General Employee Pension Board - Regular Meeting

I didn't know there was a union trustee

I recognize you.

Oh, he said hi.

You have to coordinate it with Isabella Clark. I'm not sure if anyone from IT could help.

Usually Isabella, she is distributed in the agenda. She usually sets it up. But I believe we always have to call that person.

Okay, we're calling this meeting to order. Good morning.

It's live. She says the cameras are on, and she just verified the link is active. Okay, great. Thank you.

Okay, let's call this meeting to order. Are we doing no more introductions? Yolanda?

Yes.

Yes.

Present.

Thank you so much. Let's move to the approval of minutes.

There are just a few typos on this that I'd like to point out on page one, where it says, let's see, on the public comments, it's the fourth line, fifth line rather. No, fourth line. where it says Ms. Slate-McLeod informed the board that she was present to request a recommendation of the board. Change in ordinance to lower retirement benefit to her. This should be for, to the board for a change. Do you see that? Okay. And on page five, the third paragraph that's under administrator report. And if we go to the one, two, three, fourth line, Which is information from the village club that should be village clerk. If we go further down in the last line. Instead of city code, it should be village code. Those are all changes that I see.

All in favor.

Okay, this time we have public comments are there anyone is there one he would like to speak in public comments. Once when twice and thrice. There are some warrants to be ratified. If we look at those.

Ratify all all attached warrants.

Is there a second to that. All in favor.

And again, thanks for the detail.

Yes. Okay, and we have this as new business number five. It's new business, but is this old business? Whatever. It could be, right? It could be. Okay. Business. Business. Okay, who wants to introduce this? Last time we had a special called meeting.

Was it a special call or was it a regular meeting? I think it's a regular meeting.

It's a regular meeting. And we spoke about our beloved Eric Olson and his wife who is in attendance here. I'd introduce the fact that Eric who had passed, it had to do with his pension and how best we could approach it. There was an appeal that to allow for different permutations as to well, with the eventuality that it would allow her to get his pension, not just a payout of his contributions plus the 3%, but it would be some sort of arrangements for this. And so we had asked for that we look at the different, possible solutions to that and what the costs would be on the overall pension. And so we're here today just to discuss that and I don't know who worked on this and who wants to take it on. I suppose that's you.

We've got the GRS report.

Yes, the GRS report, thank you.

Okay, can everybody hear me? Yes. Yes.

Sounds good, great.

Okay, so all of you should have a study in front of you. Oh, do I have a study? Yes, I do. Okay. This study here. If everybody can flip to that study.

I'll just... Because you have a very soft voice.

Okay, I'll just be really close to the microphone. Yes, yeah. So I'll try to go through it at a high level, and I'll pause for questions. If you could wait for the pause with your questions, please. I'd appreciate it. So this is a study that was requested at the last meeting. to review the proposed changes on the death benefit provisions that are currently in the plan. And before we get into what the proposed changes are, let's first just review the current provisions in the plan as they stand now. So the current provisions in the plan are that members are eligible for normal retirement at age 62 or at any age with 30 years of service, and they're eligible for early retirement at age 55 with 15 years of service. If a member passes away after reaching early or normal retirement eligibility, that member is entitled to a survivor pension, or that member's beneficiary is entitled to a survivor pension, which is an actuarially reduced pension calculated the same way as if the member retired on the date of his death and elected a 100% joint and survivor optional form of benefit. So it would be reduced for early retirement and reduced for the conversion factor from the normal form of life annuity under the plan to the 100% joint and survivor annuity. If a member passes away before eligibility for early retirement, that member's beneficiaries only do a refund of the employee's own accumulated contributions into the plan with interest. And at the last meeting, the case was brought before the board of an employee who passed away after 25 years and 10 months of service with the village at age 54. So he was just shy of the 55 year, 55 age requirement for early retirement. As a result, the only thing that his beneficiary is entitled to currently under the plan is a refund of his own cumulative contributions with interest, which currently total $131,781. The accrued benefit that this member had in the plan was $4,339 per month. That was the pension that he earned as of the date of his death. That's 2% times his final average earnings times his credited service. So looking at the proposed scenarios, if you go to the bottom of page one, actually do I have the right scenario? Right. If you go to the bottom of page one, the first proposed scenario that you asked that we study is that the member's beneficiary would receive a the $4,339 monthly pension that the member had accrued as of the date of his death, payable on what would have been his normal retirement date had he continued employment with the village, which would have been June 1, 2029, when he would have reached 30 years of service. So this would be payable in lieu of his refund of $132,000. And I'm just going to flip straight to the impact on the actual evaluation results. On page two, the bottom of page two, we talk about what the financial impact is of this proposed change. Now this is as compared to the actual evaluation as of the October 1, 2023 evaluation date, which is the latest evaluation for the plan. based on the latest impact statement that was done as of December 27, 2024. So the full actuarial cost of this, the full cost, the ultimate cost of this proposed change, and this is the last bullet at the bottom of page two, is $345,000. That is the difference between the present value of the monthly annuity that this beneficiary would receive, the $4,339 per month starting June 1, 2029, is the present value of that annuity less the refund that she would receive under the plan if no change was adopted. So under the proposed plan change, she gets the present value of the annuity. Without the proposed plan change, she just gets the refund. The difference between those two is the impact of the plan change, and that's $345,000 under the assumptions used for the actual evaluation. Now, if you amortize that impact over a 20-year period and adjust for interest, that gets you to the contribution impact on the village's contribution requirement. The $33,000 impact in the first bullet at the bottom of page two The village's contribution requirement would increase by $33,000 or 0.73% of covered payroll as a result of this change. Using the 20-year amortization period the plan currently uses for all changes. The funded ratio of the plan would decline from 93.2% to 91.6%. So that gets you the impacts of scenario one, and I'll just pause here for questions of scenario one, or scenario A, and then we'll go on to discuss the other scenarios. Are there any questions?

Yes, just real quick from my chair. The $33,000 would be $33,000 a year?

Yes, for 20 years.

For 20 years.

And it's not going to be an exact dollar amount every year, but essentially that's the approximate annual cost over a 20-year period. So that's the $345,000 amortized over 20 years, essentially, adjusted for interest. Any other questions or comments?

No.

For the sake of Trustee Dorsett, can you just do a very high level as to where we are, since we're just at scenario A? Okay, absolutely. Thanks.

Okay, so I'm presenting the study that was requested at the last meeting to... value the impact of proposed changes on the death benefits relating to Ms. Olson's request from the last meeting. And right now, we're just going over the impact of the possibility of providing Ms. Olson the accrued pension that her husband, Eric Olson, had accrued as of the date of his death, payable on what would have been his normal retirement date in lieu of the refund that she's currently entitled to under the plan. Okay. Is that good? Anybody else? Good to go?

Is this proposal just for the single beneficiary, or is this a change to the plan per se?

So it's a change to the plan, but in this scenario, it would just affect the one beneficiary. So it would have to go through an amendment. The village council would have to vote on it. So it's not something that the board can do. But it's not an ongoing change. It would literally just affect this one participant in this scenario.

Well, you're talking about changing the plan itself, though, correct?

Amending the ordinance to allow for this payment.

But would the amendment not then apply to future cases, similar cases?

The amendment would spell out the specific criteria that would only apply to this participant, essentially. So it would say something like, somebody who passed away before a certain date with a certain number of service and certain age, that would only target this one person. And Adam could go into that.

I get what you're saying. Yeah, I'm trying. Do you hear where I'm going with it? Yes, yes. Because... What we're asking is, and I say we, because I'm getting that. What we're asking is this. If we were to go, if we were to choose scenario A, in essence, would we be presenting to the council that going forward that this would be the case for all folks who fall into what really now is the Eric Olson's exception.

No, this is valuing just Eric Olson. There are other scenarios later on that do talk about including other participants in the future. So yes, that's in the later scenarios. Okay, so let's get to... So there's one more scenario that deals with just Eric Olson, and that is scenario B. And that's just a permutation of scenario A. And that just says, what if Melissa? Excuse me, Dina, I just have a question.

So just to expand on what these guys were asking you. So just clarify, so would the SPD in the plan document state this exception for this one person? Or I'm trying to clarify whether this is going to be an exception in the plan document in years subsequent.

The plan document will have this exception, yes.

No, I got you, I got you, I got you, Mike. I'm sorry, what was your answer? I'm sorry.

The plan document will be, like the ordinance, the city ordinance is the plan document, or the village ordinance is the plan document. It will be amended to specifically only include in the eligibility this one person. Under this scenario. That's the scenario, is that only this one person will be, the language in the ordinance will be changed to apply to only this one person. Would we include an SPD? Probably not, because the SPD is handed out to people who are retiring in the future, and it would only affect the one person, so.

And it's usually, yeah. It would be stated if we made it, you know, based. Right.

In the other scenarios where it would affect other people, it would make it in the SPD.

If there's an exception in the SPD, then it would be stated. Okay, gotcha.

Okay.

I don't know if I missed this, but why are we doing this for one person?

That's how this started, is that somebody, so there's an employee who passed away at age 54 with 25 years and 10 months of service, and his beneficiary came to the meeting, the last board meeting, and requested that we look into this study, into changing this provision, because he just missed being eligible for any kind of death benefit. For two months? Yeah, no, by... a little more than, less than a year, just due to age. And I think the chairperson can discuss the more personal details related to this.

And she's here this morning.

Okay. And we have the other scenarios to go through.

Yes. Right. Okay. So we're on to scenario B.

Scenario B is a permutation of scenario A, but instead of a deferred monthly annuity of $4,339, Melissa Olson would receive the immediate annuity. So it would be payable effective as of the first of the month following Eric Olson's death. So effective April 1, 2025, Melissa Olson would receive $4,339 per month in lieu of the $132,000 refund that she would otherwise receive under the current plan provisions. So the impact of scenario B is on page three, at the top of page three, the difference between the present value of the annuity under the plan change versus the present value of the refund without the plan change is $532,000. Amortize that over 20 years. That gets you the impact on this village's contribution requirement of $51,000 or 1.13% of covered payroll. And the plans funded ratio would decline from 93.2% to 90.7%. So by 2.5% as a result of increasing the liability to do this plan change. Then I'll just jump straight to scenario C and D, which are permutations of this where we extend eligibility to more than just Melissa Olson. So under scenario C, that's a permutation of the deferred annuity payable to Melissa Olson, but now we're extending the eligibility to any employee who passes away in the future after attaining 25 years of service. So in this case, not just Melissa Wilson, but also any employee who passes away after 25 years of service, whether or not eligible for early or normal retirement, would be entitled to a deferred accrued benefit payable as of the date, which would have been the participant's normal retirement date had they continued employment with the Village. And you'll notice that the impact of this change is almost the same as scenario A. There's very little impact on the plan of extending this to more employees, simply because the probability of death while employed is very low. That's the main reason is that we know that Eric Olson has passed away, so we have to reflect that. But the probability of an employee meeting that criteria in the future is quite low under the mortality assumptions using the actual evaluation. And in addition, Because we have the 25 years of service requirement, most employees will qualify for early or normal retirement by the time they reach 25 years of service. So this provision would really only affect some participants and only for a short period of time would it have such a material impact. Because after you are eligible for early or normal retirement, there is already a provision under the plan to provide a survivor pension equal to the 100%. joint and survivor annuity. So the difference between this unreduced annuity and the joint and survivor annuity is not that big of an impact as compared to the difference between this unreduced annuity and a refund. So all in all, extending eligibility to all employees would have an immaterial increasing effect. As compared to scenario A, where the ultimate cost was $345,000, the ultimate cost under scenario C was $362,000, and the contribution requirement increased from $33,000 in scenario A 35,000 in scenario C, so not a huge difference. And then same as scenario D is basically a permutation of scenario B where we take the immediate annuity, the immediate accrued benefit that would be payable to Eric Olson's beneficiary and extend the eligibility criteria to any employee who passes away in the future with 25 years of service. In that case, the ultimate cost would be $561,000. The funded ratio would decline by 2.6% from 93.2% to 90.6%. And the villagers contribution would increase by $54,000 or 1.19% of covered payroll. And of course, this all assumes that actuarial assumptions are met. There's a chance that actuarial assumptions are not met, in which case the cost could be different. It could be higher or lower if, for example, the plan's return is not 7% in every year in the future. Just caveats I have to put out there.

Is there any way to do this without amending the plan?

There is not. Yes, Mr. Lawman.

