Book 1 Page 383 02-23-2024 8:15 a.m. MINUTES OF THE CITY OF SARASOTA POLICE OFFICERS' PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 23, 2024 Present: Chair Johnathan Todd, Vice Chair Ronnie K. Baty, Secretay/reasurer Shayla Griggs, Trustee Joseph Jody" Hudgins, and Trustee Tyler Rossnagle. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, and Pension Specialist Peter Gottlieb. Absent: None 1. CALL MEETING TO ORDER: Presenter(s): Vice Chair Todd. a Vice Chair Todd called the regular meeting of the Police Officers' Pension Plan (Plan) Board of Trustees to order at 8:16 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): Vice Chair Todd. Vice Chair Todd 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. All trustees were 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 December 8, 2023. Presenter(s): Vice Chair Todd. Trustee Baty made a motion to approve the minutes of the Regular Meeting of December 8, 2023; Trustee Hudgins seconded the motion. The motion passed unanimously (5-0). 7. NOMINATION OF BOARD OFFICERS: 7.1. Presentation and Discussion: Selection of Chair. Presenter: Vice Chair Todd. Trustee Hudgins nominated Vice Chair Todd as Chair; Trustee Hudgins seconded the nomination. The nomination passed unanimously (5-0). Secretary/Treasurer Griggs advised that, because the Vice Chair position is now vacant, the Board must elect a new person to that position. Trustee Hudgins nominated Trustee Baty as Vice Chair; Secretary/Treasurer Griggs seconded the nomination. The nomination passed unanimously (5-0). 8. RETIREMENT REQUESTS: 8.1. Presentation and Discussion: The Normal Retirement Request of Becky Worthington. Presenter: Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin advised that Officer Worthington requests a normal retirement after 22 years of service at age 50; she selected the lifetime only option. Vice Chair Baty made a motion to approve Officer Worthington's request for retirement; Trustee Rossnagle seconded the motion. The motion passed unanimously (5-0). 9. INVESTMENT PERFORMANCE REVIEW: 9.1. Presentation and Discussion Re: Burgess, Chambers & Associates, Quarterly Performance Report for Period December 31, 2023. Presenter(s): Larry M. Cole, Executive Vice President, Burgess Chambers & Associates. Larry Cole of Burgess Chambers & Associates (BCA) appeared before the Board, introduced himself, and provided a brief overview of the investment consultant's services to the Plan. Turning to the Quarterly Market Summary page of the materials, Mr. Cole advised that Q4 2023 was largely optimistic and all sectors, other than commodities, had positive returns; the returns for Q3 2023 were the opposite when all sectors except for commodities were negative. In Q4 2023, the market was driven by reports of inflation rates being in the low 3% range, and ensuing anticipation that the Federal Reserve (Fed) would reduce short term interest rates in 2024 by as many as 7 times. Mr. Cole asserted this anticipation was premature because inflation came down due to falling energy prices, yet the current conflict in the Middle East could expand, which should cause oil prices to rise. Also, the Core Consumer Price Index, which excludes energy, remained at 4% while the Fed's inflation rate target continues to be 2%. To date in 2024, interest rates and inflation have risen moderately, and analysts now suggest the Fed may raise short- term interest rates 2 to 3 times in the later part of the calendar year; Mr. Cole suggested there could be no rate changes because, historically, the Fed has not changed interest rates during election years. Also, the Gross Domestic Product has recently been stronger than forecasted, which is not the environment in which the Fed would typically lower interest rates. While there are some negative indicators for the economy, Mr. Cole anticipates interest rates to remain higher for longer. Stocks continued to generally trend upwards in Q4 2023, and the market began to broaden from its concentration in the Magnificent 7 stocks. In Q1 2024, that concentration intensified in 5 stocks. Currently, the market seems to be favoring the Magnificent 7 because investors anticipate those companies will benefit from artificial intelligence (AI), although Al will also benefit the remaining stocks in the S&P 500. If the market continues to concentrate, the portfolio's large cap growth managers will struggle relative to their benchmarks because responsible active managers avoid the concentrations which are occurring in the indexes; in that context, this is not an ideal market environment to evaluate managers. Mr. Cole noted that the Fixed Income and International Equity indexes were up in Q4 2023. There were no compliance issues to address for the quarter. Book 1 Page 384 02-23-2024 8:15 a.m. Book 1 Page 385 02-23-2024 8:15 a.m. Mr. Cole briefly