General Employee Pension Board - Regular Meeting

Trustee Esmond Scott?

Present.

Trustee Birch? Present. Trustee Dorsett? Currently not present. Trustee Hernandez?

Here.

Trustee Longman? Currently not present. Trustee McCoy? Here. And Trustee Williams here.

If I may, before we begin, the, I know the meeting is being recorded, so probably if we keep our mics, because the last time, you know, when you listened to it after, when you listened to the recording, we couldn't always hear what everyone was saying because the mic, some mics were off when you go and listen to it. So thanks. Well, the first thing is for the approval of the minutes.

In the middle of the second page, I believe that it talks about the board size. I think at that meeting we discussed amongst ourselves that the size ought to remain the same, that that was our recommendation to the village council. I think we also thought that we recommended, but again a recommendation, that neither current village council members nor the manager be a member of

three employee representatives that want each of each level of employment in the village, stating that it is more likely not and where that came from I have no idea but as far as the rest of my counsel but in fact that's

If I may add something to that, Trustee Birch, I seem to recall that that was a general sentiment as they were going through the different rules and procedures there, but it has not come back in the form of an ordinance to the council for the council to vote on to make it bind in. So I think while there was a discussion and a vote was taken as to what is preferred, language to be in the ordinance, that ordinance has not yet been presented for you all to vote on.

That's all I recall. Well, I think you're absolutely right. The vote was that that was what they wanted, but it was not a vote on an ordinance. You're correct about that. But I think it's something, I believe it's imperative that that is something that we still think it's a great injustice I know mr. McCoy came to the meeting but That's not what we're talking about. Go ahead, the minutes.

So procedurally, I mean, just based on what Trustee Burch has said, is that something we can bring up in your business? Or how that's done? Okay.

Well, don't the minutes need to reflect that first? We are voting on minutes.

Yes, I mean, just for us to take up this point outside of us approving the minutes. That was my point. Okay. Because I also have some things, sir.

Sure. So a couple quick observations. My ears perk up when I hear the word compliance. And just so everybody is aware, the board with the current number of trustees is in full compliance with the ordinance. But over time, if the village wants to amend the ordinance, the board can play as constructive a role as you want in that process. And my office is always happy to work with the village attorney to draft an ordinance. And I think as we've spoken about before, It's all over the map when you look across the state. Some boards, it could be five trustees, general employee boards, some are larger. There's no state requirement. That's entirely up to the village council to decide what board composition looks like. So that's one quick observation. Second observation, there's apparently going to be at some point a motion to approve or revise the minutes. And remember, everybody, the minutes is a high-level summary. It's not a transcript, which is going to have every single sentence in it. But if you want to supplement it, someone would have to make a motion to add any specific language. And maybe the proposal is just to go back, listen to the tape, and see if there's anything else to be added. So I don't know if you want to, you know, table it today or if you want to.

Well, I do, because the minutes are often quoted at the council meeting. And if it's going to be quoted at the council meeting, it should reflect what was said. So therefore, I move that the minutes be amended to reflect what was on the tape.

Seconded. That takes up my discussions I would have had on the minutes as well. So all were in favor of that? Say aye or opposed? Ayes? Aye. The ayes have it? No nays? Is it time for public comments? Public comment? Going once, going twice? So long, pause it thrice. Okay, no public comment. Okay, ratifying the following warrants.

I move that we ratify the warrants as written.

Second.

And again, thank you for giving us the detail.

Yes. All in favor? Aye. Opposed? Okay, passes. On to old business, the Eric Olson beneficiary and the status.

So, trustees, I'm going to spend 30 seconds just laying the groundwork, if you will. So I understand some of the family is here. And just to give them some of the background, the board at the last village council meeting was instructed to look at and an email was sent out giving everyone the video about the village's questions. And the village had a bunch of questions. And those questions involved death benefits and the different options with regard to paying death benefits. And that's the reason why you'll see in your packet single page it looks like this and this is a breakdown that was prepared by the actuary and my suggestion is that the actuary either we can do it now or when we get to number seven and maybe it makes more sense to do it under number seven but this spreadsheet is intended we think to capture the instructions by the village council for this board to take a deep dive and a broad dive looking at different ways of doing death benefits and it's really the an A to Z it doesn't tell you what to do It sort of covers the landscape about how it could be paid and different options of how the format of how it could be paid and who it would apply to, methods of paying for it. And sometimes methods are from the plan itself. Sometimes they're from general budget. Sometimes they're from insurance. So it's intended to be a broad landscape of a roadmap, if you will, of different ways of doing it. And that will be a discussion by the actuaries who are here today. I don't know that we're going to make any decisions today, but at least we're going to have a full-throated, broad conversation. And ultimately, the only thing this board can do is make recommendations. Ultimately, the village council is going to be the one. If we're prepared to make a recommendation today, that would then result in an ordinance, and the village council would have to adopt it. But the village council wants, to its credit, to have a broad analysis, and they want this board to do more of that analysis for them. So that's on my two cents of an overview, and I'm happy to take any questions, and that's really all I'm gonna say on the subject, unless there are questions for me, because we wanna have a dialogue, which is why The spreadsheet. And did we give a copy of the spreadsheet to the family that's in the room? So that way they can follow.

I mean, not to interrupt, but just to say something real quickly, because you tied this item that we're going to be looking at and discussing with number seven. You were saying probably we could wait until we get to number seven. But I think there has to be some sort of flexibility, because if we're going to be voting on something today, And in my humble opinion, I think we should. This has been strung along for too long. And for us to wait, we'll be asking the council to wait for, what, six months before we got back to them on something. So I think, in my opinion, a decision should be made today. I see Trustee Birch is about to say something.

Hi.

So the current death benefit would not be payable because he did not qualify. He didn't meet the eligibility requirements. So it's an eligibility question. Now, I think the question you're asking has to do with the timing of when it gets paid. And that's part of the conversation, that if someone does qualify as eligible, does it get delayed until what would have been their retirement date, or do you want to pay it immediately?

It says the following day. It's in the ordinance now. I've got that section I just quoted.

I'm not disagreeing with you, but I'm saying that the section you're quoting is if the benefit applies, it's paid promptly. On the other hand, the proposal that was put before village council because we were extending eligibility, would have delayed the benefit until what would have been a normal retirement date. And that's part of the conversation to have today. And remember, whatever decision we make as a board is a recommendation, which then has to be voted on by village council. Does that make sense?

Well, it's not that it doesn't make sense. It's just that I don't understand what's wrong with what we have now. It does, in fact, say, and I hope you'll hear that again, that the...

So, trustees, that's the question. Do we want to jump into this? It's really an actuarial plan design question now, or do we want to do it under 7, and it's entirely up to you?

I hear what everybody else says, but, you know, I personally think we're here. Let's just discuss the thing, rip the Band-Aid off, and get moving.

And I'm wondering if we can ask staff, because a question was asked about a specific provision, to make a photocopy. for all the trustees of the current plan provision. I don't think we have it in the packet, and I think the mayor is asking a great question. Let's start with... Okay, I'll take it back. It is in the... I don't know. This is my... So I have to pass this around now? You'd like copies? I'd like everyone to have a copy. That way we can all look together, you know, if people want, that current language, or we can print it out on Unicode. And while that's being done, if anyone... So what I would like to see is the muni code section so people can see the current.

So section 18-48.

Is that the section, Mr. Mayor, you were referencing 1848?

It's 1848-C. So all of 1848.

And to lay the groundwork on 1848, 1848 is the current death benefit provision. And what I was just giving more background, right now that current death benefit language does not pay a death benefit to the deceased member we're talking about, because he did not meet the eligibility requirements. And what the mayor was mentioning, that if someone does meet the eligibility requirements, then one of the questions, if we do want to amend the ordinance, is when is it immediately payable, or does it get deferred? And different cities do it differently. Some cities, they make the family wait until what would have been normal retirement. Some cities pay it immediately. And right now, we don't pay anything other than a refund of the member's own contributions. So that's currently what the member is eligible for, is just getting their money back, as opposed to a lifetime death benefit. And when we're looking at options with the actuary, some cities will pay a lump sum, some cities will pay a lifetime annuity, or some cities split the baby and say we'll pay a benefit for X period of time, which could be And there's no right answer, 10 years or whatever the case may be. So there are lots of options, and that's how we understood our marching orders from the village council was to have a wide, broad discussion today so that way you could make a recommendation if you want. And the actuary is here to go into that detail with the spreadsheet. AS DEAN IS COMING UP, I'M GOING TO PREFACE THIS BY SAYING THE DISCUSSION WE'RE ABOUT TO HAVE, I DON'T WANT TO SAY IT'S TECHNICAL, BUT IT'S AN ACTUARIAL DISCUSSION, SO THAT'S WHY I LIKE TO SAY THERE'S NO SUCH THING, AND I SAY THIS WITH ALL DUE RESPECT, SOMETIMES WHEN AN ACTUARY IS DISCUSSING ACTUARIAL SCIENCE, There's no such thing as a silly question So feel free to ask questions about the full range and just to get everybody up to speed We're about to discuss a spreadsheet of options for plan design Which is entirely up to you to make a recommendation and for the village approved and you may agree with any of these Or you may want us to do more or you may see one that you like So again, you have lots of discretion here to make a recommendation

Yes, sir. Okay. And normally the village attorney would be the attorney, but the board was allowed, if it decided to, to hire a different attorney just to represent this board, and that's what was done. How long have you done that assignment for us?

Okay, so I think my office started representing this board circa 2016. The reason I say that is because I think that's the client number. Prior to my office, the attorney who represented this board, and I don't know how long ago he started, I believe Steve Sipan, and we inherited the business from Steve Sipan, was the attorney who created the plan, if I'm not mistaken. So that probably dates back, and I have to look at the ordinance to see the date of creation. And I'm assuming it was probably...

I agree right with those six. not the original ordinance? MR.

So I don't know for sure when the plan was created. I'd have to check. But I believe that Saipan was the attorney who certainly was my predecessor with this board. And more background for everybody while we're waiting for the ordinance to come in. There are about 500 pensions in Florida, municipal government plans. And the vast majority use not the city attorney, use outside counsel, especially for police and fire plans. And we can talk about why. But on the general employee side, still the majority of cities use outside counsel. And you're right. The cities could have the local, you know, the municipal counsel do the board work. But, again, in the vast majority of cases, it's outside counsel who does it. But you're right. It could be the village counsel, the village attorney.

I guess what I was trying to get at is your job then is to work for this board.

Correct. My clients.

Not for the village.

Correct. Absolutely. My client is you, the board. My client is not the village. My client is not unions. It's the board, so I answer directly to you. And that's the reason why, and that's why I keep saying vast majority, that's why it is the common practice and best practice, I would argue, to have separate counsel. We work closely with the village attorney, but that's why it's very common to have separate counsel representing the board. So I'm thanking the HR director. So you now have in front of you, and I'm saying this so everyone on the recording can hear you, because the mayor asked about the ordinance. So when the mayor asks, we answer. So you have the proposal, which was discussed with the village council several months ago. And then you have the current language on muni code. So that way you can look at the current language, and you'll look at the proposed language. And the actuary will go into as much detail as you want with regard to this chart of options. And it's intended to be, as you'll hear from the actuary, a very broad and a very comprehensive outline of options. But we're not telling you which is better than another because each has advantages and each has disadvantages. And I encourage questions for the actuaries as they go through the overview of the chart.

Just a question. Basically, it was sort of kicked back to you to come up with a plan. The council did not approve a plan, but sort of kicked it back to come up with options. Is that correct?

So the council kicked it back to you, the board, to discuss this further. Right. So as actuaries for the plan, we really don't recommend plan design. GRS does not.

But you give us options, correct?

I'm here to help you kind of start the discussion and just think about all of the aspects of plan design and what all of the choices are there. And I think before we even get into this table of all the different aspects of plan design and how you can select different choices underneath each aspect, the best thing to do is to think about what is the problem that you're trying to solve with this plan design? What hole are you trying to fill? What is the main cause for you to try to redesign this provision?

May I just say something real quick? And maybe Dr. Birch can back me up on this. The reason why it's back to the pension board is that an ordinance was created that this body did not see and bless to go to the council. It was one that did not provide a lot of options. And so the council, and I think from my standpoint, rightly said, let this board look it through and make a recommendation to us so that we can vote. Because there were I mean, notwithstanding what was presented in front of us, but also the argument was made at the time, could there be other options that are more wide-reaching? No. The council would not have voted on what other options are, because if there are indeed other options, then this board would then have to direct the actuary to do the actuarial work. to bring to us to see what the impact is so we can make a recommendation to the council. So I think it's a good reset for us to be at so we could move forward.

This is the last statement I'm going to make because I keep interrupting the actuary. But because everybody has the ordinance in front of them, the word reset, so where are we starting? What's the starting point on the reset? So everyone has the current language, the death benefit, and there are three paragraphs, A, B, and C. So just high level, what does A do, what does B do, what does C do? A is if a member is not eligible to retire. That's A. B is the death of a member who has hit early or normal retirement. They're going to get a benefit under B because they're eligible. They kept working, but they're eligible for an early or normal retirement benefit. That's B. is the death of a retired member. So the reason C doesn't apply is the member we're talking about was not a retired member. So they did not qualify under C. They didn't qualify under B because B is someone who hit early or normal retirement eligibility. So you're left with A. And all A does, and I'm going to read A so everyone knows what A currently says. A says, upon the death of a member prior to the member's early or normal retirement date. And that's what we're talking about. The member who passed, tragically, unfortunately, died prior to early or normal retirement. The beneficiary designated shall receive a refund of their accumulated contributions with interest at 3%. So right now, all that gets paid is the member's own money back, 3% interest on it. That's not a death benefit. That's just getting their money back, and we can debate about is 3% anything. Some years, inflation is more than 3%. So that's currently what the plan would pay, is the money back of what they've paid over their career. And the actuary probably can tell us what that lump sum dollar amount is and what the discussion is. Do we want to amend A, and that was the proposed ordinance, to pay a death benefit as opposed to just a refund of money with interest? Does that make sense, the difference between A, B, and C?