You disagree that there's a way to do this without amending the plan? Let me ask you a question. The HR director, does she have life insurance? Because I didn't see that in the minutes. Do we have a life policy for the participant, the employee? We do. And what's the payout on the life policy?

Good morning. Yamilet Slate-McLeod, HR Director. Yes, the village does offer employees life insurance. Okay. The payout currently is one times the annual salary. And when I say the village, it offers this to the general employees, not for the store.

And how much is that what would be the payout and we have back to the same time one times the annual salary.

It was somewhere on 93 and change. 90 in the 90's is what he got is there any other benefits. I don't know what the insurance is it that would provide a beneficiary and no benefit to know that the only one that we offer correct, OK.

You know, I had looked at this, and I've been down this road before, but I think there's a solution to this. I know it's unfortunate. I deal with death a lot, and I'm really, I feel for you. But I think there is a way around this without amending the plan and, you know, taking this thing up to where he would have been, which is he just missed the early retirement by less than a year, I guess, right? He'd been 55. So the reduction on that's 47.47, which is in the SPD, okay. So if you take your scenario, F55, what is it, 43, 38, 94, and you multiply that by that factor in the SPDs without changing the plan document, with the reduction, it's about a 90% reduction for the widow. You've got to factor that in. I don't think that's in your report. I came to roughly about, what did I come to? Well, if I take the present value factor, which is 12.39, I came to about $275,000, less the $131,000, which she would have been paid out under the normal documents. That's in excess of about $143,831 that she could be paid out immediately. That's, of course... That's got to go before the village, is my opinion, and be approved without us touching the plan. And I think that would be the least costly without amending the plan, your fees, the attorney's fees, all the other fees involved, and then putting this one time, you know, wherever that's going to be stated. You said it's not going to be in the plan document. It's not going to be in the SBD. You know, it's going to be stated somewhere. And then that way it satisfies the widow. She's got a life policy. her money back, his money back basically, the contributions plus interest, plus the difference had he made it 255, he gets the difference. Well, it's if he was paid a 55, so that would include the 131,000.

So what I think you're saying is take the current provision that's there for people who are 55 and 15 and extend it down to this participant at age 54, essentially.

Bring it up to 55, early retirement, as it states on page, I don't know if this is a current SBD. Right.

So, I mean, that's an alternative scenario, which is, plausible late to to do to provide a 100%. Well, if I join survivor reduce for early retirement that that would be a plausible alternative scenario, it would still require a plan amendment because going through the plan we're doing this for the village that way it does all through the village outside of the plan.

Right. So we're going to pay the $131,000. This is my opinion because I've been down this road before.

Well, how are we doing that outside the plant? I'm confused.

Well, that's up to the village. The village would have to look for some kind of discretionary line item, some kind of surplus or whatnot to pay from. That way it doesn't distort the numbers within the plan. When we cost out an employee salary, FICA, insurance, pension benefits, it doesn't skew that costing for our village manager and the department heads. So we could keep that intact as far as what is the cost to hire somebody today. Because you start adding these things and every time something comes up and it's unfortunate, I feel for you, you're amending the plan and you're incurring a ton of costs. I don't think it's necessary. I don't think it's necessary. I mean, I just gave a great example and that's what we do. So, the village would have to approve that. I came up with, you know, we can check the numbers. I came up with 143,831.01, to be exact, based on joint life annuity tables. The factor I'm using is 12.39.

So, if you're using an immediate annuity, yeah, I get something like 12.8, a factor of about 12.8.

That's what we're using. It might be as of a different date than you're using.

You know, that would be less than half of the current benefit amount of $4,900. What was it? $5,339. So you multiply by the early retirement reduction of 47%, and then a QGSA factor of something like 0.85, which I don't have the exact number of it. But then you're talking about a higher immediate payout from the village versus an amortized 20-year payout through the plan, essentially.

Right. Changing the plan is what I'm trying to prevent here. So it's a win-win for the widow. But then the other thing we're not talking about is tax. So the pre-tax, these are pre-tax contributions, correct? The DB contributions to the participant in the plan, right? Correct. So she wouldn't get killed on that. you know, that could be rolled into, I guess, an IRA and then she could take that out when she needed it and that way she's not getting killed and taxed just in one year. And then the additional amount, if the village approves this, that the amount, again, as if he reached, you know, 55 years of age. I came to, like I said, $275,000. I'm not sure about the tax consequences of that in an immediate payout. If the village approves that, I don't think there's any, tax protection there. I think she would get taxed on that. It's outside the plan. Go ahead. If I may...

I know that there's a conversation with that seems a little higher than my level of comprehension here. It's between you and and trustee Longman. I don't know if anybody else feels me know that they really get in it.

I'm not I'm not getting I understand what he's saying, but it's outside. I don't know that the village has the authority to do it. It's outside of the point without some other ordinance. It's outside of the plan. It's not an invoice or a bill and it's not wages. So without making an ordinance to enable the council to do it, I think you're back in the same position with the different scenarios.

Yeah, like I said, it would be... without, I'm trying to prevent, I'm trying to protect the plan, you know, because when these things come up, it's very costly to change the plan documents. It's a constitution. Every single time something comes up, and this is very unfortunate, but there's

Right, but if you change, I mean, just briefly looking at C and D, my issue is making one exception for one person. There may be people going forward in the future that could benefit from it, and I'm okay with that because as the actuary has indicated, the mortality rate, the likelihood of it occurring again is low. But if you're going to make the exception for one, make it for the remainder of the village employees that are in the general pension plan. I just don't see the purpose for doing it for one. And again, I don't think the village has the authority to do what you're suggesting without some type of ordinance.

Well, I'm just going, basically, this is a retirement plan. It's not a death benefit. I mean, the purpose of this is for people that provide the service, and do their tenure and then they retire. It's not designed to pay out death benefits.

That's what life insurance is for. It is designed for beneficiaries. The plan includes what happens if a person dies, joint survivorship, all of that's spelled out in the plan. That's why we have a plan which anticipates all of that.

And that's the $131,781. She's getting back her husband's contributions plus interest. Right. So you're suggesting just leave it there.

I'm suggesting from what I'm seeing right now and coming in a few minutes late, and I don't think I was at the last meeting when she made the request, to make it a deferred benefit and have the beneficiary receive the benefit on the date that the employee would have been eligible. That makes more sense to me. because the employee is the person that was working and would have been eligible, but for this short time period. And the amendment would be fashioned in such a way that it's gonna include a small amount. If we look at the actuarial, I guess, probabilities under C and D, I don't think it's that big of an impact to the village.

Well, if you go, Dean, do you want to explain page 10 then? Because there is more cost here.

I understand what the cost is.

It's a lot higher. I understand what the cost is. And also, April, she did mention it puts us more in debt. So we're now not broke, more broke. We're now, instead of being $1.3 million in the hole, I want you to understand that we're in the hole.

I'm clear. There's more apples going out than coming in. I've been in HR for almost 30 years.

I got you.

I've been a labor and employment attorney. I'm very familiar with the funded liability.

So we're down to 90% now instead of 93%.

Understood. This is as of October 1, 2023, and it's based on the smooth value of assets. Just keep that in mind. On a market value basis, we are very close to being 100% funded, if not overfunded, as of the latest quarterly report, which Dave will present soon. Just because there was an amazing return of 25 plus percent for fiscal year 2024 and a good return since then as well. So on a market value basis, the plan is, if not overfunded, very close to fully funded. But again, of course, market values fluctuate. But there's nothing in Florida statutes or even actual standards of practice that say that you have to be 100% funded at every single valuation date. I mean... You want to be progressing towards a 100% funded ratio.

We need to be 100% funded. We have a fiduciary responsibility with the taxpayers and the participants in the plan to be 100% funded. That's our goal.

That is the goal. I agree.

Yeah. And if the market takes a correction, Dave could tell you, the market takes a correction, then that could drop down to 80% overnight. That's true.

I agree.

You've got to bring out the downside, not just the upside.

Well, I'm just going to say I wouldn't call us broke. I think that's a little... Even a 90% funded ratio is a very good funded ratio. I mean, it's not a bad funded ratio.

Compared to what?

I would say it's... We have something like 150 clients in the state of Florida, and you're above average. So...

I think that's two different issues. I will just say personally, I've been on the board since 2005, and with respect to fiduciary duties, I think the board has been exceptionally careful. I mean, obviously, we can't predict what the market will or won't do, but again, if you're, and I'm going to talk from the HR perspective, from the employees. The employees come here and work. They get specific benefits which are terms and conditions of employment that includes wages. And I respect that this gentleman passed away before he was eligible. My position is if I'm okay with amending the plan under these circumstances so that this gentleman and anybody else who may come within that small finite amount, well not finite, but small change in the plan would be covered with that deferred benefit. So I don't know if there's a question or if this was just presentation for today or what?

I mean, I think the point of this is for you guys to decide if you want to send this proposed study to the village council and ask the attorney to draft an ordinance for the village.

Well, I'm very sympathetic to what

So in terms of time and money, if we send this to the counsel for review or to ask the lawyer to draft an ordinance, you draft an ordinance, it takes two readings. I'm not sure how much of the cost is involved in that and how complicated it is. I mean, obviously, it would come before the council in a commission meeting and there would be discussion.

I think the cost is mostly already all incurred at this point because the most expensive thing is probably just doing this study. But keep in mind that any expenses that the plan incurs are added to the village's contribution requirement and are reimbursed to the plan, essentially, with the village contribution requirement over the next two years. So it's not like the plan will be worse funded as a result of you spending some money on administrative fees as long as it's in the normal course of your duties as trustees of the board. I think there would be some small additional fee from Adam to prepare the draft ordinance, but I don't think Adam, and possibly attending the village council meeting if that's requested, just at his billable hourly rates. if you'd like us to attend as well we could do that as well that would just be hourly charges for attending the meeting and we're talking about a couple thousand dollars from us possibly additional probably similar for Adam but and then again that would be included in the villages contribution requirement any administrative expenses that the plan incurs are included in the villages contribution requirement averaged over two years

I second the motion.

I think we're on to Dave.