reviewed the Investment Performance = Net page of the materials and estimated that as of February 22, 2024, the portfolio is up 1.5% to 2% from December 31, 2023. Currently, the portfolio is allocated approximately the same as depicted on the Actual VS. Target Asset Valuation as ofDecember 31, 2023, page. He noted the portfolio remains overweight in Domestic Equities and underweight in Fixed Income even after the Board reallocated $10 million in Q4 2023 to address the overweight. Mr. Cole will again recommend moving assets to Fixed Income to take advantage of the currently high interest rates. The worst performing asset class in the portfolio is Private Real Estate. The Plan has a $10 million redemption request pending in JP Morgan's queue, however only an approximate $500,000 has been paid out to date because real estate transactions have slowed. Within the asset class, the office space subsector has been written down, although Mr. Cole was unsure if another write-down could occur. He expressed skepticism regarding the office space valuation process because occupancy rates, which are based on lease agreements, have been in the 80% to 85% range in metropolitan areas, however those don't reflect employers' current needs based on how many employees are working in office. As office leases are renewed, there could be less need which would further hamper that asset class's performance. Anecdotally, he heard one real estate analyst suggest it may be time to invest, although Mr. Cole does not recommend altering the Plan's redemption request at this time. Turning to the Asset Allocation & Performance - Gross, Mr. Cole noted that the number in parenthesis by the Total Fund is the percentile ranking amongst the Plan's peer group of 1100 public pension funds in the United States. The QTD ROR-Rank was dragged down by the portfolio's real estate and large cap growth managers. He added that both Granite and Allspring had significantly positive absolute returns for the quarter and 1-year time frames, yet still underperformed their benchmark. The ranking number beside each manager is amongst each manager's respective peer group. Frontier has outperformed over most timeframes while Franklin Templeton doesn't track well with its benchmark and should be evaluated individually. International Equities, Global Infrastructure, and Convertibles all had positive relative and absolute returns, and Fixed Income had positive absolute returns; Real Estate continues to lag both relatively and absolutely. He added that the peer rankings in Fixed Income are not concerning because performance within the peer group is extremely concentrated. Additionally, the 5-year return has been low because the portfolio has been underweighted in bonds for most of the last 5 years due to historically low interest rates which has ultimately benefitted the portfolio. Now that rates have increased, he will recommend moving more assets into fixed income. Mr. Cole reviewed the Fiscal Year Rates of Return and noted the gold bar is the expected rate of investment return. He discussed the 5 Years Rolling Percentile Ranking = 5 Years chart on the Total Fund page, and pointed out that 95% of the time, the Plan ranked in the top 25h percentile amongst its peer group. The Board had no questions for Mr. Cole regarding the pertormance review. After noting how consistently Newton has performed for the portfolio and the portfolio overweight in equities, Mr. Cole recommended the Board liquidate $5 million from Newton, $2.5 million from Granite, and $2.5 million from Allspring, and invest the proceeds in Sawgrass and NIS; he noted the fixed income allocation is already overweighted to Garcia Hamilton. To Chair Todd's and Trustee Hudgins' questions, Mr. Cole discussed how changes in interest rates would affect fixed income returns. Although he has less confidence that fixed income coupon rates in 2024 would exceed 10%, the portfolio had allocated 20% to fixed income when the rates were 2%. Now that rates near 5.5%, it seems prudent to increase the allocation closer to the target of 25%. Further, Mr. Cole does not anticipate the Fed increasing coupon rates, although the market could drive them slightly higher, and, in his opinion, the risk/return is attractive. Equities have performed well recently, and it is appropriate to capture some of those gains. The rebalancing is approximately 3.3% of the portfolio. Trustee Hudgins made a motion, as recommended by Mr. Cole, to liquidate $5 million from Newton, $2.5 million from Granite, and $2.5 million from Allspring, and invest the proceeds in Sawgrass and NIS; Vice Chair Baty seconded the motion. The motion passed unanimously (5-0). To Attorney Christiansen's question, Mr. Cole advised that, based on the portfolio allocation, the Board could reasonably expect a 6.5% return over the next year, several