A question. Can this board simply award another year of eligibility and get all around this?

Okay, so that's an excellent question. So what some cities allow, and we, I think, talked about various options. Some cities allow people to contribute to buy, and let me explain why that's such a good question. So the member we're talking about died before hitting eligibility, and you're saying that a solution, and remember, these are dials that could be turned. So what some cities do is they allow contributions to be made to buy that extra year of eligibility. So that's something that some cities allow, that if there's a big city and they have lots of union members, that the unions can donate money, use that money to buy eligibility. And here, and I think the actuary is the better person to talk about it, everything has a cost. Whenever you're talking about extending a benefit or adding eligibility, there's a cost. And again, I don't want to keep interrupting the actuary, but I think the actuary will, as requested, give you a very broad discussion about options, and that is one of the options.

Isn't it usual that when you're buying ears, that that's done before death?

So another excellent question. So normally, cities allow people to buy service, which is voluntary. But if you've already died, the question is, could someone buy it for you? Could the family buy it for you? Could your coworkers buy it for you? And really, this is a broad, it's a good discussion to have because the death benefit provision hasn't been amended since at least 2006. So it hasn't been looked at for at least 20 years. And sometimes you want to amend things, you want to look at it. And this is why I think the more questions that are asked, and instead of hearing from me, the actuaries, and they'll tell you how many cities they work with, and different cities do it differently. And there's no one right answer because this is planned design. And we can't tell you what the design can be. We can tell you pros and cons and the landscape, but it's really a detailed discussion for you to have, and there are consequences. There are consequences to members. There are consequences to recruitment. There are consequences to You know, retaining employees, and that's why different cities do it differently. There are consequences to costs, so that's the conversation to have, and I'm going to sit down. Thank you.

Hello again. Okay, so taking it back to high-level discussion about what is it that we're trying to accomplish today. MS. We went pretty far down a path of a specific solution, which I think the way that we initially understood it was there was a situation where a single employee passed away after many, many years of service, but shortly before being eligible for early retirement, and as a result was only entitled to a refund of employee contributions. So the initial solution that we followed through on was filling that one specific hole where an employee who worked for a long time for the village would pass away with no death benefit payable from the plan other than money that he himself had put into the plan. As we followed that solution down its path at the July meeting of July 2025, we had presented four different options for the board's consideration per Adam's initial proposal to you to cover that specific issue. The board selected one solution, which was the deferred accrued benefit payable to the beneficiary on the date that would have been the participant's normal retirement date. An ordinance was drafted. We came to the village council. The village council, prior to hearing the ordinance, didn't like certain aspects of it. They didn't like that there was not a reduction for the 100% joint and survivor conversion that would normally apply at retirement and send it back for a revision. And we followed up on that to revise the ordinance and the impact statement to include that revision. And then as we were working on that, it was requested that we provide additional options to the village council of other optional conform conversions that could be provided. So it essentially became more of an expanded set of options rather than one specific solution. And then the final village council meeting, the village council just said, there's a lot of different perspectives on what this benefit provision should be, what problem it should solve. Some village council members thought it should be a very specific provision to plug the hole for this specific case, somebody who's been a long service career employee, passed away, and is now getting nothing, essentially. Some village council members thought it should be broader. Why cut it off at 25 years of service? Why not 23 years or 20 years? What about anybody who's vested? And essentially, the UNDERSTANDING THAT I GOT FROM THE LAST VILLAGE COUNCIL MEETING WAS THAT THEY WANTED TO KICK THIS BACK TO THE PENSION BOARD TO LOOK AT ESSENTIALLY JUST THE HIGH LEVEL VIEW OF WHAT IS THE BEST APPROACH FOR REDESIGNING THIS PROVISION THAT WOULD COVER ALL THE SITUATIONS THAT YOU THINK SHOULD BE COVERED. WHAT DO YOU RECOMMEND TO BE THE BEST PLAN DESIGN FOR DEATH BENEFIT? AND THEY WANT TO SEE KIND OF A MORE COMPREHENSIVE DISCUSSION FROM YOU AND A MORE COMPREHENSIVE RECOMMENDATION ON PLAN DESIGN. That was my understanding. So this framework is really, it's not meant to be, this is not comprehensive, okay? This is a few examples underneath each heading. It shows you just things to think about of how to structure a benefit plan design. So the very first question you need to answer is what is the goal of the benefit? That's in the leftmost column. What problem are you trying to solve? Are you trying to address the specific situation where a long-term employee passed away prior to retirement eligibility and is now only due a refund? Are you trying to go broader and replace a percentage of income for employees who pass away prior to retirement? Are you trying to provide a lump sum death benefit to employees? Because typically when somebody passes away, there is a need for additional cash, you know, payroll services, et cetera. a lump sum benefit that's equivalent to a percentage of future income or to preserve the value of the accrued benefit. There's many different goals that you could try to accomplish with a death benefit provision. But it's really – there's not one right answer. There's not one perfect death benefit that everybody should adopt. It's really up to you to decide what is it you want this benefit to be. Part of the decision is to think about what other benefits are offered by the village to an employee that passes away. And I think we've talked with the village HR, and we now understand that there is a life insurance policy that's offered to employees who pass away that was recently increased of up to 100% of salary or a minimum of $50,000 or maximum $200,000 for somebody who passes away. So there is a death benefit provision outside of the pension plan. But I think, in my opinion, that's essentially the first step where you should stop and discuss is just what is it that you're trying to solve? Because we keep following through on solutions, but we're not on the same page about what it is that the solution should address. I'm going to open it up to comments from you guys to get your take on what it is that you think is the main problem that you're trying to solve. Are you trying to provide a death benefit to everyone? Are you trying to solve the issue of a missing death benefit for this one particular case? MR.

Trustee Dorsett.

MS. Hi. I think the last time we met, one of the issues I brought up was rather than make an exception to the rule or create a new rule for one individual, that we should look at what the financial implication was of making a revision that would be a reasonable way to create the death benefit for people who fell into the current situation or are close to it I don't know that we need to rewrite the whole pension ordinance but I don't think it's a good idea to to make the change just for one person but to make something that would be inclusive of other POSSIBLE SITUATIONS UNDERSTANDING THAT WE'RE NOT GOING TO BE ABLE TO CREATE SOMETHING THAT'S GOING TO INCLUDE EVERY SINGLE ITERATION OR EVERY CONDITION THAT ARISES. THAT'S JUST GOING TO BE IMPOSSIBLE, BUT I THINK WE CAN use the current situation as a basis and kind of go from there, as well as looking at what the financial impact of that is, of making the revision of, I guess, what is it? I don't know which... Which...

The revision to... Right. So what I'm hearing is you're looking to essentially expand the provisions that are currently there for people who are retirement eligible, possibly a little bit further than they're currently drawn at 25 years of service. Maybe 25 years is too strict of a cutoff. Maybe it should be 20 years or somebody who's within five years of retirement eligibility or something to that effect.

So another good question, which is a historical question. So I welcome that, and I'll give it the answer to my knowledge, but I think we should try to go back even further in history. And history is important because you want to see how likely it is that you'll have a death, and the actuary may even have statistics on that. So since I've been working with this plan Circa 2016, we have not had this scenario. And I think the actuary is about to tell you, if you can check if you have the data, they have probabilities of pre-retirement deaths. And generally speaking, the expectation is going to be less in this plan than in public safety plans, because public safety, there's a potentially higher but still relatively modest risk of an in-service death. So the short answer was, Not that I'm aware of since 2016. And I'm wondering, do you have data either for this plan and how far back do you have it? Or what is our assumption with regard to pre-retirement, in-service, or out-of-service deaths?

MS.

So I know there was one pre-retirement death a very long time ago, maybe like 20 years ago. There was one pre-retirement death, and it was for somebody who was retirement eligible at the time. The assumption is based on mortality tables that are prescribed by Florida statutes, but it typically is less than a 1% chance that somebody passes away during the year, maybe like a quarter of a percent chance when you're younger, maybe closer to 1% as you get older and older and older. Generally speaking, death benefit provisions, if you're changing them prospectively for active employees who are not yet passed away, it's not a very costly impact. And I would encourage you to not jump to running numbers for every possible option, because that is time consuming and expensive, but rather to think more high level about what it is you want to design and then narrow down the number of do you actually want to run numbers for? Because essentially, the numbers are not going to be big regardless of what you choose. It's not going to be a huge impact because pre-retirement death benefits are just not a huge impact on pension plans. The only reason there is a substantial impact for the scenarios we were looking at is because the person that we were trying to add this benefit for has already passed away. So there's 100% chance of this higher benefit being paid versus usually less than a 1% chance for any other person.

And I wanted to make sure that when The actuary was describing a situation about 20 years ago. Just so everybody understands paragraphs A, B, and C, the situation, what you said, was around 20 years ago. with someone who was eligible, so would have fallen under B. Whereas the family we're talking about today, the member who passed away more recently, fell under A. And that's the difference between only getting your money back with interest, which is A, a refund was what we call it, versus an actual benefit under B. And remember, C is if you die after retirement. So those are the three options. And the board previously, without going into too much detail, had proposed a new paragraph. And if you look at the photocopy draft, that was the approach before. But the village wanted you to do more homework. And maybe you'll decide today that you're okay with what you'd previously presented to village council. Or maybe you want to tweak it. And again, it could be payable. One option is to do nothing. If you're happy with the current plan as it is, that's a do nothing. Another option is have it paid out outside of the pension. Another option is to tweak the pension and to amend it. And the initial question to her credit that the actuary is asking is, what is your goal? Is your goal just to solve for one individual, or is it to solve for all future deaths? And I see there's a question.

From my point of view, the goal is to solve for this particular problem because the question at the end, how competitive is it compared to our plan to peer group plans? And I think that this doesn't even begin to address that because it focuses on one very narrow section of the plan. Again, I would urge that what we do is simply add a year, then B would come into effect and be done.

And what's there makes a lot of sense. It's been very effective. If you want to do that, that's fine. But what are we writing this new legislation for? I mean, I think what we really need to do and what the council wants to do is to address this specific situation. No one on the council was happy with simply returning the money. So that's not

If I may, I think, Jimmy? Yes.

I talked to numerous employees about this situation and what people would like to see done. One of the things is what we don't have here is if a guy leaves, if a guy works 10 years and he's vested and he leaves and goes somewhere else or whatever and his intention to draw his money at age 62. If he passes away before age 62, there's never been a benefit for that person. so what you know the employees and different people we've talked about is to when they leave or when they're vested to sign the paper to say what they want to do with their pension so that they are you know covered as people that leave but somebody that is here working we felt that it know to work to 30 years to get a retirement that passed away while they're working here so that they would be able to draw that pension at 30 years but they passed away then their spouse or who they intended to be that beneficiary for their pension so to be signed after they're vested. So when they're working here, once they're vested, to be able to sign that paper and say, my pension is going to go to X and have that. We have nothing here for that right now for current employees or people that have left and intend to draw it at age 62. Where does that go? And so if we're going to fix this situation here, this will be something that maybe should be wrote in for all future.

MS. So I will say that it is pretty common for plans to provide a death benefit for anyone who is vested. And in fact, in the private sector, not in the governmental plan space, but in the private you're required to provide a per-retirement survivor annuity to the spouse that is at least equal to the amount the spouse would have received had the employee terminated on his date of death and retired on his earliest benefit commencement date and elected a 50 percent joint and survivor annuity or whatever is the qualified joint and survivor annuity under the plan. So at least 50 percent or up to 100 percent joint and survivor annuity. pre-retirement death benefit is required for private sector plans. And so it's very common for – and private sector plans will typically have a vesting service requirement of five years, sometimes seven years. So anybody essentially who's got – who's vested at that very short vesting period will typically have a death benefit provided to their spouse. It does vary a lot more in the governmental plan space, but we do see that it's a very common provision to provide the 100% joint and survivor annuity benefit amount to a vested participant when they pass away prior to retirement. So if you're looking...

So if it's a 10-year, we'd be on that percentage, not a full 30 years.

So, yeah, it would be based on whatever you've accrued through your date of death. So it would just be – let's say you accrued 10 years of service. Your multiplier is 2 percent of final average earnings. So you've got 20 percent of final average earnings accrued as of your date of death. That amount converted into a 100 percent joint and survivor annuity. That would be a very common benefit to offer to – a participant who passes away in a governmental pension plan, payable on a deferred date when they would have otherwise been eligible, or reduced for early retirement and payable immediately. And the Florida retirement system offers that exact provision. Essentially, anybody who passes away and is vested, their spouse is entitled to 100 percent joint and survivor annuity based on their current service as of the date of death. So if you're looking for something that covers essentially all cases where somebody is entitled to a death benefit prior to death and then now is not covered, that would be probably the best go-to.

But aren't you talking about really two problems here? Problem number one is this specific situation, and problem number two is the overall design of a plan, one of which is the issue you raised here, but also this is a 20-year-old plus plan. So I think the real thing is should we go back and look at the entire plan, but I think first we should fix this. And in my mind, the easiest thing to do is for us to say, well, add a 25th year by simply charging it against the plan. Now you can ask somebody to pay for it. And then the family can get the benefits immediately. And that solves problem number one.

