Book 1 Page 88 1/24/18 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF JANUARY 24, 2018 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer Pamela Nadalini and Trustee Scott Snow Others: Senior Pension Analyst Anthony Ferrer, Senior Pension. Accountant, Aaron Brooks and Pension Specialist Lois Belle Absent: Trustee Charles Joseph and Attorney Pedro Herrera 1. CALL THE MEETING' TO ORDER: Chair Hartley called the meeting to order at 9:05 a.m. 2. PLEDGE OF CIVILITY: SecretarylTreasurer Nadalini read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Board Meeting Protocols and Pledge of Civility." 3. PUBLICINPUT: No one signed up to speak. 4. APPROVAL OF MINUTES: 4.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of December 6, 2017 A motion was made by Vice Chair Roberson and seconded by Trustee Snow to approve the Minutes of the Firefighters' Pension Plan Board of Trustee Regular Meeting of December 6, 2017. Motion carried unanimously (4-0). 5. BOARD APPOINTMENT: 5.1. Approval Re: Re-Nomination of Charles Joseph to the Firefighters Pension Plan Board of Trustees Presenter(s): Secretary/reasurer Nadalini Secretary/Treasurer: Nadalini stated that the seat FP1 expires January 31, 2018; that Trustee Joseph is seeking re-election for the period of January 2018 to January 31, 2022; that there are no other nominations received for seat FP1. A motion was made by Trustee Snow and seconded by Vice Chair Roberson to accept nomination, with Vice Chair Roberson stating that Trustee Joseph has served the Board very conscientiously over the years. Motion carried unanimously (4-0). 6. INVESTMENT PERFORMANCE REPORT: 6.1. Presentation and Discussion Re: Graystone Consulting Performance Review as of December 31, 2017 Presenter(s): Charlie Mulfinger, Managing Director, and Scott Owens, Institutional Consultant, Graystone Consulting Mr. Charlie Mulfinger, Managing Director, and Scott Owens, Institutional Consultant, Graystone Consulting, came before the Board. Mr. Mulfinger stated that fund performance was due in part to equity positioning of fund and overweighting in the international markets; that the fund had a total gain of $6,456,511 net of fees as of December 31, 2017. Mr. Owen provided an overview of the economy and the market; that Gross National Product (GDP) is 3.2%; that Unemployment is 4.1%; that large cap stocks outperformed small cap stocks; that growth stocks outperformed value stocks; that all ten (10) sectors of the Standard & Poor's Indices were positive. In response to a question from Secretary/Treasurer Nadalini asking how the government shutdown impacted the market, Mr. Mulfinger stated that there was no impact to the market, that the shutdown was disruptive but not seen as a negative. In response to a question from Chair Hartley asking if the fund is able to invest in high yield, Mr. Mulfinger stated that there is no longer a state mandate limiting investment in high yield bonds but that strategy is not in compliance with the fund's current Investment Policy Statement; that he is forecasting that the international markets will begin to catch up. Mr. Mulfinger recommended a tactical shift of assets to move 3% from large cap and reinvest into international value and growth equally; that he would also recommend bringing bonds into compliance with the Investment Policy Statement. A motion was made by Secretary/Treasurer Nadalini and seconded by Vice Chair Roberson to reduced assets from HGK by 1% and reduce assets from Sawgrass by 2% and increase assets by 1.5% for Lazard (international value) and increase assets by 1.5% for Renaissance (international growth) . Motion carried unanimously (4-0). A motion was made by Vice Chair Roberson and seconded by Secretary/Treasurer Nadalini to move the necessary amount from DRZ to bring fixed income (Richmond) in line with 20% target. Motion carried unanimously (4-0). In response to a question from Trustee Snow asking how long Oak Ridge is holding cash on average, Mr. Mulfinger stated that Oak Ridge is a conservative growth manager that will sometimes hold cash longer because they are looking for sound investments in line with their strategy; that Oak Ridge has added value versus risk so Graystone Consulting is not concerned with Oak Ridge at this time; that Scott Owens will make a call to Oak Ridge to discuss further. Mr. Mulfinger reviewed the investment managers' performances; that the risk/return analysis shows portfolio is in the northwest quadrant which is high growth, low risk. Trustee Snow noted a typographical error on pages 7 and 9 of Graystone's presentation; that the fund's return of assets is 7.0% not 7.25%. The Board thanked Mr. Mulfinger and Mr. Owens. Book 1 Page 89 1/24/18 9:00 a.m. Book 1 Page 90 1/24/18 9:00 a.m. 7. UNFINISHED BUSINESS: 7.1. Approval Re: Operating Rules and Procedures Credit Card Amendment Presenter(s): Attorney Herrera Chair Hartley stated that Attorney Herrera is out ill but that the Board was presented with the Operating Rules and Procedures - Credit Card Amendment at the December6 6, 2017 regular meeting; that changes as noted at that meeting were made. A motion was made by' Vice Chair Roberson and seconded by Secretary/Treasurer: Nadalini to accept the policy change to the Operating Rules and Procedures - Credit Card Amendment. Motion carried unanimously (4-0). 