years, and long-term thereafter. Mr. Cole reminded the Board that he has offered Nuveen, a private credit manager, to several ofhis clients, however City Ordinances must be amended before the Board would be able to invest in this asset class, should it be interested. He still recommends Nuveen, and he asserted that private credit is a higher quality investment than expected in the current economic environment. Because of regulatory restrictions, banks are averse to lending to middle- and smaller'miodle-market companies, which results in higher lending costs for those companies. As a result, high quality companies are turning to private lenders to access capital, and those lenders then offer extremely attractive yields with low default rates to investors. While private credit tends to be illiquid, investments with Nuveen are locked for only 2 years, which is less than other private credit investments. He advised he would bring up the matter for discussion after the ordinance is amended. To his question, Attorney Christiansen noted that the proposed ordinance change is on the Agenda for the Board's discussion; ift the Board approved, it would go to the City Commission (Commission) for 2 readings. The Board thanked Mr. Cole for his presentation. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: 11.1. Presentation and Discussion Re: Actuarial Valuation as of September 30, 2023. Presenter(s): Pete Strong, Consultant and Senior Actuary; Israel Bichachi, ASA, MAAA, Consultant and Actuary; Gabrie!, Roeder, Smith & Company. Pete Strong and Israel Bichachi of Gabriel, Roeder, Smith & Company (GRS) appeared before the Board and introduced themselves. Mr. Strong advised that Mr. Bichachi has worked on the Plan's valuations throughout his 13-year employment with GRS, and he may appear in Mr. Strong's place in the future if Mr. Strong is not available. Mr. Strong reviewed the Observed Experience (A-2) section of the materials; he noter that, even though the City's contribution as a percentage went down from Fiscal Year (FY) 2023 to FY 2024, the covered payroll increased by 12%, which led to a higher City contribution as a dollar amount. The funded ratio stated in the Observed Experience section of the materials is based on smoothed values, not market values. To Trustee Hudgins' question, the Plan is above average when compared to GRS's other clients. On average, GRS's clients are funded at approximately 80% and have expected rates of investment returns (RORS) close to 6.8%; the Plan's funded ratio is approximately 89% and its expected ROR is 6.5%. Of Mr. Strong's clients, the lowest funded ratio is approximately 45%; the Florida Retirement System's (FRS) expected ROR is 6.7% and funded ratio is in the 80% range, but lower than the Plan's. Mr. Strong reviewed the key elements of the experience stated in the materials. On an actuarial basis, the investment return was 5.3%; he reminded the Board that, although the market value return from FY 2023 was 10.6%, the actuarial value smooths in over 5 years the -16.5% return from FY 2022. Regarding salaries, he reminded the Board that it had, for this valuation only, raised the expected average salary increase percentage by 3.7% to 10.3%; nevertheless, the actual average salaries increase was greater than expected, and resulted in an unfavorable experience. He explained that fewer retiree deaths than forecasted resulted, for the purpose of the valuation, in an unfavorable experience because a larger retiree payroll was paid than had been forecasted. The totality of the experience resulted in a loss which was $5.9 million more than expected at the beginning of the year. In discussing the covered payroll, Mr. Strong explained that because there was a 12.4% increase in covered payroll, the employer contribution as a percentage of covered payroll remained stable. Because the unfunded actuarial liability is amortized as a level dollar amount, yet the covered pay increased, the unfunded liability as a percentage of covered pay was 2.4% less than otherwise expected. Mr. Strong reviewed the Relationship to Market Value and explained that because the valuation is Book 1 Page 386 02-23-2024 8:15 a.m. Book 1 Page 387 02-23-2024 8:15 a.m. smoothing in the market loss from 2022, the actuarial value is getting closer to the market value; in the FY 2022 valuation, the difference between the actuarial value and market value was approximately $28 million. Turning to the page titled Low-Defaul-Risk Obligation Measure, Mr. Strong explained that the Actuarial Standards of Practice (ASOP) No. 4 was amended to require all actuarial valuations to include a calculation showing thei impact of completely de-risking a portfolio by investing only in fixed income securities. The low- default-risk obligation measure (LDROM) ofb benefits earned for the Plan, based on a