Book 1 Page 56 3/22/2017 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES ANNUAL MEMBERSHIP MEETING OF MARCH 22, 2017 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, Senior Pension Accountant Cynthia Akersloot and Pension Specialist Lois Belle Absent: None 1. CALL THE MEETING TO ORDER: Chair Hartley called the meeting to order at 9:01 a.m. 2. PLEDGE OF CIVILITY: Chair Hartley 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. PUBLICI INPUT: 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 February 22, 2017 A motion was made by Trustee Joseph and seconded by Vice Chair Roberson to approve the Minutes oft the Firefighters' Pension Plan Board of Trustees Regular Meeting of February 22, 2017. Motion carried unanimously (5-0). 5. BOARD OF TRUSTEES' REPORTS: 5.1. Presentation and Discussion Re: Attendance Report Presenter(s): Secretany/lreasurer. Nadalini Secretary/Treasurer Nadalini presented the Attendance Report to the Board and stated that a requirement is the annual Attendance Report be presented to the Board and the members of the Plan; that the Attendance Report is based on the records and as reflected in the approved monthly Board Minutes throughout 2016. 5.2. Presentation and Discussion Re: Highlights of Pension Activity for 2016 Presenter(s): Secretary/Treasurer Nadalini Secretary/Treasurer: Nadalini presented the notable highlights of Pension Activity for 2016 of the Board to the Membership. There were no questions from the Board or the Membership. 6. INVESTMENT PERFORMANCE REVIEW: None 7. UNFINISHED BUSINESS: None 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Independent Auditor's Report for the Fiscal Year Ending September 30, 2016 Presenter(s): Alison Wester, CPA, Partner, Mauldin & Jenkins, LLC (via teleconference) Alison Wester, CPA, Partner, Mauldin & Jenkins, LLC, came before the Board via teleconference to present the Independent Auditor's Report for the Fiscal Year ending September 30, 2016, and stated that the audit results were a' "clean opinion." Ms. Wester presented the various components of the report and stated that this year there are new disclosures on the fair value measurement and how the different investment products are measured in terms ofi fair value hierarchy. Ms. Wester stated that required supplementary information was also included in presentation material to the Board; that regarding the internal control over financial reporting the next opinion stated there were findings this year; that there was a significant deficiency related to the actuarial reporting and two material weaknesses in relation to financial reporting, the first weakness was in financial reporting and the second weakness was in investment reconciliation. Ms. Wester stated the significant deficiency resulted from the actuarial database not being closed out properly; that the recommendation is to ensure data is kept current (within 60 days) throughout the year; Secretary/Treasurer: Nadalini provided additional comments regarding the discrepancy with Gabriel Roeder Smith & Company (GRS) software; that issues in accessibility have arisen throughout the year; however, as Plan Administrator she takes full responsibility to correct the issues going forward. Senior Pension Analyst Ferrer stated that the data was maintained throughout the year internally; however, the Pension Plans Administration Division was unable to upload the data to the GRS system. Vice Chair Roberson requested that Brad Armstrong come before the Board. Brad Armstrong, Actuary, Gabriel Roeder Smith & Company (GRS) came to the dais as requested and stated that the GRS software is not always compatible with new systems and updates; that GRS does not audit the data; that the system is a data warehouse; that the final Actuarial Valuation is accurate and not affected by the Auditor's findings. Ms. Wester concurred with Mr. Armstrong that findings did not result in any issue to the Actuarial Valuation data. Secretary/Treasurer Nadalini concurred with the Auditor's findings and recommendations and indicated that the issue is not structural rather a personnel matter; that she is working with the City Attorney and the Human Resources Department to address the matter; that she and Staff are committed to resolving the issues going forward; that a Certified Public Accountant has been retained to assist with reconstructing books. Ms. Wester stated that journal entries and adjustments totaling $6.9M were not captured timely and classified properly; that the contribution reconciliation at year end has nothing to do with the audits; that no losses occurred in income due to financial accounting. Ms. Wester concluded her presentation with a request to the Board to submit an additional invoice for fees due to the extensive nature of the Audit's findings. The Board acknowledged and requested Ms. Wester submit an invoice for review at the April 17, 2017, meeting. A motion was made by Trustee Snow and seconded by Secretary/Treasurer Nadalini to accept the Independent Auditor's Financial Statement for the Fiscal Years ended September 30, 2016 and 2015. Motion carried 4-1; Vice Chair Roberson voted no due to receipt of the report the morning of. Book 1 Page 57 3/22/2017 9:00 a.m. Book 1 Page 58 3/22/2017 9:00 a.m. 8.2. Presentation and Approval Re: Actuarial Confirmation of the Use of State Moneys Presenter(s): Brad Armstrong, Actuary, Gabriel Roeder Smith & Company Brad Armstrong, Actuary, Gabriel, Roeder, Smith & Company (GRS) came before the Board and presented the Actuarial Confirmation ofthe Use of State Moneys which is a State filing requirement and was submitted by GRS to the State on March 15, 2017. Attorney Herrera stated that two provisions are applicable in the Florida Statutes; that a default provision provides for mutual consent to use moneys to establish a Defined Contribution Plan rather than a Share Plan; that the City and County can then deviate; that the moneys are approved for use with the Share Plan. Discussion ensued concerning reconciliation oft the Pre-96 Share Amount and Secretary/Treasurer Nadalini stated that her office will draft a letter to the State regarding the collective bargaining agreement and the mutual consent and send to Mr. Armstrong for review prior to sending. 