and >> it's now 3 p.m. So I bring the meeting of the general employees pension board to order. Pam, will you please take the role? >> Hannah Juman >> here. >> Bill Collings >> here. >> Dennis Small >> here. >> Commissioner Williams.
>> Shirley Fininky >> here. All right. >> Thank you, Pam. Thank you. Um, the first item on the agenda is public comments. Are there any members of the public that wish to speak? Okay, seeing that there are no members of the public present, um, public
comments are now closed. For the consent agenda, first is the approval of minutes from the last quarterly meeting held on November 20th, 2025. Second is the approval of expenses. At this time, we've received one invoice
from Burgess Chambers, one invoice from Foster Foster, one from Sterling Capital, one from Sugarman Suskin Herrera, and one from Salem Trust. And then lastly, we have the approval of two retirees. Um, do I have a motion, a second for
approval of the consent agenda? >> I second. >> Okay. All those in favor? I. Okay. Uh, no items listed under old business. Moving on to new business.
First, we have Blake Mighton presenting quarterly reports for Sterling Capital. >> Good afternoon everyone. >> Afternoon. >> Hope everyone is doing well. I get the privilege of uh covering the fourth quarter or 2025, our first fiscal
quarter as well. Um, so I'll try to be uh kind of all-incclusive there. But as always, the first meeting of the year, uh, I'll look into our crystal ball and try to give you an idea of what we see uh, on the horizon uh, for 2026 and how that's going to impact the plan, you know, but first and foremost, 2025 ended
up very strong year. It was the third double digit year in a row uh, for US equities. Um, to give that a little bit of context, four double-digit growth years in a row has only happened about five times in the last hundred years. So, we're a little bit more cautious based on, you know, kind of some
elevated market values and some really good returns that we've gotten over the last two or three years. And I'll show you that here in a minute. Um, as always, you know, we'll go into our plan performance relative to the benchmarks. And at the risk of sounding like a broken record, what we're going to see is we were a little bit uh behind those
those blended benchmarks primarily for a couple reasons. One, we had one fund underperform. We made a little change. I'll talk about. Um, and then secondly, it's the same thing that we've talked about for the last three or four quarters. It's those AI related names, uh, those handful of US uh, growth stocks that are really leading the way.
And while we've had exposure to those, we just haven't had as much as the indexes. Uh, so that's going to make us look a little bit uh, worse in comparison. But candidly, if our our large cap growth manager had gone from a 3% position in Nvidia three years ago and rode it all the way up to 15% or
whatever it is today, uh we probably would have fired him if he hadn't trimmed it a little bit. So from that perspective, uh we're very comfortable um with that particular holding and our AR exposure. So with that, um as always, you guys know over behind Tab 2, I like to start off with the broader market and
just give us an idea of what the uh the bigger picture, how the returns were through the end of the year. And again, they were pretty strong. Got the equity indices there in that top table. You'll see the Russell 3000 for the quarter was up about 2.4% leaving up a little more
than 17% for the year or 17.15. So, good solid performance. The number that really kind of popped to me when we put these numbers uh together were just how strong the three, the five, and the 10ear were for the US market. You know, the three-year is now up 22 uh 22 and a quarter% each and
every year for the last three years. Um and then uh the 5year and 10-year which oh by the way remember it wasn't that long ago 2022 where we had both negative equity and bond returns. Um that that number sort of gotten erased and so is the the bad draw down that we saw during
COVID in 2020. So for the last five and 10 years respectively you know US market as measured by the that Russell 3000 is up 13 14% each and every year. So good solid performance out of the markets over the last 5 10 years. Um looking at the the various components of the the
Russell benchmark um under rows three and four are the top the largest growth and largest value components of the index. We did see a bit of a rotation into some of those value names which is good but it was still those same artificial intelligence related names.