discount rate of4.63%, is an approximate liability of $422 million; the Plan's current liability is $332 million at 6.5%. Mr. Strong characterized the difference between the $422 million and $332 million as the savings received by investing in risk-seeking assets. This is only a disclosure, and it does not change the Plan's funding in any way. Mr. Strong discussed the Chapter Review (A-8) and explained this is the first time in several years that the State monies shown on line 2 exceeded the base amount on line 1, providing the Growth Amount on line 3; for many years, line 3 has been zero. The Growth Amount is shared evenly, accordinn to Florida Statute, between funding the Plan and Share Plan Accounts for Police Officers. Attorney Christiansen and Mr. Strong clarified that Florida Statutes require the Growth Amount to be shared evenly unless the City and Police Officers were to negotiate and mutually consent to a different split. On the page titled Contributions to Finance Benefits of the Pension Fund (B-2), Mr. Strong explained that one component of the contribution requirement is the total of the normal cost, which is the amount of benefits earned by employees; the second and largest component of the contribution is the payment on the unfunded liability and is being paid over 20 to 25 years. The Total Normal Cost as a percentage of payroll remains approximately consistent from year to year and is the cost of eamning an additional year of pension. The unfunded liability payment is slightly up, both as a dollar amount and as a percentage of payroll, even though the dollar amount of payroll increased; Administrative Expenses as a percentage went down due to the increase in payroll. The City Portion # is the Total Contribution Requirement, less the Member portion, less the Chapter 185 Portion; Mr. Strong clarified that the Chapter 185 Portion is currently an estimate and will be updated when the final amount is known. To Trustee Hudgins' question, Mr. Strong estimated that, because the Plan's funded ratio is better than average compared to his other clients, the City's Contribution as a percentage of pay is slightly below average. He noted that a separate plan has an employer contribution rate over 100% as it has a high payment on its unfunded liability. Mr. Strong discussed the page titled Unfunded Actuarial Accrued Liability (B-7). The actuarial present value of future benefits (line A) includes past service liabilities and present values of future accruals for current officers; iti is calculated using an interest rate of6.5%. The actuarial accrued liability is based on past service through September 30, 2023. The unfunded actuarial accrued liability (line E) is the amount subject to amortization. The Comparison of Actuarial Value, Market Value and Funded Ratio (B-11 and B-12) were added at Trustee Hudgins' request; the volatility of the Market Value of Assets compared to the more consistent Actuarial Value of Assets, as shown in the bottom chart on B 11, demonstrates the benefit of smoothing, as gains and losses are incorporated over a 5-year period under the current policy. The graph on B-12 further shows the impact of the market losses in FY: 2022 on the funded ratio and demonstrates the puroose of smoothing. Trustee Hudgins noted that the more insightful chart on B-12 clearly shows the long-term strategy and positioning. On the page titled Reconciliation of Plan Assets (C-10), Mr. Strong pointed out the volatility of the Market Value of Assets between 2022 and 2023, as shown in line A; while a nearly $27.2 million retum in 2023 (2.e.) helped to recover some of the loss, it none-the-less had the greatest impact on the Plan as the remaining benefits and expenses were consistent and reasonably expected. The Development of Actuarial Value of Assets (C-11) shows how assets are smoothed into the valuation over 5-year periods. Mr. Strong explained that Section E, Line E3 is the dollar amount of gains the portfolio would have generated based on the expected ROR. The difference between the actual gains on E1 and expected gains on E3 is on line E4 and is the amount smoothed in over the subsequent 5 years. Mr. Strong noted the sizable loss being smoothed in from 2022 will continue through FY 2026; because the phase-in of market gains from FY 2021 will end in 2025, the Total Phase-In amount in FY 2026 is anticipated to increase dramatically, however the gains or losses to be experienced in 2024, 2025, and 2026 will change that amount. Mr. Strong concluded his presentation by reviewing The History of Investment Return Rates (C-12), noting that the average market return over the last 5-, 10-, and all years shown are trending consistently with the expected ROR of 6.5%. The actuarially smoothed investment return over all years is lower because the loss in FY 2022 is still being phased