Auditor Selection Committee - Regular Meeting

Call to order. City of Norfolk Municipal, firefighters, pension trustees meeting for 03/21/2025. Present Chair, Terry McLeod.

Howard Burrows, Trustee.

Scott Duff, Trustee. David Hawes, Trustee.

Mark Ryan, Salem Trust.

David Ochis, Salem Trust.

Chris and Stoker, Foster and Foster.

Boarding Friggles, Mariner.

I haven't seen any public comments. Minutes for our December 18 meeting.

Howard Burst, I move to approve the minutes as presented.

All right. We have a motion. Do we have a second?

Chopped off, second.

We have a motion and second. All in favor?

Aye. Motion

carries unanimously. Moving on to the consent agenda.

On your tablets, the summary of payments is on page six of 111. That's just a quick one page summary of the invoices paid over the quarter. These have already been audited against the contracts paid reviewed and paid. So if you have any questions, let us know. But if not, we're just seeking ratification of those invoices that are on warrants one hundred eleven and one hundred twelve or I'm sorry, the twenty and twenty one.

Sorry, I'm looking at page numbers. And the only other component of the consent agenda is the fund activity report. You'll see a new benefit set up for a drop exit for John Wallagora who's exiting March 31. His new benefit setup has already been sent to Sail and Trust since the January, so he's ready for his first check. And I am working with him on his lump sums of drop and share monies very actively.

And then the thirteenth check distributions to the eligible retirees are shown on exhibit A. The only retiree who's not on exhibit A would be Jeff Cleary. He actually reached out to me a few days ago and said, hey, I think I was supposed to get one of these too. And I looked back and reviewed everything and talked to Doug Lozin, and he agreed that he should have been on the schedule. So Jeff Cleary has since received his distribution as well, though it is not reflected on the fund activity report. Are there any questions or concerns, anything about any of the fund activity? If not, we just need a motion approve

the fund activity as presented.

I would first second.

We have a motion and a second. All in favor? Aye. Aye. Right. Carries unanimously.

The next item is mostly just a formality. So we are the custodian of your pension files. We have all your member records. We have all your investment policies. We have all of the files. And so we would just like to be designated as the records management liaison officer for the pension fund just for purposes of compliance violence with the state. If we destroy any records, we do have to report that to the state on an annual basis. And I don't believe there is a current designee unless maybe Sarah or Matt knows if the city clerk is the current, but I was not able to find anything on record. Do you happen to know off top of your head if if the city clerk serves as the records liaison for all the city plans? I believe so we have Mike.

He's our records manager for the city. Okay. So because we have all the pension files. So maybe, Paul, you can kind of speak to this potentially. Since we have all the the members' pension files, should Foster and Foster be designated as the RMLO of the pension fund? And, of course, the city is still the the custodian of the city's public records. But any pension requests would be made

with Foster

and Foster, I would think.

I think that's very, very helpful. Yes. Okay.

Do you guys know historically? Has it been someone else stuff? Do you know? Never ever heard of heard this? Okay.

Would this change any of these pathways that we're currently using for how people turn in paperwork or paperwork Oh, no,

not at all. This would be like if there's a public records request or if we shred any records that are past the retention date, we need to report that to the Division of Library and Information Services. So it's really just a compliance thing. We do have to have one. So I think we need a motion to grant Foster. And Foster wouldn't be me personally, but our firm as the records management liaison officer, or RL NLO for the plan.

It's whatever the state statute is, Chrissy, for record retention and obstruction outright. It wouldn't be something different than what the city was doing per the state statute. Is that correct?

Well, they may be destroying city records and following the retention schedule for their records. But as far as pension files, we have them all. So we do also follow the retention schedule. And if we do destroy any records or want to request to shred any records that out of date, we will bring it to the board and say, hey, I have this many cubic feet of records, and this is what it is, and it's past the date, and can we shred it? And with the board's blessing, we would do that. So no, it wouldn't change anything. Just another report my office gets to file with the state.

If there's no other questions, Chair would entertain a motion to approve designated Foster Foster's recommended liaison officer as presented. Move the motion.

Howard Verse will make motion to designate Foster Foster as recommended liaison officer. Second.

We have a motion and a second. All in favor? Aye. Motion carries.

And I'll just face with the city clerk and just confirm that this is not something she's already been handling. But from what I can tell from looking through all the files, none of these annual updates to the Division of Library Services have been sent on behalf of the pension fund. So I'll touch base with her and find

out. Moving on to reports, Salem Trust.

So good morning. I'm Mark Ryan. I'm now the Managing Director at Salem Trust Company. Salem Trust is your custodian. So we're the entity that holds the investment assets, supports Christie in terms of lump sum distributions, payments of the monthly recurring benefit payments for retirees, invoice payments, and so on.

We're the entity that provides a lot of those reports that Christie will now retain as the records management liaison officer. So we're the entity that provides those reports. As an aside, somewhat parallel to what Chrissy is doing, but our practice is to keep those records on file for about ten years. And typically, that's longer than the requirements in terms of data destruction, records destruction that the estate has promulgated, so in terms of additional backup to her lead role,

by the

way. So about a year ago, we entered into a succession plan for yours truly, which recognizes that it was not my intention to work until I was 80 years old and die at my desk. So we since hired a couple of people to replace me in certain roles that I was performing. The new president of Salem Trust Company is a gentleman whose name is Luke McCabe. Luke has been in the business for more than thirty years in the custody side, the investment management side, wealth management side.