All right. Good morning, everyone. Some good news for everyone on the tale of that very difficult heart goes out to Mrs. Olson for what they're going through there. So shifting gears here, putting the positive face on things, I have three items on my agenda to go through with you this morning. I want to give you an introduction to a professional transition that I'll be going through. Number two, of course, we're going to go through the report. And this is a June year. And as you all know, FRS ends on a June. So this is a really interesting time period to take a snapshot. I know the important one is September. We want to have comparisons in the back of our mind once we get the FRS data out so we can see how we fared there. And then my third line item today Would be to go through the the fee proposal that was presented but tabled at the last meeting so without any let me get right into it, so I have ventured into a professional transition and Nothing changes for you all for you know an entire year but negotiated a slow partial exit from the Mariner organization. And with me today is my esteemed colleague, James Reno. And James is going to be attending all the meetings. James is one of my consulting colleagues. He holds the highly esteemed CFA designation a very well-qualified individual, so I'm excited. He joined us during the ANCO period, and so I'm excited to actually have his help. in managing, working together, managing Ural's relationship here. So that, nothing changes for a year and we want to make sure that this transition is done very professionally. Not only does James need to know, you know, the technical workings of everything, but I want him to fully appreciate the secondary, tertiary objectives of the board here. I want him to be comfortable with where you all are coming from and the flavor that you want to impart and have imparted on the investment program, as well as the nuances and workings of the meetings. Every board is different, so that will take some time to do that, and we want to make sure James is fully... fully set up on that. You also may have heard in my transition, I've accepted a position as Director of Curriculum for the Florida Public Pension Trustees Association. I had to do math in the back of my, in my iPhone. This is actually my 40th year in investment, institutional investment related. asset management slash consulting. So, you know, it was time to do something. So I'm looking forward to imparting some of my four years worth of experience in helping out the FPTA organization. So that's my admin update, if you will. So let's dive right into the report. And as usual, I'm just going to hit some high points. from an attribution standpoint to things that impacted your investments most significantly. Obviously, tariffs are top of mind of everyone. We had the Liberation Day, rather severe market correction. We've had announcements, rescindments, announcements, rescindments. So where do we stand today as of, I think it was Sunday or Saturday, depending upon which clock you're on in the world. There was a settlement reached with Japan, and the agreement there with Japan now puts the average tariff rate at 15%. And, of course, these are all intent in their agreement form. The double is in the details. That does not speak to the idea that, yeah, Japan is going to be open to buying maybe more Ford F-150s. But the logistical issue with F-150s, if you've ever been to Tokyo, the roads are only wide enough for one, and you're not going to be able to pass two F-150s on their streets. And, you know, similar situation to Europe. But those items are yet to be worked out. Bottom line, the U.S. economy, as we've talked about in previous meetings, is a capitalist system. We will prevail. We will adjust. We will work through, as we have before with greater crisis events hitting us. We will get through everything. So far, no immediate tariff impact. GM was impacted because of all their suppliers. And there were a couple other major large company earnings announcements. Everybody's brought their announcements down, earnings expectations down. I think there was a lot of crisis discussion going on, which really lowered the bar. And those of you who have been around, you know, we need that wall of worry. And if you have that wall of worry and you adjust expectations way down and then the market continues to surprise on the upside, then that's very helpful in driving and arguably was a big part of driving the recovery in the bull market that we're in right now. So with equities rallying and back up close to new highs or at new highs, the onus now is on U.S. corporations to make sure that they deliver on the earnings that the equity market is now priced in or expecting. So because of that rally, if you go to – let's cover the asset allocation, and I'm going to jump you up to – page 15 of the report. My bottom line here, I have no action recommendations. As you can see, we're pretty close to the target weight on international. That's appreciated significantly. As you all know, last time we met, you could buy one euro for $1.05. Now it costs you $1.17 to buy a euro. So, as international investors, the fact that the U.S. dollar depreciated, that's good for our investments overseas, right, because those currencies that we are investing in are appreciating relative to the dollar. So, international was a big driver of the portfolio. So, that portfolio is appreciated now up close The target and international equities have now appreciated again. So the green diamond is still green. You know, we're kind of mid-level in the allocation. So I don't see a need to rebalance at this time. We got that taken care of a couple of quarters ago. and then looking down at our cash you know our cash we're running with pretty close to the minimum we'll need but we'll continue to recommend to pull any cash that we need for operations at this juncture from the from the bond portfolio so we'll continue with that with that strategy bottom line I have no action recommendations for the asset allocation Any questions or discussions or difference of opinion? All right, so we'll continue with that. So let's hop to the bottom line. And if you go to page 19. very happy to report uh fiscal year to date uh the program is up 6.7 percent and as you all know the actuarial required rate of return is seven well the year's not over and it's not over till it's over uh we are very close to achieving uh that required return number uh so at least we're you know and in good place as we head down the final stretch. Very interestingly, if you look at the, I referenced the June fiscal year end, if you look at the year over year numbers for June, were we closing the books with a fiscal year of June, we would be up 13.03%, and that's also ahead of our policy benchmark. I am very interested to see what the FRS returns. I would venture a major wager that this significantly outperformed the FRS. But I don't want to speak out of turn. Let's wait and see what the number is. And as you all know, if you were in the FRS system, Your contribution as a participant, as a village or city participant in there is completely contingent upon what goes on there, whereas here as an independent, you drive everything here and you can directly control the amount of village contribution that's required for the program. You're not at the mercy of another system. So we are in great shape as was communicated. You know, this puts the market value funding ratio in great position. As I look across all the plans that ANCO works with, you're well above average, I would say, as far as funding. Mid-80s is usually the typical target, I think, because, again, this is a program in perpetuity. So I think once programs get into the mid-80s, the rating agencies, when they rate your bond issues, they want to see you in the 80th percentile. And if you're in the 80th percentile, you know they stopped looking at this particular item so great results so far as you all know the number in parentheses that's the peer group ranking so let's just focus on the fiscal year to date so I like to say a ranking of seventh 93% of the other trustees out there would rather be looking at your report than their report, right? The three-year number, fourth percent, five-year number, top decile, quintile, sorry. top 21%, so results are very good. The five-year number ended June anyway, annualizes out at a little under 10% or 9.79%. A couple of the big things that we've done here, just to remind everybody quickly, we stayed on with Newton, formerly Boston Company, right? They were a little rocky in the performance, but over time, the performance has been pretty good. They've come back quite significantly, so fiscal year to date. They're almost twice the benchmark. The other big change we made was to wash our hands of active growth management, right? We terminated offspring with the idea that, hey, you know, the index is probably a better place to be as far as our growth stock allocation. And we moved that money into the Fidelity Large Cap Growth Index. Well, lo and behold, the MAG-7 once again have distorted valuations and active managers in the growth area have a hard time keeping up, but you are there 100% with that performance. So that index fund for the quarter was up 17, just smashing what value stocks did up, you know, right around 4%. So that worked out well for us. dropping down to international we're indexed there as well and international as I said was a big contributor and then last but not least we've got integrity fixed income very challenging period but year-over-year integrity has been able to outperform their benchmark and delivered six point six percent versus a target of six point oh eight And as you all are aware, interest rates and the bond market have just been all over the place. And the manager has held in quite nicely. Do we have any questions on the percentage returns?

Dave. Yes. We're on page 19, right? So which of these managers are now active and which ones are passive? And when you mean passive, you mean more ETFs? We've got a CFA here, so he's going to be able to help us. Which ones are next? So you've got Newton, Vanguard, Fidelity, International. We've got Vanguard Development, and then you've got down in the fixed dump, you've got Integrity. So which ones are – you said we're moving from active to passive. Which ones are active and which ones are passive now?

Yeah, so the active managers would be Newton. That's our only active equity and their value. Large cap value. The rest of the domestic equity is now indexed. And the international is indexed. And then the only other active manager would be integrity fixed income. Am I addressing the question?

Yeah, are you moving, is it your intention to move from active entirely over time?

No, no.

No, you're going to, it's a blend.

We're trying to be cognizant and be observational of the market cycle and what's going on out there. And since we've been in such an aberrational period for growth, and as you know, growth managers have historically been a little challenged and outperforming. the benchmark. But this period has been excruciating. That's why we made the change to passive. We'll stay on that for a while. We'll watch that cycle. I think we would be, and we've been talking about this, we might be, it might behoove us to move our passive management in the international equity allocation and move that into an active blend of maybe one or two managers. So that might be an area that we would actually move from passive to active. I think there's more opportunity there now, especially with the current market trends, which seem to be trending.

Yeah, it does. I just have one more. So, back on page 10, when you show the pie charts, we're 70-30, right, on our, and you rebalance that quarterly, so we get back up to that 70-30 on page 16?

Yeah, or if you use the actual table numbers on page 15, If you look at the target allocation on the far right column there, so we would be actually 65 all-in domestic and international equity. 65-35. Yeah, so the target's out of our investment policy statement. We're investing in and around.

So on 19, why do you give an 85-15 hypothetical? Are you teasing us? Because it's 9.67. I like that return. On page 19? 19, yeah. So our policy is 65-35, not 85-15. On the top of 19, you go total fund and then hypothetical 85-15. What's the purpose? Oh, I'm sorry.

There was a request. Actually, it's been a couple of years now. There was significant discussion. I think you may have even been a party to it that there's this desire to increase the equity allocation.

Mm-hmm.

and to, you know, even consider 100%. We came back to you with, you know, how about a better risk-reward balance? And we said, well, if you were to do that, capital I-F, you know, an 85-15 might be a better risk-adjusted outcome for you. So there was a request to add that benchmark. So it's really an extremist, Board request in there that we leave that in there which begs the question does the board still want to see that in the report this is entirely you know in there at the at your request

Yeah. The, we are looking to have a 7% annual return. Since inception, which is 25 years, it has been six and a quarter.

Yes.

In the last 15 years, equities returned 11.37%. Fixed income over 25 years has returned 4.19%. The question remains the same. Why are we, why do we have that much fixed income in our portfolio when over the long haul, and this is an infinite fund, This has been underperforming. And it's not just a quarter or a month or a year or 10 years. It's 25 years of underperformance.

For fixed income?

For fixed income. 25 years.

Underperforming what?

Our 7% requirement.

Right. Okay.

whereas equity over 15 years has been 11.37%. So therefore, once again, I ask the question, why the allocation, which is basically a 60-40, I think is roughly where we are, why not at least a 70-30 or an 80-20? And you did the regression analysis a couple years ago, and we would have been a million dollars better off in our fund at that point. So again, it's not like we're working with an organization whose tenure is in question. The village has been around for a while, it's gonna be around for a while. The pension fund is for future employees. It seems that the allocation to equity should be higher if for no other reason than to have some shot at getting at the 7% over time. Because we're only at 6.25% over 25 years. And the have say, well, we're going to actuarially assume 7%. Based on what? What data supports a 7% over time?

Okay, a couple things on the table. Yeah. Great discussion topic. And we talked this through. This is not the first time. And for the board's sake, let me just run down my quick bullet responses because we've had great discussions over this previously. So, first of all, let's just clarify the data, right? So, the inception date here is 7-1-01. That way predates us, but I believe your plan originally was invested in very conservative treasury or CD, bank CDs, during the first possibly even 10 years during that time. Now, interest rates were high. higher, but they were still nowhere near what equity markets were producing. So, you know, that is an all-inclusive data point, which is not reflective of, you know, the more modern.

But even if you drop back to five years, which you guys are around for all the last five years, the equity is 15.3%. the fixed income is 0.3%. Even worser. Where do you draw the line and say, look, at some point we've been hit in the head enough times with the underperformance of fixed equity for this type of fund. We say, look, let's move it up a little bit and get some of that. Because the village is spending roughly a half a million dollars a year every year on this and we're, you know, that's not a huge amount of money and an overall village budget, what, 43 million at this time roughly? But, you know, if we could, you know, take $50,000 out of it by simply saying, look, you know, let's take a long-term look at this thing, it's a benefit. So, I really think that we need to, you know, and we're arguing here about a $30,000 delta For one employee and I'm saying we can get that back by simply investing more intelligently.

Yeah, so so my second macro response point would be And and I think I'm not disagreeing with you Over the cumulative period of time clearly equities have outperformed everything over the cumulative period. But I think the other important point here, we're all fiduciaries here, as was discussed earlier. And the other important point is our task here is really to minimize contribution volatility coming from the village. And if we look at this during rolling one year, rolling, I mean, we're on a five-year smooth, right? So that helps alleviate some of the volatility that the equity markets, we all know, are going to continue to deliver. But by including fixed income in the portfolio, we are mitigating, hopefully mitigating, quite a bit of that short-term volatility, which will have a direct impact on the village contribution requirement. I mean, if we go back to the COVID situation, market blow up, you know, every previous period where, you know, we're down 20%, we got a market correction. The fixed income, generally, with the exception of one time period, which was the Fed rate tantrum, right, fixed income has been very helpful in stabilizing the portfolio. Now, that being said, the rates available in fixed income now are attractive. I think there's a much stronger argument to be made now to hold the fixed income in the portfolio maybe than there was before when interest rates were at 2.5-ish percent. Now we can make enough money in the bond portfolio so it actually is accretive. It's not going to achieve the number, but the interest rate driven off of those bond investments does make a positive contribution. And then also, if you reference page 18, we tried to be, and this is what James is picking up on, right, on this discussion. This board has always wanted to maintain a more simplified portfolio with an emphasis on equity. And we've tried to respect that. And if you look at the table on page 18, the first chart there, this is a this is a peer group ranking of public fund asset allocations and long story short you are the blue dot obviously and this ranks you almost in the top quartile as far as the amount of equity domestic equity you have in your portfolio compared to other systems across the country so the average equity allocation across the country as far as domestic equity is right around 44%. So, we are already, if you care what other people are doing, you know, we're already, you know, have you with a very high equity exposure. And it's worked great. It's worked well for us here. And worked very well for us, you know, this year, fiscal year to date. So, you know, we've tried to incorporate these things, but I think the bottom line response is, you know, as fiduciaries, we need to smooth the interim volatility as best we can because that's what directly impacts the village contribution. But we're already doing it.

We're already doing it. Dave, we're already doing the smoothing because we're using a five-year average.

Right.

So, we don't have to do it twice. We don't have to do it once.

No, it's a smoothing that allows us to hold that much more equity. Right? If we didn't have the smoothing, my god, the city, the village contribution would be, you know, 5 million up, 5 million down. So, that's a great tool, actuarial strategy.

But what I'm saying, once you're using the five years, I mean, you know, you go back and do regression analysis, you know, different starts, you know, different stop dates, it always is the same. It says that for this type of fund, which is you're putting money in every year. This isn't, you know, and you're taking money out every year in terms of benefits. So, you've got this constant flow. So, you're looking at a very long term. And on a very long term basis, it says that a higher allocation to equity, particularly because you're smoothing it, gives you a better total return. And every time we do the numbers, We wind up with more. Now, yes, if we go into a 13-year depression, I understand your numbers.