in. To Trustee Rossnagle's question, Mr. Strong explained that, going forward, if the portfolio generates returns near the expected ROR, the unfunded liability amount will continue to increase by the approximate amounts shown for each phase-in shown on C-11. While the payments on the unfunded liability will help to offset the increased liability amount, the amounts paid are relatively small, not unlike a mortgage amortization schedule. Actual market returns in excess of the expected ROR would help make up for FY 2022's losses. The Board had no additional questions for Mr. Strong and thanked him for his presentation. Trustee Hudgins made a motion to approve the actuarial valuation as prepared by GRS; Vice Chair Baty seconded the motion. The motion carried unanimously (5-0). 11.2. Presentation and Discussion Re: Declaration of Expected Rate of Investment Return. Presenter(s): Chair Todd. Mr. Strong advised that a declared expected ROR of 6.5% is reasonable. Attorney Christiansen reminded the Board that, when it approves an actuarial valuation, it must also declare an expected ROR for the next year, several years, and long-term thereafter; he also noted that Mr. Cole had advised that 6.5% is a reasonable expected ROR to declare. Vice Chair Baty made a motion, as stated by Attorney Christiansen, to declare an expected rate of investment return of 6.5% for the next year, several years, and long-term thereafter; Secretary/Treasurer Griggs seconded the motion. The motion carried unanimously (5-0). 11.3. Presentation and Discussion Re: Mauldin & Jenkins, Financial Statements for the Fiscal Years Ending September 30, 2023, and 2022. Presenter(s): Alison Wester, CPA, Partner, Mauldin & Jenkins. Alison Wester and Jennifer Trotter of Mauldin & Jenkins appeared before the Board and introduced themselves; Ms. Trotter is a manager at Mauldin & Jenkins and has worked on the Plan's financial statements throughout her employment there. Ms. Wester presented the Financial Statements for the Fiscal Years Ended September 30, 2023, and 2022. The opinion is clean and unmodified, and it now includes the Basis for Opinion, Responsibilities of Management for the Financial Statements, Auditor's Responsibilities for the Audit, Emphasis of Matter, Required Supplementary Information, and Other Reporting Required by Government Auditing Standards. She advised that pages 4 through 9, the Management's Discussion and Analysis, are unaudited, but reviewed and compared for consistency with the Financial Statements. Page 10 is the Statements of Fiduciary Net Position showing assets and liabilities; page 11 is the Statements of Changes in Fiduciary Net Position which shows investment volatility and the impact that has on the Plan's position. She noted that the Financial Statements differ from the actuarial valuation because Governmental Accounting Standards Board (GASB) requires both realized and unrealized gains and losses to flow through the Plan each year, and do not allow for actuarial smoothing over extended periods of time. Ms. Wester explained each of the Notes to Financial Statements beginning on page 12. She advised that Book 1 Page 388 02-23-2024 8:15 a.m. Book 1 Page 389 02-23-2024 8:15 a.m. the DROP balances are incorporated into the Plan's net position. Regarding Note 4, Investments, Ms. Wester explained that the investment policy was updated in accordance with changes in state law during the year. In Concentration on page 17, she called attention to 2 funds with aggregate amounts exceeding 5% of the market value of the portfolio. In Fair Value Measurements on page 20, Ms. Wester explained that securities classified in Levellare valued using prices of identical investments in an active market. Securities in Level 2 are valued using prices of similar securities in active markets. Securities in Level 3 are valued using any other valuation method. The portfolio contains no holdings which are measured at net asset value. Note 5, Net Pension Liability, is a disclosure for the Plan but is recorded on the City's financial statements. The total pension liability less the Plan fiduciary net position equals the Net Pension Liability. Note 5 also summarizes the actuarial assumptions. The Sensitivity of the Net Pension Liability to Changes in the Discount Rate shows how the net pension liability changes if the discount rate, which is based on the expected ROR, is increased by 1% and decreased by 1%. In the required Supplementary information, the Schedule of Changes in the Plan's Net Pension Liability now shows a complete 10 years. The Total pension liability data at the top of the page comes from the actuarial valuations and the fiduciary net position data on the bottom comes from previous financial statements. The Schedule of Contributions may be changed in future reports to landscape to improve legibility. The