Pension Board - Regular Meeting

sure which we appreciate is the same presentation I saw yesterday should turn off yeah no really at launch are we ready to go or not show up to Al today at 8:38 thinking that was did it open today yeah oh really there's like hundreds of people in line camping out really yeah yeah marless said to me I guess I guess you didn't want to go I said I don't look at the card on the table can't imagine the welcome packet was that good of mine 100 bucks what got the gift card oh $100 gift card for the first 100 people yeah you must have you must have sneak snuck in on the side door you were smart oh I'm sure sort of like Black Friday right [Laughter] oh that's why that's why I don't go to Black Friday I'm scared all go all right shall we start

yes oh good okay all right so welcome uh to the uh first me 25 first meeting of 2025 yes thank you Alan all right let's approve the minutes do I have a motion to approve the minutes we do Mike second no Shannon second any changes or modifications or comments all in favor any opposed excellent all right motion uh minutes been approved so now we go to Tom Jonathan please good evening evening so we have H performance to the end of year so obviously fourth uh fourth quarter uh Jonathan's GNA run through the the impact on the uh on the portfolio if you've looked at the back we have a couple other thoughts on kind of where we go where we go from here some conversations that we've had past couple of years real estate private Equity just overall things so there 's likely some room for us to continue that conversation in the journey I guess that we've uh kind of been on so we'll we'll get to that but I let Jonathan talk about the portfolio thanks Tom so uh you all can go ahead and flip to exhibit one we'll skip the market environment as usual and what we have here today is your fourth quarter report everything is pretty much up to date except the uh the Partners group investment that's still lag by about a month we don't have the December statement yet so you flip ahead to I believe page four and five you have your market value page here so you have all your uh your asset class composits the underlying Investments what asset class they correspond to beginning market value as of the beginning of uh uh fourth quarter net cash flows in and out for

Investments through that period ending market value as of 1231 and then you have it's called percenta portfolio but it's just the current waiting as at the end of the quarter for the Investments and the composits and then and then that's compared to the uh the right column there policy percent which is your target weightings for all those asset classes and the underlying Investments and overall as you go down the page you see that you're pretty close to Targets in most cases little under for fixed income that's because you pay benefits out of there a little over for us equities because they ran for the most part and then on page five you do see we are under on real estate and over on private Equity that's kind of what Tom's going to get into here in a bit uh but I did want to bring attention to uh the real estate investment principal real estate uh we did get about a little over $500,000 out of that investment during the fourth quarter so the gates kind of opened up a bit in the fourth quarter thankfully for those redemptions and uh currently we have about 284,000 left in the Redemption queue there out of the initial 1 million that we had requested so made quite a bit of progress there but again Tom will'll talk about that more here in a bit go ahead and flip with me to page eight I just want to spend a moment here uh just since this is the end of the year um looking at that uh Second column from the left it's the one-year column kind of just shows you your journey throughout the year so you start out the year with just under $22 million had negative cash flow out of just under 1.1 million but you had positive investment gains of just under 2.1 million and that's how we arve at that ending market value of just under $23 million for uh 2024 yeah that same information going out to the right for different time frames and you see that in most cases the uh investment gains have typically more than made up for those negative cash flows I'm going to skip a few more pages here a lot of this is repeated on pages