So he has a great depth of experience and most recently was CEO of a line of business of one of our major subservice providers. So he joined us May, right around there last year. So he's been on board for quite a while. The other person who we hired is Chris Taylor. Chris Taylor is now the manager is now the Tampa office manager. He is the person who makes sure that people show up on time. Right? He'll he's the person who handles the annual reviews. He's the person who ultimately is responsible for the service delivery of the type of experience that makes Sandwich Trust unique. So you'll see two different names.

If you go to the FPPTA conference, you'll see both of them there. My job as a managing director is to help make sure that this transition is smooth for all of our clients. Speaking of clients, I was also responsible for 45 relationships. Thank you. I've been your relationship manager since about 2016.

So as part of transition, the question was, who should handle those relationships that I was directly responsible for? Well, candidly, the decision was pretty easy. Debbie has worked with me through the years on your relationship and most of the other ones. In fact, she was actually handling a lot of the administrative and operational elements associated with your relationship with us before I was hired and became your relationship manager. So she's really steeped in operations, operations, knows how to handle it, administrative, and is firmly imbued with the importance of good service delivery.

The really cool thing about this whole thing is she was actually hired before I was. She was hired in 2003. I was hired in 2012. So she has even deeper experience in terms of this line of business and same with trust. So it's my pleasure to introduce your new and vastly improved relationship manager, Debbie Coches.

Hi there. Thank you. Thank you, Mark. I'll just a little bit more about myself. I did start with Salem in 2003, as Mark had indicated. I started as an entry level trust associate. I really knew nothing about this industry. And so what I've learned, I've learned on the job. I worked on the day to day operations, behind the scenes on client accounts including yours, since you've been a client of ours since 2006. Over the years, I've received several promotions, was promoted to a relationship manager in 2018.

And today, I'm standing here, sitting here, as a vice president and relationship manager and very happy to be your new face of Salem Trust. So my order of business today is to kind of bring you up to date. You may recall a couple of years ago, Mark had introduced to the board a new service enhancement that was designed specifically for retirees, an online pension portal. Allows the retirees to go online. They can take a look at their payment history.

They can pull down their tax document, all right there at their fingertips. What we know is that with the demographics of retirees, it's not for everybody. They range in age from the late 40s to the early 90s. So not everybody is adept at using electronic devices. So we felt when we started this project that a successful program would show have a activation rate of users equating to about 10% of those we introduce it to.

To date, we've rolled this out to about 84 plans, including yours. We have sent out and reached out to more than 6,200 retirees and we have about thirteen fifty active users of the program. Puts us at about a 22% activation rate. So, it's much more successful than we had hoped it to be. Now how it rolls back down to your plan is we've sent out 41 letters. We have nine active users, put you guys at about a 21.9%. So you're pretty much in pace with the rest of our clients, our average, with Salem, which is very good. We're very happy with that. But we'd like to bolster your number some. We'd like to see if we can get more people using it.

So what we are going to do this year is we're going to send out a letter to the retirees again. And hopefully, the letter will get into the hands of those who didn't see it the first time around and any new retirees that have retired since the letter was initially sent. And then hopefully, we can get more people signed up for It is also our recommendation that when new retirees are set up at the point of contact that Chrissy would have this as part of the retiree account set of paperwork. So they're introduced to it right as they're retiring. They can get started right away when they start getting that first check.

My only comment is that right now that U. S. Bank is, which is our service partner, this is their program. Are able, because we work with them, we're able to extend it to our clients. They are enhancing the registration process. They're making it more robust. And because of that, they have currently turned off the ability for new people to sign up. So if you're talking to any of the retirees and kind of pushing them, hey, you might want to use it, They're not going to be able to sign up yet. We're hoping that'll be completed in the next two to three weeks. And that we'll be able to start having people back enrolling.

And when that happens, we'll communicate that with Chrissy because it'll have different online instructions if anybody has it. A letter laying around from a couple of years ago. It will be new, improved information. And we'll get that over to Chrissy and then we'll be back in business. Is there any questions that you guys may have regarding the portal or about Salem Trust that we can answer?

Well, thank you very much.

Well, thank you very much.

Is the apprehension for people to use it like the technology data, you think? Is that what you typically run into? Like the people don't like computers have it.

They try

to get paper stuff in the mail still.

Yeah. The older retirees, we don't expect the 90 year old retiree to go online. Well, who knows? My mother's in her late 70s, she's very adept at going online. Depends on it's a personal preference and we know that not everybody's comfortable with using it. But yes, we feel that with the age of most of the retirees, it's just not for them. But what we do expect to see as the retirees get younger and younger as they've been kind of born into the technology age that they will want to do this because it's a hands on self-service type world, right? So they'll want more, hey, I want to see what this is. I don't want to wait for my $10.99 to be mailed to me. They can go online and get it before we even put them in the mail.

It'll be available online. So I see the usage of it becoming it's just going to grow. That's what we see.

We've only had one person who hasn't been able to figure it out. And it was only because the person couldn't distinguish the difference between a zero and an O. So he called us up. We walked him through it. He was able to get online and finish

registration. One person.

Is it still they can't actually register until they've received a check? Will that still be the case going

forward? That is correct.

Okay. And the instructions will provide that?

Yes, absolutely. So we'll get all that to you once that has been finished and we have those new instructions. So you'll have all that good information. Perfect. Thank you so much. You're welcome. Welcome. Thank you very much. Happy to be here.

Moving on to Merit. Perfect.

