Book 1 Page 92 2/28/18 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF FEBRUARY 28, 2018 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer Pamela Nadalini and Trustees Charles Joseph and Scott Snow Others: Attorney Pedro Herrera, Senior Pension Analyst Anthony Ferrer and Pension Specialist Lois Belle Absent: None 1. CALL THE MEETING TO ORDER: Chair Hartley called the meeting to order at 9:00 a.m. 2. PLEDGE OF CIMILITY: Trustee Snow 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." Chair Hartley called for Approval of Minutes before Public Input. 3. PUBLICI INPUT: Ernest Cave, retired Firefighter and Keith Austin, retired Firefighter came to the dais and introduced themselves for the record. Mr. Cave stated that he had multiple questions relating to interlocal agreement; that there was discussion to extend the timeframe to pay off the unfunded pension liability past 2023; that the current split is County - 65% and City = 35%; that if the unfunded pension liability extends past 2023 is the County still liable for that 65% payment or does the entire liability shift to the City and what is the impact to the Pension; Attorney Herrera stated that the question is two-fold; that the first question is who is responsible for paying and second, how are we going to fund; that one suggestion discussed is to increase or extend the smoothing period, amortize the losses or gains, for a duration after 2023. Attorney Herrera stated that, with regard to the question of who pays, up to 2023 the agreement in place stipulates a 65%/35% split between the County and the City; Trustee Snow read Article 4.2 of the interlocal agreement, "the county's obligation to make contribution to the Firefighters' Pension Plan shall cease upon earlier of Oct 1 2003 or upon the termination.. "; Attorney Herrera stated that this Board is not interpreting this contract in any meaningful way we're telling you our thoughts on the contract; the thoughts on the contract, that although the contact may renew by virtue of the language included in the contract provisions that the contribution provision specifically for the 175 Plan seems to say that it will end in 2023; that there will be no further contributions from the County, unless there is another agreement put into place the pension contribution will expire and any remaining unfunded liability will shift back to the City, who is the Plan Sponsor. Mr. Austin stated that there is concern if the pension liability is extended past 2023 what is the impact to the plan and its retirees; discussion ensued around whether the Plan should continue toward becoming fully funded by 2023. Trustee Snow stated that State Law in Florida does not allow reduction in benefits and as long as you have a working pension plan the state will send premium tax monies. If fully funded and annuities are purchased, then premium monies would cease because the Plan is no longer a working pension plan. Currently the City and County's obligation is to become fully funded by 2023. Secretary/reasurer Nadalini entered Chambers at 9:19 a.m. 4. APPROVAL OF MINUTES: 4.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of January 24, 2018 A motion was made by Trustee Snow and seconded by Trustee Joseph to approve the Minutes of the Firefighters' Pension Plan Board of Trustee Regular Meeting of January 24, 2018. Motion carried unanimously (3-0). Vice Chair Roberson entered Chambers at 9:04 a.m. 5. INVESTMENT PERFORMANCE REPORT: 5.1. Presentation and Discussion Re: DePrince, Race & Zollo Performance Review as of December 31, 2017 Presenter(s): Matthew Williams, Portfolio Manager, and Nate Rusbosin, Client Service Portfolio Management, DePrince, Race & Zollo, Inc. Matthew Williams, Portfolio Manager, and Nate Rusbosin, Client Service Portfolio Management, DRZ, came before the Board and Mr. Williams introduced them both. Mr. Williams stated that there were no significant changes to the DRZ small cap strategy; high level overview of DRZ's value philosophy; that the past 10 years have been a growth driven market but that DRZ's value driven strategy should be ideally positioned for 2018 market. Mr. Rusbosin discussed sector attribution and which sectors performed well; that DRZ continues to perform with the same discipline and philosophy to mitigate volatility; that real estate performed very well Trustee Snow noted a correction needed on page 16. The Board thanked Mr. Williams and Mr. Rusbosin for their presentation. 