Book 1 Page 299 03-22-2022 8:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES' PENSION PLAN BOARD OF TRUSTEES MEMBERSHIP MEETING OF MARCH 22, 2022 Present: Chair Ryan Chapdelain, Vice Chair Mark Nicholas, Treasurer Kelly Strickland, Secretary Shayla Griggs, Trustee Robert Reardon, Trustee Barry Keeler, and Trustee Jan Thornburg. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: None. 1. CALL MEETING TO ORDER: Chair Chapdelain called the General Employees Pension Plan (Plan) Board of Trustees Membership Meeting to order at 12:00 noon. 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 not engage in personal attacks." 4. ROLL CALL: Pension Plans Administrator Debra Martin called roll. All trustees were present. Trustee Keeler requested an excused absence for the April 11, 2022 meeting; he will be unable to attend due to personal obligations. 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 February 18, 2022. Presenter(s): Chair Chapdelain. Attomey Christiansen noted that, under Attorney Matters, in the third paragraph of the February 18, 2022 meeting minutes, the Board had declared an, "expected," rate of return, and not an, "assumed," rate of return, and suggested amending the minutes. Trustee Reardon made a motion to approve the minutes ofthe Regular meeting of February 18, 2022 as amended by Attorney Christiansen; Treasurer Strickland seconded the motion. The motion carried unanimously (7-0). 7. BOARD OF TRUSTEE REPORTS: 7.1. Presentation and Discussion Re: Highlights of Pension Activity for 2021. Presenter(s): Secretary Griggs. Secretary Griggs presented the Highlights of Pension Activity for 2021, stating that it provides a summary of the Board's accomplishments for the year. She noted the Board had declared an expected rate of investment return of 6.55% as well as added new Board members. Chair Chapdelain noted that, as of September 30, 2021, the Plan had 109 active members; Pension Plans Administrator Martin stated that currently, the Plan has 100 active members. The Board accepted the Highlights of Pension Activity for 2021 by consensus. 7.2. Presentation and Discussion Re: Treasurer's Report for the period ending September 30, 2021. Presenter(s): Treasurer Strickland. Treasurer Strickland presented the Treasurer's Report for the period ending September 30, 2021, noting little change in employer contributions from the prior year, but a $27 million increase in investment income compared to the prior year. She noted the net rate of retum for the fiscal year was 22.97% and there had been little change in expenditures. She discussed the portfolio balance as of September 30, 2021, which brought the ratio of funding value of assets to actuarial accrued liability to 76.5%. The Board accepted the Treasurer's Report for the period ending September 30, 2021 by consensus. 7.3. Presentation and Discussion Re: Annual Board Report for 2021. Presenter(s): Secretary Griggs. Secretary Griggs explained this was presented to the City Commission on March 21, 2022 at a regular Commission Meeting and approved by the Commission on consent. The Board accepted the Annual Board Report for 2021 by consensus. 7.4. Presentation and Discussion Re: Proposed Annual Budget for Fiscal Year 2022 - 2023. Presenter(s): Secretary Griggs. Secretary Griggs presented the Proposed Annual Budget for Fiscal Year 2022 - 2023 which is for administrative expenses. Secretary Griggs stated that this budget is responsible and accountable; she reviewed the items which changed from the 2021 - 2022 budget, including legal fees. Pension Plans Administrator Martin noted the Board can expect at least one request for disability benefits in Fiscal Year 2023; there had been two disability benefit requests in Fiscal Year 2021 and Pension Administration had to request a budget adjustment from the Board. Attorney Christiansen explained that legal expenses include payments to physicians who perform independent medical examinations, which are a component of a disability request. Treasurer Keeler made a motion to approve Proposed Annual Budget for Fiscal Year 2022 - 2023; Treasurer Strickland seconded the motion. The motion carried unanimously (7-0). 