So even in the value indexes it was the utilities that are going to benefit from the extra power generation andor some of the industrials that are going to create all of these data centers. and uh Caterpillar is a great example did extremely well. Some of those types of industrials that investors think are
going to benefit from AI with the parts of the the market that really got rewarded. It wasn't uh really the traditional uh value benchmarks but um so again something worth watching at least through the end of 2025 that was the case. We are starting to see that move into more of a broadening so far
this year first 6 weeks or so but we'll talk a little bit more about that when we get together next time. But um again for 2025 really in in on the equity side it was a great very strong year. Um but it was a year again dominated by those handful of names. Um so while we
participated um just probably a little shy of our benchmarks as you'll see here in a minute. Um same is not true for the bond portfolio. We actually got two interest rate uh cuts during the quarter by the Federal Reserve. Um, so that actually was a a nice little tailwind that if you look at the the the the
table there under fixed income, the second row, the US aggregate or the broad benchmark was up 1.1 for the fourth quarter. Uh, and then over 7% or about 7.3. So, we kind of came into 2025 thinking, hey, if we can get high single digits out of stocks, 8 n 10%, that
would be a good year. If we would get four, five, 6% out of bonds, that'd be a good year. Well, we exceeded both of those. um really doubled it on the equity side and because of a couple of interest rate cuts um we got more than 2% better than probably our expectations. So as we sit here today
and look at 2026, unfortunately we don't see those same interest rate cuts from the Fed. Uh we do think Fed policy and what they do with interest rates is going to be uh worth monitoring this year. Um likewise the change in uh Fed chairmanship from Mr. Pal to Mr. Marsh
and exactly how that impacts monetary policy is obviously something else we're going to watch pretty closely. Um and our best guess right now is probably won't get a whole lot of interest rate. It won't get any uh unless we get some economic data that probably is pretty poor. Um and and then we might get an
interest rate cut or two, but that would probably be in the the second half of 2026 in our opinion. Um because candidly the the the good news of that is economically speaking we're in pretty good shape, right? I mean inflation has come down. Nobody wants to say it, but remember it was only a couple years ago
we were talking about is it going to be a hard landing, a soft landing, what kind of landing? Well, it was a pretty soft landing, but nobody wants to jinx it and and say that it was because again uh inflation has come down from double digits and is now in that 2 and a half range, which while not quite to that 2%
that the Fed is targeting, is still in pretty good shape and has come down pretty nicely. And then conversely on the other side, their other mandate is they want low inflation, but they also want full employment. Some of the employment numbers have been pretty solid. You know, we're getting a lot of rhetoric in the in the the news and the papers in the markets about how AI is
going to impact um employment going forward. And and our take at least right now is it's not going to have a significant impact in the near term. It obviously will have an impact in the longer term, especially for some of those lower level jobs. You know, there's no cashiers at Walmart anymore, you know, is the great example. Um it's
all self-service at just about any retailer we go to now, whether it's Home Depot, Lowe's, Publix. Um, so those are the types of jobs that probably um will get um eliminated because of AI and and ways to do it. But uh again, it's not going to be an overnight process and and
those folks are not all going to go on welfare and start collecting unemployment. They're going to retrain and find other jobs and and hopefully find other jobs in better industries. So from that perspective, uh we think the Fed's kind of done a a very good job over the last couple years of navigating what was really a pretty difficult
environment to bring inflation down and keep unemployment um pretty low as well and keep employment at full full speed ahead. And consequently, you know, again, we're pretty optimistic this year about stocks, but not to the double digit range. We're probably looking five, six, seven, 8% is probably our
target there. And then on the bond side, we're probably pretty similar to where we were last year. think of that four to six range. So, you put all all that together for a portfolio that's pretty close to 50/50 like yours and we're probably looking at at mid single digits is is our expectation as we sit here, you know, in the middle of February.
Obviously, the caveat is a whole lot can change. Uh we all know we're only one social media post away from uh wreaking havoc on the markets or benefiting the markets one way or another. Um so, we'll continue to monitor that, but um all in all, it was a real good quarter.
We are a little bit more conservative though. But over on page six um are the stoplight sort of tactical strategy um slides. I like not a whole lot has changed on the equity side. What is really changed is our equity to fix uh ratio. We have we have a target of about
5248 52% in stocks and 48 the remainder there in bonds is our our target index here. And really for the better part of the last few years we've been running about 53 54 letting you know as equities went up um we kind of trimmed a little bit but um coming into the year we're kind of underweight for the first time
in a number of years and we're just a little bit more cautious. Um realizing that it's been a really good run again alluding back to that three straight years of very strong returns out of the markets. Um it's unlikely we we'll get a fourth. The one thing I can say with 100% certainty um and Doug's going to
love this is the volatility is going to be there. I mean unfortunately you know four, five, six% pullbacks, 10% pullbacks, those are normal. Um and unfortunately we forecasting a few of those in 2026 as well. So over on the equity side, not not real
uh no real big changes. We still like um domestic a little bit more than international. We still like growth ever so slightly more than value. Although um again based on some of the the runup there, we're starting to get pretty neutral. You see most of those guys in the yellow. Um and then over on the next
page is probably the the biggest change and it's really not very significant. Um but recall we had about a 2% um US Treasury um short-term US Treasury allocation last period really for the most of last year. uh we unwound that uh
at the beginning of January in favor of a small TIPS position and TIPS is a fancy acronym for Treasury inflation protected securities just to kind of u really hedge against any unforeseen inflation um going forward. So again not a huge change there um just to come two
or 3% um just trying to be a little bit more conservative with that fixed income portfolio. So, with that guys, as you know, there's a lot more in my material that goes into every little nook and cranny in detail that kind of comes to all those conclusions I gave you. Uh, any questions, comments on either the bigger
picture, what worked in 2025 or our forecast for this year. All right, I can see I'm putting you to sleep. All right, let's go over to the next tab. Starting on page 21, that's the performance. I'm sorry, page 20 is the performance.