12 or sorry 12 through uh 14 I believe so on page 12 we'll start with the Top Line there it's your total fund composite and overall pretty good year uh just under the Benchmark for the quarter and just under the benchmark for one year you had a return for 2024 of 99.8% uh just 2.2% behind The Benchmark of 10% and again same information kind of going out for varying time frames you were in line for three years and five years matching your benchmark I should say seven years a little bit behind 10 years a little bit ahead and then since Inception uh we are lagging The Benchmark there and then underneath the uh The Benchmark return you have rankings uh one would be the best top first percentile in the universe and then 100 would be would be the worst the bottom 100th of uh the universe and then uh looking at the underlying here we have the different asset class composits I'll start with fixed income of course fixed income composit is done really well you have some more high octane kickers in there uh rather than rather than your core uh managers that a lot of people like to stick with uh high yield and Aristotle principal high yield and AR should say they even though they were behind their benchmarks for most time frames uh they have added quite a bit of uh Alpha compared to the the uh Benchmark for the total fund there so that's why you see that outperformance on the top line for your fixed income composite thankfully they were there because fourth quarter was not great for fixed income as as rates rose on the long end of the curve due to uh fears of inflation Resurgence and the uh the deficit of the government then on page 13 we have your us Equity composite and the underlying Investments there uh overall pretty good year you're up 20.8% still behind The Benchmark unfortunately though um probably would not expect another 20 plus perc return for for us equities uh

this year but you know stranger things have happened um unfortunately that tilt to midcap and small cap has brought drag us down a bit compared to that all cap Benchmark that we have the Russell 3000 the uh the thesis is that you know you go into more riskier Investments smaller capitalization and mid capitalization stocks should have a higher return but that's not really been the case the last few years especially with uh with rates being high next on page 14 on the top line there we have your non- us Equity composite actually a good story here for the quarter and for the year you were ahead for for those time frames uh mostly lagging uh going back in time unfortunately but uh the underlying did pretty good for the quarter they at least either matched their Benchmark or were ahead uh it's kind of tough for these International Equity bench or International Equity mutual fund indexes to really keep up it's such a wide universe and things move so quickly sometimes there typically that's why you do see a lagging or or a tracking error there for those those indexes but uh Emerging Markets has done pretty good at least from a universe perspective typically ranked in the top third or so of their uh of its universe and uh pretty uh 1% ahead for the quarter then real estate you have your principal us property uh fund there typically ahead for most time frames it did lag for the quarter year and three years uh but overall positive for most time frames and thankfully it looks like maybe we might have seen a bottom as of the end of the quarter uh so hopefully we continue to see positive returns after a few rough years there in real estate then private Equity this is a the much newer addition to your portfolio uh Partners group which was added in February 2022 so we're coming up on three years here this month uh overall that's done pretty well um a little bit behind The Benchmark for the year um we don't have the the the return as of

fourth quarter uh fully for The Benchmark or the fund uh but as you go back in time since Inception it's it's pretty handily ahead of its Benchmark 6.2% versus 6% for The Benchmark going back to February 2022 that'll do it for performance I'll finish up on page 21 this looks at the fees that you're paying all these managers so what this page shows is all your managers what their expense ratio is or or their fee schedule is and what we do is we put that into dollar terms estimate an annual uh fee you're paying them per year and then we break that down into an expense ratio and then compare it to the industry median for other managers in that asset class that they're managing to uh and what we do is we total all that up on the very bottom not the very bottom blue line but the the second uh the bottom darker blue line so we're estimating as of Market values as of the end of the year you're paying about 86777 annually to these managers and that equates to an expense ratio of 38 basis points uh just under 4/10 of a percent and that is just a little bit higher than the industry median of 35 basis points and uh unless there's any questions that's all I had on the uh fourth quarter report I'll go ahead and hand it over to Tom to look at exhibit two which Di more into the private equity and real estate discussion that he uh foreshadowed I have one question I have one question on page 11 I know we delayed these meetings um you know for the month after the quarter ends why don't we get 2024 numbers on there so it's an issue with the reporting system because it just ended what you have to look at is actually on page well at the top line there so page nine that that onee time frame it's the