8. APPROVAL OF RETIREMENT REQUEST/S): None. 9. INVESTMENT PERFORMANCE REVIEW: Book 1 Page 300 03-22-2022 8:30 a.m. Book 1 Page 301 03-22-2022 8:30 a.m. 9.1. Presentation and Discussion Re: HGK Asset Management, Performance Review as of December 31, 2021. Presenter(s): Matthew Witschel, Director, National Accounts, HGK Asset Management. Matthew Witschel of HGK appeared before the Board and introduced himself. Mr. Witschel gave a brief overview of his presentation. He discussed HKG's Investment Philosophy and noted its benchmark is the Russell 1000 Value Index. He reviewed the Statement of Changes Trailing 1 Year as of December 31, 2021, noting the Market Value at the top of the page should state as of December 31, 2020, and not December 1, Statement of Changes Since Inception, and Long-Term Performance Calendar Year December 31, 2021. Regarding the Attribution Analysis YTD, Mr. Witschel explained that Selection + Interaction contributed 7.95% outperformance against the index and demonstrates how the fund's performance was due to security selection and not due to overweighting or underweighting. While sector weighting is of secondary importance, bottom-up selection is HGK's primary focus. Mr. Witschel discussed the Portfolio Characteristics, noting its Price to Earnings ratio of 14.4x is lower than the benchmark's 17.2x, and the S&P 500's, which he believed was approximately 22x. Calendar year-to-date, HGK's model portfolio, which closely track's the Plan's portfolio, is up 1.7%, and is 3 points better than the benchmark. He reviewed the Top Ten Holdings, advising that the portfolio is overweighted in health care, but not significantly overweighted; the portfolio is, however, underweighted in financials compared to the index, and it is only coincidental that as many financials and health care companies are in its top ten holdings. He stated that the portfolio's returns were not due to the performances of any few stocks, but of the portfolio as a whole. Mr. Witschel provided a market outlook, first stating that Michael Pendergast, HGK's CEO, CIO, and Portfolio Manager, was unable to attend today's meeting due to personal reasons but anticipated future appearances before the Board. Mr. Witschel noted how current events are impacting the stock market and economy, including the war in Ukraine and rising inflation. HKG believes inflation will rise throughout 2022, and begin to normalize in 2023, suggesting modest equity returns for the short-term and negative retums for bonds. He discussed the Portfolio Commentary Fourth Quarter 2021, Large Cap Quality Quintile Returns around Major Market Drawdowns, which shows how both high- and low-quality stocks have performed during market drawdowns in 2002 at the end of the tech-bubble, 2009 during the financial market crisis, and the market correction in 2016. He explained that, as the overall market declines, higher quality companies tend to decline slower than low quality, but after the market passed its trough, lower quality companies rebound faster; the same pattern held in 2020 with an initial, low-quality rally, and, as the second and third year of the recovery came around, high quality stocks outperformed. Regarding the Scorecard Factor Relative Weight by Quintile, Mr. Witschel explained that although HGK focuses more on fundamentals and bottom-up research, factors are also worth some attention; this chart shows HKG is overweight in high quality and underweight in low quality, as well as overweight in less expensive stocks in its universe and underweight in more expensive stocks. He stated this is a typical representation of HKG's portfolio. Mr. Witschel concluded his presentation by asserting the market is shifting to favor HGK's investment philosophy. Chair Chapdelain thanked Mr. Witschel for his presentation. 9.2. Presentation and Discussion Re: INVESCO, Performance Review as of December 31, 2021. Presenter(s): Marvin Flewellen, nvestment/Senior Client Portfolio Manager, INVESCO. Marvin Flewellen appeared before the Board elephonically and introduced himself. Mr. Flewellen thanked the Board for its continued relationship, noting the Plan initially invested with INVESCO in 1994. He pointed out that the current market has been challenging and volatile for fixed income, even though the portfolio has high credit quality and no direct exposure to Russia. He stated that the Federal Reserve Banki intends to be very active over ther next several quarters, andi inflation is not typically a positive environment for fixed income investments. He reviewed the Portfolio Summary, the Market Value Reconciliation, the Market Overview which shows US Treasury Yields noting the current 2-year, 5-year, 10-year, and 30-year returns are not that far off of the same on December 31, 2019. He reviewed the Investment Grade Sectors - Excess Returns and compared the best and worst sectors from 2021 to year-to-date 2022. Mr. Flewellen reviewed the Trailing Performance as of December 31, 2021 and explained there are some circumstances in which BBB securities outperform higher grades; during those periods, the portfolio, which by mandate does not hold grades less than A-IA3, would trail the benchmark which contains BBB grade securities. He reviewed the Positives and Negatives on the Trailing Performance as of December 31, 2021 page of the materials as well as the Trailing Performance as of February 28, 2022. Mr. Flewellen discussed the portfolio characteristics, noting the duration is close to that of the