a a little bit slightly different format. Um we kind of combined a couple of of slides. You know, recall when you guys transitioned over to Salem, we've been working with them to try to get connectivity and and unfortunately just for the rest of the trustees, we've had to bother Hannah about three or four
different times to get permission to do this or do that or do some ver every little thing possible. I think we we've needed to get approval for um but as we sit here today, we're still not fully integrated getting that file feed set
up. Um we are very close. I um had an email this morning saying we're on target for the end of this month and hopefully that will make things flow a lot more smoother. Um but what we tried to do was kind of uh you know sort of handdo the performance so it's a little bit different format but same material.
Um as you can see u in the middle of the page are the trailing time periods. Uh for the fiscal year or the quarter we were up about 1.12 slightly behind the blended benchmark up about 1.7 1.8 again the primary reasons for that were slight underperformance in the large cap value
product not slight the underperformance of large cap value and then the underweing to to AI. So, it was really uh those large caps that didn't quite keep up. But, you know, for the calendar year, we were still up over 10% at 10.4. Um the three year up over 12 and then
obviously um factoring in 2022, which was a pretty bad year. Uh we we go back down again. But, uh we talked a lot about the the the value product. We did implement that in the the first quarter of January. It wasn't in here for this this meeting, but we did uh essentially
take half of the allocation and split it between the two value products. Uh as we sit here today, you know, both of them are beating their benchmarks yearto date for the first 6 weeks and that new behavioral fund that we added um is actually doing a little bit better than the old old product. So, it's paid off in the very short term. Um but again, I
think having that diversification is going to benefit the plan moving forward. Um but nothing earthshattering in the performance. You know, the other area that that that trailed ever so slightly down at the bottom under the asset category returns, you'll see that third grouping there, that Lumen's large cap growth. You know, for the the
quarter, he was up about half a percent when the benchmark was up closer to 1.3. And for the year, he was up about 15.8 or nine versus the benchmark at 18 1.5 or so. But for the three years, he's actually beaten the benchmark up over 33%. So again, you can't get a 33%
annualized return over the last three years in large growth unless you had those AI names, which he did. He just was trimming them or not adding to them as they became ever bigger uh pieces of the overall benchmark. He didn't think it was prudent to again to have like 15%
in Nvidia. U we we tend to agree with him. Um so again, nothing earth shattering there. Over on the next page is the asset allocation. As you'll see, really kind of right on top of the benchmarks uh at the end of the period. And as I indicated earlier with our rebalance in January, we're probably
about a about a percent and a quarter more in uh fixed income than we do equities. So probably a little closer to 51 uh 50 and a half 51% as we sit here today. So all in all guys, um that's really what I wanted to cover. Uh the rest of the material goes into all the
holdings in in in each and every one of the the various strategies. But all in all good solid year up over 10%. Could have been a little bit better um if we had had more AI exposure and our large cap value manager had done slightly better. But you know all in all you guys know you most of you have been on the board for quite some time and you kind
of understand that we're never going to uh outperform in an environment like the last two or three years where it's very concentrated and really all you had to do is throw risk into the portfolio and you would have outperformed. um that we don't think that's prudent and uh again uh for for that we will gladly take the
the downside which I'm not not hoping comes um but that's usually when we tend to look a little better versus the benchmarks and and hold up pretty pretty well in those tough times as you guys know. So with that I'm going to stop talking and see if there's any other questions, comments, thoughts.