Well, we had that last decade for equity markets, right?

But, you know, I just don't see it looking at the numbers we've had over a very long, you know, basically this century. We're looking at this century numbers, and it says that you're better off to have a higher allocation of equity.

I agree with you. If we're shooting for total return, and that's the end game, total return, absolutely. 85-15. But if we're shooting for a 7% actual required rate of return, that's our number, and we can think we can get there by limiting inter-year volatility

But we only got there. But since inception, even if you're looking, you know, since inception is below that, yes, we're above. And I understand that. But, you know, why leave it? You know, I understand it. And people say, no, no, we don't want to take the risk. You know, debt's wonderful because it doesn't go. Now, debt paid, you know, over a five-year period, The return on fixed income was 0.32%. That's over five years. Am I wrong?

No, you're right. And that's coming off the tail of 2.5% interest rate yields.

The only one that's close to seven is the one-year number, which is 6.64%, which is less than seven.

Yeah, and if we're going to earn the current yield in the portfolio, it's probably going to be a 5.5% yield year, return year.

So, you know, my motion is that we increase equity allocation by 5%.

So 5%.

Yeah, 5.5 points. Yeah, just five points.

So just to clarify, so we're at 6535 now, correct? And then the motion is to move it to 70. 8515 is on page. I mean, I still think that's enough cushion. No, I'm patient.

I'm I'm from going 6535 to 7030. That's the motion.

I second this. All in favor? Third, yeah. Or entertain some conversation on this? You're not even saying that the 10% that you would have moved, you're just saying let's go halfway.

Well, no. I'm saying going up 15% and Bob's suggesting 5%. That's correct.

And I second it.

Tom, I think you're right, but I think from a practical point of view, it's five points.

Okay, well 5 is better than nothing. I mean that that that helps our numbers obviously 5% is better than no percent. So I I'll 3rd it wherever I am and this 2nd 3rd where I am here. It's a 3rd where I am I'm just a 3rd, no.

All in favor, aye. Okay, so

Obviously you don't do it right away. We understand that we're smart.

Well, that's we need to address that. Okay, so administratively You just voted to change the investment policy statement, right? That's our that's our guideline and So we are now going to change our domestic equity target from 65, I'm sorry, from our target for domestic equity, and I assume this is just domestic, right?

No, all equity. It's just simply equity versus, you know, in my mind, it's equity versus fixed income. It's not whether it's domestic or international equity.

Okay, so we are adjusting pro rata our allocation target in the investment policy statement to domestic equity and international equity so that we are effectively making our total equity target 70. And then if we continue with our rebalancing around the 5% rule, we're going to make the top end 75% permission in equity because obviously if we're 70%, we have a huge quarter. We're going to appreciate up to 73, 74, 75, and we need to have a discipline trigger to cap us somewhere at some point.

And I believe that's fairly stated correct.

Okay, so we'll come back at the next meeting with a revised investment policy statement showing those targets. And now, at the board's pleasure, you know, we can increase... We can increase domestic equity. We're at 52%. I'd suggest we wait until we have the policy, but we could add 2% to domestic equity today. Quite frankly, I'm coming in with a rebalancing recommendation for the police plan because their diamond is in the red, and I'm going to be recommending taking profits for them. So we're kind of moving in a different direction here, but you know happy to take Going whatever direction the board wants to do But I would suggest we revise the policy Next meeting and then see where we are and go from there. That'll also be coincident to our plan fiscal year end so we can close out the year with the current policy take the mark and then start out the next fiscal year with the more aggressive investment policy statement if that works for everybody through the chair I think that's quite fair yes okay and just again for the record you know usually when your plan approaches a hundred percent funding you don't have to put the pedal to the metal that's typically when you might consider a throttling back reducing your rate of return assumption because you have extra money in the bank When you're fully funded, you don't have to take as much risk, right? It's the plans that are underfunded. You've got to get them funded from some source. So you're more dependent upon your investment portfolio to help you out to get up there. But in this case, you guys are in phenomenal shape. So you don't need to take that extra risk. But I understand the argument and where you're coming from.

Dave, why wouldn't you rebalance that immediately, like as of today? What's the delay? I know you want to bring this to the next meeting. You're going to change the investment, whatever, IPS. I mean, we passed a motion. I don't know why you wouldn't just go ahead and rebalance it.

Yeah, if you want to add, we have enough room here that you could add 2%. Domestic equity, if you want to do that.

And you said you could air, there's a margin of error between 70 and 75, and that's reasonable, right?

Well, we can't, we have a policy, so we've got to make sure we're in line with policy, especially coming into year end with auditors looking at everything, right? Right, but it's a moving target.

The market goes up, the market goes down. So you're going to have a little bit of variation. I get what you're saying. I'm saying I agree with you. Yeah.

So if you want to balance today, you'd be happy to take direction to do that. But I think we'd be capped out with an additional 2%. to domestic equity and then decision has to be made where are you going to allocate that right so you've got Newton and value value continues to trail you've got fidelity large-cap growth which is a little bit underweight value I don't know maybe you put it there but that's what's been driving you know i'm not making any market calls here are you asking us what to do you're the manager you brought these guys to the dance yeah i think i think it's not our job i think your mid cap allocation is my opinion is way underweight right um looking at the long-term target and scheme of things i'd allocate the monies to uh to mid cap it's not as not as overvalued it's within the policy structure that would be my suggestion if you were to increase equity you're managing the managers that's well we have we we have no discretion right so we have to take take your direction but happy to have the conversation as you know So I guess in the form of a motion, Mariner would need direction to increase domestic equity by 2% of total asset value. And we would do so by increasing the allocation to the Vanguard Mid-Cap Index Fund. And then we're going to have to raise cash, so we're going to have to direct a cash raise out of the bond portfolio, integrity fixed income, for the same amount. So we'll need a motion and direction to get that done, and we'll do it.

I'm really reluctant to try to drive you between domestic and international equity. That's really your call in my mind. If I'm wrong and we have to do that, then we should reconsider it. you know in my mind which equity market you decide to go on a dollar denominator non dollar denominated is really more of an investment decision that you make because because you know i understand the euros you know gone through the ceiling because of the the tariff stuff it can go the other way i remember a dollar euro so yeah a couple of quarters ago this board wanted to underweight uh international

You know, because there was a concern of the tariff impact. So, I mean, I think you have two options. I think at the S&P 400, I would keep the bias. You're increasing the risk of the portfolio. So I would keep the bias towards the less risky equities, and that's domestic equity. I'm not trying to call markets, hey, international is going to outperform domestic. I'm just looking at this from a risk management standpoint.

And that's fine if you want to go in that direction. But I'm just saying that the choice of a dollar versus a non-dollar denominated equity market is really more a call that you could make.

Yeah, and we would defer to the long term. So when we approve the new policy, right, then we will be adding to international at the next meeting, right, assuming values stay where they are, because we'll need to increase because we increased the policy target and we'll be under target. So I would suggest we address that one at the next meeting.

We'll come back at the next meeting with some detail, but again, I think that that allocation is really more in your bailiwick, because I don't want to try to choose equity markets.

Yeah, and that would be the recommendation, that we follow the administrative procedure operationally, then we're all legal, right? Everything's going to pass the audit, and so we address international at the next meeting, but I'm more than happy to take a direction to add 2% to domestic equity, purchasing the, putting those monies in the S&P, I'm sorry, in the Vanguard mid-cap 400 index, and raising the comparable amount from the fixed income portfolio to pay for it. But I need board approval and direction to do that and we'll get it done.

That's where I'm hung up still. Dave, clarify. I can understand waiting for the IPS so we have a document to springboard off of to keep everything legitimate for the next meeting. But you're asking the board to, no offense, to do your job. I mean, you're the one that's got to decide the mix between, in my opinion, between domestic and international equity, whatever that model should look like. You know, some domestics are going up.

I gave you my recommendation.

Well, that's what we're going with. Well, go with your recommendation.

No, but you just said with board approval, and I don't know what that means. I mean, I don't know. So say it's, or now it's 70% domestic and international equity. Does that mean 50% of that is domestic and 20% of that is international. And then you're asking, you know, I don't know what the mix is going to be, what you decide. Again, you're the manager of the managers. You're the advisor.

I think we agree from the policy perspective. I think we agree that everything gets increased pro rata 5% right so that's across the board increase value we get a little bit we'll get a little bit mid cap will get a little bit and then International the one fund in there will get we'll get a little bit and that moves a whole portfolio up to the 70% target that we address next meeting but to your your question your point absolutely do we can we do it now yes we can but we can't really add more than 2% so I'm looking at the portfolio and in my mind you're increasing risk I am giving you my advice and the way Mariner would look at this we're increasing equity so we're increasing risk so how can we increase equities and minimize the risk but still increase equities and looking at where valuations are, but principally looking at you're very under-allocated in the mid-cap index fund. In the long scheme of things, you're very, very underweighted. We've been emphasizing the large stuff that had worked really well, and mid-cap has been underweight and has been a laggard, but it's domestic equity. So that's the basis for my suggestion. Hey, let's fill this up and get things closer to what, you know, they might be taking a long-term viewpoint. And that's why I would be coming up with the allocating that additional 2% to the mid-cap.

Okay. At the next meeting.

No, the board wants to do that now.

Oh, sure. Okay, I don't know if we're back to the next meeting or if it's immediate.

Right, so we have to pay for it. We don't have the cash, so we're going to have to direct our bond manager to raise the cash, and then we can pay for it and do the transaction. Okay, you're telling us what you were going to do. I would need direction to get that done, yeah.

Okay, all right. Okay, it sounds good.

So I need a motion and approval and we get it done.

Okay. I'll motion for that to happen. Second.

All in favor? Aye.

All right. We'll get that done. So let me just wrap it up here. A couple charts. If you go to page 20 and you go to the bottom table, Here's our fiscal year to date cash flow for the program. If you look at the top line of the second table, total fund, we opened up the fiscal year with 20.8 million. We had contributions coming in of 869,000. Distributions going out for benefit payments, $743,000. Investment management fees as invoiced by contract only, right, were $37,000. Other line item expenses that we pulled from the Salem Statement, $125,000. And our total return on investment, all in income plus appreciation, was $1.4 million, and that left us with an ending value June 30th of $22,238,812. And let me just remind, unless there's any questions on the cash flow, let me just pop you down to page 24. And again, with the June fiscal year end, but the long-term perpetuity in mind here, if you take a look at that top right chart there, uh to the earlier point you know this is the three-year rolling return result uh for the portfolio and uh starting in 22 and 23 during covid we had some manager issues and we you know we were having under performance pretty significant under performance from the growth manager which we switched over but since that time the index itself and your performance in the blue dot has gone back up so that's what gets you up into the you know top fourth percentile but that's just looking at quarterly meeting progression there we dip we made some changes we got things fixed and now you're back up in the in the top quartile last but not least just a quick look at the fee structure of the portfolio towards the back of the book And if you take a look at page 49. You know, the cash flow covers the contracted managers, the individually managed manager fees, but this lists all your manager fees on the basis point basis. So the Vanguard mid-cap index fund, as you all know, these are all mutual fund fees. That's three basis points. And Newton is a separate account manager, is at 55. basis points. And by basis points, that's a little over half a percent. And you go down to the bottom line, the total fund here is being managed for basically a quarter of a percent or 24 basis points. It'd be hard-pressed to find a less expensively run portfolio delivering these really high results. So that's the report through June. I'm excited to see how FRS does because I'm a competitive guy, and I want to make sure you guys are on the podium and making your objectives. And we want to outperform FRS. So that's the report. Any questions on the report?

Thank you, Mr. Weiss.

All right. My last item was tabled at the last meeting. And I hope you had a chance to take a look at it. We actually did get this approved with the police. It's a fee proposal for you. We would respectfully request your consideration for what I think is a reasonable increase in our fee. If you look at the table below, our annual retainer fee, last reviewed back October 1 of 2016, did include a 3% COLA, which gradually increased this up to 25,000 per annum, and that was as of the April 28th, excuse me, April 28th, 25 print. with that 3% COLA and that equated to basically 12 basis points so again referencing the fee schedule in the back of the book which are paying for managers so then you're adding another 12 basis points for the consulting fee My proposal is that we go to an annual retainer fee of $30,000, and we eliminate the COLA provision totally, and we just restart the clock. From our perspective, we really need to get some catch-up going here. And again, last time we looked at the contract, it was 2016. It gets reviewed periodically, obviously. by the board but we hadn't requested any any change to the contract so I'll leave that oh and I'm sorry and that gets us to 14 basis points up from 12 basis points so I respectfully request your consideration for that fee increase and this was originally presented at the last meeting and we were requesting an effective date for this you know for this fiscal year

Any discussion on this?