8.3. Presentation and Approval Re: Actuarial Valuation Report as of September 30, 2016 Presenter(s): Brad Armstrong, Actuary, Gabriel Roeder Smith & Company Brad Armstrong, Actuary, Gabriel, Roeder, Smith & Company (GRS) presented the Actuarial Valuation Report as of September 30, 2016, and stated that the recognized rate of investment return is 6.5% without fees; that the investment experience is recognized over a three-year period to mitigate volatility; that two normal retirements requests have been received versus the anticipated six retirement requests; that the Plan is currently 74% funded which allows thel Plan to receive funding under Chapter 175, Florida Statutes; that the Division of Retirement now requires the Actuary to file electronically and the set-up fee to accommodate electronic filing is $1,250; that the Plans Administrator no longer should send hard copies to the State. AI motion was made by Secretary/Treasurer Nadalini and seconded by Vice Chair Roberson to accept the Actuarial Valuation Report as of September 30, 2016. Motion carried unanimously (5-0). 8.4. Presentation and Discussion Re: Voluntary Correction Program Compliance Statement Presenter(s): Attorney Pedro Herrera, Sugarman Susskind Attorney Pedro Herrera, Sugarman Susskind, stated that the Firefighters' Pension Plan received a signed Voluntary Correction Program (VCP) Compliance Statement from the Internal Revenue Service; that the VCP was done pre-emptively to ensure the Plan took advantage of the opportunity to file; that this VCP protects the Board and Plan against potential issues; that a favorable determination is expected. 8.5. Presentation and Discussion Re: Certificate of Tax Exemption Presenter(s): Attorney Pedro Herrera, Sugarman Susskind Attorney Pedro Herrera, Sugarman Susskind, stated that the Board members currently use the City of Sarasota's Tax Exemption Certificate when traveling on business; that no issue of misrepresentation or fraud exists with current procedures; however, the Board qualifies for its own certificate; the Plan should apply for its own Certificate of Tax Exemption. Chair Hartley noted Board consensus to direct Attorney Herrera to file for a Certificate of Tax Exemption. 8.6. Presentation and Discussion Re: Future Correspondence from the Pension Office to Federal, State, Local Governments and Participants Presenter(s): Chair Hartley Chair Hartley stated that more transparency with the Board concerning any correspondence from the Pension Plans Administration Division would be appreciated. Vice Chair Roberson stated that any information sent to one Trustee should go to all. 8.7. Presentation and Discussion Re: Agenda Items and Changes to the Agenda Presenter(s): Chair Hartley Chair Hartley stated that more transparency to improve communications would be appreciated to ensure the Board is aware of any items/issues sO the Board members are aware. Secretary/Treasurer Nadalini stated that her expectation in the way information should be communicated is the same. 8.8. Presentation and Discussion Re: Hiring Process in the Pension Division and communication from the City Attorney Presenter(s): Chair Hartley Chair Hartley stated that the hiring process in the Pension Division is solely the responsibility of the Office of the City Auditor and Clerk is understood; however, the current situation of the Pension Plans Administration Division is a concern; that providing a Member of the Firefighters' Pension Plan Board of Trustees the opportunity to be part of the interview process concerning the hiring of new Staff would be appreciated. Secretary/Treasurer: Nadalini stated that the current Plan Administrator has been counseled; that she is working closely with the City Attorney and the Human Resources Department to address the issue further; that the current situation is due to negligence not a lack of qualifications by personnel; however, a Trustee's input as part of the interview process when ready would be welcome; however, the Board must adhere to and not violate the Florida's Govemment-n-heSumanne Law. To ensure open communication with the Board, Secretary/Treasurer: Nadalini stated that Pension Specialist Belle will reach out to Trustee Joseph concerning the start of the interview process. 9. ATTORNEY MATTERS: Attorney Pedro Herrera, Sugarman Susskind, stated that a Florida Public Pension Trustees Association conference is scheduled at the end of June 2017, and a Division of Retirement conference is scheduled from May 31 to June 2, 2017 if anyone is interested in attending. 10. OTHER MATTERS: Chair Hartley stated that the Firefighters' Annual Health Trust Benefit Statement Summaries were provided to the Pension Plans Administration Division for distribution; that the Board should be aware in case Trustee Snow receives calls or emails from participants regarding the material. Chair Hartley reminded the Board that the 17th Annual Wall Street Program hosted by the Florida Public Pension Trustees Association in New York next week will be attended. Trustee Joseph stated that an issue arose with his City email address to which Senior Pension Analyst Ferrer responded that an Information Technology (IT) update had been mplemented; that IT sent an email regarding the update; however, the email was only sent to City employees. Secretary/Treasurer Nadalini stated that the update information should go to anyone with a City email address; that the matter will be investigated further. Secretary/Treasurer Nadalini reminded the Board that Financial Disclosure Statements are coming due and reminded everyone to retain a receipt of submission. Senior Pension Accountant Cynthia Akersloot was introduced. Ms. Akersloot provided a brief overview of her background and qualifications. Secretary/Treasurer Nadalini stated that the additional cost of bringing in Ms. Akersloot will be paid out of the budget of the Office of the City Auditor and Clerk, not the Fund. Book 1 Page 59 3/22/2017 9:00 a.m. Book 1 Page 60 3/22/2017 9:00 a.m. 11. ADJOURN. Chair Hartley adjourned the Firefighters' Pension Plan Board of Trustees Annual Membership Meeting at 12:04 p.m. oNob b00 ChairMichaelHarte) Secretary/Treasurer Pamela Nadalini