No. Well, as always guys, thank you very much for your business. We appreciate it. >> Thank you Blake. Okay. Um, next on agenda, we have Mitchell Brennan presenting quarterly reports for Burgess Chambers. >> Good afternoon. I'm here for Larry today. Uh, Mitchell Brennan with BCA.
Uh, and I wanted to start my uh, report with actually Dan Brea here with Con and Steers. So, you currently have exposure to them through the Conan Steers Global Infrastructure Fund. Uh, but today I invited him in to discuss a new product uh, that they're offering in the real
estate space. It's the Conan Steers Tactical Real Estate Fund. Uh the reason I'm bringing them in is uh twofold. It's a great opportunity. And in addition to that, the private real estate exposure you have through USQ uh core real estate fund is actually liquidating. So we
should be receiving back uh some of those funds starting this quarter uh sometime around the end of March. Uh and so this gives us an opportunity to put something in place to reallocate those resources to. So um the benefit of this fund and I won't steal too much of Dan
Thunder is it combines both private real estate and publicly traded so REITs. So we can actually consolidate the exposure you have here. Uh you have about a 50/50 split between REITs and um commercial real estate through the Schwab REIT fund and then that core real estate fund. So
their product covers about 65% is private real estate 35% public real estate. Uh and he'll get into the benefits of that. So, uh, he'll presentation for you to through. He'll highlight the the fund and some of the benefits and then any questions you
have, please pause him, ask him, make sure that, uh, any concerns, questions you have get answered. >> Awesome. All right. Well, thank you, Mitch. I appreciate you guys uh, having me down here. I'm really excited to uh, present this to the board. Um, so, as Mitch mentioned, my name is Dan Val. I work at Con and Sears. Uh, I cover the
Southeast territory. So, um, looking forward to meeting, uh, hopefully be down here more with you guys and and facetime. Um, so when I think about the Tref fund, I mean, this is their tactical real estate fund. It's it's better known as Tref. Um, when we launched Tref in June of last year, we
we wanted to figure out how can we improve core real estate. And anytime a man um is investing, an institutional pench land is investing in in core real estate. There's great benefits to having real estate in the portfolio. Um, as we mentioned before, like inflation sensitivity. Anytime that there's a, you
know, a negative inflation rise in the market, you want to see the portfolio perform well. Um, real estate does a really good job of keeping returns in that higher inflationary environment. But there are some negatives to having core real estate in the portfolio and one of them is liquidity. Um, so if
there's an earn specifically private market with um, real estate, it's very difficult to get your money out. Um it takes a few quarters to fully redeem out of uh you know these core funds. Uh and at the same time you positive side real estate is trending upward. Um you can't
just hop right into the private market right it takes time for people to buy buildings. You know if a fund X wants to um capture on the rent growth opportunity that happens in Florida say you know Miami Industrial is doing really well you guys want exposure to that. You can't just hop right in and
get exposure immediately. They need to buy property. So my point is that core real estate typically has kind of this slowy slower moving nature whether it flows. Um so liquidity is an issue that we want to address when launch this fund. And then number two is is kind of having relatively underwhelming returns
in the core private sector. Um obviously there are funds within the core what we call odyssey index which is the benchmark where all these funds in which sit plenty of funds that do really well. Um, but I guess if there's if there's sectors that are trending upward, it's
difficult to get that exposure in the core sleeve. Um, and when I say core, I mean multif family, industrial, retail, or office. Uh, when I say core, that's kind of just the four core property sectors in real estate. Um, there's plenty of sectors in real estate that do
really well that aren't in that umbrella. So, when we launched this fund, we said, "Okay, we want to have better liquidity. We want our client to have the ability to take their money out if they need it." and then also to give them broader exposure to new sectors. So we launched Tref as I said before it
stands for the tactical real estate fund um to address those two issues in core real estate. Um so far there's been a very resounding positive response in the market for a lot of the clients we work with. A lot of the consultants we work with um are very high on this uh this
new strategy. um it hasn't truly been executed before um you know in our world because it's very difficult to create a passive private vehicle and then combined a a public um vehicle with that because it's very hard to get in and out
of these funds. Um so I hope I'm making sense but essentially it's it's a blended public and private real estate strategy. You have the benefits of private, the steady returns. Um, you get the benefits of owning core properties, but you also have 35% of the strategy
dedicated to public real estate. With public real estate, these are publicly traded companies that own and operate portfolios of real estate. They have exposure to next generation sectors like data centers, healthc care facilities, skilled nursing facil, places that are