Respectfully, you're only going to be with us for another year?

Right, but Mariner stays and all the resources.

But you'll stay for a year. We've had Mariner with the transition from ANCO. How long? A year as well?

It's been about a year and a half, two years, yeah.

Okay.

Corporate name only, same people, yeah.

Okay. I don't know if you guys are off probation yet. I'm not quite sure if Mariner's off probation yet.

Well, nobody's left, and it's still the same firm. We're just flying a different flag, but we're still doing the same thing that we were doing before.

I move we accept Mr. West's proposal.

I second the motion.

All in favor?

Aye. We appreciate your continued support and pleasure to continue to work with you.

You're going to really retire?

I'm not completely.

Yeah, I know. Okay. Same problem here.

Thank you.

Thank you. The only thing that I have left to discuss is something that Yami brought forward, I think, at the last meeting.

which is she requested that the board consider changing the notification forms that are used for benefit calculations for participants. And so it might be good to have her in here just to...

Okay, and you have the new forms?

So I have an example of a form that's used for another client that is the town where Yami used to work, which has almost all the same information, just in a different format. And if you'd like to take a look at that, I can give you some copies of what that looks like.

What is it, the notification?

She's on her way.

Yeah.

So when a participant retires, they get a benefit calculation that shows their benefit amount.

Why do we have to decide on a form? That's administrative, why do we need to decide on a form?

Okay. Right. Okay.

You know, it's essentially a legal document that the member signs, so you at fiduciary as trustees can pick what that document is, and then we can use whatever format you prefer.

And I don't think that this actually works.

I think it is all right, sir.

And I also have a copy of a benefit calculation that's done for a participant of this plan as comparison, but I'm not sure if I'm allowed to distribute it because it has personal information for that participant on it. No? Okay. Yoli, do you have a sample? Did you? Oh, good. Okay.

Is this missing? I'm missing the last page where the trustee signed, but that's basically...

Oh, okay. Let me see. Okay.

Yeah, I mean, this has to do with the form that you had discussed the last time.

Okay, so we were just going to talk about, I just wanted to present a sample form, which is like the form that used to use at Surfside for identity calculations, as I know.

Excuse me it's going to just for the benefit of everyone because some folks are here some weren't would you just I think know that we have passed with everything just talk about the current form we use the one that's been proposed the reason why this is brought up in the first place and I think that's why we have yummy here just to talk a little bit about that.

Good morning, Yamichele McLeod. During the last meeting, I had requested a proposal to the board where the board would ask our consultants to have forms that are clearer for staff. Well, what's happening is, in my view, employees were receiving calculations or given just a spreadsheet on Excel saying, this is your payment, but there was no full disclosure of how you came about to those numbers. So, for example, you could box to say that I've earned in my tenure here, I don't know, $300,000, but you're not really breaking them down for every fiscal year so that employees could actually see, indeed, yeah, this year I earned this, and they could do their own costs and checks. In addition, the forms were given blank. I mean, you don't necessarily, if you're given an option of a 10-year certain life thereafter, the numbers should have been plugged in there so that the employees could actually see what each payment option looks like to them as far as monthly income. rather than just giving them a form blank. So my ask was that when forms are given, not only for the calculations, but actually for all the forms, that there's clear data that the employees could themselves verify or consult with whomever their financial advisors are, rather than to just put it as a lump. And then when I would ask, where is the backup, you know, because I will be copied on them. Well, that's all we have. No, that's not all you have. The employee should receive a letter like what you have in front of you, like how you said what I'm used to in my prior employments that lists the numbers so that the employees could have a clear understanding of what their, you know, where they fit and what they decide to do financially. So that is what my ask was in compared to what we were doing, which was just an email from our third party administrator that had an Excel spreadsheet that says this is what you got. No, employees should be able to see other options with the numbers plugged in so that, you know, because I could make an error myself in determining what 75% is or 66 and two-thirds. I mean, I think the papers need to be filled for employees so that they know a clear number. And right now we weren't doing that, at least the versions that I saw. If this was provided before to the TPA, I don't know, but the versions I saw were just an Excel spreadsheet, not even a letter attached to it like you have here.

So, Yami, are you asking for us to adopt what was previously used here? It looks like town to surfside. Dina, is that complete enough?

Okay, well, maybe I... I don't know if I misunderstood what was discussed at the last meeting, but I just brought copies of what the notification form looks like that we prepare for this client, which is also the same form that we use for most of our clients, versus the form that Jan is used to seeing, which does have a little bit more detail. So I think if you look at the two, THE CURRENT FORM VERSUS THE SERVED SIDE. The Surfside form includes, both forms include the participant's date of birth and name, the date of employment, date of termination, the benefit commencement date, the beneficiary name and date of birth, years of credited service. Surfside had a breakdown of different multipliers applied for different dates, whereas yours does not. So we just have a total credited service they had broken down by the time. The member contribution rate was different by dates in Surfside. It's the same contribution rate for all employees for all time in this plan, so we don't list the contribution rate. Okay. The final average monthly compensation, that's the one item that there's more detail in the Surfside where it's broken down. There's a five-year average, and it's broken down by five years, potentially. for five years, whereas we need to show the average monthly earnings, which is we receive a total of three years, and then we divide that by 36, and that's what goes here. And then there's a formula showing how the accrued benefit is determined in line 11, whereas here it's 2% times year's credit service times final and average earnings. And then it shows you the amounts, like Surfside had the amount, different multipliers for different years of service, whereas here it's just 2% for everybody. Sorry, and then on, then at the bottom there's the benefit options, the different, you know, if you choose a life. 75% joint and survivor, 100% joint and survivor. We list all those amounts as well on the form. Now, if this is not the form that a participant was looking at, you know, that's... Is that this form? So could I... This is the form that participants currently receive. Yeah. And then on the back page, there's also a...

It's not included on the Surfside form. Okay.

What's missing from this would be just the dollars as it pertains to the specific employee.

Well, no, no. I mean, the dollar, the amount of all the retirement options are here. The only thing that's not here that I see that's in the Surfside form is the breakdown of the final average earnings.

Right. The percentages are here.

Percentages.

So, may I please now thank you for that, because I walked in here. So, just to be clear, the ask is exactly that you actually give the employees the letter, okay, with a walkthrough of how you came up with the calculations. Because, again, as Dina just stated, having the form, and Surfside gives both, by the way. The TPA sends the letter and this. We've never, at least since I've been here and I've asked around, never really had an education seminar here for our employees and I've requested it numerous times and I won't touch it anymore. It's easier for us to use this verbiage because we understand it. The average employee does not know what 75% joint and contingent means. So I am asking you to actually provide him this document, although, as you stated, some of the data is here, but it's not reader-friendly as if it's here. In addition, the other issue with this document is that we had scenarios where we had this document. It requires a chair to sign, and what we have on file is not signed. When Yolanda approached me for records, I said, well, this wasn't executed, so how do I know that this was the final final? So it creates other issues when it's not done fully as intended.

So you're asking for this board to give some directions as to how things should be? What are expectations to be from diners?

Well, you're asking to add this letter in addition to the current form.

That is correct. And that the current form be actually used for its full purpose, which requires signatures. From the chair? Well, right now the form actually says Board of Trustees by. So if it's not signed by any, whether the chair or whomever you guys designate to do this, I'm not an attorney, but if I'm pulling out an employee's file or a calculation that doesn't have that sign, it's like, was it really approved by the board?

Yeah, we don't. Okay.

Yeah.

for the participant. So, Yami, this cover letter is what you're looking for?

That's what I was looking for you to provide to our employees so that they can see clearly what their amounts are for each option and how you came across. In particular, the most important factor, from my perspective, is where you actually show the final average monthly compensation. If you put it as a whole sum and say, look at the page... this page on what you have. If an employee receives just this document saying your contributions were $245,000, how do you know that that was the case? If there was an error, especially since we're doing things manually here where someone internally is providing the earnings, how could you dispute that that is what you earned if you're not actually seeing it broken down into your last three, five, whatever the... The salaries, if your salaries are not reflective correctly, how would you then come back and say it's an error? And now you're owning a life payment on perhaps the probability of us reporting the wrong data.

So there's some additional details that need to be on these forms?

That this letter has it, that this doesn't, as she highlighted.

Okay, but they were never given that letter before?

No, not to my knowledge.

So this isn't really – this is just a notification form. It's just a slightly different format of a notification form.

Yeah.

So this form has the same information as this form. It's in a different format, but it does have the additional breakdown of salary by year, which was not part of this standard form. Okay. So it has to break – this has five years of salary broken down by each year. So the frequency of – The highest five. 17, I earned $90,000.

which is what's being used to make the calculations.

And it's totally fine, we can easily add this format For the benefit options, we can use this form, I guess?

Yeah, it's the same form. The form doesn't change. All I'm asking is to communicate it in an easier way for the employees to read and for them to actually go back and say, yeah, I did earn $50,000 or $60,000 or $70,000.

So respectfully, what do you need from us? A vote to say that the thing has more details? A vote to use the first two pages. The first three pages of the surf side form in addition to the current update. And I hate to call it the surf side form.

I know. I was just going to say that. An updated version of the form that is more comprehensive.

Yeah.

And that the board actually, when you have such action, that the TPA brings it forward to the board for actual execution. Because if you have a form that says someone is retiring, that again, it's not executed by the board, and the form says it requires a signature, then what are we doing here?

Wait, but we haven't been, have we been signing off on anything for people when they retire? No.

And the form requires it as is.

As a matter of fact, I brought the most recent two retirements that we've processed for signature today by the chair. But yes, no, they're not.

So it should have been signed before all along and we weren't doing it?

When we took over the administration, we were advised that this step was not done. And to be honest, we started the administration with very, very, very little data. We hardly got anything from Baker so I guess Ms. Yami is perfecting the process for both us and them because we don't have.

As it should, as it should. Exactly. So if there's a form now that should have been signed in the past is what I'm hearing. It existed but it wasn't being signed.

Exactly, correct.

Okay.

It wasn't signed in the past. It was, you found some that were signed and then there were some that weren't, correct?

I've been here, and since I've been here, I've had three or four scenarios where someone has passed or requested things, and half of them or more than half weren't signed. So, again, from an HR perspective, a document that's not signed.

So that's one of the easier things for us to vote on today, right, in my opinion? If it needs to be signed, it's signed.

Mr. Chair?

Yeah, but with, excuse me one second, but with respect to signing off on, I don't know, the back of one of these forms, do we need to do it or can that be by the manager? Because from a practical standpoint, you're going to wait every quarter?

IT'S RATIFYING THE CALCULATION. IT DOESN'T STOP THE PROCESS.

OKAY. ALL RIGHT. IT DOESN'T STOP THE PROCESS, BUT AS A FORMALITY, IT SHOULD BE RATIFIED AT THE NEXT AVAILABLE BOARD MEETING WHERE YOU GO ON RECORD TO SAY JOHNNY DOE RETIRED, THE OPTION THAT THEY SELECTED WAS THIS, AND THEN THE BOARD AT THAT TIME ACKNOWLEDGES AND IT GOES UNDER THE MINUTES. acceptance of that individual's retirement. We're not asking to delay anything. Simply that the TPA brings it forward.

All right.

So were you going to say something or were you going to make a motion?

I'm just troubled by the fact that the board has asked to sign off on calculations that they have no control over. It seems that the manager would do that because you have the capacity to look at the underlying data and sign it. I don't know why the board has to sign also. I mean, if that is the rule, okay, that's fine. But I just don't know that we have the competence to make that sort of decision. Yeah, to ratify. I mean, based upon what? Other than the fact, you know, you put numbers in front of us, you know, unless you go in and, you know, dig around. What's the rule now? I'm just curious. If there's a rule that the board needs to ratify, we can go ahead and do it.

If it's not in the ordinance, I don't know why we would have to.

I'm just curious why we would do it.

We have mentioned boards that do not have a trustee signature exactly for the same explanation you just gave.

So is there something, other than on this form, is there something in our ordinance that requires us to do it?

