconded the motion. The motion passed unanimously (4-0). Mr. Cole advised that the specific changes in the IPS are restated in items 3 and 4 in each fund manager- specific addendum, and the name of the fixed income index is updated from Barclays Capital U.S. Aggregate Bond Index to Bloomberg U.S. Aggregate Bond Index; he requested the Board's approval for the 3 addenda to the IPS. Attorney Christiansen advised that, when the Board approved the IPS, the approval included the addenda. Mr. Cole asked the Board to consider proposing an ordinance for approval by the City Commission to allow the Plan to invest in private credit and other asset classes. BCA has been reviewing a Nuveen/Churchil fund which is more liquid than most private credit funds, invests 100% in floating rate bonds with 5% to 6% spreads over the Secured Overnight Financing Rate (SOFR), which replaced the London Interbank Offered Rate (LIBOR), and it has an extremely low default rate; City ordinances specifically prohibit the Plan from investing in private credit. BCA has recommended this fund to some clients when allowed. He noted that, if the applicable ordinance were to be changed to allow investing in private credit, the Plan would not be obligated to invest in private credit but would have the option to do sO. He advised that all of Attorney Christiansen's other clients are able to invest inj private credit. Iti is not highly liquid, but spreads are currently paying 12%. Trustee Hudgins and Mr. Cole discussed Nuveen/Churchills default and recovery rates. Attorney Christiansen noted these details are premature until the Plan is allowed to invest in this asset class. Attorney Christiansen explained that he had sent an e-mail which included the existing ordinance requirements, as well as his proposed, more permissive language. He noted that Florida statutes allow local municipalities to determine their own investment parameters or restrictions, provided their allocation Book 1 Page 380 12-08-2023 8:15 a.m. Book 1 Page 381 12-08-2023 8:15 a.m. does not exceed 25% in foreign securities, but that the City of Sarasota's ordinances are considerably more restrictive than most of his other clients, including those which are significantly smaller than the Plan. His proposed language would allow the Board greater authority in choosing its investment asset classes, while still being subject to prudency and limitations. Mr. Cole noted that he has not recommended private equity to his clients because the risk does not justify the returns, but that over time, the Board may wish to have greater investment options. Attorney Christiansen reiterated that the authority to invest in a greater variety of asset classes does not require the Plan to be invested in every allowable class. He asked, if the Board approves of proposing a change to City ordinances regarding the investment restrictions, that Mr. Cole appear with him before the City Commission; Secretary/Treasurer: Griggs agreed. Trustee Hudgins noted that there are a number of attractive alternative investments, however they are not as regulated by the Securities and Exchange Commission traditional investments. The Board would need to perform more thorough reviews of potential fund managers before investing because operators' and managers' histories are as telling as their investment returns. Mr. Cole agreed and added that TIAA not only owns Nuveen/Churchil but is also a significant investor in that product. Pension Plans Administrator Martin advised that Attorney Christiansen's e-mail was not distributed to the Trustees: Attorney Christiansen advised that he would prepare a draft ordinance for the Board to review at its next meeting. The Board thanked Mr. Cole for his presentation. 12. ATTORNEY MATTERS: Attorney Christiansen advised that Pension Letter 2 is required to be sent to the City Commission with BCA's Q3 2023 report; Pension Plans Administrator Martin advised she will send those after the conclusion of the meeting. Attorney Christiansen advised that the recently passed House Bill 3, which prohibits local pension plans and other public entities from making investment decisions based on non-pecuniary factors, will require a comprehensive report to be filed beginning December 15, 2023. He and other Florida pension attorneys drafted a sample report template to submit to the State of Florida with the Plan's IPS to comply with the reporting requirement. Pension Plans Administrator Martin advised she has already filed the report. Attorney Christiansen advised that he is still compiling medical records for Takiya Ainscoe's request for disability benefits; when all records are received and the cause of Ms. Ainscoe's request is clarified, she will undergo an independent medical evaluation. 13. OTHER MATTERS: 13.1. Presentation and Discussion Re: Administrative Budget Analysis as of September 30, 2023. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Administrative Budget Analysis. To Trustee Hudgins' questions, Pension Plans Administrator Martin explained that the overage for salaries, which was due to the City issuing a wage increase after the Board had approved the 2023 Administrative Budget, was offset by other items for which the actual amounts paid were less than their respective budgeted amounts. Further, the City's 3 defined benefit plans and the defined contribution pension plans share the cost of Pension Administration's salaries; the defined benefit plans each contribute 30% of Pension Administration's salaries, and the defined contribution plan contributes the remaining 10%. The rate at which each plan contributes to shared expenses are flat percentages of the total cost of the specific item; the contribution amount is not based on the number of participants in any of the respective plans. 13.2. Presentation and Discussion Re: Check Register for July 1, 2023, through September 30, 2023. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin presented the Check Register for July 1, 2023, through September 30, 2023. To Attorney Christiansen's question, Pension Plans Administrator Martin advised she had confirmed that 2 of the 3 lines from Empower to Derrick Gilbert were rollovers; the $25,000 payment was a distribution to Mr. Gilbert. Pension Plans Administrator Martin advised the Board that Pete Strong of GRS is unable to attend the January 26, 2024, meeting as previously scheduled, and that the Chair and Secretary/Treasurer advised that he could present the actuarial valuation at the February 23, 2024, meeting; she noted that Mr. Strong will make the actuarial valuation available well before the February 23, 2024, meeting. As there are no presenters currently scheduled for the January 26, 2024, meeting, Pension Plans Administrator Martin asked the Board if it wished to hold or cancel the meeting. By informal consensus, the Board agreed to cancel the January 26, 2024, meeting. To Pension Plans Administrator Martin's question, Attorney Christiansen advised that the Vice Chair, if available, can officiate the February 23, 2024, meeting at which time the Board may elect a new Chair. Chair Konstantopoulos again congratulated Sgt. Rossnagle on his election to the Board and asserted he will dutifully represent the membership. He thanked the Board for the privilege to serve the Plan. The Board, Pension Plans Administrator Martin, Attorney Christiansen, and Mr. Cole thanked Chair Konstantopoulos for his service to the Plan. 14. ADJOURN. Chair Konstantopoulos adjourned the meeting at 10:07 a.m. Chair Demetri Konstantopoulos Seçrétay/yeasurer Shayla Griggs Book 1 Page 382 12-08-2023 8:15 a.m.