uh the fourth column or kind of the middle uh 99.8% was your return for 2024 so if we wanted to attach a year to that one it would say 2024 but the system just kind of doesn't let us get around it so if we generate a report as at the end of January then it would show up on that page you were referencing page 11 sounds crazy I understand Partners group Partners group is in closed out no that's not the reason just your software have data right it's just crazy okay I know you guys don't write the software and buy the software I was uh we were talking about this actually we I was thinking about adding a year-to date number there which technically would be the exact same as that one year return we have on page nine so I'll go ahead and add that just just so we have it it would be updating every you know if we did it as of March it would be for the first three months of the year so yeah it's goofy bottom line 9.8% for the so exhibit two kind of talks a little bit about some of the things that uh that the board's discussed you know in the past couple of years as well as kind of some some longer term thoughts that uh that you've all had we've had with you uh I'll wait till Jennifer gets you got to get through all the fun stuff yeah the stuff that'll put you to sleep let's do that we'll both Mar have these bookmark these yes uh so discussion points that's perfect right there so um just kind of a reminder you know we streamlined the US Equity allocation long ago ancient history you had different managers doing different style boxes they would underperform you

would fire them you would hire a a index funds he kind of had this hodge podge of uh of of index funds so we streamlined it into into just midcap and small cap and you also shifted the small cap to the S&P 600 uh mandate which uh historically has done better and this year also proved out that way as well and you eliminated preferred stock uh from your from your allocation so it's kind of somewhat recent history put in a couple couple rounds of redemptions for real estate um and as Jonathan mentioned you know the market is starting to heal uh in the real estate market obviously there's different Pockets that are still stressed and uh obviously office is is still one of them and we expect there to be obviously some continued pain there uh but at the end of the day the the real estate is seven and a half percent of the portfolio your 10 your target is is 10% and when we talked a couple meetings ago about thinking kind of bigger picture kind of round numbers that was actually kind of one of the thresholds of of the allocation that we talked about of maybe maybe 7 and a half% the right number maybe it's five whatever it is but uh that was actually so coincidentally it's right now at seven and a half per. we didn't get to say how much to to take back but that's how it worked out you still have another 285,000 uh in the in the exit Q for that so if you don't resend that and you're able you're able to resend uh if you don't resend that and that money starts coming back that's going to put you at a little over 5% in in real estate so where that all kind of sits there and your real estate minimum based on your guidelines is is 5% so you'd be extremely close to kind of the the bottom end of that uh your cushion as you'll see I bunch of different scenarios I have in here as well as I've mocked up a bunch of others uh outside of this is your cushion is is pretty healthy right now uh but if you

want to do any kind of major overhauling move bunch of fixed income out all that like that's you're not there yet so you still have to kind of work within the the constraints of the uh of the cushion you have um and I just put a little note on there you know the the core the core fixed income the core Plus real estate you really hurt you guys too much um but there you know if we had a choice on a couple of those we would look elsewhere uh one thing I didn't mention in that little list there was high yield that's one where it's kind of through the years we've said we kind of knock dominoes down maybe that's a place where we can look elsewhere for uh for your high yield so portfolio thoughts for today uh within the constraints of your current asset allocation investment policy um you could look at keeping your real estate at that s and a half percent which has come down and look at bumping up your private Equity to S and a half percent seven and a half seven and a half uh on there you are already overweight Jonathan mentioned you are already overweight uh private Equity so this wouldn't be a full top up from five to seven and a half you'll see on there but we have a little we have a little portfolio background on that as well and then number two uh just kind of thinking ahead uh if you'd be interested in authorizing us to perform a high yield mutual fund search uh at say the next meeting um we can look at possibly lagging into another High Yield Fund outside of principal have that held in custody at at uh at regions we know a lot of options out there and like I said probably some things you might prefer if you had the choice so um how what would that do to what would be the impact to that from a cushion standpoint I have that behind here so we can talk about talk about that when you say the um if the real estate allocation went down to five you say it's the bottom part so it's the IPS