Schedule of Contributions on page 26 compares the actual and actuarially determined contributions, and includes the specific assumptions related to the contribution calculation. Page 27 shows a1 10-year history of actual, money weighted rate of investment returns net of investment expense. Had Mauldin & Jenkins identified any significant deficiencies and/or material weaknesses, they would be reported in the Independent Auditor's Report on Internal Controls Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards; Ms. Wester advised that, while Mauldin & Jenkins did not identify any significant deficiencies or material weaknesses, they cannot confirm none exist. The Board had no questions for Ms. Wester regarding the Financial Statements. Ms. Wester briefly reviewed the contents of the Auditor's Discussion and Analysis, Financial and Compliance Audit Summary. The Board thanked Ms. Wester for her presentation. Trustee Hudgins made a motion to accept the Financial Statements for the Fiscal Years Ending September 30, 2023, and 2022; Secretary/Treasurer: Griggs seconded the motion. The motion carried unanimously (5-0). 12. ATTORNEY MATTERS: 12.1. Presentation and Discussion Re: Proposed Ordinance. Presenter(s): Scott Christiansen, Attorney, Christiansen & Dehner, P.A. Attorney Christiansen explained that the proposed ordinance essentially deletes the investment language offered by the State of Florida and authorizes the Board to invest in anything the Board deems prudent without investing more than 25% of Plan assets in foreign securities. This is his most liberal language, and the majority of his clients have adopted it. He reminded the Board that the proposed language does not require any changes to the Board's current strategy, philosophy, or portfolio. A discussion ensued. To Trustee Hudgins' questions, Attorney Christiansen explained that the Plan language must specifically authorize "group trusts, however, he and Mr. Cole clarified that the type of investment which prompted the proposed ordinance, should it be adopted, is an alternative investment. The authority to invest in Mr. Cole's alternative investment is found in paragraph 1, which contains no restrictions on investments other than a 25% limit on foreign securities. While the language is broad, the language does not obligate the Board to change any investment; the Board would continue to be counseled by the investment consultant, and trustees' fiduciary responsibility to the Plan would also not change. To Secretary/Treasurer Grigg's request, Attorney Christiansen advised he would be available to present the proposed ordinance to the City Commission and answer questions as needed; she expressed concern about explaining the details of the proposed ordinance to the Commission. Trustee Hudgins opined that, before the Board were to advance any proposed ordinance to the Commission, the Board should be able to explain the details of that proposed ordinance. He reminded the Board that it is making decisions based not just for its current composition and investment consultant, but for the Board as it will exist in the future. He and Vice Chair Baty noted that the Board has always engaged in robust and productive discussions, but it has tended to take conservative investment positions. Trustee Rossnagle questioned whether it was prudent to grant an expansive investment authority to future Trustees. Attorney Christiansen reiterated the importance of having a responsible and competent investment consultant. Vice Chair Baty reminded the Board that trustees remain fiduciarily responsible and would suffer the consequences of irresponsible decisions. To Trustee Hudgins' question, Attorney Christiansen advised that the Board could draft any language it would prefer on the matter, including amending the existing provision to add just the asset class Mr. Cole will propose; this would be the most restrictive option. He advised he had previously provided the proposed language, albeit not drafted as an ordinance, to the Board. Mr. Cole explained that most of his clients are adopting less restrictive language due to changes in the investment world and that he would not present any fund to the Board if believed it to be imprudent; he also acknowledged the Plan will have other investment consultants after him. He is asking the Board to consider the proposed ordinance because, under the current provisions, the City Commission must approve investment in any asset class outside what is now stated in City ordinances; the time it takes for both the Board and the Commission to review and approve, is an opportunity cost which is lost. He acknowledged that less restrictive provisions would not prevent irrational actions in the future. Chair Todd asked if the only negative consequence of the current process is the loss of time needed for the Commission