benchmark, and thei index contains BBB grade securities which can produce higher yields. He reviewed the Sector distribution and explained that INVESCO is underweighted in Mortgage-Backed Securities because of its general view of the mortgage market as well as the Fed coming away from buying mortgage-backed securities to dampen economic growth and liquidity. He discussed the Quality distribution and Duration distribution. Mr. Flewellen reviewed the Executive Summary and provided a market outlook; INVESCO anticipates continued Fed tightening with six or seven additional interest rate increases, absent any significant weakness in economic forecasts or inflation. While the portfolio is well positioned, INVESCO also anticipates difficult times for fixed income investors over the short term. He advised INVESCO's investment team has remained consistent and discussed their ratings process. Trustee Reardon asked Mr. Flewellen to explain how INVESCO could anticipate high rates of GDP growth while central banks are tightening and inflation is high Mr. Flewellen clarified that INVESCO expects high rates of nominal GDP growth and not net GDP growth. He explained that, with the onset of the COVID-19 pandemic, both the goods and services sectors were severely affected. While goods have rebounded considerably in 2021, the service industry has not. The demand for goods has escalated faster pre-pandemic levels, yet services continue to lag. The nominal growth expectation is for services return to pre-pandemic levels. In that context, the increased levels in the service sector will add to higher levels of nominal GDP. Mr. Flewellen concluded his presentation by noting the advantages of al higher quality allocation, being overweight in credit and underweight in mortgages considering anticipated Fed actions and favoring whole-portfolio performance rather than one or two strong holdings. He posited that 2022 will be challenging for fixed income due to rising interest rates, the wari in Ukraine, and other unçertainties, buti for a retumn to predictable performance over the long term as those issues resolve. Chair Chapdelain thanked Mr. Flewellen for his presentation and INVESCO's service to the Plan. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: Trustee Keeler advised he has recently been approached by retired participants who have asked if he would resume supplying information to participants, such as the meeting agendas and materials, as well as FPPTA newsletters. Trustee Keeler asked if the Board would take issue if he were to provide those to active and retired participants at their requests. A discussion ensued. While all meeting agendas and materials are available to the public and posted to the City Auditor and Clerk's section oft the City's website, the Board and Attorney Christiansen generally found no issue with a trustee providing participants with meeting materials and newsletters, nor would a trustee need the Board's permission to do so; however, trustees must not speak or appear to speak on behalf of the Board. Attorney Christiansen suggested Trustees refer participants' questions to Pension Administration Additionally, Pension Administration advised it does not have a list of retirees' email addresses, and therefore would not be able to provide weblinks to meeting agendas to all retirees. Trustee Keeler explained that when he previously served on the Board, he was elected by a specific segment of City employees, and at that time, he was able to conveniently pass along meeting information, presentation materials, and FPPTA newsletters. Now that he has been elected by employees and retirees, he merely wished to raise the question of effectively and responsibly communicating this information to all participants. Book 1 Page 302 03-22-2022 8:30 a.m. Book 1 Page 303 03-22-2022 8:30 a.m. Attorney Christiansen reminded the Board that trustees have a fiduciary responsibility to all Plan participants, both employees and retirees, irrespective of who was eligible to vote for elected trustees. Attorney Christiansen further encouraged the Board to focus any communications with participants to the entirety of participants, and not any subset of participants. Trustee Nicholas suggested each trustee could regularly forward to Pension Administration the e-mail address of any retiree who contacted that trustee for such materials SO that Pension Administration could build a distribution list for information. Attorney Christiansen asked how Pension Administration contacted retirees in the last Board election; Pension Plans Administrator Martin advised that election materials were distributed by regular mail, and that many retirees may not have e-mail capabilities. Secretary Griggs suggested some retirees may not want to provide the Plan with their e-mail address. 