I'm not aware of the, sorry, I walked in here. However, if that's the case, I would just... The manager should do it. If that's the case, I would amend the current form that you're using that says for board's approval to say whatever else you wanted to say or simply remove it or TPA acknowledge, but there's got to be someone who, an entity that approves it in essence.

Okay, so my thing would be let's look to see if an ordinance is there that says it has to be that way, and then we could always entertain amending that ordinance if the board feels that that should be a management function.

Yeah, I mean, it says yes, and okay, we can do it, but I'm just saying if we don't, it's not in our purview. I don't know why we would do it because we don't have the, The underlying data to do it. Yeah.

I was just going on the current practice of the form because it has a line for that.

But I don't know where the practice came from. That's sort of the point. Yeah, fair enough. So that's what we need to look up.

Come back the next time and tell us what the answer to that is.

And it does say for the Board of Trustees, which I think you could delegate that duty to, like, Yolanda. I don't know that a board member has to sign it. I think somebody that is authorized by the Board of Trustees to authorize it.

I think it still stands.

But we don't know.

Exactly.

Correct.

So I'm just saying we need to know. So what we need to do is to look to see if there's any existing ordinances that says it should be that way. In the absence of that, then we can move forward. But yeah, let's discuss this in our next meeting. Thank you so much.

I will go ahead and add the additional detail that Yami is requesting.

Fair enough. And then bring that back to us.

Yami, I have a quick question. So are you going to provide this and then that you mentioned you use an Excel spreadsheet right now. I'm familiar with that. Do you attach that as well?

I don't actually. I'm not involved in an HR perspective on this. This is a duty of the third party administrator. She copies me on the data and then she sends it to the individuals that are impacted. And if and when the individual comes and speaks to me about their reports is when I get involved, but I provide no financial advice as an HR director. That is not my role. but I could explain to them the difference between the different options, as is the verbiage that exists.

But you verify the comp, you know, because you've got payroll records. No, I don't. Oh, you don't do that either? No, I don't. Really?

And that's exactly why I said it's important that you show the employees... what their earnings were, rather than booking it as a lump sum. That's exactly why.

I'm a former auditor, so I used to do a lot of pension audits. So we would look at voluntary and involuntary termination, just make sure the actuaries, you know, comp goes to the actuaries, they do their part, and then there's comp records, and you attach that Excel spreadsheet, it goes in their employment file, and then we come along and verify everything.

The attaching goes on the file, but I don't, because I get copies. Attached to this, yeah. But that is exactly my point as to why the employees need to see how you're coming across with what their earnings were rather than booking it as a whole number.

Meaning they need to see.

They need to see it, of course, because if the data that the actuary is receiving is incorrect, then you would know, oh, I didn't earn that last year. I earned more, and you could question it rather than just looking at it as a whole number. That is exactly why.

You've got payroll records, so it's easily tick and tie.

So our finance department has been providing that information to Yolanda and started doing that on a quarterly basis as well. But again, it's the checking, you know, the human error component that could come across into this.

Okay.

Thank you.

Thank you. Mr. Rousseau, good to see you.

Good morning. Can you hear me okay? Mm-hmm. I'm Karen Russo with Salem Trust Company. We're the custodian for your plan. I typically come out once a year. If you need me to come more often, just let me know. I'll be glad to attend. What I'd like to do is just do a real quick recap of your account at Salem and then talk about a form that we've sent out that we'd like to get updated and an email that had gone out. So another form, right? I'M GOING TO TALK ABOUT So at Salem Trust, we do have four accounts that are set up on our system for your plan. And you've kind of heard this through Dave's report, but there's two separately managed portfolios, Integrity and Newton. And then we do have a receipt and disbursement account, which is where we pay your benefit payments from and your invoice payments to vendors, with the exception of the two manager payments are paid from their respective accounts. We also have another account which holds your mutual funds, and Dave went into detail with those, but there are four mutual funds that are within that particular account. So, of course, as I mentioned, we do process the benefit payments. That's recurring as well as lump sum. Currently, we process approximately 60 retiree monthly benefit payments each month. And we do have a rebalancing letter on file just for the receipt and disbursement account that if there is insufficient cash to, meaning we keep cash, there's money market fund. It's never sitting there uninvested. But if we need to raise cash to cover the benefit payments, we go to the rebalance letter, we review it, and we do what it lays out within that rebalancing letter. That way, we're not having to reach out and it helps with efficiency. Also, we might receive letters of direction for transfers between the accounts or just like what you approved today, we'll receive a letter of direction telling us what to do in order to do your rebalance that you approved. When we receive that letter of direction, we do compare it to an authorized signer form that we have on file. And we look for how many signatures are we required to have we compare the signature to what is on the form if anything doesn't match we push back on on the letter of direction. And currently we do have an authorized sign a form from July of 2021 and. We do need to get that updated. We'd like to have it updated every three years or of course you can amend that anytime. Just let me know and I'll send a blank form to Yoli and Doug. But she does have, Yoli has the form for you to sign today and I appreciate you getting that done so that we can get our records up to date and have a more recent signer form. So I'll stop there and see if you have any questions on What I just reviewed.

I have none anyone else.

Okay and then the the other item has to do with we sent out an email at the end of April to all of our clients just as a friendly reminder that anything that is sent to us that's a monetary type letter of direction it should be sent to us in a secure manner. which they are very your plan administrators are very good at that they do send the information in a secure manner but if we do receive something that is not secure we will reach out to make sure that the request we receive is is valid what we wanted to do is go ahead and get a form this is the form Just filled out as to updating who your service providers are, you know, your consultant, your actuary, your investment managers, all of that. Just update the form. And then at the bottom, what's important here is what I was referring to on the callback. If we do have to perform a callback because we don't receive something secure or when we do wires, if it's a first-time wire, we have to do a callback on the wire form. We want to know who you would like us to call back. And typically, it's the plan administrator. You don't have to say a specific name, just plan administrator. Then, of course, at the top of the form, they're listed with their phone number. And then that's who we would call. Some boards, they want the plan administrator and the consultant, if that's OK with the consultant as well. Some choose the trustees. If it's the trustees, then we would need, of course, the phone numbers and the names of who you would like us to call back. So it has some flexibility as to what you would prefer. So that's something I guess you do need to discuss and inform Yoli. on how to fill the form out and what you would like for the callback.

So, trustees, I think it makes sense, and I apologize for being late, but if the administrator has any preference and talk about what the majority, if that makes sense, of plans that are similarly situated do with regard to that form. Not that you have to listen to the suggestions of your administrator, but I think it informs the conversation.

As I mentioned, I have, it's kind of all over the board, but typically we call the plan administrator. That's who we typically call. And then sometimes they will add the consultant because it might be a letter of direction that actually is signed by an authorized signer but comes to us through another means. So it doesn't have to be who we received the letter of direction from. It's going to be whoever you select and that's on this form. I have had some plans that they'll say anybody that's on the authorized signer form and that's under other and then of course we would need the phone numbers for each of those individuals so but you know it just depends on what the board is comfortable with the main thing is we want to be able to get in touch with them in a timely manner so that we can act on the letter of direction that we receive that's the main thing

You know, our standard way of handling it is to have a letter of direction in front of us. And I did have one of the attorneys' email get hacked over in Tampa. And so there are malicious operators out there that are doing that. And I think maybe, and Adam may know, maybe even in Dade County, there was a call back that was done to somebody in the city somewhere and that person verified a transaction which was fraudulent, and I think the bank ended up eating it. Not your bank, it was another bank. Ended up eating it, but we're used to handling the callbacks, and we'll have the documentation along with your investment consultant. We'll have that documentation in front of us. Usually there's a challenge question that the custodian will challenge us to make sure that that we are, and then usually it's recorded, right?

No, we don't have recording, but again, this is only if we receive two scenarios. Only if we receive a monetary request that is received unsecure. And then the other scenario would be if we're doing a wire out, the first time wire, we always do a callback on the wire form.

So let's go to... Wires can't be called back. That's the problem. Right. ECHs can be called back a wire form. Right.

Okay.

So I just have a question. So before you do a payout to a participant, do you have a multi, um, what do they call it? Verification for that participant before the money's actually released tax email? How does that work?

We receive a secure email from the plan administrator with the distribution documents that we use in order to set up the person. Let's say it's a new retiree. So if it comes to a secure, then we move forward and we check the signers, make sure the signers are accurate, and we'll look at the form. make sure everything looks in order. We check if there's backup. We'll kind of look at that to look at the front. If they did it, you know, obviously they would fill out a W4P form if they forgot to select anything and they just sent the form in with it. We look at that and we try to stop things so that it doesn't go to the next step of processing before, you know, and then come back and it delays things. So we try to find those things at the beginning. If the address on the front form doesn't match the address on the backup, we question that. If the address doesn't match the voided check, we question that. There's a lot of, as Yoli can speak, we reach out. And we go through our processes. Of course, it's dual processing, you know, at Salem Trust before we take the next step of actually getting the person set up and then sending the funds via ACH. Hopefully I answered your question.

Do you have any where the checks end up going to the bad guy?

We don't. Typically the checks are only done for lump sums. The monthly benefit payments are always direct deposit or a debit card. And so it's the choice of the retiree which they prefer. And the lump sum distributions are also paid via ACH. Where it's a check, it's going to the rollover institution. So the number of checks are minimal compared to direct deposit.

Okay. So you need some direction on this.

Yes, so Yoli can fill out the form as to who you would like us to do a call back if we need to.

And the call back could go to Yoli?

Just the plan administrator. Yes.

Is everybody in agreement with that? Yes.

Okay, so then she'll fill out this form, and then, of course, the authorized signers will sign this form and then get it back to Salem Trust, and we'll have it on file. So that's everything that I had, and we've actually been your custodian for 24 years, and I've been on the account through that time frame, so it's been a pleasure. If like I said, you need me to come out another time other than just annual 25 years is magical. So yeah, there you go I've been working there 25 years, but in the industry for don't want to say 30 something 25 plus years. There you go.

But thank you very much and Somebody mentioned I think it was Doug mentioned how a city in the last couple years Not your bank, not your custodian, but there was a situation, and we may have talked about this at a prior board meeting, This tells you how sophisticated the hackers are getting. They put through a change of trustees. They made the administrator think that there was a new trustee. And then let the bank think there was a new trustee. And then lo and behold, the new trustee authorized a transfer of $100,000. And the bank complied with it, transferred out $100,000. So that's, I won't say where the real risk is, but that's where a risk is when you're dealing with large lump sum, and they only did 100, probably realizing if they did too much, then that might attract attention. So my suggestion, and this is looking at Dave and his colleague, is that if there are transfers when it comes to, not members, but when it's transfers relating to portfolio transfers from one manager to another, from bucket A to bucket B of the investment portfolio, I think it makes sense to CC Dave because that's yet another layer of protection because Dave would have known about and probably suggested that transition anyway. So that was just two cents on the subject of transfers that are wires involving money managers. Make sure that Dave's office is being CC'd.

Adam, I don't think you should take a seat because we're going to move to you real quick.

Is that my exit? No, no, not at all. I thought you had wound up before. No, thank you.

Right, so you can just confirm that, that you're happy to CC the consultant.

Yes, but it's also the Prime Minister because they're sending us a lot of directions, so then they would need to make sure that they CC it.

Thank you so much. Thank you. Levinson.

So once again, I apologize. My phone wasn't linking with the office calendar. And any attorneys in the room know that I'm in court on Wednesday. And if you don't show up on court, I could have been held in contempt. Actually, it's not good for the client if you're not there. So you can hold me in contempt if that's what you want. But real quick for the attorney's report, I'm very curious to find out. And as it turns out, when you look at the agenda, the attorney's report is right after the Salem Trust anyway. But I'm curious if the board made any decisions or if we sort of waited for me to get here on the question of a potential amendment relating to, and I'm horrible pronouncing names, Olsen? Did we make any decisions as a board? Yes. Okay, and what was the decision on the Eric Olson item?

The board voted to bring forward the third.