I think the issue, the thing is, regardless of how you word it, the effect on the plan is going to be that the benefit is going to be paid out. So it's not like it costs less to say we're going to grant him an extra year of service, which actually would be an extra year of age because he didn't meet the age requirement rather than the service requirement. He was five years away from the service requirement. He was one year away from the age requirement, so he would have been eligible for early retirement at age 55. He was still like four and a half years away from the 30 years of service on retirement requirement. But regardless of how you word it, the effect on the plan is that the benefit would be paid out. So the impact financially will be the same, but certainly we could reward it that way if it makes you more comfortable to treat this situation.

That's sort of my point. The saying we'll add a 25th year of service as if he had retired, had died at 25 years, then Section B kicks in at that point. and then paid that benefit, which solves the immediate problem, then go back and look at the plan overall. Because I think we're trying to fix the plan a little bit to solve a singular problem.

And that just, you know, and you've got a point. You know, here's an issue that's got to be fixed in the plan. There's probably others.

So let's do the others, but let's do this separately.

And to some degree, I agree with Trustee Williamson. We've been looking at this since close to a year, give or take a few months. And we have heard it. Your question was, what is it that we're trying to achieve here? And this all came about as a result of Eric's death. And we have been trying to see... How do we move forward with this? And then as we were doing that, we got involved in the current ordinance, and we've even made amendments with suggested amendments to the ordinance. I've heard enough. I've read enough. And I'm just saying that at this point of our conversation here on the dais, I don't see, I think we should separate the two. what it is that we would want to provide for Eric's widow and family, and then do we need to look at this ordinance? Do we need to do additional pension reform? We've got to separate those two. I think it's time we look at this and put it to rest. And Mr. Williamson says, do we need to make any amendments to what we currently have to – accommodate how close he was to that 25 years in my opinion I think we have an ordinance that clearly states what happens even if you die and I don't want to come off cold and callous not by any means I was there I As he took his final ride, okay, I was there as an employee. And as Trustee Birch will tell you, in my other capacity as Village Manager, he says, Esmond, you're all about the employees. And yes, I am. But we have an ordinance here that clearly states that if you happen to pass before a certain time, then you get your contribution plus 3%. And at this point, at what? 909 of the conversation, that's where I am. The contribution plus 3%, and then we can go back and look more globally at our current pension plan to make not only amendments in terms of early retirement, but any others that maybe need to be made. And that's where I am at this point of 19. Thanks.

MS. And that's a legitimate route to take, that you don't want to amend the ordinance further. There is a death penalty. But that's Esmond Scott. MS. And that's a refund of contributions, and that's what should be paid. And that's absolutely – if that's your prerogative, then we could solve that today. Me.

Yeah. I speak for everyone else.

to do something. The council unanimously felt that we needed to do something for this individual to address this. So whatever we can do to do that, I think we should.

Wasn't he here 27 years? And he's age 54?

He was age... He was a little bit over 54.

So he was over the 25 years that we keep saying...

So there is no retirement at 25 years. There's only retirement at 30 years.

And it's age 55. He was a year shy of that. He was a year shy of 55. So that's why he didn't get the thing.

He wasn't eligible for early.

What we proposed, I thought, was for her to be able to wait until his 30th anniversary.

2029.

2029 and draw a 27-year pension, you know, on his years of service, whatever it is, that pension number be that amount on his 30th anniversary. That's what we were proposing. But the thing that we didn't have was her age and difference, what the lesser amount was. We said the full amount. But it should be the amount that your spouse would get.

Right. So the initial... proposal of the initial ordinance that went before the village council was the full accrued benefit. Correct.

It should be the reduced amount for her age or whatever it is.

Yes, for the optional form conversion to 100% joint survivor.

That's what we proposed, but we did not have that in the writing, and that's what got kicked back. I think it should be the reduction of her age, whatever that is.

Mm-hmm. Okay. So is there consensus that the goal right now for this immediate decision is to pay something to the beneficiary of Eric Olson for this specific case and to table greater reform until another discussion?

I agree with that. I think that's how it is. Can we phrase that in terms of a motion?

Well, I think we're going to need to specify that a little bit more of what it is that we want to pay.

Well, I think we're not going to make a recommendation and change the plan. I think we're now, what is the recommendation for this specific case? That we can solve this problem hopefully here and go back to the council and say we suggest you do X.

We have to first establish if that's how everyone feels. Or if the majority of us feel it. I get that feeling, but how do we make sure? Because that tells us procedurally how we go.

Well, perhaps we should just get a sense of the group. If that's it, then we put it in its case of motion. I know how you feel, but I feel that it ought to be modified, as you all were talking about.

And so we're trying to get a consensus if we're just going to fabricate them.

For this situation? Yes, for this situation.

We look at the pension as a whole, the pension plan as a whole, and further reform separate and apart from this situation as it pertains to the late employee.

I agree.

I agree. Good. So do I.

Okay.

So then what would be the specific recommendation for this case? Is it simply to add a year? No. Or maybe you can explain it a little bit.

I'm going to use 27 years because I don't know the exact amount. As a 27-year employee, his intentions would be to be here for 30 years. So his beneficiary would have been his wife.

Correct.

So his wife, on his 30th anniversary, would be able to draw his pension at whatever the amount is for the spouse of age difference. I don't know what that's called.

There's a two-year age difference. There's a two-year age difference. So if he had lived to 30 years of service, he would have had a benefit calculation done for him that presented optional forms of payment, and he could have selected

A, B, or C, whatever that is.

MS. An optional form that provides 100 percent of the benefit continuing to his spouse after his death. And for that continuation to the spouse, there is a reduction up front in the benefit amount.

And whatever that reduction is, is what she should get.

If I may before, just to remind everyone, because I just got a text, to remind folks to turn their mics on, because those who are listening and watching, they're not hearing the audio. So please.

Are you hearing me?

Thank you.

MS. So I do – and so I think maybe now is a good time to review this document that we discussed at the last Village Council meeting, which showed a what-if benefit calculation if Eric Olson had survived to his normal retirement date. And based on his service through his date of death, what would his benefit election form look like? And then we looked at the different costs of if you wanted to provide the 100% joint and survivor or if you wanted to provide 50% joint and survivor, what impact would that have on the financials for the village and for the plan? So if you'd like to take a look at that, again, I don't think we had a lot of time to discuss it at the village council meeting, but it was prepared for the village council meeting.

But it would be the same impact if he would have lived and drew the pension for her. There's not really a big impact on the pension because he would have drawn it anyway if he would have made it to 30 years.

So what you're saying is partially true. There is a gain from the fact that he passed away, and that gain is being eliminated by adding this provision to now – restore the benefit to the spouse. But without any change to the plan, the plan would continue to have this gain. So relative to the current plan provision, there is a cost. There is a cost to the plan. If nothing happens, the liability goes down. If you change the plan, the liability goes back up. So that delta is what we measure as the impact of the plan change. It's the difference between the cost if you make the change versus the cost if you don't. So there is a significant cost because you're essentially adding a benefit that was not under the plan if no changes are made. So you're adding, essentially, if you're choosing the 100% joint survivor, you're adding a $3,785 per month benefit payable at age, payable four years from now for this beneficiary that otherwise she would just be entitled to the refund.

The amount that's there.

The refund.

Am I correct that the benefit would not start for four years? Is that correct?

Whenever his 30th anniversary would have been.

It would be four years. Because I think it's retroactive.

June 1, 2029 is when.

And is that generally agreeable with the family? Is that correct?

I don't know. That was just one of the things that was being proposed.

I think that's the fair thing, not of this date. I think it would have to be on his 30th anniversary.

So you think it's retroactive to the time of his death? No. Am I correct? That's what makes it 2029, four years? Yes.

It's based on service through the date of his death, which was 25.833 years of service. But it's payable on the date that would have been his normal retirement date. So it's not retroactive. It's going to start on June 1, 2029 and be payable.

I understand.

Right. So there would be no immediate payment. Until 2029. And she would not take a refund.

And what we're saying is that we will... Do it as if he retired on that date and died simultaneously. Correct. Yes. Is that a motion before us at this point?

I would put it out there, yes.

I would second it. How would you frame that so I can understand that? Try that again.

Before you vote, I do want to caution you because this has come up at past village council meetings where some, I don't know if it was members of the audience or village council members, did not like the idea that this benefit was payable on what would have been his 30 years of service rather than age 62. Because right now, if somebody terminates employment, they are not entitled to a benefit starting when they would have received 30 years of service. They're only entitled to a benefit at age 62. You only – you would have to work the whole 30 years, have 30 years of credited service to be eligible to start at age – at 30 years of service. And so some – At past village council meetings, some people have voiced concerns that this is overly generous because it's essentially crediting a benefit that wasn't fully earned because he wasn't there for 30 years of service.

Didn't work for that.

So I just want you to have a knowledgeable discussion about it so that it can be documented that this is what you intend and it's not just a byproduct of not having thought it through.

Picking up on that point, and it is not my job to recommend that you slow down or speed up, and I would fully support you know, the proposal that's being floated. Put that down as a bookend. That is a very viable solution. And by the way, you answered the question when you look at the chart of who's eligible, and that's the third column. And right now, you're just focusing on this one case. So that way, we're not talking about others in the future. We're just talking about this one case. But it may be worthwhile, and I think that's really what Dean is saying. is to at least be able to tell the village council you looked at other options. And the other bookend was, so you have one bookend on one side, you have one bookend on the other, is not to do anything, which was the bookend of just paying out the refund. So you may decide once you look at the various columns that you're very happy with one proposal or you may be very happy to do something in between. And this is the deliberation where you're looking at options, and I think it may be worthwhile at least for a few moments to let the actuary talk about other alternatives. And you may like those alternatives, or you may like the alternative that was already put on the table.

MR. Jim, can I ask you a question? There will be no income then for three years? SECRETARY KERRY, Correct. MR. You think that's good?

I'm looking at what is fair, I think, for everybody. I don't want to single out a person for feelings. I think as a board or as we have to do for the group,

one incident in 20 years and maybe longer than that.

Lisa, I'm sorry.

There can't be comments outside of this, please.

Can you hold one second? Sir, is it possible that before the item is voted on that we can entertain public comment?

Okay. So it will be at that time, Ms. Keeley. Thank you.

I felt that, you know, we're talking about this situation. The thing I brought up earlier would be for the future and other things that we need to fix on 18A. We're just concentrating on this situation here. And my intention is that if he worked here 27 years, he was going to retire here. He was going to work the full 30 years and retire. whatever, then he would have drawn up the paper that they give and signed his beneficiary or whatever. So we're actually doing that ahead. So we're saying that he passed away. She will get his pension at the reduced amount, whatever that number is because of age difference, at the 30-year mark.

Right, and plus the different choices, whether it's 100% or 10 years certain or 75 or 66 and two-thirds or 50, right? Those different options that... There's other options in there, yes.

Well, there's really no benefit to choosing any other options. The 100% JNS is the most...

Yes.

You know, if you're making the choice after death... MS. The reason that people choose different options is because there's less of a reduction for, generally speaking, for a 50 percent JNS up front.

Right. MS.

But then if you choose the 50 percent joint survivor, then your spouse will get half of the benefit you were receiving when you pass away. So if you're making the choice after death, it really only makes sense. It really makes sense to only offer one option, whichever one you think is appropriately generous.

Okay, there are things that would seem almost logical, but then at the same time, you know we deal with the logical, so we can't really say what would be chosen. For certain, right? We can't. Yes. Because if you give them options, then you choose options.

Yeah. I mean, she could possibly choose 10 years certain if she expects that her lifetime is not going to be very long. I'm just saying. That's a possibility.

I'm just saying. But anyway, I guess Trustee McCoy, I guess I'm calling you Jim. Trustee McCoy was making a motion for us to vote on. And what was that? So we can have it real tight and concise.

Was to be able, for her, to be able to draw... his benefit on his 30th anniversary date. So whatever his 30th anniversary was, 2029.

June 1, 2029.

Yes, 2029. So she would be able to draw the amount of his pension of the reduction of the spouse.

And that's at 100%?

It's 100% of his, but she gets less because of her age and different things.

MS. Well, so it's a reduction – there's an accrued benefit that is based on the benefit formula, 2 percent times service times final average earnings.

And that's his benefit?

MS. That's his life annuity benefit. And then that benefit gets converted to a joint and survivor annuity for him, which is a reduction of usually somewhere around 85 percent – a reduction of about 15 percent. So about 85 percent of your standard benefit formula benefit would be payable under the 100 percent J&S option.

Because if I died today, that's what my wife would get. And it would be fair that that would be fair for everybody.

And it's also consistent with your current plan provision for people who are retirement eligible. It's 100% joint and survivor.

Jim, what is she supposed to live on for the next three years?

Well, she did get a check from here for her life policy and different things. And

So there is a life insurance policy.

She did get a life insurance policy from here. I guess that she was the beneficiary. I don't know that.

And there's also an option to provide an early retirement benefit. You could provide the option to choose between an early retirement survivor benefit people now or deferred benefit.

Then we would have to grant the one year of age, too, for that.

Well, you're changing the plan, so you can do, you know, if you're writing a plan provision for one person, you can craft it so that this specific person is eligible for either an early retirement benefit commencing immediately following death at age 54 1⁄2 or when they would have turned age 55. That's really up to you how you want to draft it. That would be a pretty significant reduction, though.

Yeah, I think it should be on the 30th year is my...

Trustees, to give you an idea that there is no right answer and there's a range of options, if the concern is that someone, the spouse, would pass prior to the 30-year anniversary, you could, in theory, allow the spouse to select. And this is how it works, by the way, with the Florida lottery, a lump sum value. And that's one of the options when you look at the chart is lump sum payments. So I don't know if the actuary, if you want to hear her discuss that, but you could ask for ballpark what the lump sum value is of that annuity if the spouse doesn't think they're going to live until the 30th anniversary or if the spouse has medical conditions and maybe the spouse wants a lump sum payment. And this gets into the discussion of what's referred to as, and the actuary can spend hours talking about it, but adverse selections. where if we give people too many choices, they're going to act in their best interest, which may not be in the financial interest in the long term of plans, and that's advantages and disadvantages of lump sums. But again, what we're doing is we're having a broad conversation. We're looking at options, and these are certainly all viable options.