range from 5 to 15 so if market performance in real estate Dives and it drops below five what does that mean from a compliance standpoint that means you're you're out of compliance so do you have to buy immediately or what do that I mean you really can't um on that I mean it's does it happen occasionally in portfolios obviously extreme events we all live through yes uh well let me interrupt real fast if we change the allocation of real estate to 5% we're going to change the bands but I don't think that's what he's then you would need to yeah we would have to change the band there's no way you zero yeah zero would be your minimum or 1% correct you you would definitely have to go like zero to 10 or like two to eight or something like that yeah so if you just turn to page three kind of big picture here uh we this is what we ran similar last year when we kind of started thinking through kind of next steps your current portfolio uh average annualized 10e expected return that's that uh in the box below 7 . 58% uh expected volatility throughout that time period 10.07 and then that number beneath that is just return divided by volatility there kind of utility portfolio a try to color code it uh that's just going from 10 to seven and a half basically working within your current investment policy uh seven and a half seven and a half that bumps up your return a little bit uh and your volatility does go up um as well just your private Equity is going to be more volatile than than just uh just real estate from a expectation standpoint your return over volatility stays the same um and then B is kind of the flipping kind your alternative targets here because you have 10% real estate 5% private equity and basically flip-flopping that uh you see the return

goes up a little bit more volatility goes up as well uh utility does go down a little bit but your expectations are some higher returns from this portfolio then my little footnote on there to the Chairman's Point portfolio B would require uh investment policy change and get that getting that through uh through Council um you know some other things that we have talked about but are not included in here uh we talked about private credit right now with you being less than 25 million in assets that kind of limits options from new funds that you can get into uh so there are other products that are coming along um bdcs I believe there kind of one vehicle that where you could start to start to use private credit or even private Equity less than 25 million uh but it's still kind of I would say new uh to a point right now so this is kind of us looking at what you have going on right now conversations that you've had I will stop talking and let you all give me your thoughts anybody want to start I mean it seems like seven and a half of each would not require and IPS change because that's well within the the bands it's kind of VI as like a a half step that doesn't require lots of lots of overhaul I oh go you finished no I in my experience the I think we talked about this but the private Equity is going to continue to creep up so I don't know if you're proposing adding more private Equity or just letting it kind of organically grow our we will propose uh in the next area a little a modest increase just to kind of bump that up because you do exhibit three are the uh different scenarios the three highlevel different scenarios and the usual kind of

rebalancing that you see that goes in there the blue one that I color coded there that's that's saying no we like our targets for now you still got to raise money to pay benefits and you have excess cash now because of the redemptions that that you received so it's two things going on there you need to you need to get um need to rebalance and then put that cash to work and you still have that Redemption out there from Real Estate so we need to make a decision yeah so um the first thing is we had talked about going down to 5% real estate yes and I don't think we should change our mind because we have to do a couple extra steps I think that's being foolish and you know taking the easy way out and the easy way out is usually not the Smart Way sure that's again same for us yeah no I know I'm just giving my opinion here uh that's number one number two um as far as the private Equity what is I know we I forgot what did we were we replace the preferreds with private Equity what what was the private Equity kind of grab it from a few different places preferred was preferred was a big part of that we did there was there was some different moving Parts but preferred was a big and what's what is it in place I mean as far as the what do we putting I know it's different and I know it's I understand private Equity but but what are we I mean I guess we need to say what is our private equity in where are we taking it from to get to private Equity is it going to be all real estate where we go 10% % real uh private equity and 5% real estate because um for two things number one I mean over the last three years the private Equity I don't know yes compared to your benchmark it's done great but it's been it's been it's been a quiet

period it's been very quiet so um that's one thing that is I in three years is a small time frame but and we're looking long term I get that the second thing is is that um with the private equity is how liquid is it to pull money out similar to principle it's like quarterly Redemption yeah it's it's it's not going to be a part of your portfolio that when we need money that we're gonna right so but my point I guess what I'm getting at we're at 6.8% now yeah right if we put more money in it we get to seven and a half or eight% and two years we're sitting here and now we're at 11 or 12% hope yeah hopefully I agree with you I'm not saying I'm not I'm not a huge fan of the whole thing but I went along with it but then we're scaling back I'd rather let we have organic growth on the private equity and pull back the real estate that's again this is I'm one opinion of of many but I'd rather pull back the real estate and let the private Equity organically grow especially if we're looking at um uh debt bringing in a uh what what kind of fun priv from now I think okay but even that because the other thing which is a sidebar to this is I think we we ought to have somebody um sort of project you know we've had obviously 2022 was really bad right and 2023 and 2024 were really really good our returns were not you know large cap returns but they were you know but those were good but we really haven't gained any ground as far as our total I mean we're at 25 million yeah I for forget what year it was but then we we just bumped up there and then we immediately came down so what does this future look like if we continue to take money out at this rate

