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BOARD MEMBERS PRESENT:
Jim Freeman, Chair
Dale Hoffner, Vice Chair
Cheryl Miller, Secretary
Robert Schofield
Shannon Ingram (Not Present)
Leland Taylor (Appointed at this meeting)
Allen Tusing
STAFF AND OTHERS PRESENT:
Scott Christiansen, Board Attorney
Doug Lozen, Foster & Foster
Scott Owens, Graystone Consulting
TJ Loew, Graystone Consulting
Cassi Bailey, Assistant City Clerk/Plan Administrator
Chair Freeman called the meeting to order at 8:30 AM and conducted a roll call.
1. AGENDA APPROVAL
MOTION: Mr. Tusing moved, Mr. Hoffner seconded, and the motion carried 5-0 to approve the February 26th, 2024 General Employees’ Pension Board Agenda.
2. PUBLIC COMMENT
No public comment.
3. APPOINTMENT OF LELAND TAYLOR TO THE GENERAL EMPLOYEE PENSION BOARD OF TRUSTEES
MOTION: Ms. Miller moved, Mr. Tusing seconded, and the motion carried 5-0 to appoint Leland Taylor to the General Employees’ Pension Board of Trustees.
4. APPROVAL OF MINUTES
MOTION: Mr. Schofield moved, Ms. Miller seconded, and the motion carried 6-0 to approve the November 27th, 2023 minutes.
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February 26, 2024
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5. APPROVAL OF EXPENSES
a.) City of Palmetto Reimbursement
b.) Foster & Foster invoice dated 02/06/2024
c.) Christiansen & Dehner, P.A invoices dated 01/31/2024, 12/31/2023, 11/30/2023
d.) First State Invoices dated 01/04/2024, 10/05/2023
MOTION: Mr. Tusing moved, Mr. Schofield seconded, and the motion
carried 6-0 to ratify the paid expenses as presented.
6. INVESTMENT REVIEW
Scott Owens, Graystone Consulting, presented the end of the quarter investment review. Mr. Owens gave an overview of their services for the benefit of the new Board member. For this quarter alone, they received a 7% return. The goal is to get 6.75% for the year.
TJ Loew gave a brief history of what has happened over the last year regarding the economy. At this time last year, we were in a much worse position. No one would’ve predicted the +26.29% over the last 12 months. He discussed the overall market’s performance. He began to highlight individual indexes and their performance and how they compared. They believe the dollar is going to begin to weaken. Emerging markets were down over 4% over the last 3 years. Fixed income was discussed. The FED’s plan to slow inflation has been working. Credit card debt is at an all-time high, and savings accounts are also at an all-time low. Based off the trends, they are still anticipating a recession towards the end of 2024. They are starting to see layoffs at the corporate level and employment opportunities have come down. The Magnificent 7 and their effect on the market was discussed.
Mr. Owens went into further detail of the plan’s portfolio. Page 16 of the summary shows the overall return charts of our plan. He discussed the history of the plan and the fact that our alpha is -.22 and alpha should always be a positive number. For the quarter we had a return of 7.74%, which is amazing. Over the last year we decided to be a little more defensive. He showed each asset class and discussed our plan’s allocations. They slightly underweighted everything and slightly over weighted cash. It wasn’t a bad move; they’re still reaching their returns. He wanted to discuss if they wanted to continue with this defensive posture. Individual managers and their performance were discussed. On page 27, this shows where we don’t want to be: low and to the right. The problem has been real estate. Mr. Taylor asked for clarification on real estate. Mr. Owens went into detail regarding the commercial real estate allocations. We do have a redemption to get out of UBS but it takes time to get our money back. We are in compliance everywhere in the portfolio. We’re achieving our return assumptions, but it is up to the Board if they want to continue in this defensive posture.
Mr. Schofield asked if any money had come in from the UBS redemption. It was answered, not this quarter and not since October.
Mr. Freeman questioned the fixed income side and noted that it seems like we’re trailing in the indexes. A lot of the indexes are lower. Mr. Loew explained the trends over the last few quarters and over the longer duration. Madison was questioned by Mr. Freeman and Mr. Owens responded that Madison focuses on high
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February 26, 2024
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quality credit, so they’re not taking a lot of credit risk. Our two fixed income managers are extremely risk adverse. They are there to be dry power. This can be changed if the Board wants to get different returns. Historically, they did not want to take risks in the fixed income environment. Discussions continued regarding the right time to make changes.
Mr. Taylor had a couple of questions related to a possible recession and the timing of the market. Mr. Owens answered that’s why being a little more defensive is a good thing. Inflation is coming down, but the prices haven’t. He discussed the effects of this on the economy, the market, and our plan.
