Book 1 Page 295 02-18-2022 8:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 18, 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 regular meeting to order at 8:30 a.m. 2. PLEDGE OF ALLEGIANCE: Presenter(s): Secretary Griggs. Secretary led the Board and meeting attendees in the Pledge of Allegiance. 3. PLEDGE OF CIMILITY: 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. Treasurer Strickland was not present at the time of Roll Call. 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 21, 2022. Presenter(s): Chair Chapdelain. Trustee Keeler made a motion to approve the minutes of the Regular meeting of January 21, 2022; Vice Chair Nicholas seconded the motion. The motion carried unanimously (5-0). 7. BOARD ELECTIONS: 7.1. Presentation and Discussion Re: Nomination to General Employees' Pension Plan Board of Trustees Seat GP3. Presenter(s): Secretary Griggs. Treasurer Strickland joined the meeting at 8.32 a.m. Senior Pension Analyst Ferrer appeared before the Board and unsealed the ballots from the election of Seat GP3. Secretary Griggs read the ballots for the record; Pension Plans Administrator Martin and Pension Specialist Gottlieb recorded the ballots. Susan McLeod received 3 votes; Stacey Monroe received 3 votes; and Jan Thornburg received 15 votes. Secretary Griggs administered the oath of office to Trustee Thornburg, and she joined the Board on the dais. 8. APPROVAL OF RETIREMENT REQUEST(S): 8.1. Presentation and Discussion: DROP Retirement Request of Richard Campbell Jr. Presenter: Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated that Mr. Campbell requests to enter the DROP at age 65, effective December 1, 2021, with 20.35 years of service; he selected the 50% to joint annuitant option. Trustee Keeler made a motion to approve Mr. Campbell's request for retirement; Trustee Reardon seconded the motion. The motion carried unanimously (7-0). 9. INVESTMENT PERFORMANCE REVIEW: None. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: 11.1. Presentation and Discussion Re: Mauldin & Jenkins, Financial Statements for the Fiscal Years ending September 30, 2021 and 2020. Presenter(s): Alison Wester, CPA, Partner, Mauldin & Jenkins. Alison Wester of Mauldin & Jenkins appeared before the Board telephonically and introduced herself. Ms. Wester stated that she is presenting a clean opinion for the General Employees Pension Plan for the fiscal year ending September 30, 2021. She clarified the financial statements only cover the General Employees' Pension Plan and do not address the City of Sarasota; she gave an overview of the contents of the financial statements. She discussed the Statements of Fiduciary Net Position and Statements of Changes in Fiduciary Net Position, noting the significant investment gains for the year. Ms. Wester reviewed the Notes to Financial Statements. Regarding Note 4, Foreign Currency Risk, she stated that the Plan is within the Policy limit of 17.5% for foreign currency risk, however, as of September 30, 2021, the Plan held mutual funds, in the amounts of $31 million and $23 million, which contained foreign currencies. The mutual funds containing foreign currencies represented an aggregate 17% and 15% of the total Plan investments. She noted that the mutual funds holding foreign currencies had tremendous growth by the end of Fiscal Year 2021 and it therefore it was possible the concentrations were an anomaly. In Note 4, Fair Value Measurements, Ms. Wester clarified that Level 1 is the exact same investment in an active market; Level 2 is a similar investment in an active market; Level 3 is any other valuation method. She also pointed out that real estate investments were valued using Net Asset Value as explained on page 20. Note 5 states the Net Pension Liability, which shows the Plan fiduciary net position as a percentage of the total pension liability increased from 73.09% as of fiscal year end 2020 to 85.31% as of fiscal year end 2021; while the liabilities remained relatively consistent, the change is due to the significant investment portfolio growth. Book 1 Page 296 02-18-2022 8:30 a.m. Book 1 Page 297 02-18-2022 8:30 a.m. Under the Required Supplementary Information, Ms. Wester stated that the Schedule of Changes in Net Pension Liability and Related Ratios will eventually present 10 years of accumulated information and this page in future audits will need to be reformatted for legibility. Trustee Reardon asked how the assumed rate of inflation was determined. Ms. Wester advised that the inflation rate is part of the actuarial assumptions, and therefore questions regarding it would be better addressed by Pete Strong of Gabriel, Roeder, and Smith, the Plan's actuary. She understands it to be a long-term look at inflation over either the required projected contribution period of time or the calculated required payments of benefits period. Chair Chapdelain noted that the required contributions are calculated 2 years in advance; Ms. Wester confirmed that the contributions stated in this report were determined in 2019, which is in accordance with accounting standards, although they may be revised if warranted. Chair Chapdelain asked Ms. Wester to clarify the aggregate investment in foreign stocks exceeding the asset allocation policy. Ms. Wester explained that, according to the investment performance report, there were 31 funds which held investments in foreign currencies: Templeton International Value Fund, Lazard Global Infrastructure, and Renaissance International Growth. Each fund is mixed and doesn't have a specific investment in any single entity, however, in aggregate, they are all international, and had double-digit increases for the year, and therefore the financial statements made note of them. Attomey Christiansen explained that this was not a violation of the Plan document but of the Investment Policy Statement, which the Board determines and imposes upon itself; he recommended either amending the Investment Policy Statement or rebalance the portfolio to be in compliance. Pension Plans Administrator Martin advised she would contact Scott Owens of Graystone Consulting to determine if he could appear at the April 2022 meeting; he is currently scheduled to present at the May 2022 meeting. Ms. Wester discussed the contents of the Auditor's Discussion and Analysis, including the Required Communications. She invited the Board to enroll in any continuing education courses offered by Mauldin & Jenkins. Chair Chapdelain thanked Ms. Wester for her presentation and service to the Plan. Secretary Griggs expressed her appreciation to Ms. Wester and Pension Administration for their efforts in the audit. Chair Chapdelain agreed. 12. ATTORNEY MATTERS: Attorney Christiansen advised he reviewed the Investment Policy Statement which states that the target for international value is 7.5%, and the target for international growth is 7.5%, for a combined target of 15%; further, the maximum holdings are 8.75% in each class for a maximum of 17.5%. Chair Chapdelain noted that the international infrastructure fund may have caused the concern. Attorney Christiansen advised Trustee Thornburg she must file a Form 1 for new trustees if she has not already done so for her current position with the City. He also asked if former trustee Kari McVaugh had completed Form 1F for exiting trustees. Pension Plans Administrator Martin advised that she had provided Form 1F to Ms. McVaugh; Attorney Christiansen stated that was the most the Plan could do. At Attorney Christiansen's request, Pension Plans Administrator Martin advised she has submitted to the State of Florida notification that the Board declared an expected rate of investment retum upon accepting the actuarial valuation as of September 30, 2021. Lastly, Attorney Christiansen stated that Susan Blake has applied for disability benefits; he has sent her interrogatories to be completed and returned. He noted that Ms. Blake is receiving Social Security Disability benefits which requires a disabilitant be unable to perform any gainful employment, which is the same criteria for the Plan. Upon receipt of the interrogatories, he will schedule an independent medical evaluation and then al hearing for the Board to review the records. 13. OTHER MATTERS: None. 14. ADJOURN. Chair Chapdelain noted that the annual Membership meeting will be held on Tuesday, March 22, 2022, and adjourned the General Employees Pension Plan Board of Trustees regular meeting at 9:02 a.m. 6/1 A - Chair Ryan Chapdelain a Secretary Shayla Griggs Book 1 Page 298 02-18-2022 8:30 a.m.