and we have X amount of return will we ever get back to 25 million obviously there's some projections and assumptions and all that kind of stuff but you know to talk about uh private credit and doing all kinds of other stuff is it even in the cards because are we you know and what kind of return do we need to because we've had really good returns in over the last two years and we really haven't gained that much ground which is kind of scary yeah I mean yeah page you we talk about it every time but back in our main presentation page eight is you know that's that's the battle that you've been fighting yeah yeah so um so anyway so that's my my five cents let me let me ask about what it's work let me ask one question on private private Equity is there a point in time are there any cash calls that could made on private Equity from us what you would do kind of the mechanism is you would you know basically submit to Partners group that you are looking to add funds they're on a monthly basis on the info no what I'm saying is are there periods where they can make cash calls on us because of what a just yeah it's not a closed inp structure it's a good question yeah it's good distinction it's very no that's def you're like I don't want to give you money like yeah no it's not a fun where they can okay that's fine they're in money Crunch and they can call and ask you yeah um so those are my thoughts is is it's more of a planning and sort of looking out instead of doing this as a how we feel today I would typically I would agree with that too and I don't I don't like the idea and I'm a huge fan of Partners group but I wouldn't I don't want to put 10% in a single manager if anything I was hoping you had some other or maybe you still and some other P fun to fun options that the the 25 million is the

C that's why I want to see if we'll ever not if we'll ever get there but somebody to project I don't know if you guys can do that or we can be actuary probably they they have access to obviously your actual data on cash flows we just kind of see the I understand no I know I didn't know if you yeah that would get AJ in here maybe we hire to do it I'm just kidding there yeah yeah no I know they can yeah what specifically would you want the actuary to project well they can project what money's G to come out future cash flow yeah doing a cash flow with because they know based on life expectancy and and when people retire so they can say this is how much is going to come out and then if you know they always project what are they they're projecting like an eight you know they have to like an 8% return but I think we I think based on Gap rules and all that no I think they they do do that um if I remember correctly but is it seven and a half okay it's seven and a half and then what we're putting in which you guys kind of know versus and then he could run it you know if you get a 6% this is what it'll be if you get your seven and a half this is what it'll be yeah I mean and sort of a year-by-year look at what it uhhuh and we don't have to go out 20 30 years I mean we just for our purposes maybe 10 years 15 years you know just to see what it's look like because if the numbers show that we're going to

be at 15 million in five years it's a it's a big uh that we don't want to have 15% in illiquid funds either correct yeah so I have I have two questions number one is what's the impact going to be of freezing what's the impact going to be of freezing um the real estate taxes on us okay one then but it goes the other way where it doesn't apply it might be that they have to anybody over 62 they might have to kick out of the city well and then and then the other question is at what point in time can we start at increasing property taxes to cover the pension plan because I think that would be the best thing to do we don't necessarily have to go there but we at least have that opportunity because as of right now I think we're at the cap is that correct were from that's not our committee no like but but I think I mean from a recommendation standpoint if you find the cash flow is but that's long deeper than than I agree with you but that's very deep because that yeah right well yeah in in sales organization you always have a revenue problem we always but