Okay, so we're going to vote on Jim's thing.

I've got a comment. Here we go. MR. So at our last meeting, we talked about what would – I think we talked about what the actuarial computation would be had he made it to early retirement, right, 1555. He had made it – he was 54. If he made it to 55, we did the actuarial – it would have been like $275,000. Let's talk numbers, because you mentioned what is she going to live on now, right? So then she gets the $131,000, which is his contributions to the plan plus interest. Okay, so if you subtract the $275,000 minus the $131,000, there's a deficit of about $143,000. Now, she got paid a life insurance, and really that's the issue here. It's life insurance. That's the equalizer. If you subtract the life insurance, which was almost $100,000, and that's tax-free, by the way, And then you subtract what she got, what he, well, what the survivor received and additional compensation, that $143,000 is closed. You're at zero. I don't understand the payout to $29,000 either. She needs the money, so I don't understand. I agree with that. But I don't see how this, I don't see what the problem with the plan is. It's like changing the rules at halftime. I mean, it's early retirement is $15,000, $55,000. It's Normals 30 and 62. I think basically what we left off, what my suggestion was, is to go to the council and provide the, it's unfortunate, without changing the plan at all. I just don't see how the plan is broken. I've been doing this a long time, and this never comes up. It's usually looking away from the ball, looking outside the plan. If you do this, you set a terrible precedent. Look at what kind of money we've spent already on legal fees and GRS fees, and nothing's got accomplished. If you open up this Pandora's box, someone dies at 53, someone dies at 52. You're going to constantly change the plan. I don't understand why the plan is under attack. We can compensate her, and she got a nice life insurance, but that should have been larger. For our clients, we look at the gap between, hey, if you died today, you look at it this annual, if you died today, what's the gap between your retirement benefits? The survivor and the family, they got mortgage, they got debt, they got all kinds of things going on. Let's up your life insurance. It's cheap, you know, and the village is paying for it. And then she's got health benefits. So we look at the – you've got to look away from the – look at the plans under attack here, and I just don't understand how the plan is flawed. Many plans are like this. I have a lot of plans, and I went to the top actuaries in the country, and we don't understand. It's always back to life insurance. It's back to – Let's go to the village and let the village make a decision. And hey, there's a shortfall here. Let's take care of this. I'm all for that. But that way, you don't affect the plan. And you're not pushing this cost, because there's a cost. You just mentioned it. Forward for the taxpayers are going to have to pay this. And then when we get a downturn in the economy, then you cost out each employee. Some people are going to have to be let go because now the plan has put this burden on, you know, costing out an employee, you know, FICA, Medicare, health benefits, pension benefits, and this happens. So I just don't understand. I think there's a solution here to satisfy what you're trying to say, Jim, in taking care of the survivor outside of the plan through dollars, just compensation, on top of which he's already been paid.

I have a question. You keep talking about life insurance. With respect to the village, did they pay out on a plan that was voluntary? In other words, that the employee participated in a life insurance program?

Yeah, I mean, HR would have to speak to that. I don't know the specifics of the plan, but there was a benefit paid out. I'm not sure.

I could actually wear my other hat and answer that question.

Go ahead.

Okay. Prior to me being here, there was a $50,000 limit on insurance for employees. But I want to thank the sitting council who was able to vote on... on just to get that up. So where it stands right now is if you're making over $50,000, then it's going to be one time your salary and up to $200,000. And so that's what the employee. No, no, no. That's what the village.

That's what the village. Yeah.

Not anything like any other plans that may be voluntary. Correct. Correct. Thank you. You owe me one. I spare you.

But you can get additional policies. Correct. Yeah, you can do that. Yeah, I'm just looking at the benefit package when you're evaluating an employee.

So I would agree with the statement that if you provide a refund to the beneficiary and you also count the, was it $90,000 or so life insurance payout,

Ninety-seven? Ninety?

Eighty-seven? Ninety-four. Ninety-four. Life insurance payout just based on his salary. You know, that's – I think the refund is something like $130,000. So altogether, that's – that should be pretty close to the value of his early retirement benefit had he been eligible. So if that is your position that, you know, the sum of those two things is already a fair compensation, I think that's a reasonable stance to take.

Let me just add something to that because I don't want it to seem as if we're getting into somebody's purses and finances on this because that's not where we're going. We're just saying that benefits have been enhanced on one level. And we also – that's primarily what we're doing. I just want to – I don't want anybody to think that – The way his survivor, his beneficiary's wife got this, and they got this, so they should be able to live on this. That's not where we are. We want to make sure. I want to make sure that we stress that for those who may be listening, in other words, and say that we're trying to organize our finances. It's not about that. It's really about... on this side of the fence the village's fiscal responsibility in certain things and that's what's really being discussed here but i think which are we trying to hear what jimmy what trustee mccoy is is trying to formulate so we can vote on that okay I want to hear it clear and concise and tight so we can vote on that.

So if I were to try to rephrase the motion from Mr. McCoy, I think his motion is to recommend a benefit provision that would apply specifically in the case of Eric Olson, so somebody who passes away after 25 years of service with the village, which is I think how we drafted it previously, would be entitled to the benefit he would have received had he retired on his 30th anniversary of employment and elected the 100 percent joint and survivor benefit calculated based on service and salary as of his date of death.

Okay. So that's what we're voting on. Everybody's clear? There's more than that?

Just making it clear that we're only talking about this one scenario. So this would cover only deaths that occurred, and I would have to look at the year, but from January of 2015 through the present. So it's a window, but only one person falls in the window. So anything that happens in the future would not be covered by this window, if that makes sense.

I would say it's more limited. It's specific to this person.

Correct. Right, but we don't draft an ordinance related to a single person.

No, we're not drafting an ordinance.

You are.

We are? Yeah, you're given the language to draft an ordinance to go to council. Okay.

But the ordinance date would be so limited it would be only this person. We know that because we passed those.

Okay. So are we ready to vote? Are we clear on this? All in favor of that motion, say aye.

Wasn't there public comment? I'm sorry.

Oh, OK. Well, is it now?

So.

I defer to the chair. I would not disagree with public comment because it can inform the conversation. Or we could wait until – because there's more discussions that potentially may take place. So I think the safer position is to allow public comment. That way it can inform the vote. All right.

Thank you much. And Ms. Keeley, I think you're the person who wants to speak.

I'm not going to attempt to move all my stuff. It's okay.

I'm sorry, my back is out, but I... Will you introduce yourself, Ms. Kealey?

Yes.

Elizabeth Kealey. Almost 31-year employee who's been involved with this pension since my fourth day of employment. And what I'd just like to say is a few things. When this initially came before you, what you provided as a recommendation to the council was a better benefit that I was afforded as a 30-year employee. Currently, and I don't disagree with Mr. Longman and the chair, that there is a plan in place, and it is unfortunate that Mr. Olson didn't meet those requirements, but we did propose to you eight different changes to the plan that would have encompassed this situation, and it would have encompassed many other people's situation had it occurred, where you don't have to wait until your 30th year to If something happens to you and you're vested, you don't, you get your benefit at your 30th year and you all denied us that benefit. And that would have encompassed every employee. So what are you going to do when the 28 year employee who has 10 years vesting, something happens to him and his family's more impacted because he had two or three children that are toddlers and they have a lot more bills to pay. When you talk about finances, this is something that we all have to prepare for. That's why the village does provide life insurance. And there is a gap. So while it doesn't encompass the full amount of an early retirement benefit if that was passed, we all have to prepare for that in life. And our life insurance policy, you can add to it. I have additional coverage through the Village. So that's just a matter of preparing and people being financially educated on what their retirement is. And so while I do have sympathy for this situation because I knew Eric his entire career here, I just think that you are making a change to the plan that doesn't need to be because there are provisions. I've been here almost 31 years. This is the second occurrence, and the first one was because the person was 72 years old and age eligible to receive his retirement. And so I think that moving forward, are you going to do this on a case-by-case basis for everybody? What are you going to do if somebody's only 28 years old and is vested and passes away? If I were to leave and I was vested at 25 years, I would have to wait until I was 62 years old to get my pension, and you're giving a benefit ahead of that. And I worked here, and I'm alive. So you're providing a benefit that I wouldn't even be able to be eligible for if I was vested and left the village. The 30 years is... THE TARGET PROBLEM, AND I'M NOT SURE I'VE SAID IT BEFORE WHEN WE WERE DOING THE EIGHT RECOMMENDATIONS FROM THE PENSION COMMITTEE ON REFORM, 30 YEARS IS A LONG TIME IN THIS DAY AND AGE, AND I THINK THAT THAT SHOULD BE MORE LOOKED AT RATHER THAN MODIFYING A PLAN THAT PROVIDE WHAT YOU'RE DOING IS PROVIDING A BETTER BENEFIT THAT I WOULD HAVE GOTTEN IF I WAS VESTED AND I LEFT BECAUSE I WOULD HAVE TO WAIT UNTIL I'M 62. So that's all I have to say. Thank you.

Thank you very much. Are there any other comments or would the board want to have a final bite of the apple before we vote or are we ready to vote? On Trustee McCoy's motion. OK, so let's vote then. All in favor of Trustee McCoy's motion? Say aye. Aye. All opposed? Opposed. Opposed. OK, so it's a 4-3. So what do we do now?

Give me a second to check the ordinance.

What is 4-3 now? It's 4-3 in support of Jim's... Anything with four positive votes passes. Yes, exactly. So that passes.

I want to read the ordinance provision just so we're all on the same page. Give me a quick second. And by the way, while I'm looking at the ordinance, the history was that although it currently says 2006 is... You know, the current version dates to 2006. The original plan was created in 1971. So that tells you the history of the plan goes back as far as 2001. And I'm looking at the provision dealing with the pension board and pension board votes. And this is Section 18-39. And it deals with votes. I'm just going to read it. Meetings of the board shall be held at such times and places as the majority of the members shall from time to time determine. A majority of the membership shall constitute a quorum. We have a quorum. And all decisions, acts, and resolutions of the board shall be by affirmative vote of at least four members. The motion carries. The motion carries. Thank you.

Now that that motion carries, we now have to determine what it is that we're going to do as it pertains to this.

Am I correct?

How do we move forward with whatever benefits and how we go about doing it?

Based on the motion, you've given me instructions effectively in the actuary to prepare an ordinance which we will then send to the village council, to the village attorney to look at it. And then it would then have to be voted on if they want to vote on it. And they could approve it as proposed, or they could tweak it. But it seems to me the most efficient process is we're going to try to get that on an upcoming meeting. I don't want to say ASAP, but as soon as reasonably possible. And the village will get to vote on it. And I think it makes sense for the actuary to be present for that meeting if the village wants us there. I'd be happy to attend as well. I think you can honestly tell the Village that you have studied this, you've looked at a range of options, and this is – it wasn't unanimous, but the majority of you thought this was fair and appropriate.

MR. My question is, have we looked at every option – or maybe I should be asking this Board – are there any other options that we should be looking at other than have been proffered to us?

We already voted. We already voted. No, no.

No, no. I know, no. We voted on doing something. Did we vote on those options that were presented?

100%. Oh, the joint and survivor versus? Yes. It's 100%.

Okay, good.

I think we, the motion was for the 100% joint and survivor.

It was for the 100?

It was for the 27, whatever his years of service, plus the reduction of whatever the reduction would be of her age.

So converted to 100 percent joint and survivor option. MR.

Okay.

Okay. That's how I phrased it. MR. Okay. Good. So if that's not what your intent, we can revise it. But what you intended was for the beneficiary to get the benefit she would have received had he retired on the date of death and then elected 100 percent joint and survivor option.

MR. Correct.

Yes. Okay, good.

All right.

MS. Okay.

Minus the amount of her age. Because of her, that's the joint, I think that's the joint.

When I'm saying, when you convert from the crude benefit to 100% joint and survivor, that's the reduction of 80, of taking it from 100% of the formula to like 85% of the formula. Yes. So.

And you're saying, and you're saying normal retirement though, not early. Had he made it to 55? You're saying normal. It's a different calculation.

No, it would be his 30th anniversary. Okay.

So this would be delayed to his 30th anniversary of employment. Right. And unreduced for any early retirement.

July of 29? June 1, 2029. Okay.

And I think the ordinance that we previously drafted is very close to that. It just would need to be changed to exclude anybody who might pass away in the future.

We're limiting it to just this case.

Excuse me, wasn't it to this personal case? Yeah.

This motion was just for this case. Correct. And we had previously done a very, very similar ordinance. that covered essentially this motion, but it also extended to future employees who would pass away with 25 years of service.

OK, perfect.

And that's what we were going to talk about in the next meetings when we come up with maybe some things to help the benefit of somebody that died at 10 years or once they're vested. MS. Okay.

MS. Maybe it would – I want to ask the question of is it worth it to do a natural impact statement on first reading, or if you'd like to wait until the second reading, because it's been a lot of back and forth, and I don't want to charge more fees than necessary if this is going to then go back again. But if it passes first reading in the village council, then me preparing an impact statement would be a requirement and would be the final step, and there would probably be

MR. First is my two cents, which you can throw in the garbage. My two cents is have the impact statement for first reading. That way the village has everything in front of them, and if they want to change it, then we have to do a separate revised impact statement. But my preference from my vantage point is let the village have everything in front of them so they can approve it, because it's already taken approximately a year. And if they don't agree with this recommendation and they want to change it, then, you know, we require to revise it. So those are my two cents. And then the value of having this chart is either, you know, at the next meeting or at a future meeting, we can look at what solution, if any, we want to do for future employees. And that's the broader conversation.