Thank you. Good morning, everybody. We'll turn to page three of your larger books here just to give you a little bit of economic backdrop. And it's funny. If we were meeting one month ago, we'd be meeting when the market was at an all time record high. And unfortunately, we were meeting at the March, which we've hit a correction. But we bounced back. We're only down 7% from all time record highs as opposed to the 10% we were down a little while ago. But on page three, see at least what we were experiencing at the end of last quarter, a very mixed picture, right, overall leading into the election and kind of an odd end to the year, right, where you had U. S.

Equities up slightly. And then obviously, the election happened and obviously concerns about tariffs and immigration and things like that. So a lot of pressure on international stocks. International stocks were down 7% to end the year, plus dollar gains also put a lot of pressure on international. But also fixed income down below in those red bars, right?

Even though the Federal Reserve started cutting rates finally in September, right? We've been talking about this for the last time. Even though those rates came down, the rest of the yield curve went up. So what happens when yields go up, prices go down, and you end up getting a reduction in your performance in bonds overall. So yields went on a ten year from about three high, three, three point six, almost to 4.6. They went up a percent while the Federal Reserve cut rates by a percent overall. But again, as I mentioned, a month ago we were leading into record highs. What's led a lot of that? Things we've talked about before, right? Everyone's excited about AI.

AI is going to do all our work for us. Everyone's on weight loss drugs and they're going to live forever. Everyone's taking ZYN tablets. I mean, Philip Moore, never thought I'd say tobacco stock is at an all time record high, but I guess tobacco is making a comeback, right? Everyone's living a great life, I guess, overall because Philip Morris hit recent highs recently. So all these things and of course corporate earnings were also very good. We've experienced double digit corporate earnings over this time, which has also helped The U. S. Stock market lead to where we were. But obviously, we've hit some friction here.

And you've heard me go on now for many quarters about looking behind the curtain. And sometimes things aren't as good as they seem. We've been talking about, if you like, for quarters about how there's significant labor market weakness that is not being realized and appreciated by the markets overall. I think there's been a lot of kicking the can down the road, companies that have job openings that aren't filling them overall because they don't want to incur that extra cost. Not a day goes by now where you're not seeing layoffs announced, I feel like, from some big national company overall.

So we've talked about the labor markets being weird. We've also talked about consumer stress overall the past couple of quarters and how I'm surprised, and I've been surprised that I have not seen that consumer stress show up in a lot of these economic numbers. We continue to see strength. More recent reports now show that it's been what we've talked about. It's really been the higher end consumers spending so much that they've been kind of mirroring over or kind of glossing over the fact that the rest of the consumer base is struggling.

There was a report that said the top 10% of income earners now make up 50% of the spending over the past couple of months. To put that in perspective, the top 10% usually make up only about 35, 36%. So they've increased their spending as the wealth effect has gone up, as stock markets have gone up. Everyone else obviously has been struggling with inflation and things of that nature. So we've seen all that play out.

So really what I think is happening more recently with the market going back is not that anything new has particularly happened. Yes, there's a lot of uncertainty with tariffs and things like that. But it's really that the market's finally seeing itself in a mirror, and we're seeing, oh, wait, these things have really been there all along. The tariffs were kind of just the catalyst to actually acknowledge that in the market. And sometimes it happens that way, right?

Things kind of build up in the background, and it just takes that one thing, right, the straw to break the camel's back, where it's like, Okay, we're going to take all of this bad news that we've been sitting on for a long time and kind of realize it in the market price. My opinion as to what's going on overall and I kind of think about this I don't if anybody has watched any TV recently, but if you have, particularly March Madness, the new State Farm commercial, you've seen it with the Batman, Baitman Our kind of economy's kind of been more like Baitman and not Batman for a while now overall, even though we think it's been like Batman, but it's really been like Baitman. I don't know why I thought of that. As I was watching those commercials the other day, because I really enjoy that. What's the actor's name from Horrible Boss?

Justin Bateman?

Yes. It's his name. Yeah. I forget his first name. Funny commercials there. But I brought this up because we are now at the March, right? So a lot of this is old information. So I bring this up because we experience pullbacks pretty commonly. I know it's hard to remember that because we've been in such a big, long bull market. It's been a while since we've had a pullback. But when you look historically, and I don't know what this is going to end up being, I don't know if there's more downside left in this overall or maybe that's it. And we start recovering from here and kind of set a base. But when you look back in history, the market is always undefeated. Right? It's always come back from every single pullback we've ever had.

And looking in the rearview mirror, whatever this ends up being will most likely just be a blip on a long term chart. Right? This page here behind it shows it's one of my favorite charts that we produce every year. So this shows annual returns of the S and P 500 by calendar year. And this is along the lines of, right, not not being dissuade or or getting into kind of negative reactions in the market or or, trying to derisk when things look bad.

Right? Because if you look here at this distribution, the chart with the biggest years is greater than 20%. Actually, 38% of the time, the market's not only positive, but it's positive over 20 of the time or 20% returns over the year. About 73% of years, the market's just positive in absolute terms. It's really only negative 26% of the time overall.

So I I bring this up because I want to remind everybody that sometimes we have this reaction when things get bad to de risk. Let's go away from equities. Let's de risk from that. But don't put yourself in a position where you're protecting yourself from something that only happens a third of the time or 28% of the time, and you're going to leave yourself in a position where you can't participate in something that happens 76% of the time, which is very attractive positive performance overall. The last chart here is kind of a table of all of the pullbacks we've had over the past thirty five years that have been greater than 5%.