um all right so back to square one yeah I would be comfortable with doing the real estate at 5% okay um not changing private Equity at this time okay um and just giving ourselves bands I don't know what what's I don't know what our band is for the private Equity usually it's it's 5% either way so right now the 5% Target you know one or zero right and 10 um that's where it is now and I mean if we want to right now I guess it's fine if we need to give ourselves more leeway and not pull money out but as Mike said I don't know if he wants to have 10% in of not a single manager anyway yeah yeah that's that's obviously it's a very Diversified company fun blah blah blah but yeah I mean just to the point of of having that in there yeah like I said we haven't done that because you're kind of this is like a trick bag here because you're below that 25 when we did all this you like Crest it over it that's jump we jumped into it like we didn't know how long and it Cas based on cash flows we didn't stay there long so but you're kind of Grandfather didn't correct so so you're you're sorry finish that because I'm going to a new thought should we have a motion to do this you need a motion to give them a Direction so I recommend I move I move I move to to um change core real estate to 5% okay change the bands 5% on either side yep and keep private Equity the same and you guys come back with a recommendation of where to increase the the additional five okay within the within the the other constraints of

the yes okay and my recommendation would be in the US Equity markets and not the international markets even though Europe's running this year so far but it's a shot here yeah against what we thought yes okay you had you asked a question about high yield is that to replace current high yield managers or was that an addition to the portfolio repl current that would that would be a replacing what you currently have uh so I ran some ran some additional scenarios um just looking at the cushion because obiously that is a principal uh a principal product uh your Baseline right now cushion is 1.4 million the rebalancing that we're going to be proposing just to you know keep replenishing the Kitty uh gets your gets your cushion back up to a little over two million obviously very very very healthy if you were to rebalance and complete completely remove high yield from your uh from your your account principle that would knock it down to about 1.2 million so still healthy uh knocking real estate all the way down to 5% I like 10 different scenarios uh rebalancing getting rid of high yield in real estate getting down to 5% and your cushion is little little under 800,000 when when you say get rid of high yield you're saying high yield that princip I'm speaking sorry yeah so so let me ask you a question and we should probably go back to my motion and finish that but I'm going to we'll go this first if we drop below our cushion do they I mean are they they're monitoring this well the cushion the cushion is the additional part no I understand so we're we're under so we

have no cushion left we're negative no no no it's only if you drop below the cushion cushion is the amount that you have to cushion above above not to get trouble above here this is the trouble Zone cushions a million dollars right I understand no I said that if we lose that million dollars oh okay yes and we're we no longer have cushion and you know have cushion correct right you have to have communication do they call you and say you guys are below we haven't received that call in all our years so that's a good thing um but what we do like when when markets were selling off go back to co we're doing almost weekly calls uh yeah there was concerns just kind of because you you know Equity exposure and just trying to understand understand all that uh so yeah you're we're replenishing it if we need to if there's like a major Market meltdown you you owe you need money to be able to cover that right that is your those are your benefits correct I mean they're not going to call and shut us down immediately my point is is that what if we go to the 800 with your recommending or not your recommending I'm not saying you're recommend I will give you my full recom my recommendation is if you if you're willing to look at another high yield manager there's no rule you have to do all at one time so you say you find someone next meeting you like you may pull half those assets out now and then in a year because each the each each month the amount you need to you know generate it goes lower and lower and we can look at then getting it all out within the course of a year that's kind of like a middle ground you're then your cushion still over over a million it's not less than a million real estate can come down everybody sleeps at night I think it's fine because I think we can always make adjustments if we we can always make adjustments if we have to you can it's there's no right these are those are those are very liquid Investments or mutual funds we're talking about correct so all right so let me go back to my motion are you wanting to amend your motion no no no the motion's good this is we're the the high yield is a totally

different okay then we're gonna have to do a second motion for that that's fine just everybody remember my motion let me remind you yeah no I remember it but I just wanted to make sure everybody else was so he has asked that real estate um be adjusted to 5% he wants an adjustment on the bands 5% on either side Equity Remains the Same and um we've advised that Marquette will provide a recommendation on where to take uh increase the other 5% at the next meeting private Equity says the same I'm sorry that's what iant yes private Equity Remains the Same uh we'll have a recommendation for that additional 5% preference is more that was just a sidebar so you need a sec unless you want to change your Mone no no that's fine you need a second yes now we need a second second okay any discussion questions anything okay all in favor I all oppose anybody staying all right so we've got that now you want us to do another MO regarding the high that would be another one if you're if you're so inclined and we think that would be appropriate I mean you're recommending that yeah we are so I think we should do that okay we hire you that's great I appreciate that getting back to discussion if we do pull we have to go to the council to change the IPS right yes yes so we're gonna we won't be able to do this officially until we have a recommendation of where the 5% goes is that right yes that's true but we also won't know about when's the next Redemption for principal it's quarterly quarterly so it' be I don't know when the cut off is probably either April or July is it it's quarterly so and and you