Okay. Perfect. All right. Thank you all. Let's move to investments.

I think we might need a motion to do the impact statement for first reading.

Yes, we would. Okay, so motion to do the actuarial studies impact statement for this ordinance to be brought forward or recommended ordinance to be brought to the council. I'll give them right away. Yes. All in favor?

What's the estimate? So what's this going to cost?

MS. I think around $4,000 probably. I mean, it's going to be based on hourly time charges. MR. Let me ask you a question.

How much have we spent so far as taxpayers on the Eric Olson issue, changing this plan, to date? And the attorneys, my same question. I'd like to know – I want everybody to know what we've spent to date on this endeavor.

MS. The taxpayers did it. The pension fund spent it.

Yeah, but Jimmy, ultimately it filters through to us, the taxpayers. We're paying for this. No, you're not. No, yes we are. The pension benefit.

The pension is funded by the employees.

It's not funded by you. I know partially, but the other part comes from the taxpayers, and that contribution is going to go up. I'm just saying. So how much have we spent to date in GRS and attorney's fees? And I think that's important for the council to know that as well.

I WOULD SAY IT'S SUBSTANTIAL. I DON'T HAVE AN ACCOUNTING OF EVERYTHING THAT WAS CHARGED DIRECTLY FOR THIS. I COULD GO BACK AND CERTAINLY COME BACK TO YOU WITH THE TOTALS, OR MAYBE YOLIE CAN PULL UP THE INFORMATION. BUT I MEAN, WE'VE BEEN TALKING ABOUT THIS SINCE APRIL OF 2025, AND SO I'VE GONE TO MAYBE FOUR OR FIVE MEETINGS AND DONE FOUR OR SO DIFFERENT STUDIES AND DELIVERABLES WITH THIS. SO PROBABLY 10 TO 20,000 JUST DONE

So just to reiterate what I said before is I don't look at this as a pension problem. This is a financial planning problem. And what I propose is a great solution for the spouse basically in that if it goes to the council, we figure out a compromise in this computation, this shortfall that she would have otherwise received had he made it to 6230. And you did that computation with the reductions. in place, and I think it was 270. It might be larger. I think that was at early retirement. Normal is a little bit higher. But we can figure out the competition and pay her out now instead of waiting until 29. I don't get that. That part makes no sense to me. She would get an instant cash payment.

But we already voted on this.

We already voted on this. My question was the fees. And we lost. I got it. I just want to reiterate that. And so the question is about what this would cost and fees to date.

I don't have an exact number of a fees to date. I would ballpark it probably in the $10,000 to $20,000 range for the last year or so of discussing this in all the different studies that we've done. But I'm sure Yoli can come up with the total, or I could go back and sum up all the bills and come back to you and respond in an email or whatnot for future reference.

MR. We need that.

Thank you. If you're looking for an estimate for the impact statement?

No. Oh, okay. I mean, after. FYI. Okay. I think the board would like to know, too. I don't think they have a clue.

Yeah. And that doesn't preclude them from going for us to vote and having them be ready to do the study because the council needs that.

Okay. Right.

Yeah, so we're in favor of...

So the motion would be to do the study and the impact submit at the regular agreement hourly charges, and I can provide an estimate of approximately $4,000. Great. Yes.

All right.

On my side.

So I effectively have the same answer, which is I don't have the specific number in front of me today, but if you look at your packet, the two prior bills were each $2,000, and we are an hourly charge. And it's the same question. If you want us to attend the village council meeting, I'm happy to do it. And some cities will say the following. They'll say, don't go to first reading, because if there are no questions, then come back and answer the questions at second reading.

Some villages... That doesn't make no sense to me. You've got to be at first reading.

Right, exactly. And we're also happy to do one-on-ones, or sometimes the HR can do a good job of explaining things to council members. But there's no right answer, and the quick, non-specific answer is it's an hourly charge, and we hope to get it taken care of without unnecessary charges. Thank you.

Okay. Okay.

We're moving on to the next item.

Thanks much.

Good morning. It's very good to see you all again. Just a reminder, I'm James Reno with Mariner, and as Dave continues his professional transition over the course of this year, I'll be stepping up as your investment consultant. As you can see, me and Dave are still working very closely behind the scenes on your plan. Just jumping right in, last quarter we kind of had a busier quarter, a few action items. Updated your IPS to new asset allocation. That was approved a couple quarters ago. Updated some legal language as well as tightened up our cash management system with the standing rebalance letter. This quarter I have no new recommendations at this time. And as you'll see, I believe the plan is well positioned as we go into 2026. But before I jump in, I did prepare some market perspective charts, and I just want to take a moment and pause. The board's done a lot of heavy lifting today, and I just want to gauge interest. So do you all want the five-minute or the 20-minute version today?

Five.

Five? Okay. Three minutes. Okay, three minutes. Okay, so we'll jump right in to the investment performance report, the quarterly report. And very briefly here, if you move to page three... Just going to give a broad overview of the markets for the quarter. So the S&P 500 U.S. broad stock market advanced 3% and closed the year out just under 18%. So continued strong growth in the stock market. A lot of this driven by better than expected GDP growth results, as well as continued strong earnings across the board throughout the S&P 500 companies. Coming down to the MSCI Acquiax US International Stock Market Index, advanced 5% over the quarter, landing at a one-year return of over 32%, which has been historical, a big year for international markets. as we've seen a rotation because U.S. equities have had such a good run to more relatively cheaply valued stocks overseas, especially due to concerns around tariffs and some geopolitical tensions. If you go lower to the Bloomberg U.S. ag, we also got a positive return from our bonds, up 1 percent for the quarter, and a very strong year of 7.3 percent. Last quarter, I mentioned we had an interest rate cut at the end of the quarter. We've gotten two more interest rate cuts over fourth quarter in October and September from the Fed. So we don't time the market, but it was very timely to go ahead and tighten up our cash management system with that standing rebalance letter because we're not getting any more free lunches with short duration or short-term bonds. So any questions there with the market update? But positive and to the right across the board, exactly what we hope to see on any given year. Moving on to page 12. So this page shows the plan's long-term strategic asset allocation, and you can see the green triangles, your current allocation as a quarter in, are all very close to your vertical long-term targets. So the plan is very well positioned. Remember, we moved you all to a 70% equity, 30% fixed income a couple quarters ago at the board's direction, and you can see we are close to those targets as a quarter in. Turning the page one more time, started the quarter in the top left at $23.2 million and was up about $800,000 to close the quarter at $24 million. So up $700,000 from investment earnings and $100,000 in net contributions. So another impressive quarter under the plan's belt in terms of investment earnings. So finally, moving to page 16 to review the plan's performance. Going to focus on the fiscal year-to-date column, but to start your fiscal year up almost 3%, so a very strong start to your new fiscal year. And you can see the three five-year since inception numbers consistently highly competitive with your benchmark and exceeding your 7% actuarial assumption with the exception of the since inception time period. And remember that predates Dave and me and the plan was invested a lot in CDs at that time. So you expect your returns not to be what it would if you were taking more equity risk. But focusing on the fiscal year-to-date column, total equity was the main driver, up 3.7%, outperforming the benchmark. International equity, up 6%, and fixed income, up 1%. So all strong results across the board for the quarter. So that'll wrap up the quarterly update, unless there are any questions. We do have one other outstanding item. Remember, a few quarters ago we came with a fee increase request, which the Board approved. Our team has now finalized that amendment, so we'll just need that signed today.

A question, if I might, to the actuaries, if they could take a quick. What is our current actuarial liability? Do you have that decided?

We don't have a liability measurement that is as of the exact date that the financial statements are. No. But I could give you an estimate. So as of September 30, 2024, the total pension liability, which would be comparable to this gross market value of assets that you were looking at, was $20.5 million. And just due to time value of money, Typically, it would increase by about half a million year-over-year, so we might be at 21 million. There is a scheduled assumption change that will have to be recognized as of October 1, 2025, just a prescribed mortality assumption change under Florida statutes, which will increase that by an additional 1 percent. So 21 million and change is not a bad number to think. 22 maybe, maybe a ballpark figure. I think we also did have a small impact statement that we prepared that might push that up a little bit. So let's say to be conservative, 22 and a half or so. which is where we would expect it to be as of 2021.

Sort of your actuarial number is 22 and a half at present, give or take a few cents.

Give or take a few cents, yeah. Give or take a million. Yeah. This is an estimate, a projection, high level estimate. We don't have the census data yet. We don't have the information to do the evaluation of September 2025, but. But you should be overfunded. You should be overfunded. You were overfunded as of 9-3-20-24. On a market value basis, you should be overfunded now because you had a better return than your assumption of 7%.

And I realize that you'd use a five-year average also on the actual. I understand that. But I'm just trying to get a sense of where we are in terms of funding. Okay, thank you.

Trustees, as was pointed out by James, at the last meeting you approved the fee increase. There hadn't been one for many years, and it's the second-to-last item in your packet. It's all of two pages, so behind the green, and it says what you would expect, first addendum. So all that we're asking for is a motion to authorize the chair. It's already been signed by Mariner, but we do need a signature on that agreement, and it was already approved, so it's more of a formality than anything else today.

And I would say that... We don't have any further action. No further action.

I mean, if you wanted to give specific authority for the Chair and Secretary to sign it, I think that's subsumed in the motion at a prior meeting, but we do want to get signatures on that document.

Okay.

I move that the Chair and the Secretary be authorized to sign the amendment that's before us, the first addendum.

Second.

All in favor say aye. Aye. Oh, I forgot that I was back.

Thank you. Thank you all. That wraps up Mariner's update.

Thank you.

Thank you.

Okay, where are we? Are we on to you?

MS. Okay. So you're probably getting sick of me by now, but here I am again. Okay. So initially, the plan for me to come to this meeting was to discuss the assumptions that are going to be used for the October 1, 2025 actuarial evaluation. The – I believe Mr. Longman was the one that really wanted to have this discussion before we start work on the October 1, 2025 evaluation. And if I'm reading the minutes correctly, there was specific concern about the investment return assumption to be used. MS. Typically, the way that we review assumptions is that the Board authorizes an assumption study and experience investigation. We prepare a study, and we come to the Board meeting to give our recommendations and observations on the actuarial assumptions. But I think what the intention for this meeting is just to have a preliminary discussion prior to authorizing any more work, because I understand that is a concern, just additional fees for more studies is a concern for some trustees. So let's have a preliminary discussion about your investment return assumption, and then we can decide if further studies are needed. And so I... I sent out some reference material just to give you just a frame of reference of where you are, like what your assumption is relative to other plans. That's – you can take a look at the NASRA survey. I don't know if you have copies of this. I think Yoli said she included this document in your packets.

All right, so he emailed it to us yesterday.

Yeah, it was emailed yesterday. But I think it should be. I do have copies. I can hand them out. So just to... MS. So the NASRA publishes a lot of educational information. The National Association of State Retirement Administrators, they do an annual survey of what investment return assumptions the public retirement systems of the U.S. are using, the big state retirement systems. And I think just taking a look at the graph, The bar chart on page six, that shows you the distribution of what the big state retirement systems across the country are using as their investment return assumption. So your investment return assumption is 7%. And you can see that's a very common choice amongst public governmental pension plans after evaluations. And this is done, I think this is a June 2025 publication. So it's fairly recent. And essentially, 7 percent is a very common choice. There's a wider distribution below 7. It's getting more and more rare to see plans use an assumption above 7 percent. I haven't done a specific analysis for your plan. The way that an investment assurance assumption should be set, the way that actuarial standards of practice encourage us to look at assumptions is to look at the target investment policy, the target allocation of the plan's assets. map that target allocation to forward-looking expected returns by asset class that are provided by various investment advisors and forecasters, and come up with a forward-looking expectation for the portfolio reflecting those expected returns for each asset class and correlations and standard deviations. That's how we perform an investment return assumption review.

Not just us.

MS. Not just us, but standard actuaries across – that's standard across actuarial practice. And I did – I can also hand out some other reference material here. I included an example of AN ASSUMPTION REVIEW THAT THE FLORIDA RETIREMENT SYSTEM DID. THEY DO AN ANNUAL ASSUMPTION REVIEW, AND THEY LOOK AT THE INVESTMENT ASSUMPTION ANNUALLY, AND THEY LOOK AT THIS INFORMATION, THIS CAPITAL MARKET ASSUMPTIONS THAT ARE PROVIDED BY THEIR INVESTMENT ADVISORS, AND REVIEW WHETHER THEIR INVESTMENT ASSUMPTION IS REASONABLE RELATIVE TO THESE FORWARD-LOOKING EXPECTATIONS. Some, there's a lot of confusion about should we look at, can we just look at historical data for what the plan's returns have been in history and just pick based on that? history can be a helpful guide to understand the range of volatility that can exist or what is a reasonable return that can occur in a year. But the problem with looking at historical returns is, one, they're specific to actual past events that have occurred that may not reoccur. We don't know what the future will hold, but 100 percent it will not be a repeat of an exact period of time that has happened in the past, and if and if it were, to predict which period of time is very difficult. We don't want – it's very subjective to say, let's look at the last 10 years or 15 years or 20 years. Where do you draw that cutoff? Which historical events do you want to include in your history of returns to base your forward-looking assumption on? So I do have another question. article that I could hand out that talks much more eloquently than I just did about how the assumption should be set and why we shouldn't purely look at historical returns. Pete, do you want to chime in a little?

MR. Sure.

Set the background, because it – MR. Sure. I don't usually do, like, this high level of . MR. Sure.