So we just experienced a 10% pullback, right, just between February 19 and last So that's on the bottom there, already started. Or do we have we haven't included that one yet. Anyway, so there's 55 occurrences in the past thirty five years. So one to two a year, essentially 5% pullbacks on average that you get. On average, they end up being about eleven point six eight percent, and you end up recovering in about ninety days.

So this kind of feeds into the other charts we saw. The pain that we experience is not only common, but it ends up being short lived. And we see that not only on this page, but also on this page, right? They end up being short blips over the long term. So I bring that up just to kind of if I can't calm anybody over what's happening in the markets, it's keep this in mind in the background, even though I know it's hard when things are when you see red every day in the markets and the financial press and the news don't help out because obviously they like to exacerbate some of the negative news that's out there in the market overall.

But any questions on kind of performance here? I would say the only other thing so this is as of December. Now since December to January, you essentially take this and flip it, right? US equities are down. International's up double digits overall.

Surprise, surprise, when you start cutting the international markets off, they have to start spending money on their own protection, on their own other things. So actually, European stocks are getting a big boost because now European governments are having to spend money on their economies and on defense spending and all those things, and the market's taking that into consideration, up 10% international overall. Fixed income, also up about 3% year to date because yields have come down as there's been inflationary pressures, as the slowdown in the economy starts to get baked into the numbers, you'd have seen a pullback in rates that's been positive for fixed income. So as of the end of the year when it was US equity up, everything else down, now it's US equity down, everything else has been up over the past three months. Interesting dynamic playing out there.

And value definitely overgrowth now. So we've now shifted back toward value defensive over the growth names. I know that was a lot there, but any questions on kind of the background of the current economic situation? So with that, we'll go to page 12 of that report. So you did go down.

Obviously, we saw it was mixed results across asset classes. You were down about $600,000 over this first quarter of your fiscal year from September to December from $69,300,000 to $68,700,000 Some of that's just slight negative market performance, but also you have net cash outflow. So that put down was a big contributor to the outflows in balances overall. As of yesterday, you're actually sitting at about $68,350,000 so just a little bit even below where you were in December, which actually isn't that bad given everything that's going on in the market. Could only be a couple $100,000 even below where you in December before we experienced even all of that pullback in the market overall.

I'm going to skip page 14 for now because we're going to go back to asset allocation when we go to the flash report. But I do just want to show you on page 20 what your performance was at least through the end of the year. You do see, yes, negative 0.55% down for the quarter, but that's better than your fund policy. That's better than your peer groups. That still puts you in the top third overall.

So that's fun to be negative. You were much less negative than most other peers out there and better than your benchmark overall. Still one year also looking very, very good in the top fortieth percentile ahead of your benchmark overall. So very happy with the way really the portfolio performed leading into the end of the year despite the negative print. Short term bonds, particularly remember, have short term bonds now.

So as rates fell a lot in the fourth quarter, we were protected a little bit by short term bonds. So you see your domestic fixed income actually ranked very, very well against peers because of some of that short term exposure we have there. But twelvethirty one's old news already, so let's go back to the thinner handout you have, which is February. So on page two of this report, we have our current asset allocation. So you will see that you are slightly above your threshold for domestic equity.

It was 42.4 percent, and this was as of February 28. But as I mentioned, things change fast. So we did have the pullback in March. So as of yesterday, you were at 41.1% U. S. Equity. So still slightly over your threshold, but only marginally by about 1% or so. Everything else looks really good. At this point, I'm not recommending a rebalance. I'm kind of comfortable leaving that hanging right above the upper bound of your domestic equity threshold, partly because some of a lot of this.

Right? Hopefully, we do get some of that recovery. I don't want you to sell out now and not be able to participate in the recovery If one were to occur, I'd rather us be able to participate in that a little bit, get a little bit more overweight, then rebalance. But also, we've seen such a significant decrease in rates that I actually think that rates are too low. I actually think they were too low even before, but four point two percent is really too low on a ten year.

So I think that you might actually see some reversion in rates bouncing up, which is going to be negative for fixed income overall. So I'd hate to see you take it out of equity to put it in fixed income then have rates go up. You lose on fixed income and then equity kind of recovers overall. It's so marginal at this point, and there's so much uncertainty that I'm comfortable just letting it go for another quarter and seeing what happens and not taking chips off the table in the equity market right now. We've seen some recovery overall.

Maybe there's legs to that. Maybe it just plateaus out from here. But I'm comfortable with the asset allocation as it is right now. I don't think it's extreme enough to do rebalance at this point. But happy to take any comments or considerations if the board feels differently.

Everybody Okay letting

it They're Okay. We're doing good

on GAML. Sounds good. And we do we are running a little bit low on cash. So if we do need to raise cash, I'll take it from domestic equity, but we'll wait until that happens. I think we can still even get through the next quarter without needing to raise cash as well.

How much cash is in there, like dollars?

$185,000

We might need to raise

cash. Okay.

Well, the war is going to be quite a bit,

Yeah, because he's got a share in his well, yeah. And he'll have more coming in the future because I still don't have his, of course, his March 31 draft schedule. So it's going to be his December 31 balance for now and then his shares. So those two things together will be pretty substantial. I'll let you know.

Okay. On page five, we'll see performance. So, so far, fiscal year to date. So now instead of three months, we have five months of history. Fiscal year to date, you're up 1.74%. Your policy benchmark is 1.34%. So you've had a good last three months. You've had a good fiscal year overall. So yes, five months into the fiscal year, we're positive. We're ahead of our policy benchmark.