know what we've what I've done for other clients that were kind of in between asset allocations is you is you can say just skip us this time next time next quarter not saying to do that here but there's it's flexible yeah which part I'm sorry with realate I think we should still go forward with that yeah say if you're between yeah we still have that 284,000 Q to get down to 5% you'd probably have to put in roughly about another 290 289 to where at for principal the Redemption to get down to 5% about taking 57 what okay so why don't you I suggest we do two and a half% of real estate to private equity and then and then figure out the other two and a half percent because Partners group is almost already there at 6.8% well but we've got a ban we're gonna have a b but if we're changing the IPS so so when you I'm I'm not post what do you uh I don't know if it's two two and a half% to private equity and two and a half perent to either fixed or saying yeah so that we can go to the council and change that yes oh yeah that's fine that's fine yeah yeah no that's fine yeah since we're there unless all of a sudden principal goes down now that now that it's just two and a half if that is if that is the motion um you know knowing knowing weights and knowing the overall you know Russell 3000 weights uh I would say that two and a half% goes to private Equity I would just say two and a half% and then the S&P 500 because you were still you were still a little bit underweight that fine sure so if it was 5% I'd be like let's do the numbers just to make sure you're

not getting out of whack but two and a half percent that's the so okay so I'm I'll make a motion to amend the motion should we mend the motion do you want to men the motion or do you want to make a new motion why don't you make a new motion because you've already voted right directing staff to um you can make the motion we can do it all in one or you want to just you what would you like to do um so I think based on the based on the context of the conversation you can see that the pension board has uh reconsidered the direction to Marquette in the interim about uh their 5% recommendation so in the interm you want Marquette to take the 5% that they're eventually going to take give you a recommendation on and you want it to go two and a half percent to private equity and two and a half percent no as far as we're going to change the IPS upon further discussion with Mar we decided two and a half% would go to private Equity to make it 7 and a half% and 2 and a half% would go to us large cap M make your there's your motion there's your motion yes um move make a motion to after discussion with Marquette move the 5% that were pulling from Real Estate two and a half percent would go to private equity and two and a half percent would go to us large c a second any discussion or comments or okay all in favor any post super all right okay so we're good right now we have to do the high yield got to do high yield and then and then we're going to need to raise some

money do we have to motion for do you want to do them together you no let's do high yield first authorize us to do high yield so we authorize Marquette based on their recommendation to start transferring money from Up principal High Yield Fund into a no uh to perform a man investment manager search at the next meeting that we will then present you multiple options and then we'll the money will be later but that's this is just saying yes Marquette come back to the next Mee with a bunch of options yeah with high yield options yes perfect do we have a second second perfect any discussions all in favor any opposed awesome okay now so trying to balance what we've done um if you go to exhibit three this is the one it's kind of like a peach I guess says change it says change Fe Target to 10% which is not what we're doing but this this helps get the uh get some of the funds going here um one of the first things that we would need to do so we have if you go down to principal us property see that is that is 5% uh what we need to do you have 284,000 that's in the execute but in order to get to 5% it's 573 th000 so you would need to request more is that possible yeah yeah yeah we have clients have different tranches effectively of of exits and entries so that would be something um that we need to do today uh based on some of these changes here we we don't want to add money to Partners