The actuarial standards of practice are pretty clear. And it's highlighted on page two of this article we just sent out that actuarial assumptions are intended to be forward-looking estimates of expectations for future behavior. So their development must reflect that intention to be forward-looking in nature and look at assumptions that are based on what's expected to happen in the future, not just what's happened in the past. Also, when you look at just the past, you're not taking into account what the current overall economic situation is, where interest rates are today versus where they were 20, 30 years ago, where current valuations of the overall market are and PDE and CAPE ratios are today versus where they were 10 and 20 and 30 years ago. I mean, we're looking at a market right now that has an overall CAPE ratio of close to 40, whereas the historical average is closer to 20. So, I mean, that needs to be taken into account when you're looking at future assumptions, and financial consultants will take that into account when developing future capital market assumptions. I mean, the consensus right now is that over the next 20 years, equities are going to return between 7% and 7.5% on average. That's the current 20-year forward-looking consensus. Fixed income is closer to 4.5%. So when you combine 4.5 on fixed income and about 7 to 7.5 on equities, you're looking at a blend of about 6.5 to 6.75. Seven is within the reasonable range of the forward-looking expectations, and 6.7 is what FRS is out, and the average for the entire public sector market is about 7%. The average for our clients is about 6.8, and FRS is at 6.7. So I think anything in that 6.5 to 7% range is a reasonable return based on forward-looking expectations. You're at seven. We're not telling you you need to change the 7 percent assumption, but it certainly shouldn't be increased.

And can we add that we have not had any plans increase a return assumption?

MR.

MS. Certainly not above 7. Right. MS. So there are plants that are still straggling kind of a little bit above 7. They have been decreasing their returns from an unreasonable 8 percent over many, many, many years. So some plants are still kind of stuck slightly above 7, but no one – not one of our plants has increased their assumption. We have 120 or so pension plans in – local pension plans in Florida.

Almost 1,000 throughout the country.

MS. 1,000 throughout the country. I don't believe we have any that have increased their returns.

Not over the past decade.

MS. Over the – no. Yeah. So this would be – if you're contemplating increasing the return assumption above seven, one that puts you in that 25 percent top percentile of benchmark plans if you're looking at other governmental plans. Two, it's kind of optically a bad move just because no one's doing that, no one's increasing their return assumptions. And three, just based on high-level understanding of a 65, 35, or 70-30 allocation, If we were to run our capital market assumption model with that allocation, we would not come up with a return above 7 percent. So we do not recommend changing it in the up direction. And we do think it – we have a lot of plans at 7, and we don't see that as needing to change. But we could do a study and we could show you what the best estimate 50th percentile geometric return is over the short-term and long-term for your specific allocation. It would probably come out somewhere in the 6.7 percent to 7 percent range. It would not come out above 7.

I would just like to also say that I work with Dave West on several other pension plans. And Dave and I have had this discussion dating back over the last 15 to 20 years on other pension plans. And I think we're on the same page that looking forward in time based on capital market forward-looking assumptions is the best way to set your investment return assumption.

Pete and I go back and forth debating this, like you said, for the last 15 years. But if I could add some additional perspective from the investment consultant's chair, and I think the initial comments that were made are completely consistent from the actuary's perspective. They're doing everything the way they're supposed to be doing. But I'd like to add some additional color from the investment sphere. So a couple quick points. In establishing the rate of return assumption, the investment consultant's role is to weigh the amount of risk that the pension board and the sponsor is willing to take. So if we're willing to come up with a 8% rate of return assumption, that means that we are agreeing, hey, we're willing to take and accept a lot of volatility. So when we recommend a portfolio, we are going to put together a portfolio that has the best probability of achieving that rate of return assumption. However, in the vast majority of cases, most cities or towns or villages do not want to take huge amounts of risk, right, because it directly impacts the contribution requirement on a year-over-year basis, even if it's smooth over five years. So vast majority, as the chart indicates, kind of settle in around the 7%. That's an acceptable level of year-to-year and smooth volatility. So then we then go in and construct a portfolio. So that's one critical piece of the building in establishing a rate of return assumption. The actuaries are bringing out the report card. They're grading us. They're doing the forecasting. But this is a key element that goes into what that decision is and what that rate of return we end up settling with. So that was point number one. Point number two, just in fairness, you know, future returns include risk premiums when we now do our own forecasting. We used to do JP Morgan, but regardless of the financial institution that returns, and they all go into a very reasonable sample of forecast returns. We are all using past results to establish what we think the long-term risk premium should be for equities, the long-term risk premium we should for all the various other asset classes. So a lot of our forecasting and expected future returns is based on past experience. So from our perspective, the returns that you are seeing are a blend. So in a kind of a simplistic way, It boils it all down into what our future expectations are. It makes it easier for the actuary just to focus in on future expectations. Third point I'd like to make is all of our modeling, with all due respect to the investment consulting industry and the actuarial industry, all of our modeling is assumptions based on assumptions, right? You will never, I'd never say never, the probability of actually achieving the return that is modeled is extremely low. You could give a better percentage, Pete, than I could. You're better at statistics than I am. Exactly. Right. Right.

Right.

Yes, he's right. The probability of hitting exactly a 7% return in a year is very low. But what you're targeting is a return assumption that over the long term will average out to 7% with positives and negatives on each side of that. Right.

So, as Pete said, we're on the same page, but our approaches from our two different chairs are a little bit different in how that number, so there's a lot more going into that number. Agree 100%. These guys are following best actuarial practices and only using forward modeling. And the earlier point made, you know, if you do use historical You know, what do you take out? What do you include? And we would argue you don't take anything out, right, because you can't forecast. Past history is an evolution of capital markets, and we try to integrate that when we set our risk premiums for our forward-looking. So when we do an asset allocation study, yes, we include our best guesstimate of forward returns, and that's what's shared with the actuary. But from our chair, we also include historical experience and come in with a blend. So when we're sitting here with you discussing what should the actuarial required rate of return, again, from our perspective, how much volatility are you willing to accept to get the return here? And in this case here, this board most recently INCREASED THE ALLOCATION TO EQUITY, AND YOU'RE IN, AS A RESULT, 2020 HINDSIGHT, YOU'RE IN AN OVERFUNDED POSITION FROM AN ACTUARIAL MARKET VALUE TO LIABILITIES PERSPECTIVE, AND MOST OF THAT CAME FROM THE STRONG PERFORMANCE COMING FROM AN OVERWEIGHT, SIGNIFICANT OVERWEIGHT TO EQUITIES. AND AS WE HAVE DISCUSSED IN PREVIOUS MEETINGS, When equity markets are good, your plan should rank in the top 20th percentile, top 10th percentile, which has in fact been the case. And as James just reported, your peer group rankings are extremely high because you've been willing to take a little more risk than the peer group. Conversely, equities don't perform well. We would expect the plan performance ranking to be a little lower or maybe significantly lower than the peer groups during periods of equity market to rest. So we came about this investment return based on a blend and a conversation. The actuary is using forward projections. They're doing the report card. How are we doing? And what do they think the model will forecast out as far as the probabilities of our current portfolio? And a lot of thought going into that, too, achieving whatever the agreed rate of return is. So I just want to get the consultants involved. PERSPECTIVE ON OUR INPUT AND HOW WE GO ABOUT TALKING WITH YOU, BECAUSE EVERY BOARD IS DIFFERENT, EVERY SPONSOR IS DIFFERENT, AND THE AMOUNT OF RISK THEY WANT TO GET AND THE AMOUNT OF RETURN EXPECTATIONS THEY'D LIKE TO GET.

Dave, I got a question for you. So you're saying, as the actuary just stated, equity returns historically since back to, say, 29 have been 7%, 7 and change?

We would agree with that, with that range, yes.

From my experience, they're closer to 10%, so historically right now. And just to go back to the valuation, back to the actuaries, so we have this in our valuation. It's a page that you guys put out. This is why we do this, I guess. As CPAs, we do financial statements. We have to rely on historical information. When we provide a financial statement to investors or a bank, they're relying on those historical information, that data in that financial statement to make decisions. Going all the way back to 1994, all the way to 2011 and beyond 2008, we've always been at 8%. And there's been huge gaps between actual and basically assumed. Right. So I'm saying historically at the Village here, based on our performance and our portfolios, because I know, Dave, we just – and another factor, too, to factor in to think about, we just went from 65-35 to 70-30. Yes. That's going to tweak and change this variation as well. But going all the way back to 1994, we've always been at 8%. all the way to about 2011, and then it slightly dropped in 2012 to 7.9, 7.8, 7.7, down to the 7% we're at today. I just want to bring that to your attention, that we've always used a higher benchmark to drive down what the taxpayers have to pay as far as the contribution into the pension plan. So I'm just saying you can't just discount and say or disregard him saying, what the actual numbers have always been and saying that there's really not much of a gap between assumed and actual because that's what the actuaries are basing our contribution percentages on.

I think I'm agreeing with your point. In all previous board discussions, there was that discussion of risk, willingness to take risk, and I define risk as volatility, right, versus return. And because of those conversations and where we've been, The board, to your point, 100%, has been a huge beneficiary of having a higher equity allocation.

Yeah, I'm just saying I'm trying to get closest to actual historically as possible. And if you go to your report today, Dave, you're at, since inception, 6.75%, which is closer to 7% since 2011. But, I mean, this is, you know, evolving, you know, You've got five funds here, so it evolves, and it can change drastically between which managers you select and bring them into the game. So I'm just saying, going back, is the gap between assumed and actual easing very important, and to look historically at this as well as what we've done in the past.

Yes. Agreeing with your point. Okay. Thank you. Let me rephrase that. Point well taken. Yes. that we're addressing the question? I think we're addressing the topic, right?

The question was, Dina mentioned, maybe inadvertently, to discount or disregard historical information. We have to absolutely, despite what these studies say, what FRS is saying, our plan is our plan. Our investment pool, our mix of investment, our strategy, our investment mix, our goals and objectives, risk tolerance, time rise, and the whole thing, you can't compare that to FRS. Where Miami Shores, they're FRS. And so the the data is the data and so what I'm saying is we need to close the gap between assumed and actual and I think there's a gap there in the past that I think we need to close up because that'll that'll affect our contribution into the plant that's all I'm saying so if I may I guess a question on for your two consultants are you suggesting how are you proposing a higher the gap a higher percentage than what's been used in the past. I think 7% is unrealistic. I think it should be, now it's going to be for discussion between 7% and 8%. That's my opinion.

I'll let you guys address that one because that will have actual, major actual implications.

Well, I agree that over the last 100 years, the average return on equities has been 10%. It's also true that the average P to E ratio on the whole market has been closer to 20%. And right now, we're between 30 and 40. So valuations are much higher right now, which suggests a return to the long-term mean over the next 20 years, which is why forward-looking expectations are closer to 7 to 7.5 for equities, whereas the long-term average has been closer to 10. For the next 20 years, we're closer to a forward-looking expectation of 7 to 7.5 because of that projected return to the long-term mean from current valuations. That's why we look at forward-looking expectations.

Well, I understand your theory. I'm sorry. I disagree with it. We have to base this on historical information. We don't have a crystal ball. You're right.

That's not what the actuarial standards of practice say. The actuarial standards of practice say to base your return assumption on forward-looking expectations. MR.

I've seen it both ways. I've seen actuaries bring it right in with actual. We've had no problems. And I've seen some come in the middle and some go with assumed. So I – and we're 70-30, so we're not going to be – we're not going to be 10 percent. We're going to be – Dave's going to be able to tell you we're 70-30, so we're going to be off 10 percent. We're going to be somewhere in the 7 to 8 percent area. So – but we'll see what you come up with, and we'll go from there.

You'd like us to do an investment turn assumption study? An analysis? Is that what you're saying?

Here we go, another analysis.

So, trustees, I can... Aren't you just going to bring a proposed valuation? This valuation that you typically do for us every two years, aren't you just going to bring a proposed valuation like we would an estimated financial statement to the meeting? You don't have to do a study. I have a suggestion. This is what we come up with. I mean, it's based on the work, the heavy lifting you've got to do anyway, and then we're just going to discuss it before you stamp it. That's all I'm saying.

You can actually...

Okay. Bring a draft.

It's going to be at the assumptions that we have now, which is 7%. So we're not doing a separate study to do a capital market assumption model specific to your asset allocation, and we're not coming up with a recommendation for changing the return assumption with every actual evaluation. Typically, that's a separate study that's done once every five years or so, and we would be happy to prepare it. But we are also happy to stay at seven because we believe it's in a range of reasonableness and is consistent with a lot of other plans with similar allocations. I would also like to add that your... eight percent return assumption that you've had historically. It's not a special feature of Miami Shores. It's not like Miami Shores outperformed everyone else and it was – and we should get back to doing that. It's – that was the expectation, the general understanding of the investment and actuarial community based on the market conditions at the time that eight percent return was reasonable. has lowered their return assumptions since 1990s because the expectations have come down. The forward-looking expectations have come down. And I don't know any plans that use an 8 percent return assumption now. It would be unheard of. And 100 percent would be flagged by the – by your office.

I understand your point. We could talk about this for eight hours. But if you go to your report that you provided us back in 2023, and last data cuts off at September 23, there are huge gaps between what was assumed by the actuaries and what the actual returns are. And they go year after year after year. There's one that's a negative 1.9% return, and we put in 8%. How do you answer that? Well, the assumed was 8% in your actual report. And then the actual return was... So that's a gap.

That's a huge gap. You're going to have volatility. I mean, the average standard deviation on a 70-30 portfolio is about 11% to 12%. So that means... You've got a 65% chance of being within plus or minus 11% of 7% or whatever your return assumption is. So that means 65% chance of being between negative 4 and positive 18. You're going to have volatility when you have a mix of stocks and bonds. That's just part of the nature of investing in risk-seeking assets. I mean you're going to have years where you have negative 10 and years where you have plus 20. But the average long term over time, you're trying to get to that assumption.