We still got some work to do to get our expected rate of return, but the entire market does overall, but still sitting very, very well. I think the past couple of weeks have been very positive for your portfolio, not only given the fixed income exposure, but some of your value exposure as well. Vanguard equity income, we see on the next page, has done incredibly well, outperforming in the value space within domestic equity. So we've seen a lot of good performance from them. MFS, unfortunately, has continued to lag.

And interestingly, one of the things that have hurt them, even though they're still keeping up with peers, keep lagging against their benchmark, they've been a holdout against Tesla forever. They never had it in their portfolio. They've always said they don't believe in the valuation. It's overpriced. Well, they caved, and they bought Tesla.

And they bought Tesla right at the record high and then saw it fall. Tesla's been dinged pretty hard the past few months. So I'm disappointed that they did not stick to their conviction there and added Tesla to the portfolio. So I'm keeping an eye on them, and it's something that we might need to address what our large cap growth manager is in the future if they can't work that out overall. But I'm fine if managers take positions like that, but I don't like it when they flip their conviction after holding a conviction for so long.

You know, bad timing. I'm sure they probably bought in thinking that Tesla, with the relationship with the market, will have a lot of support. But we've seen the opposite of that happen in the stock price overall. So MFS is something we might be talking about a little bit more specifically. Unfortunately, just like all active managers there are challenged in that segment overall. But a conversation we'll have in the future, but I'm keeping a very close eye on MFS. All your fixed income doing well, Europe Pacific Growth bouncing international index doing well. Even BlackRock multi asset, right? This is their they love this environment, right? Value, income oriented manager, this is great for them.

They love outperforming their respective benchmark as well short term. So other than MFS, which I'm keeping a little bit of a closer eye on, very happy with the way everything's performing. You're ahead of your benchmark and positive so far for the fiscal year.

MFS, is that the one that we've been kind of watching for quite a few quarters now? Been underperforming for a long while.

Yeah. It's been always underperforming its benchmark, but it's been able to perform pretty well against its peers, which is what's allowed us to keep it in the lineup overall and really continue to support MFS because no active managers are really outperforming the benchmark. Now the benchmark ranks in the top eight percentile, which means there's only 7% of managers in large growth that are actually even beating the large cap growth benchmark. And those managers are not managers you wanna be in, unfortunately. In an institutional basis, right, those managers tend to be small managers that are taking very heavy concentrated bets, particularly on the magnificent seven, if look at who those managers are.

They're not managers that are used in institutional formats, right? But all of our active managers and all active managers that are viable to be used in this kind of a structure have all struggled because they can't hold enough NVIDIA or Amazon or Microsoft that the benchmark has because they have certain restraints. Right? There's SEC restrictions. If they want to be called the diversified mutual fund, there's certain diversification requirements they need to meet.

And they also have certain mandates, within their own philosophy and process that limit how big they let any single stock become of their portfolio. So naturally, when you've had all this concentration in the indexes with these magnificent seven funds, the index now is in and of itself undiversified, so these managers can't keep up. We're hoping that, and what we've seen over the past few weeks is, right, the magnificent seven's actually retreated more than the broader market. So ideally, you're going to get concentration starting to reduce, these names coming down. It should play very well for a lot of these active managers.

So far, term, MFS is still in line. They're down about 6.6% through yesterday, which is in line with the large cap growth index and its peers. But yes, it is frustrating that they've had situations where you continue to see a manager that's underperforming the benchmark is always frustrating

to see. It's good to understand why they're underperforming

that benchmark.

It makes sense to not just say it that way.

Then the other argument is or the other kind of conceptually, right? As I look at how you build domestic equity exposure overall. There's active, there's passive. We have a split right now. You're 50% passive with the total stock market index, and your other 50% is split value growth. Value has a lot higher probability from an active management standpoint historically, but also over the past couple of years, about performing the benchmark. And we see that, right? Vanguard equity income is consistently adding alpha, right? Excess return over the large cap value benchmark. You have active growth, which has been lagging.

All active growth has been lagging over the past couple of years. So you kind of have them going. So if you were to overhaul that, you can try to find another active manager, which is also going to underperform the benchmark overall. So that's not really going to help you. Or you could forget about value growth altogether, just consolidate and have passive domestic equity exposure or just active exposure within the core and forget about value growth overall.

That's kind of a structure that's been some people like to see. I personally, if I was starting from scratch, really like the core approach because I think value growth overall doesn't mean anything anymore, at least in the classical way that they split value growth. So something, if we were to take action on MFS, would be that discussion. Do we want to just collapse everything down, forget about dedicated value growth, just have active market, not style specific? Or do we want to try to still do something in the active growth side because we don't want to lose out on our active value manager overall?

At the end of the day, they probably offset each other. Overall, it's more personal preference. But it is another way that we could look at constructing our domestic equities overall. No, it's a tangent. I'll get it. Any other questions on

was at Performance February 28?

That's as of February 28,

yes.

And it's at a little over $70,000,000 And you said today, it's about $68,000,068,350,000

So you did bounce back, right?

And then now we bounced back.

And then you went back to where you were with the market pullback. More discussions to come in the large cap space, but anything else? Those are my comments.

Of course.