group that one is out we probably don't want to pull as much from S&P 500 yeah yeah so maybe just do you want to take that down can we do a general motion to let you guys go back that would be helpful yeah why don't we do that because for you guys to do this on the Fly and us and then be committed to it is not good yeah okay so based on the two motions that were just approved or actually the one the original um we authorize Marquette based on the new percentages to reallocate the cash um to reallocate the cash and create enough for for liquidity purposes benefits yeah uh based on the existing Investments that we already and put them and make and make the change within the existing Investments that we already have okay my second any questions or comments Perfect all in favor any opposed perfect okay and the additional Redemption for I don't know if we need to make that one special the remp principal real estate I think we've already done that isn't it that included uh well just the 28 yeah but we need a little bit more you need to we 300,000 or so so you're currently you're 573 th000 under the 5% Target now so I we authorize Marquette to make or 29 to make the enough redemptions to uh get our allocation of real estate to 5% within the new um uh what's the within the new

allocation would recommend that within the investment policy statement second second any discussion questions anything all in favor hi any opposed perfect okay I'm War out on a motion so we still need one more motion to modify the bands no no that was part of mine that was part of the original to modify okay I move the we no we're good I think we're good do you guys have anything else no we have our marching orders and not yet not yet I have one thing I have one I have one item oh what you want to um and you guys can hang out for this if you want so I have um contacted a friend who used to work for the um um uh what's his name I can't think of was I just loost uh uh Law Firm but anyway I think we ought to pursue and I'd like permission to pursue to he gave me some referrals to some attorneys to maybe look at our principal contract and see I mean we signed this thing 50 years ago and we're still fighting this 50 years later I we take the Trump yeah we'll ask Trump to um to you know not to have a motion but just permission to go talk to have some conversations with an attorney or something to see if we can do something about this contract we did yeah we did it with an orisa attorney yeah and I think we ought to look at somebody that's that does more litigation stuff because I think this is more about contracts than orisa let me take it to the council that's fine yeah I didn't want to do anything

without asking yeah let me take it to the council what the council's going to want to know is how much um this individual May charge us this would just be an introductory just to talk to them there would be no there would be no fees or anything like that unless they came back with a proposal okay yeah um yeah let me take you to council that's fine yep yeah that's I didn't want to do anything till y till but no there if there was any if they said there's a f talk then we're not talking okay so yeah what your grievances are about everything well the the grievance is what you just heard which is we're we have to make our investment yeah our investment decisions because we have to keep so much in principle and if we don't if we go below that number they will it'll the cushion if we go below that and you don't change then they will make every make everybody take an annuity and the and the whole thing blows up and goes away and then any any then any unfunded liability the city still right so the city might have to pay $15 million for un I don't know what the unfunded liability but I know Darren do you know what the unfunded liability is currently that's okay but it's millions of dollars that they would that immediately would have to come up because they would mandate that anybody everybody who's got a balance will turn their their uh thing into an annuity C people yeah so it would be $10 million

right right I mean you this is like it's crazy yeah yeah actually it's 59 years old because that was the year I was born I mean and that's and that's when um you know engent planes were the the K you shouldn't be able they should be able to hold you hostage the request of the board is to have a particular attorney that you know yeah take a look at the contract like an introductory look correct contct correct just talk and see what they they they they think correct yes no it's some it's somebody who worked for schlicker that's who I was talking Jerry schlicker is the famous but he was a partner with Jerry and he's no longer a partner with Jerry but he gave me some names to of attorneys to talk to we'll see because he as I said it's a I think it's a contract dispute it's not a Aisa dispute and we had an orisa attorney look at it they said No it's it's false under Arisa yeah it does but you shouldn't be able to be held hostage for 60 years okay so anyway that's my thoughts and the last thing I will tell you is in 2009 I was not on this committee but were you part of this in 2009 yes you were and we lost a lot of money because we were handcuffed we couldn't maneuver as far as investment returns no yeah so correct yeah yeah well the cushion looks that much better yeah correct right correct so now your motion to a

joury I'll second meeting a joury [Laughter] thank you guys appreciate it it was a good meeting