Let's go with that example we just gave. If you're at negative 1.9 one year, what are you going to do next year? You're at 8%.

We're not going to change the assumption for one year of experience.

What about the second year? Because that's what's going on here. There's been gaps where the return has been 5.7, 6.2, 3.8.

We're focused on a 20-year horizon. We're focused on what's going to happen over the next 20 years on average, not what's happening in just single three- and five-year periods.

No, I'm looking at since 79. I'm going all the way back.

So I don't have that report right in front of me. It's just your last vowel. But anyway. Here, just right here. So yes, the average return since 1979 through 2023. 7.9% on a market value basis. There you go.

Yeah. That's what I'm trying to say. That's an actual number.

But that's since 79. But that includes the 80s and 90s when you're still in a bull market on fixed income, when interest rates were still trending down over a 30-year period. So, I mean, you've got more than probably 6%, 7% a year on fixed income throughout that whole time.

Well, I mean, okay. What are you going to do, a carve-out? I mean, you could carve out 2008 then and actually – Dave, were you around then? Dave did 4.4 percent. Not bad. MS.

There's a couple discussion here in this article about looking at history. So if you look on page four, the highlighted yellow section, it talks about how if you look at historical returns, you could – depending on which historical period you pick, you could justify any return that you want. But none of them are going to be – And none of them are going to give you the full picture. So for example, focusing only on the total column and looking only at the past, it would be easy to say that the top half of the chart provides support for a return assumption in the 8 percent area, particularly if the 30-plus year time horizons are considered. However, when looking at the bottom half of the chart, it appears that the longer-term returns were influenced by extraordinary returns for the 1980s and 1990s, the period during which the baby boomers became a significant driving force in the economy, which may or may not recur. Is it wise to fund a retirement plan by assuming that the 1990s will happen again? On the other hand, the bottom half of the chart also includes the influence of the tech bubble in the early 2000s. and the 2008 financial crisis, as well as the high-inflation environment of the 1970s. Will any of those happen again? Because of the historical volatility of investment returns, it is particularly important to consider forward-looking expectations of professional investment consulting firms when developing an investment return assumption. For the most common asset allocations today, most of the firms would be looking for 10- to 20-year returns ranging from 6.5% to 7.5%. This was dated in 2019, so it's a little bit dated. The returns at the upper end of the spectrum would require a more aggressive asset allocation than those at the lower end.

MS.

Okay. In response to the current investment environment, many public funds have lowered their return expectations. According to the most recent National Association of State Retirement Administrators public survey, which you have in front of you, the average assumption today, as of 2025, is 7 percent, and the most common assumption is 7 percent, and most plans are at 7 or below.

I understand the data. I mean, that would be something we would rely on if Miami Shores was starting today. We just incorporated and we have no data. We have data. Our new plans in the office, the DBCB profit sharing, we rely on statistical data because we have no data. It's a new plan. This is an existing plan. He just said it. We're at 7.9%. That's reasonable.

Every one of those plans is an existing plan.

But there's a big difference between 7% and 7.9%. as far as what the taxpayers are going to have to kick into this plan. That's all I'm saying.

It doesn't affect the benefit. If I may. If I may. Yeah, I just wanted to. I understand. I understand. But how do we get there? Because it's going to be two different points of view. where you're saying that the historical data is there, and then they're saying, well, this is what all the literature says. I don't need another piece of paper on this, okay? It affects your budget. Yes. That's what it affects. I understand.

Because they're still going to get paid out. This doesn't affect your payout at all. I don't understand.

One second, Trustee. I think we're at the point where we were saying that do you want them – do we want to authorize them to do some actuarial study or to come back to tell us how is it that we can be more at 8%, right? I think that's where we were, and then we...

I don't need a study, but that's just my opinion. I'm only one board member, so if there's going to be... go ahead and authorize and do . Actually, as a board member, I don't know what that would cost, but I don't think it's necessary to have the data right here in the evaluation .

So do you think probably just based on the fact that many of us have just gotten literature on this as recent as five or ten minutes ago, that probably we can bring this up, we can defer this to old business for next time? Sure. Yeah. When are you going to start working on your VAL?

October right there too I mean oh no it's what's the cutoff usually the valve gets presented in July or the July

No, we have an April meeting, so. And we have an April meeting. Yeah.

And I suppose we could do the estimate based on whatever the assumption is now. If you were to lower it, if you were to increase it, it would just reduce the contribution requirement. So that would be. Yeah.

Midnight.

So if you want to talk about this again at the April meeting, that would be fine. I do think it would be productive that if you want to have an in-depth discussion about it, that we do an actual study. So you have it in front of you and you have time to review it rather than, you know, just kind of getting at it from these other public papers that aren't applicable to your plan. I agree. and we can have a real discussion.

Yeah, in the same way that you've put together a chart here for us to look at or whatever, just to get us ready for our April meeting. At least that is what I'm recommending.

Can I offer another potential solution? As part of Mariner's contract, and I don't want to take away from... GRS is fee potential here, but as part of Mariner's ongoing contract with you for investment services, we can provide our own asset allocation study, which encompasses everything that I was just discussing using our methodology. That is a I don't want to say it's a free service, but it is an inclusive service. We'd be happy at the board's direction to provide an asset allocation study for you, and then you can combine that with the GRS look or not. And, you know, that's another fresh perspective and look at it, and it may help address some of your points and issues.

What I heard was no additional dollars. It's inclusive.

It is inclusive.

That sounds good to me. That sounds good to me, too. It's free. We'll take three. That's right.

You want to incorporate then JP Morgan's? You guys use JP Morgan.

No. Thank you. So the difference is Mariner now creates, we create our own capital market assumptions. Yes, formally we use JP Morgan. So now we are in generating our own capital market assumptions with the mergers and acquisitions going on. We've been able to really accelerate the depth of our research team and are bringing on some really nice history of some very experienced individuals. So we would be using our own assumptions. So it'll be a single point. data generation assumptions, where GRS is going to be using the collective of seven or eight, taking the average assumptions, which would include JP Morgan and other investment firms. So it's a different data pool. and it's a different methodology. I would argue ours is more investment-rooted because of who we are, but it is singular in that we're using our own forward-looking market assumptions, but would also be included backward-looking assumptions in that study as well, or backward-looking experience as well.

I think that's a good starting point. Would you be recommending a return assumption based on...

Yeah, we will go ahead. I mean, it's part of our standard operating procedure, right? We're going to test our portfolio versus our assumptions, looking forward, looking backward, and give you the probability ranges, just as the actuary would. But we'll be using our own market assumptions, and we will be incorporating historical experience into that study. So we're happy to do that. And use it as you will, but with board direction, there is no additional charge for that study. And it will be customized to your situation.

So, Dave, in addition to that, not to do study after study, can you extrapolate your current, you know, five funds, the dream team here, out so we can see what that looks like? I mean, as if there was no changes into the future and you kept the same allocation, 70-30, with these five funds, with these fund managers.

That would be our baseline. It would be the index representation of the allocation. We can't forecast an active manager. They might make it. They might not make it. We hope they will make it. But for example, we terminated the growth. Each manager has historical data. We terminated active growth. So we are now in the index. So we will be using that index in the forward looking. So that's amenable to the board. We're happy to take your direction to complete the investment consultant's version of the asset allocation study.

That's good.

Okay, we'll do it.

So would you like to just see the investment consultant's or would you like both? Would you like to see just the investment consultant's study then, not the actual study?

going to do the investment part, which is what we're talking about.

Well, the thing with what she is suggesting is GRS collects capital market forecast assumptions from 13 different national investment consulting firms throughout the country. And Dave's firm would be just one firm. And so I like seeing a range. Because this is a combination of art and science, when these big firms like JP Morgan, Wilshire, when they come out with their capital market forecast assumptions each year, each one is their own track. And they can vary by as much as 75 basis points between all 13. So I look at it as compared to like when the National Weather Service is predicting the path of a hurricane, and they come up with these spaghetti lines of where it's expected to go, but you have 13 other weather forecasting services, they also have their own models. You get this cone of the probability of where the hurricane is going to go. And I look at it the same with using 13 different investment consulting firms. Each investment consulting firm has their own projection, but you get 13 of them, and you can average it, and you get this cone of where the projection is. So that's what we can do by averaging the 13 together. So it's something that, you know, it would supplement what Dave is doing.

But, Dave, you have access to the same data that the actuaries have access to.

No, we would not have access. Short answer, no.

We go straight to those 13 firms and request it directly from them.

Yeah, that is proprietary.

We have to sign confidentiality. And we have to sign confidentiality agreements that we won't disclose who they are. So we don't put a label on, like, this is Wilshire's projection. We've put investment consultant one, two, three, four, five. So. We do name the firms, but we just don't align the returns with firms. Right.

I mean, how would that necessitate a study if you just brought that data to us? I mean.

Well, it's, there's a process because we have to take the exact investment allocation and align it with each investment consultant's assumptions. And so we come up with a forecast from each investment consultant.

And then we put together a deliverable that has to go through a peer review process. And then we come here and talk about it. So there's hourly charges involved with that.

Yeah. I mean, I don't think it's more than a couple thousand in charge. I mean, it's not much to put that together. It's maybe three or four hours at a time.

Well, in my opinion, I think the investment information we're getting from Dave should be sufficient. But that's my opinion. I don't know what the board wants to do. Spend more money on another study. It's up to you guys.

When was the last time you guys did an asset allocation?

Oh, it's been a while.

I'd like both. Dave's is free, or Mariner's is free, and I'd like to get an updated analysis from GRS. That's me.

Okay. Okay, just to clarify what you just said. So we're going to get this study, and we're going to take that information, and we're going to compare it basically to the valve, what we've done historically since 79 and actual and just go from there.

Yeah.

Okay.

I mean, it's very critical to get this as close to correct on a forward-looking basis as possible because the downside of missing it, I mean, you're approaching 100% funding right now. If you set the return assumption too high and miss it, then you drop back down to 85% funded over the next 10 years. I mean, you want to have a realistic assumption going forward so that you can keep at 100% funded once you get there.

All right. Well, no, I understand that. Okay, I should stop here. But, I mean, if you go to your funding page, we talked about this last night, we've always been over 100%, and the variation between years is not that great. No.

We have not always been over 100%.

Well, in the past we have, I'm talking about in the past, we've been over 100%. I'd have to find the page.

You mean at 103?

Yeah, we've been, you know where that is in your file? Yeah, it's on. I mean, historically in the past, up to about probably about 2008.

There's a historical funded ratio on page 17, shows the historical funded ratio, and yes, Back when we were assuming an 8% return throughout the 80s and 90s with really good returns, the plan was over 100% funded throughout that time period. Correct. It dipped down to the 80s in 2015. 2013, 15. What page is that? 2023. 2023, we were at 93.4. Exactly, and that's my point.

That's when I started, and it has dropped below the 100.

Yeah, and that was a function of the Fed rate tantrum, which crushed all assets.

But it was from 91 all the way down to basically 2008, we were over 100%. 106, 103, 103.

And that's when we started reducing the investment return assumption because... recent – that decade of 2001 through 2010 was pretty rough, and then forward-looking assumptions – with interest rates being so low, forward-looking assumptions kept coming down, and there was a national trend of reducing the investment return assumption going forward. So that's when you came from eight down to seven.

Which, if I may, to Pete's point, a big contributor to plans reducing return expectations than the actual ROR assumption? was a direct function of the fact that interest rates were low to nonexistent after the financial crisis for almost a decade. So we're only making 2%, 2.5% in bonds, whereas prior to that, we were making 5%, 6%, even higher than 8% on fixed income. So we've all had to reduce our expectations when we plug the fixed income returns into our portfolio. But now we're looking a little bit better. We're a little bit more normalized for rate expectations, so the pressure's not on the same degree as it has been.

Yeah, but you've still got a P-E ratio at 40.

I mean, that's... Yeah, we're smoothing. We're looking long to that, and at this point, yeah, if you pick this period in time, we're going to suggest, hey, this is not repeatable, so we're going to temper forward in our 15- to 20-year forecast, we're just going to sneak that average down or we think it's going to come down.

MR. Trustees, I'm going to summarize your options. So option number one, And I should compliment you first that Tallahassee is not going to tell you a specific number. They want to see this kind of discussion that you just had. That's what they want to see in the minutes, that you're having this discussion every year. So what are your options? Option number one is just go with Mariner. That's free. They can do it for you, but it's a little bit more limited than what GRS can bring. So option number two is to authorize GRS to do it. Option number three is you don't have to do either, by the way, because you don't have to change it. But with that said, it's been I don't know how many years since you did an actuarial asset allocation study. So I think the standards of practice would encourage you over time to do the kind of studies you're talking about. My last point is that approximately 3,000 or 4,000 to have the study that you're talking about is fully reasonable. And this is one of the reasons I encourage trustees, go to the conferences, because this is part of what's discussed at the conferences. And again, Tallahassee won't tell you a number, but they want you to engage, because this is the most important. I don't want to speak for actuaries. But of the assumptions, this is the most meaningful assumption over the long term.

But we have the option of having them do the analysis and also having Mariner. Sure.

Right? Yeah. I think that we.

They'll probably fall somewhere between the first and the 13th.

So that's option number four. All right.

So we're clear? Yeah. We're good? All right. Great. Thanks.

We need a motion. We're going to do it? We're going to do the study. Don't we need a motion to do it?

Both studies. Yeah, we need a motion.

All right. You want to line it up?

You're doing?