I think it was C. Yes, option C. So if the board voted, you're good, but are there any lingering, so I'm assuming the actuary was very efficient in answering any questions? Yes, so we're good and remember we're just advisory right we give options to the city, the city has to answer them, but I do have a logistical question which is assuming that you know that the city wants to put it on an agenda and wants to if the village wants to move it forward. Did we discuss having a representative from the actuary or representative from our office with the HR director at the village Council meeting as well understood, yes, fantastic, yes, absolutely. Excellent. So the only items I have for the attorney's report are two memos which are coming out of our office. I'm not sure if they've made it to Doug yet. I don't think they made it into your packet. And these are not things that require action. These aren't things that require action. These are just FYI items. So the first item is there is a U.S. Supreme Court case, and again, this is a memo from our office, dealing with a Florida city. And you may learn about this at either HR conferences or the League of Cities. and it's the city of Sanford, and the issue involves U.S. Supreme Court. Whenever an issue goes to the U.S. Supreme Court, it's because, for various reasons, there was a disagreement among the circuits, among the various federal appellate circuits or other states. There has to be important enough for it to reach the Supreme Court. So it's an issue involving age discrimination, and we pay attention to age discrimination because pensions take age into account. In fact, some of you may know that our office had, A U.S. Supreme Court case, we represented the state of Kentucky in an age discrimination case at the U.S. Supreme Court. So ask me about that one day if you want to talk about age discrimination. But the point is that they held, which is somewhat might say a little surprising, that a retiree cannot bring a case under the ADEA. is basically the result of the decision. If you're retired, you're not actively looking for a job, so you can't claim age discrimination. So that's more complicated than that, but that's the nuts and bolts. So it relates to potential disability claims. If someone's bringing a disability, seeking a disability, and if they've already retired, so again, this is not something we have to take action on today, but it's something which will work its way through the courts And I expect it will be discussed at upcoming conferences. The second separate memo deals with an issue that Mariner is all over. And if Mariner at future board meetings will probably go into more detail. But the Florida legislature from time to time, they make laws dealing with pensions and we always pay attention. So this is an update on what the Florida legislature decided to do this term. And the answer is relating to Israel and boycotts. The Florida legislature is taking a very, it's not just Florida, there are other states as well who want to make sure And it applies not just to pensions. It applies to the state of Florida. It applies to cities. And it's fairly broad that we cannot contract with entities that are boycotting Israel or otherwise limiting contracting with Israel. And the nuts and bolts of that is that in future contracts, whenever we enter into a manager contract or an actuary or a legal contract, we have to make sure we've got language we want to insert into those contracts. And the city also should give some thought to incorporating this language. But most importantly for our portfolio, and this is something Mariner keeps an eye on, we're going to have to make sure no different than scrutinized companies like Iran or Sudan, where we can't own companies that are on the scrutinized company list. We can't own, similarly now, companies that are boycotting Israel. So that's That's on this list of scrutinized companies. And over time, I think Mariner will add that as a compliance item into their compliance report. So with that said, that was the abbreviated attorney's report. Thank you for sticking around to allow me to make it at the last minute. But were there any other questions on the two items I mentioned, which do not require any board action today or in any other topics?

Yes. Sorry, I missed the last meeting. So I'm going off the February minutes. And Adam, you had mentioned as far as the RFP process, you know, you had handed out all these sample forms. And so where are we at with that? What's the plan of attack? When are we going to have that meeting and entertain?

So the answer is obviously not today, but it's entirely up to the board. And the board as an entity has to decide what it wants to do. If you board wants to vote today to send out 1, 2, 3, 4 or all for RFP you can but at least and I'm not sure what made it into the packet as I stand here but I want to say we made available for the trustees everyone should have received just samples of and those weren't customized for us those are just You know, basically the bullet point high level of what RFPs look like. And, you know, this is an example where it's entirely up to the trustees. You could decide to do them one at a time, choose the attorney, send out an RFPs for attorney. We do them all the time. Or you could decide to do them all. So it's a question of, you know, what does the board want to take on? And I think one of the questions you have or you may ask is, well, are we required to? And the answer is you're never required to do an RFP. But it's not a bad practice from time to time to see what the market will bear. And again, that's entirely up to you. So who are the – go ahead.

I was missing. I just wanted to know because I know that was a meeting that ran out of the hot, hotter than it should have. I wanted to know, are we talking about RFPs or are we talking about RFQs? And if so, either, why are we doing what? If I could just get a refresher on that. I wasn't at that meeting.

So that gets into the weeds of what is the goal. Is the goal to sort of get an idea of fees and how do the fees compare? Is the idea to go through the full deliberative process where the goal is to bring in three consultants and interview them. Bring in, and it could be five, it could be.

And my question, you know, since I do RFPs all day long, you know, RFQs, is it for qualifications or is it for price? What are we looking at?

So the board was not of a mixed mind on exactly, you know, it was starting a conversation. So that's why I defer to the board today and not future meetings. You know, what is the goal? What do you want to do? And whatever it is that you want to accomplish, you know, we want to be part of that process. And it's another opportunity for me to mention conferences. You know, by going to some of the FPPTA or the Division of Retirement, you get to meet basically who the usual players are, the usual suspects, the competitors of, and I'm looking at the actuary, the competitors of the of the administrator, the competitors of our custodial bank. So that's an informal way of seeing who's out there. But again, to answer your question, it's entirely up to the board if you want to do an RFP, if you want to do an RFQ, when you want to do it, if you want to do it all at the same time, it's entirely up to the board.

I mean, I'm ready to be a part of the conversation. I just wanted to know the reason why. I mean, I am someone who believes that things should be refreshed or at least examined over a period of time. That's just good governance. But I just wanted to be a little part, you know, to be engaged in the conversation. Where were we headed? What is it that we want?

Well, I do think it's a governance issue, you know, doing it from time to time. But we don't have a full board at this time because the council did not vote at its last meeting to replace people. So I think the issue ought to be put aside until the council has appointed all of the people who are members. Otherwise, we're going to start the process and, you know, they'll walk in blind to what we're doing. So I really think we need to put it off until the village itself has constituted this board.

I will point out, and I'm a little biased when it comes to obviously legal services, but just to give five seconds on the different groups that you potentially might do an RFP on, when it comes to banks, Salem Trust is by far the largest custodial bank that does governmental work in Florida. I will tell you they are not the most expensive because Fiduciary Trust has a higher basis point fee. But again, if you wanted to get the list and send it out and see RFQs, if you wanted to interview them, that's entirely up to you. For actuaries, GRS and Foster & Foster are the two largest actuaries. National, and I don't know if you have any international Canadian clients, but, you know, and you would know this from some of the conferences. GRS, which happens to be in Fort Lauderdale, they could tell you how many clients they have. But Foster & Foster and GRS are by far the two biggest. And then you have other national actuarial firms. For investment consultants, Mariner also can speak for themselves, but they are, in Florida, the largest consultant that does municipal governmental pensions. They're not the largest consulting company in the country, but in terms of the municipal space, I'm basically giving you the pattern, which is you are using for good or for bad, because there are always advantages and disadvantages. You're using the largest players in their space. On the administrative side, we are not using the largest administrator. FHATPA is sort of a smaller, I think they're nodding their head. And then part of that is you want an administrator potentially who's somewhat local. And that may explain why we're not using an Orlando-based administrator. But again, it's entirely up to you how you want to proceed. And I welcome questions.

Since I wasn't here, I just wanted to ask, so each of these entities were chosen through a formal bidding process?

So I don't know that offhand because I came aboard around 2015 is when my office took over the work from your former attorney who started the plan probably at its inception, that was Steve Seidman. So Steve retired, and then our office merged with his, if you will, and took on most, if not all, of his former clients.

Yeah, I see you nodding your head, Mr. West, but I just wanted to know if there was a formal bidding process, because that's what levels the field. I mean, personally, I... You know, there's a saying that if the wheel ain't broke, don't fix it. And I don't personally subscribe to that. I think you need to examine the wheel to see if it's broken. And so for that reason, I think going through that process may be a good exercise. I don't know if that's where the board was going at that meeting that was missing. But I think it's a good exercise. But at the same time, I also support that there are, there's gonna be a new look on this board and that probably we should wait until such time for them to.

Yeah, I think I'm the longest serving board member and We've never looked at it during my my period but I really think because we've got three open slots at this point On the board that the village is supposed to fill and let's let's get that done then then revisit it that way I just wouldn't want to start it right now. I agree. Yeah, I agree.

I agree with I've been about 12 years

I've been on since 2005. You're longer than I. I remember doing, Dave McLeod and I did reference checks for some of the money managers. I thought we did a bid for Dave's group. What was the predecessor before ANCO?

Oh, for the Bogner group?

Yeah, Bogner. Yeah, he definitely did an RFP.

Yeah, we did a bid.

But I think they were in place, and you, Bernie, the Bogner group was in place.

No, I think we did the bid for them. It was different. We fired a lot of people.

I think I started in 2000. Okay, thank you. Since I've been involved with the board, 2015, 2016, I do not believe we've done any RFPs.

So I'm agreeing with both of you. So we're waiting for a full board, and then we're going to float this out for RFP, just to get a different perspective. But I agree, it's not just about price. It's about what, you know, there's a huge universe out there, and nothing against these guys. They're doing a great job. It could be a better fit. And one thing that's missing that I took from Yami is training and education. I think that's key. So firms could come in and just we could delineate as a board between what we have now and just go through the process. Right.

And we may just find that probably this is a fit.

Yeah, possibly. Without doing it.

Correct. I don't agree. I think the ordinance says the manager is designee.

Yeah, so excellent question. And I'm going to pull up the ordinance so I can read it to everybody and hopefully my signal works. But long story short, before I pull it up, it's an excellent question. And it's the perfect legal answer that attorneys like to give is it depends. There's no right legal answer. It's a discretionary plan design. So the minutes can use that term plan design. So what I'm going to describe is that You know, different cities do it differently. The majority of cities, to your point, do not have a manager serving on the pension board. And this is advantages and disadvantages. The disadvantage is that the manager is a busy guy or gal and you really need the manager on the board. So that's why the majority of cities do not have the manager as a trustee. But with that said, there are some cities either because they like it that way or that they've always done it that way. And I think that's probably the case here. We have always done it that way where the manager's on the board. So to answer your question, I'm going to pull it up if the internet works. So the point is that we would have to amend the pension. And that's going to be the question for either this board or others. And I'm I'm mentioning to everybody that it would require a vote of three members who sit here, the elected officials, to amend the plan, to remove the manager. And one way to amend it would be to say the manager or the manager's designee, because right now it doesn't say or designee. So right now it's the manager. But we could potentially amend it to say desert manager or designee or just take the manager out completely and then figure out another way of filling the spot. So let me see if the.

Does the ordinance say he's ex officio? So by virtue of his being the manager? Correct.

It says ex officio. That's what it says. And I'm going to pull it up so I can read it to you. And I'm just doing anything that anyone else could do. You go to muni code, which is the host for our city code. I'm going to. It's a map of all the 50 states. I'm going as it slowly loads. Let's go to Florida. Going to Florida. It's still loading. Okay. I'm clicking on Florida. And now I'm going to click on Miami Shores Village. It's a list alphabetically, Miami Shores Village. And now I'm going on the left-hand side to Pensions, which is under Chapter 18, Personnel. I'm expanding it, general employee's pension, and I'm going to read you from the pension board, which is 18-39. So the minutes will reflect, we're reading from 18-39 of the city code, and it says as follows. The general administration of the plan and the responsibility for carrying out the provisions of the plan are hereby vested in the pension board, blah, blah, blah. The pension board shall be composed of seven members, the village manager ex officio, three citizens of the village who hold no office, and it goes on to the other total of seven. So to answer your question, village manager ex officio that whoever the village manager is, that's a part of being the village manager is you serve on the board. So we could remove that entirely or we could say, and it's not us, it would have to be the village council, We could say village manager or her designee or remove it entirely. And I think that's another example of something that we could put on for a future meeting unless we want to make the recommendation now. And another quick observation, if you wanted to do this ASAP, we could incorporate whatever you decide to do today in the draft ordinance that we looked at, but that potentially complicates the draft ordinance. But again, that's a question of timing and I defer to- Keep it separate.

A quick question for you, Adam. Is the composition spelled out in terms of the types of trustees? Do some have to be employees?

Yes. Three. Go ahead. So three citizens of the village who hold no office and are not employed by the village, one council member ex officio other than the council member serving on the police pension board, and two active employees appointed by the council. And that's another quick observation.

That's six, though. Who's the seventh?

Okay. The board members shall each serve a term of two years.

Or is ex officio considered the seventh?

Ex officio is seventh. Yeah.

Oh, okay.

So that's, okay. Village manager, three citizens, so that's four. Two employees. Two employees. That's six.

And a council member. And one council member. And a council member. Ah, okay. So that's your seventh. Okay.

And another quick observation. This is planned design where there's no right answer. Many cities, because the question is, how do you get those two employees? Many cities where there are unions, there's an election of the members.