to approve new asset classes for investments; Mr. Cole agreed. Attorney Christiansen explained that, if the Board were to propose amending the ordinance to add just a single asset class and the Commission were to approve that ordinance, then any other new proposed asset class would again require the same lengthy process of the Board's review and approval, and then the Commission's review and approval, both of which would require presentations from Attorney Christiansen and Mr. Cole; the process is effectively supplanting the Board's judgement with the Commission's. Secretary/Treasurer Griggs echoed Trustee Hudgins' concern for explaining the proposed change, however the Board also does not want to delegate investment decisions to the Commission. She noted that the Commission composition changes as new Commissioners are elected. Vice Chair Baty reminded the Board that the Board must vote to approve investment changes, and therefore a single trustee should not be able to significantly derail a reasonable investment strategy. Trustee Hudgins asked what the issue is with the Board evaluating a new investment opportunity and then going to the Commission to amend the controlling ordinance. Mr. Cole explained that the current process gives the Commission ultimate controi over that individual investment. To Chair Todd's question, Mr. Cole explained that he is asking the Board to consider proposing a change to the ordinance because he would like the Board to consider an alternative investment, however the Plan is at least 3 to 6 months away from being able to do the same. Mr. Cole noted that some of his clients have already begun to invest in that altemative class. Trustee Hudgins and Mr. Cole discussed how the proposed ordinance would change the Board's investment decision-making process. If the Board and Commission approved the proposed ordinance, then the Board could then begin to evaluate investments under new asset classes at the Board's discretion without obtaining approval from the Commission, however the Board is also free to decline to invest in any new asset class. Attorney Christiansen noted that nearly all of his clients have adopted the proposed language or a similar version of it, and that this is not a radical move by the Board. Book 1 Page 390 02-23-2024 8:15 a.m. Book 1 Page 391 02-23-2024 8:15 a.m. The Board and Attorney Christiansen agreed that the Board has thoroughly discussed the matter. Trustee Hudgins made a motion to adopt the proposed ordinance amending Section 24-65, subsection (6)b. and advance it to the Commission; Vice Chair Baty seconded the motion. The motion carried unanimously (5-0). 12.2. Presentation and Discussion Re: Financial Disclosure Portal. Presenter(s): Scott Christiansen, Attorney, Christiansen & Dehner, P.A. Attorney Christiansen explained that the Trustees will, going forward, file Statements of Financial Interest (Form 1) directly with the Florida Commission on Ethics through an on-line portal instead with Trustees' respective County Supervisors of Elections. Trustee Rossnagle has already filed his Form 1 through the portal. While Form 1 has been updated, it is essentially the same form Trustees previously filed. He clarified that Trustees do not need to file Form 6, which is required of elected officials, and has been the cause of controversy. Trustee Hudgins asked if a trustee is required to complete Form 6 for another position, must the trustee also complete Form 1. Secretary/Treasurer Griggs advised that she did not believe the official must complete Form 1 if they already need to complete Form 6; Mr. Cole asserted that another pension attorney for a separate plan advised that the trustee would only need to file Form 6. Trustee Hudgins advised he would consult with the Commission on Ethics. Attorney Christiansen reported that the State of Florida has not further responded to the Plan's report affirming it does not make investment decisions based on environmental, social, or government factors. The next report will be required in approximately 2 years. There are no legislative changes to Chapter 185. A physician has been identified to conduct an independent medical examination (IME) in Officer Ainscoe's request for disability benefits; the IME is scheduled for April 1, 2024. Officer Michael Pangallo has filed a claim for disability benefits; interrogatories are being drafted and will be sent to Officer Pangallo's physicians. 13. OTHER MATTERS: Pension Plans Administrator Martin advised there are no investment managers scheduled to present at the March 22, 2024, Board meeting. By consensus, the Board agreed to cancel its March 22, 2024, meeting; the annual Board Reports will be presented at the April 26, 2024, meeting. 14. ADJOURN. Chair Todd adjourned the meeting at 9:43 a.m. 2 ChairJohnathan Todd Secretary/Téasurek Shayla Griggs