We're doing, so basically, how are you framing this up? You're doing a study based on historical investment data.

I've got the market forecast analysis.

Market forecast analysis? Forecast analysis. So you're taking this out 20 years? Right. Okay.

A review of the investment return assumption.

Yeah. This is a review of the investment return assumption. They're forecasting out 20 years based on the current modeling, 70-30. Who's in favor of this?

I'll second the motion.

I didn't say I was in favor of it. I'm not in favor of it. I'm just making motion, I guess.

Because he told me to make it. No, because you brought up all of this. You can back out now. Fine.

Who's paying for this?

You don't have to. Friendly amendment to this? Because we kind of said that if... I mean, we heard inclusive slash free, and we have a next meeting in three months. Why don't we go with that first, and then if anything, we can commission another, ask for another one. That will probably going to cost us money for the following three months. So it would come after. When's our next meeting? April? April, yeah.

Yeah. Next meeting's at the end of April. So if you have a study at the end of April, and you're not set on an investment return assumption based on that study, We could potentially bring a study together with a valuation report to the July meeting, but then you might have to revise the valuation report to reflect the new assumption that you decide on.

No, I say go ahead and take it.

All right, so what? You said $1,000 to do it? So only $500?

Is that what you said?

Yeah, that's what I was going to say. So let's do that.

You know, he hasn't finished that. I probably don't care anymore. So listen, okay.

Okay, my friendly amendment is going to die, okay? Let's go with what Trustee had brought up. Yeah, on Dorsett.

Mine is for them to do the review of the investment return and also have Mariner give us their free version.

Second.

And I'll second.

No, go ahead. Seconded here. Okay. All in favor? Aye. Aye. Aye. Unanimous.

Okay. We have our assignment. And just as a reminder from my earlier comments, our review will include an assessment of risk. We will also take into consideration in a loose approximation the overfunded status and what we might consider given the overfunded status of the program versus where we are from an asset allocation standpoint, and also what we see from our chair, other systems doing, and the funded status that's similar to yours. So it'll be a great, inclusive discussion, so everybody can come away comfortable, and I'm sure the actuarial will have some Comments on appropriateness for levels of funding status?

Can I ask you a question? Do you all consider, either of you also, geopolitical factors in your assumptions?

Short answer, from our perspective, no. We're looking past several administrations.

Those tend to be one and two years in duration, whereas we're looking at a 20-year horizon. And that tends to focus on fundamentalists.

Yeah.

Microphone. MR. Oh, sorry. I was done.

Okay. MS. I'm just going to – just a really quick note on – side note, I probably won't be here at the April meeting.

You may have noticed that I – She's due in April. MS.

I will be out. So it'll probably be Pete or possibly Jeff that comes. But I'll probably be back for the July meeting if all goes well. Okay.

Can I bring up one more point? I hate to bring this up. So at the April meeting, you'll have the study. We're going to have both studies. And then you're going to have census data, too, so we get the salary increases, correct? Going back to your... Because that's important. This page here.

History has shown that we don't always have data by April, certainly not screen data. We're still working on finalizing data questions for the 2024 data at this time. So I wouldn't bet on it, but we may be able to get just the active member salaries in time if that's what we're looking for.

Well, HR is here, so you can get the census status from her. And then you just have an idea because that will throw off the number two. So those two factors, salaries and investment returns.

So you would like to do a study of both the salaries and the investment returns?

I get nervous every time you say study.

They just want to see what the updated number is.

Yeah, that's payroll data. The updated salary versus the investment.

Historical. For how many years?

Page 13. Just go there.

You want that page up there?

In your report. Okay.

She's got it.

HR is right there. She's got it.

Assuming that we can get the data, I think we can get that table updated if that's what you're looking for, sure. We can just bring that table to the meeting as well as the investment return assumption.

Also, if it's possible, this type of information being handed out at this meeting everyone else may be a lot smarter than I am but I can't absorb this think about it and cetera I'd love to get this information a week ago where I could have read each one of these papers and then be able to understand understand it better get handing this out at the meeting it's impossible to listen to the speaker and read this at the same time

Dina and I had some correspondence last week about what we should send. We wanted to – I mean, we have a volume of information on the investment return assumption we could have sent. We tried to come up with three appropriate deliverables that you could actually use and absorb and not to be overabundant and in paper. And so there was a lot of – issues with timing because, number one, I was out traveling Wednesday through Friday of last week, and so I didn't get a chance to circle back with her until Monday morning. Our chief actuary was tied up as well. She sent an email last Tuesday to our chief actuary asking for help, like what are the top two or three things I could send them. It took a while to narrow it down, and we got it out yesterday. Yes, ideally we should have gotten it out a week ago.

Yeah, it's not ideal. And I wasn't expecting you to essentially read the entire article and internalize all of them, but just kind of maybe point to the graph and point to that page and this page and just have a frame of reference, and then you can think about it a little bit more. When you take it home, think about it a little bit more, because I figured we would not be reaching a decision at this meeting. It's just a start of a conversation. But yes, I agree. I should be sending these earlier. And I want Deborah to do so.

Mr. Chair, we're up to the attorney's report, which thankfully will be very brief. If you go to the last page in your packet, whenever you see the logo with the palm tree, that's my office. So this is a memo we send out to all plans. We can talk about it in more detail at the next meeting. But this is reminding plans of what has to be put on the city's websites. And these are state requirements. So over time, we want to make sure we're populating them on the city website. The second quick observation is that for anyone who goes to conferences, the IRS, this is because of the cost of coal is inflation, the reimbursement rate for mileage went up to 72.5 cents. If that's the mileage rate we're using, that's the IRS rate. The final topic is that you'll see on the agenda, There's an item, this is 8B, that says RFPs, status. So the answer is that, I think it was two meetings ago, we provided, it was requested a template of what RFPs would look like. So for all the service providers, so you could look and see, and that way you could customize them. If you do want to do an RFP, but we gave you a sample, and then you can decide over time if you want to send it out, Some boards will send it out for one. Some will send it out for all. That's entirely up to you. But we won't pull the trigger on an RFP until we get directions from the board. And, again, you have templates. And another good example of go to conferences because you can talk to all the actuaries at the conferences. You can talk to all the investment consultants. You can talk to all the attorneys, et cetera. I encourage trustees, and Tallahassee wants you to do that. You're not required to go to the conferences, but in our investment policy, we have to have boilerplate language there that you are encouraged to avail yourself of educational opportunities. So that will conclude the attorney's report, unless there are any other questions. The next conference, by the way, is next week, February 1st, if I'm not mistaken, and that's the FPPTA in Orlando. So there are three, it's not conferences, there's two schools, right, the conference is over the summer, and I refer to the summer as a kumbaya conference, where it's sort of a more broad-ranging discussions, whereas the February school and the winter school, so the fall and the winter school, the difference between schools and conferences, and you're right. But there are three from the FPPTA, and then the Division of Retirement also has its own school, which is a lot of police and fire go to that school, And again, the administrator is happy to provide the dates. And the conversations you're having today fit right in with – and you can't talk – if you go to the conferences, you know the Sunshine Law. You can't talk about any of these conversations with each other, but you could always talk to the HR director. You could always reach out to the actuary and the investment, James and Dave, and you could have questions. They're happy to take calls about the materials you have.

But they can't speak to the village manager either.

So trustees can't talk to each other, but you can talk to someone who consultants. You can talk to me, but not each other.

And they can't speak to the village manager either.

Correct. So the village manager is sitting on the board, and that's another conversation that the village wants to have about board composition. And if we take the village manager off the board, I think I mentioned this, most cities do not have the manager on the board for that exact reason, so that trustees can talk to the manager. But if you're on the board, you have the same handcuffs as other trustees. You can't talk to each other, but you can talk to anybody else. That concludes the attorney's report, unless there are any other questions. Thank you for a fulsome discussion today.

Thank you. Now we're on to new business. The drop entry retracted.

Chairman, I think that's something that we added. And briefly, you have a drop provision which requires the drop application to be submitted to the Board for approval. The drop retirement then becomes effective 15 days after approval by the board, and the finance department wants 15 days to process the change in payroll deductions. So the drops are people who are still working. What brought this to light was that we received a drop application in November, and under that circumstance of us receiving an application in November, you having a meeting today, that individual, under the terms of your own ordinance, can actually get into the drop until March 1st, you know, 15 days from today, 15 days to process March 1st. So we have kind of a conflict between the operation of the drop, which normally would occur mid-meeting, and what your actual ordinance says. So I guess, and I don't know if Adam had an opinion on this about a way to resolve it. What we see in other plans is the paperwork is processed in between the meeting and then brought to the board at the next meeting. But that is not what your language says, and I think it's Section 1863. This was something that was brought to us by your finance department.

So where's finance?

Is this other than magisterial decision? Well, I think it's... Or is there a policy decision? Because if it's something magisterial, then you'd say it's okay as of that date and we simply approve it ex post facto.

I think the problem is... the customary way that it was being handled here and in other places, and what your actual language says. Your actual language calls for the Board to approve it.

And my question is, is approval anything other than pro forma?

Well, I think that's a great question because, yes, you would assume by the time it comes to you, the person already qualifies, the actuary has already received the information, the person's at a normal retirement age. And you, I would never imagine that you would be in a position where you would say no. I can't imagine any circumstances where you wouldn't approve it. Pretty much one of those, you know, file and use scenarios. But again, we just have a conflict with what your ordinance says and operations.

In terms of retroactive?

And retro, right. And this particular individual notified us in the first or second week of November for a November 1 effective date. And obviously, by that time, payroll deductions have already been taken out for November. And there's a good bit of accounting that's got to be done to, you know, to clarify. But over and above that, how do we get around this issue of somebody want, let's say that we had gotten that paperwork. in October, but we didn't have a meeting until today. And finance now wants 15 days from today in order to stop the contributions. So how do we get around the operations?

Is everybody else confused like me?

So what the HR director to her credit is doing is she's printing out 1863 so you can look at the two sentences. So I don't know how long it will take her to print it but she's going to do that because I think it's important to look at the actual language. And I'm going to discuss with you how you could interpret that language I'll tell you how I interpret it, but ultimately it's for you to interpret, and that's going to be for the minutes, 1863, and I'll read it to you, and then we'll look at it when you get it. It's 1863, paragraph B. So what does 1863B say? And I don't want to overcomplicate it, so I have a simple interpretation, but what it says, and we'll read it when you get it. But a member's election to participate in the drop must be made in writing, makes sense, in a time and manner determined by the board. So the board determines the time and manner in which people submit their drop application. and shall be effective on the first day of the calendar month, which is at least 15 business days. So it's effective at least 15 days after it is received by the board. Now the question is, when it says received by the board, does that mean received by the board, you sitting here to actually approve it, or submitted to the administrator who is the delegate of the board who receives the applications? So some boards who meet every month, It is common practice if it's a monthly board meeting that it's not effective until the board approves it and votes on it. But in your case, because you're meeting four times a year, it creates a delay if you want to interpret it as saying that you have to approve a drop application before it can take effect. And I will tell you, and if I'm speaking too quickly, I apologize, but most boards do not require, especially if you're meeting quarterly, that you have to rubber stamp something, which is an actuarial calculation anyway. So I think it makes sense for you to look at it as soon as that's available. And from my standpoint, and I welcome HR's input, I welcome input from the actuary, the administrator, etc., But I don't see an issue here as long as you interpret it broadly, which is that it doesn't require the board to approve it to be effective. It's submitting it to the board. And effective 15 days after. And effective after it's submitted. And that's another point I want to make, that usually in order for something to be retroactive, the ordinance has to specifically permit retroactivity. And the actuaries, we have two of them today, can explain to you that if you start allowing retroactive decisions, you can introduce what's called adverse selection. But if you wanted to amend the ordinance, I'm happy to do that, but I want you to take a look at it.

That way you can read these really – But it says receipt, not vote.

It does not say vote. It says – Receipt. And I'll read the sentence again. A member's election to participate in the drop must be made in writing – in a time and manner determined by the board and shall be effective on the first day of the first calendar month, proactive, prospective, which is at least 15 days after it's received by the board. It does not say it has to be voted on by the board. And perfect timing.

So receipt is when somebody delivers a piece of paper The administrator.

And that's the question that the administrator is asking. Is it the board approving it or is it the administrator receiving it? And it's paragraph B, and the HR director may have additional input or anyone else who has input.

It seems like it's ministerial to me if they're our delegate.

Yeah, it's received.

It's received.

It's received. I mean, if it had to be voted on, would the language not say it must be voted upon?

I support that interpretation, but it's up to you.

But that's something we have never done. We've never voted on somebody going in there. That's my point. It's never been done here.

So I think the whites here is because of the retroactive. Is that correct? Because, I mean, I see it as received.

Received.

It's there. Once it's there, the number runs at that point. I mean, it has to be delivered. I agree.

If I could. Good morning. So I received a copy of the request of this particular employee to enter the drop, and it happened in November. The letter stated that the employee wanted to drop retroactive to March of that year. That was the issue. I think that it wasn't described as proposed. So because we got it in November, our finance department said, based on the rules, that it will be the next month. In other words, December 1st. So that is the issue.

Just to summarize. So March is wrong. It's when it was received. And it was received in November, correct?

Correct.

Then it's November, period.

We applied it as a December date because finance said we've already done the deductions, et cetera, et cetera. So to summarize it, that was the issue.

There's no retroactivity. It's received, which is November. It goes, I guess, effective December 1st.

Yeah, I think that actually the individual first asked for March 1st. No. Then asked for November 1st based on letters received November 17th and November 7th. So although the letter that we get is dated October 24th, But if they're looking at letters November 17th and November 7th, that's impossible date. And maybe we misunderstood what the finance department told us. about approval from the board. So was that process December 1?