Mr. Owens reiterated that in our current defensive posture, we may not have as big of returns. Mr. Tusing opined that seems to be the trend of the Board.
MOTION: Mr. Tusing moved, Mr. Hoffner seconded, and the motion
carried 6-0 to approve the investment consultant and
manager fees as presented.
7. 2023 ACTUARIAL VALUATION REPORT
Doug Lozen, Actuary with Foster & Foster, presented the 2023 Actuarial Valuation Report. Mr. Lozen gave an overview of his role and what he was presenting for the benefit of our new trustee. He highlighted the report that was included on the Agenda. He started by highlighting page 9 and giving an overview of how they arrived at what he is presenting. The current funded status is 89.7%. It changed from last year, which was 96%. Last year the City needed to contribute 9.33% of the payroll and this year it will need to be 12.59% of the payroll. This is applicable for the upcoming fiscal year. The members’ contribution remains at 5%. Mr. Lozen went on to discuss why it increased. We’re still at about 90% funded status, which is still great. The opinion from the actuary is that our plan is fine with the funded status and the return status.
Ms. Miller questioned the GASB reports. Mr. Lozen responded that they decided to separate them out from the actuarial valuation report.
Mr. Freeman asked about the contributions going forward based on the returns over the year. Mr. Lozen believed they will most likely still have an investment loss next year because it is a four-year average. Salary increases will also play into it. The number of active employees remained the same as last year. Mr. Lozen is guessing the contribution will be around 15% for the following year, but it will depend on the headcount. He also noted that hopefully the ad valorem will increase and it will help offset these costs.
MOTION: Mr. Hoffner moved, Ms. Miller seconded, and the motion carried
6-0 to accept the 2023 Actuarial Valuation Report.
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February 26, 2024
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8. BENEFITS DISBURSEMENT APPROVAL
a. DROP PARTICIPANT
· N/A
b. SEPARATED NON-VESTED EMPLOYEE
· DAVID HERNANDEZ JR. (LUMP SUM PAYMENT 1/19/2024)
· TARLEENA WALTON (LUMP SUM PAYMENT 2/2/2024)
c. SEPARATED VESTED EMPLOYEE
· N/A
d. RETIRED EMPLOYEES
· N/A
e. DECEASED RETIREES
· N/A
f. DECEASED ACTIVE EMPLOYEE PAYOUT
· N/A
MOTION: Ms. Miller moved, Mr. Schofield seconded, and the motion carried 6-0 to approve the Benefits Disbursements as presented.
9. NEW MEMBER ACKNOWLEDGEMENT (Informational Only)
· EURICA ENGRAM (11/27/2023)
· CORY KAPRAL (12/06/2023)
· DOUGLAS NICARAGUA (01/17/2024)
· JOHN BIBLER (02/14/2024)
10. SEPARATED MEMBER ACKNOWLEDGEMENT (Informational Only)
· KEVIN BAYON-RAYAS (01/19/2024)
· HAGY VAQZUEZ (02/14/2024)
· CHRISTOPHER GIDDENS (02/23/2024)
11. ATTORNEY CHRISTIANSEN’S REPORT
Attorney Christiansen wanted to note for Leland Taylor that we are a separate legal entity, not a recommending Board. This Board is administering the pension plan.
MOTION: Mr. Tusing moved, Mr. Taylor seconded, based upon the advice
of the consultant, the Board expects to get a 6.75% investment return for the next year, the next several years, and the long term thereafter. The motion carried 6-0.
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February 26, 2024
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He created a memo for the state reporting financial disclosure forms. Form 1 has to be filed through the portal and will no longer be filed with the Supervisor of Elections. Leland Taylor will need to do one. The due date is still July 1st for everyone. Form 6 is for the elected officials.
There are no Florida Legislation changes this year that affect the General Pension Boards. They are adding a few exempted positions that won’t have to provide their personal information to the public. These individuals will have to ask to be exempted, it is not the responsibility of the City to determine these exemptions.
For the ESG reporting, we submitted a letter, provided by the Attorney, and the Investment Policy Statement into the portal in December. It was approved by the state. This doesn’t have to be done again for another two years.
Mr. Taylor asked for clarification on the ESG requirements. Mr. Christiansen responded that they can’t make investment decisions based off those factors, however, you can invest with those companies as long as it is decided based off non-ESG factors. Mr. Owens noted that they have never made decisions based on ESG factors.
12. PLAN ADMINISTRATOR’S REPORT
Ms. Bailey reported that she and Ms. Miller attended the 2nd FPPTA conference for the CPPT program and passed their intermediate exam.
Chair Freeman adjourned the meeting at 10:18 am.
Minutes approved: MAY 20, 2024
CHERYL MILLER
CHERYL MILLER
Secretary