The city of Miami, that's how they do it. It's basically a union election.

Here, it does not say an election of the membership. Two active employees appointed by the council. In fact, I could go into a lot of detail about one of my cities that's created an issue right now.

Yeah, they should be elected by their peers.

Right. Historically, we may have done that anyway as a practical matter, but it does not say election. It just says two employees appointed by the city, and there's no right answer. We follow whatever the ordinance says, but if we're talking about planned design, that's something you could look at if you want. But remember, at best, you make recommendations because it's the village council that has to implement that with ordinances.

How did you guys draw the short straw? How did you wind up on the board? What was the mechanism?

We applied for it.

Oh, you applied, okay. And that's another point. Some boards have a lot of trouble getting trustees. So if you're willing to do it, they'd love to have you.

There's always been quite a few employees that have applied.

Oh, okay. For years.

You have seen many, and I've asked my peers about this. How typically are you seeing with other plans, how are these employees getting on the board?

The majority, and it's always, you know, what does that mean? Because the majority means bigger cities. But it's most common in my experience, and we work with, there are 480 plus municipal pensions in Florida, and we work with a good chunk of them. approximately half but the majority in my experience is that for the employee representatives there's an election yeah and the majority of plans the manager is not a required to be on the board right good so trustees that will conclude the attorneys report thank you for a long meeting and humoring me today and I'm always available to answer questions after meetings and I will take my seat thank you very much

Okay, the administrative report.

Okay, so at the last meeting, Yami asked that we develop the form to obtain demographic information and any other type of information that we needed as an administrators so that we could have hard copy files on all the active members, electronic and hard copy. We worked together, we developed the form, Yami and her team OBTAINED ALL THE INFORMATION AND AS OF LAST WEEK WE RECEIVED, IF NOT ALL, MOST OF THE FORMS SO THAT WE CAN ACCOMPLISH THAT EFFORT. WE TOUCHED A LITTLE BIT ABOUT THE FORMS NOTIFYING THE BOARD ABOUT INDIVIDUALS THAT WE ISSUE REFUNDS OF CONTRIBUTIONS AS A RESULT OF RESIGNATION OR TERMINATION AND ALSO NEW RETIREES OR MEMBERS WHO ENTER THE DROP. WE'RE TRYING TO ESTABLISH PROCESSES THAT HAVE NOT BEEN IN PLACE, SO IT'S UP TO THE BOARD HOW MUCH INFORMATION YOU WANT TO SEE OR WHAT NOT. WOULD YOU LIKE US AS THE ADMINISTRATOR EVERY QUARTERLY MEETING, SUPPLY YOU WITH A LIST OF THE INDIVIDUALS THAT WE PROCESSED REFUND OF CONTRIBUTIONS AND THE DOLLAR AMOUNT THAT WAS DISTRIBUTED AND ALSO A LIST OF NEW RETIREES or new drop entries, and not give personal information, but general. This person retired on such and such a date, received the option of benefit that they requested. It's really up to the board. I'm working with YAMI to try to give you more information on what we do on both ends. So other than that, I don't have anything else to say.

I think it would be nice to see that information depersonalized, just because it gives us an idea of flow.

Okay, we can do that. So at the next meeting, I'll bring a full list, and then at each meeting, we'll add.

I'm in agreement, too. I don't see anybody going no, no, no, so I think you have consensus on that.

Okay. No personal information.

Right.

Correct. Depersonalized.

Depersonalized.

Right, right. Mr. X, Mrs. Jones, whatever.

Okay, I think that's it. Have we gotten to that point? One more.

For the actuaries. They're just dying for one more question.

I would have no objection, and it's fairly common. If you wanted information for activity, to have the names, you don't have to give, nor would I recommend giving addresses or other personal information, but at the very least the names. That way the trustees or city employees or others can see. Yes, yes.

You have a question? Yeah, just for the actuary. For the actuary, yeah.

So when do you guys start your year-end balance? What is it, September 30th? When do you guys start compiling the numbers? So this is an every other year value? Correct. So this board does the values every other year?

Correct.

from the authors of that.

Right. The reason I ask that, because I'm trying to, I mean, it was a good attempt moving the equity up to 70 percent. Should, I'm trying to bring down the underfunded portion, which is over 1.3 million. And I think we can do that if we stick to what you have here, which you have the investment returns 8 percent, and you're showing 7. And then the salary increases you have, we have 4.7. I came to 3.18 for the last 10 years, and you have 5 percent. So, that'll help us move the needle. and bringing that underfunded down a couple bucks, a lot more than a couple bucks. A lot of bucks.

Correct. Based on? Yeah.

Yeah, this goes back to 1979, which is, you know, I would use the last 10 years, but we can talk about that before you publish this.

BEFORE YOU FINISH THE VOW, YEAH. CORRECT. RIGHT.

provided by various investment firms to set the investment assumption. The future is not going to be an exact replication of the past. And the past is subjective when you're looking at historical returns. You can pick a date. If you pick one date, that's one average. You pick another date, that's a different average. And you can always pick an optimistic average return. All in all, you were correct that the higher the investment assumption, the lower the liability, because it's a present value of a benefit stream, the lower the liability will look on your balance sheet. But that's not, we don't set the assumption to get a certain liability number. We set the assumption based on your investment allocation using the forecasts of what each asset class is expected to earn over the mid-term to long-term horizon. And we provide those forecasts to your investment allocation. And that's how we come up with whether your summary

Correct, yeah. I think we could certainly take a look at- Well, Dina, I'm sorry. Yeah, I know this is high-level stuff. I'm just saying before you put pen to paper, we need to talk about this because that's not how I work with my actuaries. We look at the data, not prospectively. We don't know what going forward looks like. We look historically because right now you're at 7%. Dave's got us at 8%, and this is since 79%. So that would help us out significantly and the salary increase just to make it more. But we can talk about it. I'm just saying before you do the vow, we just need to discuss it based on your assumptions.

For me, information, and I may recommend some assumption changes. Right. If I do a full review of all the assumptions, I may recommend some adjustments to . It will be up to you to decide if you want to make any changes.

Well, when you say study, I'm confused. All I'm saying, I keep this real simple. When you put together your numbers, it's like when we do an audit, you're an audit. What I'm saying is that discuss it with us before you actually publish this, not spend another $10,000, $15,000 on a study. That's not necessary. It's just in your normal course of preparing this document, we need to talk about it before you give us a salary increase number, an inflation number, an investment return number. You know, we need to discuss it. So we're not with sticker shock and saying, well, oh my God, we're 1.5 million in the hole. You know, that's all I'm saying. It's just normal course of business. That's all. You don't need to do a study. You don't need to spend, wait. We want another study for 10, 15, 20.

Good morning, trustees. I'm Nicholas LaHaye. I work with Dina. So, I mean, we do experience these all the time. So what we do, because you are responsible for the assumption. We just help you decide which one. But you can't just say, let's switch this one to this because they have to be reasonable also. So what we usually do is we do an experience study. So we would look at the data, like the salary scale, for example. You might think it should be 3%. Maybe we don't agree with that. We have to look at the data and what we see out there to see, well, I don't know what we're doing now, but maybe we're going to say we recommend 4%, not 3%. You might think it's 3%, but it doesn't mean...

All I'm saying, I don't want you to go defensive on this. We need to discuss it. That's it.

We don't just discuss it. Usually we'll do a study to show you what we would recommend for the board to approve. Because if you just talk about it, we don't have the details behind it.

But it's part of your, that's what I'm trying to say, it's part of your work.

But currently, the assumptions are set. The board has selected the assumptions. So there's no need to look at them again unless we do a study that we would recommend new assumptions. That's what I'm saying. So you're saying, let's look at them. Well, they've already been approved. So there's no need to look at them unless the board wants us to look at them again to recommend new assumptions.

Well, if that's the case, bring a draft and we'll just discuss the draft. A draft of the report or the... Of the ballot, yeah. Yeah, we can... Okay, all right. So we're saying the same thing.

But again, this report you're looking at is at 10-1-2023, which does not include the great year on the assets in 2024. So you're looking at data that's outdated already because you're not doing a value every year.

It's historical, but it's based on... It's based on the assets...

It's based on the assets as of October 1, 2023.

Well, correct.

2024 was a great year on the assets. Right. But you're not doing a VAL every year. So if you did that, you would see the results are much better already.

Right, it's biannual.

Okay, so that's one thing. But the assumptions, the board approved the assumption, we just helped them, we helped the board picking the assumption.

What was the time frame of when the last assumption study or payroll growth study was done?

The last time we revised the investment return assumption...

I think it was maybe five years ago. It used to be 8% a long time ago. And that wasn't a formal study.

That was just, at that point, the assumption was out of bounds, what was reasonable, and we recommended lowering it to be within the bounds. We didn't do a full experience study looking at all the assumptions and doing a detailed analysis. We just said, we don't feel comfortable saying this. The assumption at the rate at which it is, and we recommend changing it down.

Because you can't just say, well, let's increase investment assumption up and salary down and then boom, everything's fixed. It doesn't really work that way. We like to do things where we look at what's reasonable and what the board wants to select. But we have reasons for what we suggest to the board. The salary scale, you might think it's 3.1%, but if we look at it and say, and how far back do you go for the 3.1%? One year, five year, ten year?

All I'm saying again, I'm reiterating, all I'm saying is based on the actuary's order, we base it on historical information. You haven't, what's the purpose of this page then? Why are we using this?

But how far do you go back? That's my question.

Exactly. We can discuss it though. We can have a dialogue. Because you got us at eight, this says eight percent. This is since 79. You're actually, you've got it lower, which actually makes the underfunding.

Even the eight percent, that's how many years you're looking at. back to 1979. Okay, but why is that the right amount? We also showed a five and 10 year averages also. So there's no real good amount, it's just we're showing you what happened. And maybe it is eight, but the board has selected 7% currently.

Right. And we could run hypotheticals. Say it's 7.5%. That still moves the needle and lowers our underfunding.

If you select to go that high.

Correct.

And it's up to you. It goes without saying. Right. And we might say 7.5% is reasonable, but it's on the high end of the range. But at the end of the day, it's to the board to decide. If it's really not to you personally, it's to the board as a group to decide. No, I'm not saying this is me personally.

I started the whole conversation as bringing that data to the board so we can have some dialogue.

That's all I'm saying. And we usually don't bring that data because it's already been approved. If you tell us we want to change the assumption, then we will study them and provide you with a report to say here's what we're seeing.

The assumptions are based on the data. We're in a circle here. I'm kind of lost in what you're saying.

But the board has already approved the assumption.

I'm lost. I am too. Literally, like you, I do this every day. I'm on the phone with three actuaries every day. So the assumptions have already been approved. It's all based on historical. We don't do prospectively data, and this could significantly move the underfunding down.

So we have an assumption section in the report you have, correct? Right, right. So if you don't do anything else, we're going to use the assumptions that are in the assumption section of the report.

Do you think that any of them are outside of the range of reason most, which we currently do not?

So I guess I don't know what...

So we're not going to be doing this additional analysis. We're not going to be compiling additional data and looking at forecasts and bringing... This information is not standard part of the actual evaluation process.

Listen, I'd like to make a motion. Can we bring up this discussion at the next meeting? Because today's been like drinking out of a fire hose. So how about we bring up this assumption, because they haven't done their vow yet, and they're about to. What did you say, in early October? We're just going to be starting. Starting. So we can get into this more, because this is late in the day. I'd love that. Can we get into the assumptions and how they're, you know, compiled and what's going to be presented in the report? Because it's huge. I think it's significant. It's material. That's my opinion. We'll have this big, beautiful conversation next week.

Yeah, just to sum it up, at the end of the day, you select the assumption, but usually we help with that to provide you information to say, here's what we are recommending. And usually boards will say, this looks good, let's go with that. Correct. But we do that when the board tells us, do an experience study. So it's a separate report. We would look at every assumption and we would say, we are recommending this for this assumption, this for this assumption. It's a separate report.

Respectfully. Respectfully, I think we said we're going to discuss it. I'm making a motion. Second?

Yes.

Okay.

We're going to discuss this at the next meeting. I hope. All in favor?

All right. Okay. Okay. I think it's back to you, Yolanda. Just for that one line in line D. Speaking point. Motion to adjourn.

Second.

Thanks everybody.

Thanks.

I saw the faces. Absolutely.

I sent you a text message. You never responded to me. You're welcome.

I didn't. Ouch. That's a cold one.

I welcome the best lines coming together in the forum that everybody's having.

So use that.