Moving on to Paul. Good

morning. Thank you for allowing me to attend by Zoom. I have a few things actually to discuss and report on. I see the first item on the list is update on the proposed ordinance. I believe hasn't that already passed the second reading? I don't have it on my list as a to do item on my list. So I believe

I just wasn't sure if you had received an executed copy. Farrell did confirm it passed, and I wasn't sure if if you had it or not. I will reach out to the city and, get one. And I've already amended the drop application to reflect the ninety six, month participation. So as long as we know it it was adopted, we're we're all set on that one.

That's awesome. Thank you so much for that. That's excellent. I've got a few other things to report on. Let me get to the item that's next on the listed on I asked that it just be put on the agenda so we remember it. You all received a letter from a lawyer representing mister Krajic and miss Kehoe, and I'd like to report to you on that. There's no need for the board to take any action. I would like to send a letter responding to them, and I can tell you what that letter is said. It's short, and I've already drafted it. Let me tell you what the key points are.

Basically, this letter simply reiterates the arguments that the board has already heard. This is not a claim for benefits as contemplated at all by the plan. So for example, if someone were to make a claim for disability benefits, is a very, good example, and they have to go through a quasi judicial process for approval of that. This is not that kind of of claim. So, there's no action required by the board.

What this could be is it could be a precursor to their effort to file a lawsuit. All the lawsuit would be is what's called a petition for declaratory judgment. In Florida, anybody who has a disagreement over the interpretation of a contract, an ordinance, or a statute, or even a constitutional provision can under the can go to circuit court to ask the court to resolve the actual dispute, who's right about their interpretation. So, you know, they've got an avenue for someone else to decide the matter if they want, but it's doomed, I believe. It's doomed for one reason alone.

And it did well, two reasons. One is they're not right. But number two, that the statute of limitations bars claims. All legal claims in the Florida legal system and in the and in the federal legal system, but this is a Florida matter, all legal claims have a statute of limitations. And these exist so that claims are not festering or being relitigated or re brought up year after year.

And it's a I was gonna maybe share the screen, but that may be overkill. The Florida statute of limitations is in a is in a particular statute. For what it's worth, it's 95 dot $1.01. And there all of the statute of limitations except one are five years or less. So the most that a person could could sue on is a claim within over a problem that they're alleging, an injury that occurred within the last five years.

They proceed downward to four years, four years, then three years, two years, and one year based on various different types of claims. This claim could possibly fall under the five year statute of limitations, and as you know, these matters were decided and they should have brought their claim within five years of when this the share plan allocations were made and were beginning to be paid. The statute of limitations is long since past. There's only one statute of limitation that's longer than five years, and that's a twenty year statute of limitation, but that's only for renewal of a judgment from a court. So if a court issues a judgment, it's you can you can sue on it for up to twenty years.

So that doesn't, you know I mean, that makes sense. Right? A court judgment, you're allowed to collect on it for a period of twenty years. But there's no claim allowed beyond five years. Beyond that, there is a doctrine in the law called latches, which is delay.

So that in places, in the American and British legal systems where there may not be a statute of limitations, the doctrine of latches achieves the same thing. And it says that people can't wait to bring their claims. They must be brought in a timely fashion. So I, absent other direction from the board, I intend to reply, politely and briefly with those points and invite the lawyer if he has any questions to to please feel free to contact me. So that's the report for that. I don't consider any board action necessary, but it's question. Turn next

I'll I'll sent there, addressed to the Board of Trustees. So the paper copy that I have, do you need that? Or do is there anything I need do specifically with that paper copy? I've got it. I've got everything. Okay. Thank you for that.

Sir. Correct. That's the r

And of course, I'll of course, I will copy the board members on the letter. I mean, I'll make sure I send send it out, you know, that you see it too. It's it's very short. I can tell you what it says. Is that helpful? Sure. I'm just going to say simply, I'm right. Dear Mr. Pure, I'm writing in response to your letter dated 03/12/2025 to the Board of Trustees of the North Port Firefighters Pension Local Option Trust Fund. The Board has not changed its position regarding Mr. Kragic and Ms. Kehoe's request for reinterpretation of pension ordinance. That request does not constitute a claim under the pension ordinance, requiring a hearing before the board. It should be noted that the request is barred by the statute of limitations and the doctrine of Latchez. If you have any questions, please do not hesitate to contact me.

So with that, I'm ready unless the Board has questions or comments, I'm ready to move to my next report.

Okay. All

right, hearing none. So the next report is many of you may have heard about this, but I just wanted to make sure I mentioned this to all the boards I represent. At the January, shortly before, leaving office, President Biden signed into law, a law passed by the Senate and the House of Representatives fixing provision in the Social Security laws that offset or reduced benefits from Social Security received by government employees, including firefighters and police officers, who also received government pensions. So I know that that was kind of in the news and but some folks I've mentioned this to was were not really aware of that. This might possibly, I don't know, possibly affect some of your existing retirees.

So I just wanted to mention, they shouldn't have to do anything. And they're actually my understanding is with the passage of that law that those who saw deductions, if they saw deductions that they may get retro payment on their Social Security checks going maybe back to backdated to January 2024. So I don't normally just report on pending legislation because that all may change. It may never get passed. I used to really work myself up with reports about here's what's happening in the house and the senate and federal and state government.

And and at this point, I've realized that it just gets everybody all worked up and upset unless it's an issue we need to act on, like, politically or talk with our representatives about. So this is the kind of report I like to give where it's where it's been enacted, it's put in place, and it's it's really gonna be helpful for a lot of people in the country. So mentioning that. Any questions about that before I move to my last little, item on my list? Okay.