5.2. Presentation and Discussion Re: Lazard Performance Review as of January 31, 2018 Presenter(s): Sean Delaney, Vice President, Institutional Sales & Client Services, Lazard Asset Management Sean Delaney, Vice President, Institutional Sales & Client Services, Lazard came to the dais and introduced himself. Mr. Delaney provided an overview of the firm and Lazard's investment strategy; that non-U.S. investing is a core competency of Lazard; that international equity at 24.5% and emerging markets equity at 22.8% make up almost half of Lazard's assets under management; that the organization is stable; that the style and strategy is relative value with focus on highly financially productive companies. Mr. Delaney provided an overview of markets; that corporate profit improvement drove strong international market returns; that sector leadership was dominated by technology and cyclicals; that strong currencies boosted Continental European equity returns; that growth stocks continued to lead, particularly in Emerging Markets. In response to a question from Secretary/Treasurer: Nadalini regarding how much cash Lazard allocates average, Mr. Delaney stated that the 5.0% is an average level perhaps slightly high but did place some new buys and added to the emerging markets allocation; that he will follow up on what the current cash Book 1 Page 93 2/28/18 9:00 a.m. Book 1 Page 94 2/28/18 9:00 a.m. level is. Mr. Delaney discussed the market outlook; that global markets are at or near all-time highs; that consensus expects low rates/inflation and positive growth to continue. The Board thanked Mr. Delaney for his presentation. 6. UNFINISHED BUSINESS: None 7. NEW BUSINESS: 7.1. Presentation and Discussion Re: Independent Auditor's Report for the Fiscal Year Ending September 30, 2017 Presenter(s): Alison Wester, CPA Partner, Mauldin & Jenkins, LLC Alison Wester, CPA Partner, and Jennifer Cook, Manager, Mauldin & Jenkins, LLC came to the dais and introduced themselves. Ms. Cook presented the Independent Auditor's Report for the Fiscal Year Ending September 30, 2017; that she is pleased to present a clean, unmodified opinion of the financial statement; that there was a $10.0 million increase in total assets and net position during the year; that contributions and investment returns primarily were driving the increases; that the Salem statements are used initially in the grouping of investment levels and the statements are in agreement to the supporting financial records from the different investment manager; that there were no conflicts between the data audited. Ms. Cook and Ms. Wester provided al high-level overview on the structure of the report and described each Note to the Financial Statements; that there were no subsequent events that required disclosure; that there is now four (4) years of supplementary information showing the summary of the net pension liability and the net pension liability as a percentage of covered payroll; that there were no material weaknesses identified this year; that the follow-up of prior finding is resolved. A motion was made by Vice Chair Roberson and seconded by Trustee Joseph to accept the audited financial statement as prepared by Mauldin & Jenkins. Motion carries unanimously (5-0). Ms. Wester stated that the Auditors' Discussion & Analysis Report provides background on the firm; that the report discusses the different components of auditors' opinions and the required communications and responsibilities. There were no audit adjustments proposed to the Plan, very clean this year; there were no uncorrected misstatements and reaffirms independence; lastly, for educational purposes, the report provides a walk through some of the upcoming GASB; that Mauldin & Jenkins offers complimentary continuing education for clients and if any trustee is interested in attending to please contact the offices to enroll. Discussion ensued around Salem Trust's past performance issues and Secretary/Treasurer Nadalini reiterated that Salem Trust's service to the Pension Funds has been impeccable; that they have been open and transparent; that Salem sent their Q4, 2017 Audit report which was forwarded to the Boards; that staff will resend. The Board thanked Ms. Wester and Ms. Cook. 8. ATTORNEY MATTERS: Attorney Herrera stated that session ends March gth; that four bills were filed; that SB 980/HB 1363 filed by Senator Brandes doesn't seem to be gaining traction in session; that the bills sought to include additional disclosures in valuation reports and analysis of assumed rate of return against the Florida Retirement System rates; that SB695/HB900 seeks to amend chapter 175 to provide additional benefits to Firefighters suffering from cancer (both active and separated, up to 10 years) and has refined list of specific forms of cancers. 9. OTHER MATTERS: Secretary/Treasurer: Nadalini stated that her office is preparing Annual Board report for the City Commission; that would like to discuss the 2017 absences; by board consensus 2017 absences were noted as excused for the record. Chair Hartley stated that he will not be at the March 28, 2018 meeting. Discussion ensued on status of shirts for Board members; Pension Specialist Belle came to the dais and provided a status update and received direction to proceed with shirts as discussed. In response to a question Vice Chair Roberson asking if there were any staffing updates, Secretary/Treasurer: Nadalini stated that she has made an offer and is awaiting a response; that this individual has extensive experience and background. 11. ADJOURN. Chair Hartley adjourned the Regular Meeting of the Firefighters' Pension Plan Board of Trustees at 10:51 a.m. YUD)O Chair Michael Hartley SecretaryTreasurer Pamela Nadalini Book 1 Page 95 2/28/18 9:00 a.m.