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Actuarial Valuation Report for Fiscal Year Ended September 30, 2017 Presenter(s): Brad Armstrong, Actuary, Gabriel, Roeder, Smith & Company Brad Armstrong, Actuary, Gabriel, Roeder, Smith & Company, came before the Board and introduced himself for the record. Mr. Armstrong presented the Actuarial Valuation Report as of September 30, 2017; that the recognized experience gain for the fiscal year was $0.7 million, amortized over 5 years; that there was one normal retirement versus the four expected retirement requests; that the Plan is currently 76.7% funded, an increase from 74.7% last fiscal year; that the funded condition should move towards 100% over the remaining amortization period ending September 30, 2023. In response to a question by Chair Hartley asking where the direction come from to move to 100% funded, Mr. Armstrong stated that this was a policy direction set by the Board. Discussion ensued around the unfunded value of the fund. Mr. Armstrong recommended to keep the existing unfunded liability and amortize each subsequent year's gain orloss and the Board agreed by consensus to revisit the amortization policy at the Firefighters' Pension Plan Board of Trustee Regular Meeting of February 28, 2018 with Mr. Armstrong attending the meeting via telephone. A motion was made by Trustee Snow and seconded by Secretary/reasurer Nadalini to accept the Actuarial Valuation Report for Fiscal Year Ended September 30, 2017 as presented. Motion carried unanimously (4-0). 8.2. Presentation and Discussion Re: GASB No. 67 Plan Reporting and Accounting Schedules for Fiscal Year Ended September 30, 2017 Presenter(s): Brad Armstrong, Actuary, Gabriel, Roeder, Smith & Company Mr. Armstrong stated that the GASB No. 67 disclosure is a requirement for pension funds in preparation for the audited financials and more for informational purposes. There were no questions from the Board regarding the GASB No. 67 disclosure and the Board thanked Mr. Armstrong for his presentations. 9. ATTORNEY MATTERS: Attorney Herrera was absent and there were no issues to speak of. 10. OTHER MATTERS: Al Request to Speak was submitted and Chair Hartley called Mr. Ernest Cave up to the dais. Mr. Cave introduced himself and stated that he wanted the Board to be aware of an issue; that in 2015, 1099s that went out to some Firefighters/Police Officers were incorrect; that this issue affected disability pensions and one of the necessary boxes were not marked properly; that the correction of the erroneous 1099s triggered an Internal Revenue Service (IRS) flag; that the Pension Department has offered assistance in any way possible. Secretary/Treasurer Nadalini stated that she was aware of the 2015 1099 issue and that the issue was due to ADP payroll services inaccurately coding the disability pensions; that Staff worked diligently with ADP to resolve the issue; that her office and the Pension staff are committed to assisting in any way to resolve issues that may arise due to the error that occurred. Senior Pension Analyst Ferrer stated that issue stems from the nature of the pension; that this is a disability pension and a disability pension is tax exempt up to the age of 65; that it is an isolated incident between the IRS and the individual; that the IRS uses a discriminant function, or a computer program, which triggers an audit flag if a large pension disbursement without taxes withheld comes through; that he has offered his continued assistance to this individual for resolution. Secretary/Treasurer Nadalini reiterated her office's attention to this matter; that there are check and balances are in place to ensure that potential issues are corrected. The Board thanked Mr. Cave for coming to the meeting. Vice Chair Roberson stated she would like to attend the National Conference on Public Employee Retirement Systems (NCPERS) conference in New York in May 2018, that she has a scheduling conflict with the FTTPA winter and summer conferences. By unanimous consent, the Board approved Vice Chair Roberson's request to attend the NCPERS conference. By unanimous consent, the Board agreed to direct Staff to order one (1) dress shirt and one (1) polo shirt for Trustees to wear; Staff with reach out to Trustees with a design sample for approval and sizing for each Trustee interested. In addition, Trustees may order business cards if they wish. 11. ADJOURN. Chair Hartley adjourned the Regular Meeting of the Firefighters' Pension Plan Board of Trustees at 11:53 a.m. Chair Michael Hartley SecretaryTreasurer Pamela Nadalini Book 1 Page 91 1/24/18 9:00 a.m.