The last item I have, I just want to make sure that with Kyle Dawson, you know, we have that question. I still have that sort of as pending on on my list of things, And, I just wanted to kind of touch base to see if we've heard anything or, any anything on that. I did not have any to do items on my list, but I have it here, and I wanted to just see if there was anything I needed to help with on that.

As far as I understood, last communication was just between you and Kyle, and I am not sure where that left off.

Okay. Then I will follow-up with Mr. Dawson. How

about that? Yeah. Was he supposed to provide you any information? Because I can touch base with him.

Well, actually, it would be most convenient if he could provide the the information that we had discussed, is which is his his, employment information, just as helping establish that, you know, where he was working. Because what he did was this, they called him remember, they called him a volunteer, but he he really wasn't a volunteer in in the in the sense that's contemplated in the plan or in chapter one seventy five. He was actually a firefighter working full time, paying pension contributions to that one seventy five plan is my understanding. And then, I believe it was South Manatee. And then, when a position came open in Northport, he transitioned into the position there.

So he is entitled under the operation of our plan, the language of our plan and chapter one seventy five to receive you know, to be able to get that credit for that South Manatee time. And it's it it's he wasn't actually, in fact, a volunteer, though that's what they had on the title back then. He was in every he meets in every respect the requirements for the for the plan as far as I can tell. So he just needs to get that information and get it to the actuary, and really, Chrissy, probably the administrator, and just kinda get that rolling. And I I'd be happy to help in any respect in this regard.

Okay. I'll, I'll contact him after the meeting to touch base with him about that. So if he turns to that paperwork, is there still anything that the board would have to do? Would this have to go to the next meeting? Is this a it's the decision is pretty much good as long as he has that paperwork? Or is this something the board has

The decision is fine. I as long as the actuary and the administrator are are fine on their end, I am. We don't I don't consider this necessarily a board motion. It could be. I don't see that as I see it as an administrative matter as anybody would come in and buy back time or, you know, get, you know, their service credits calculated. So, I don't see the need, but I don't want to misspeak if the actuary or the administrator feel that that would be helpful. We can certainly do that, you know, get a board board action on it.

Well, he would have to show proof that he was a full time firefighter is what you're saying to the actuary to meet requirements to get buyback that time. That's what I think we asked

That's correct. That that that's correct. Right. That's correct. And and one way of doing it also is to show that his time he worked twenty four forty eight. He was on a regular deal. It's just that he was like a it was really like a probationary employee category. Okay? But he was working full time, and he was having the pension contribution deducted for that local pension. Therefore, he was a under that pension, a full time firefighter for those time periods.

You see what I'm saying?

Yeah. I do. And I just my my one other question was, I think when we did the stop start that there was and maybe you could see in the ordinance when we did that, that there was no more you couldn't buy any back or you could buy back any more time. And the start stop was 2015, maybe. But I remember that. And I wouldn't say 100%, but I remember that being part of the stop start. I know he put this claim in maybe 2010 or 'eleven, which I know you talked to Dave Carroll.

So I

can say, if he meets requirements, great. I guess back then, it should have happened. But he just I don't think he ever proved back then or showed documentation that he was full time. So I just don't want to trump anything that's written in the ordinance is what I would say.

Right. And then he's got the same situation as as others. I mean, it's been that long, and he has he'd have a statute of limitations problem should the board decide not to not to allow it. I mean, it's just you just can't wait forever on these things. Right. And that's why you have a statute of limitations. Yeah. You know, so, I mean, we're literally almost done to another generation of firefighters already.

Yeah. You know? Well, if you wouldn't mind just looking into that ordinance if

you just to make sure we're not going outside our ordinance.

I will. I will. And to remind you, the discussion with that he had with the Board back then, and I spoke with Dave Carroll about this, was that they were looking into the the facts behind his actual service in South Manatee. Mhmm. So it and, like, it's kinda like it never nothing ever happened with it. It wasn't as if it was actually denied is what I can find. I can't find any actual, you know, denial or anything. It was just

no one did anything about it.

Right. I just So Yeah. It's very vague to me because it's so long ago, But there was discussion. I just don't remember what happened or it just got dropped.

And forget me if I'm wrong. Wouldn't he have to buy back the time?

He would. As you said, it would be, what, an actuarial study of how much it would cost. Back then, it was a determination whether it was full time or not. That's all I can vaguely remember. And I don't remember what he showed or what he didn't show or what he again.

I remember. I have those documents here, and they were just it it was, like, not I I explained it was not enough. It just was too general. The little letter he had from from South Manatee. Right. And so when I talked to him, and I appreciate the chairman's gonna talk to him for us. That's very, very helpful. And you can have him call me or email me directly too. I'm fine. I'm happy to help, okay, on this.

But I I explained to him what he needed to to establish. And one of one of the thoughts here is that since it requires an actuary true up, I don't think there should be I think, and the actuary can tell us, I don't think there's any impact to the plan or to the employer contribution or anything if he buys it back. You know what I mean? It's like a zero

Right. It would be for Finny. Yep. I think our You know, so

Doug talked about that and said that it would be, like, based on his current salary for whatever that buyback would be, it wouldn't be from that time frame. Yeah.

Yeah. I remember. And I just wondered if we're following

I think that kind of dissuaded Dawson from doing it, though. Like, he was kind of like, oh, man, didn't realize it was gonna be a big cost to do that. Right? Even at point seven something years or whatever it turned out to be. Right. I don't even think it was a full year of service. No. Don't

think so. But, Scott, thank you for that reminder. I will circle around and double check that question of whether the stop start prevented his subsequent buyback at this time.