12. ATTORNEY MATTERS: Attorney Christiansen explained that the 2022 State of Florida Legislature's season had ended, and it passed no legislation which could impact the Plan. Attorney Christiansen stated that his office is in the process of compiling medical records for Susan Blake's request for disability benefits. He noted the records received to date confirm Ms. Blake is receiving Social Security Disability benefits; if a participant applies for Plan disability benefits, that participant's Social Security Disability status may be considered by the Board in determining whether that participant meets the Plan's requirements for disability benefits. 12.1. Presentation and Discussion Re: Securities Class Action Against Fluidigm Corporation. Presenter(s): Scott Christiansen, Christiansen & Dehner. Attorney Christiansen stated he received an e-mail from Attorney Atara Twersky, of Abraham, Fruchter & Twersky, regarding the Board's decision to not pursue lead plaintiff in the class action against Fluidigm Corporation. He explained that the lead plaintiff was an individual who, presumably represented by competent counsel, had filed a complaint, and amended complaints, which were dismissed by a court for not stating a cause of action which the judge deemed appropriate. Attorney Christiansen had no opinion regarding Attorey Twersky's communication and believed the Board was justified in its decision to not pursue lead counsel. Attorney Christiansen was doubtful the Board would have received $116,000 as a result of litigation, which was the amount Attorney Twersky advised the Plan lost as a result of investment in Fluidigm Corporation. In response to Trustee Thornburg's question, Attorney Christiansen explained that the Board treats each request for lead counsel on a case-by-case basis, and it has recently been lead counsel in a similar claim. Chair Chapdelain thanked Attorney Christiansen for his presentation. 13. OTHER MATTERS: 13.1. Presentation and Discussion Re: Administrative Budget Expense Report, October 1, 2021, through December 31, 2021. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated she had intended to present the Administrative Budget Expense Report to the Board at its February 2022 meeting, however she wished to avoid any confusion with Mauldin & Jenkins' presentation of the Plan's financial statements which were presented at the February 2022 meeting. She noted that the items which had 0% and 100% expenditures were a result of the timing of the charges for those items, which was annual. The Board had no questions regarding the Administrative Budget Expense Report. 13.2. Presentation and Discussion Re: Check Register. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated that payments made to individuals, or to Empower for the benefits of individuals, were disbursements of DROP funds. The payments on October 12, 2021 to people with the same last name were payments made to the beneficiaries of an individual who had been in the DROP program and who passed away prior to leaving the DROP. Regarding payments to Staples, two-thirds of those amounts are reimbursed by the two other defined benefit pension plans sponsored by the City. 13.3. Presentation and Discussion Re: Asset Allocation. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated that this allocation is as of March 11, 2022 and explained each of the columns on the statement. To Treasurer Strickland's question, Pension Plans Administrator Martin explained that Pension Administration performs this analysis monthly to determine where to draw assets from to pay monthly benefit payments. While she had initially intended to present the analysis as of December 31, 2021, Pension Plans Administrator Martin stated that it seemed appropriate to provide more current information. To Attorney Christiansen's question, Pension Plans Administrator Martin stated that Pension Administration determines which investments to drawi from, and it would consult with the Investment Consultant if the Investment Consultant were considering reallocating amounts to rebalance the portfolio for compliance, or if the Plan had recently directed money to be invested into a specific fund to avoid immediately withdrawing funds which had just been invested. Lastly, Pension Plans Administrator Martin stated that Pension Administration had sent out nomination forms for Seat 2, which is currently held by Chair Chapdelain and the term for which expires June 30, 2022; to date, Pension Administration has received one nomination form, which was from Chair Chapdelain. 14. ADJOURN. Chair Chapdelain noted that the next regular meeting will be held on Monday, April 11, 2022, and adjourned the General Employees Pension Plan Board of Trustees membership meeting at 1:18 p.m. S6 Cg Chair Ryan Chapdelain Secretary Shayla Griggs Book 1 Page 304 03-22-2022 8:30 a.m.