Paul, think maybe sorry, this is Chrissy. I think it did. And I don't have the language in front of me, but just my cheat sheet of plan provisions. In the buyback section, I have a note that members must have completed their purchase by 07/01/2016. So I think you're right about the stop start.

Mean, if that's

the I haven't found it in ordinance. It's just on my cheat sheet. I'm not saying that's Bible, but just I have that too. So I also will will take a peek.

Would you Chris, that's wonderful. Could you send me a copy of what you find?

Absolutely.

You know, the thing that really I have a hard time with is that this is a zero. It doesn't cost anybody up but him anything.

Yeah. It's true.

I mean, if it wasn't in the ordinance at that that stop start, you know, cause that provision, then I don't think it'd be as big of an issue. But if the ordinance says explicitly those dates or whatever, I think we'd be inclined to

have Yeah, if it says that. I just don't recall that. But we'll triple check that.

I say that he tried to do it in 2010 or 'eleven when he first got hired. And does that trump that is what I would say, if he's eligible and meets all the requirements of 2448s and all of that. Back then, I don't think he proved that or showed that. Or if just didn't follow through. I I just don't remember all that. That's what I was just saying.

Yeah. He did he didn't now this is not our problem, but he didn't follow through. There was some time that he had bought back, and then this one was the one that needed additional proof. And and his view was he had thought that Dave was going to get that information, and Dave says that's not my job to go find that at South Manatee. You need to go get that stuff. Right. You know? I mean, I'll help. Dave was saying I'll help, but it's like, you know, you need to approve and establish that you had you know, you meet the requirements. Mhmm. That it was full time and that you were contributing to pension fund. And so it just kinda he just let it drop. He being mister Dawson.

Yep. And you're gonna talk to

him, Terry. Yeah. I'll I'll talk to him and see if he's still interested in it, but and he can work on that paperwork. But until they have a definitive answer on the ordinance issue, I I think it's kinda wait until we get that. But, yeah, I'll let him know. Awesome.

I'll follow-up on that. I think that's it. That's it. My reports are normally a fraction of that time. Thank you for your attention.

Thanks, Paul. Thank you very much. Yes. All

right. Let's see. What did I find in the agenda for myself? Administrative updates. So I just checked my e file. And I do have an executed copy of the drop extension ordinance. So that is all good to go. And like I said earlier, the application has been updated. So Kevin Barnes will get the new application that reflects the ninety six month participation. And the executed ordinance has been filed with the state. So that's all set. We have submitted the state annual report. That's what is needed to be approved before the plan gets its state monies. The last thing we need for that is the city audit. So I'll just keep in touch with the city and make sure that we get that and turn it in.

The due date for the annual report was March 15, but it's almost always the audit is the last thing to come. And I think we just need to submit it by 09:30. So everything's good there. Let's see. I mentioned Jeffrey Cleary. Let's see. I just distributed it's not on the current fund activity report, but Steven Sanco just separated from service. He received his accumulated balance of the share plan. I'm working with John Wallagora. And I think that's it for my admin updates.

I don't have a whole lot, but if you guys have any questions for me, please reach out at any time. And if you want to go to the educational opportunities, please let me know as soon as you can so we can get you signed up and booked for a hotel room. I do like to kind of put in my notes just so I can keep you on my radar who is interested in attending anything. So looking at the first one, annual conference. Anyone planning to go or wants to Scott, you're going? Howard, going? Terry?

That's June, right?

June '25. And that one's in Orlando. So I'll say Scott and Howard. David, yay, nay?

I'm looking into it. I think we have volleyball tournament at the same time. It might actually work out because it's in Orlando, but I'm gonna talk to the boss and see what she says.

Okay. We'll just reach out to all of you when registration opens and see.

Terry, are you thinking Yeah. It's already my calendar,

actually. Okay. So Terry and David A few people will reach out. The next opportunity is the fall school, but that was up in Bonavidra. So it's kind of a hike. But certainly, if you want to go, the dates for your calendar, October '8, I would get on there as soon as possible just so you don't put anything else on your calendar for those days, especially if you're working on a CPPT certificate. But just let me know if you see anything you want to attend. Even if it's not listed on the agenda, you might get an email from another organization. And if you're interested, please forward it to me and I'm happy to take look. But I have no concerns right now. Everything's going well with your plan. So that concludes my prepared remarks.

Christie, just have dropped statements. I had contact with Jamie.

Yeah. I'm not sure why because it's almost April, and this is the time when

I get money's there because we have

No.

Oh, yeah. I know. I know.

This is the the time that it can be frustrating being in the same organization as the actuary because I'm trying. I'm trying. It's almost April, so it's like, don't we have these twelvethirty one statements? I'm going to follow-up on that today.

Okay. Thank you. You're welcome.

Well, sometimes they give me a call.

The older guys used

to and said, we never get our drop statements.

Know. I'm frustrated Right. As and they

No worries.

Very good. Thank you.

You're welcome.

Thank you very much. We have no old business and no public comment. When is the next meeting? June?

Friday, June 20. I think we rescheduled that because of FPPTA, right? So Friday, June 20 at 9AM. I think it'll

be in chamber. Sarah, do you know if it'll be here or there? I think

we were only in this room today. But I'll confirm either way on the agenda. Sarah, you and I

can maybe chat offline. But definitely Friday, June 20.

Thank you. Thank

you, Paul.