trending in rent growth. Um, so you're getting you're getting exposure to those two sectors in this fund. Um, and forgive me if I'm if I'm flying through it, but there's also a lead lag relationship between public and private real estate. So, say we think the public
market, the stock market thinks the office sector is going to rise, right? Maybe we think people are coming back to the office, maybe in gateway markets like New York or LA. We think that people are going to go back to the office and the landlords for the office buildings are going to be able to improve rent because there's more demand
for office space. That positive spike happens immediately in the market. If there's a news article that breaks that, you know, maybe one landlord in New York City is is getting more rent per square foot than they have since co the office stocks are going to go up that day. So, you're getting immediate responses in
the market when there's positives in the market. Um, private real estate appraises on a quarterly basis. So, all these properties, you don't truly get the value of these underlying assets until the next quarter appraisal value. So, there's a lagging indicator of
private real estate where public real estate kind of tells you where the tide is going. Think of it like a like a room, like the ambient temperature of the room is private real estate, but the thermostat is is public real estate. So by having that lead lag knowledge, we
can get ahead of market turns to say, okay, we think private real estate is following the trajectory of public real estate. We're going to increase our exposure to private and we're going to take advantage of the upside returns for that. So um without getting too in the weeds, I would say TF is really just a
wonderful strategy to take advantage of that lead lag relationship that traditionally isn't available for institutional investors and pension plans like yourself. Um we have a great pipeline of capital growing into this fund. We have around five plans uh in the southeast specifically in Florida
that are already allocated to the fund. Um we're expecting anywhere between 30 to 75 million to fund on the 31st of March. Um so this is definitely a positive sentiment product that um we've presented to the market and I I I certainly think that um it'll be a great
you know uh pin the portfolio. Um also want to talk a little bit about fees. um for Burgess Chambers clients, we're offering a 20% discount um as a founders fee um which has been accepted by um I believe correct me if I'm wrong, Mitch, but a few clients so far um under the
Burgess Chambers um relationship base. So um always thankful for their partnership and and hopefully um we'll we'll find a way to work together and continue our partnership. But um happy to stop there and answer any questions. I know it's kind of a it's an interesting strategy. There's the
public, there's the private component. kind of hard to to navigate those two, but if there's any questions, feel free to to fire away. >> How long does that 20% discount last? >> Um, >> is that as long as we have money in there? >> I believe we're offering it for the
year. Um, and I I believe for the extent of your partnership, yes. >> What is the percent that you do charge once that fee 20% discount goes away? What is does it compare to >> that will that will stay with you throughout your partnership with Conan Sears? >> What is it? I mean
>> it's 1.15%. >> So it's over 1%. >> Correct. >> So it's one and a half. You said >> 1.15 sir. >> Oh 1.15. >> Okay. Thank you. >> What's the allocation between public and private real estate for investments? >> Yeah. So it's so our benchmark is 65%
private and then 35% public. Okay. >> Um there's actually a really good slide on this deck if you guys want to flip to uh page 10. Um, so on page 10, we looked at this and we said, "Okay, we're going to build a track record on the strategy, a hypothetical track record." We found
that the 65% private, 35% public maximizes returns while mit mitigating draw downs, um, and also reducing volatility, right? So, if you were, you know, say if you were to go on all the way right on this spectrum, 100% listed,
yeah, you get the best returns at 9.4%. but you're also getting the highest standard deviation. So you're getting the highest um volatility and potential risk. Um so we found that the the sweet spot for a lack of better words is 65
35% private 35% uh public real estate. >> What is the trend right now for public because you said you kind of lean towards that to gauge everything else? >> Exactly. So we're seeing um an inflection point in the public market currently. We're seeing values start to rise. A lot of the REITs have gotten
beaten up over the inflation the last few years. Since REITs and real estate in general is such a highly levered asset class, anytime interest rates go up, the value of the REITs typically drop. We found a lot of discounts in the public market that are giving us a
strong buying signal for the public market. We think REITs are going to rebound, so we're slightly favoring REITs right now. Um, and then once REITs get a little expensive, maybe we'll we'll shift it more towards private. But right now I believe we have a 60 40%
allocation 5% more towards reats >> in your I don't know uh looking into all this what is the what is the commercial side of it I mean are buildings getting leased out again because after co a lot of buildings weren't yeah
>> they were closing you know getting rid of their leases going back up >> yep yes I would say it greatly depends on the property type but I would say we're seeing we're very bullish on healthcare retail and specifically office. We're seeing I mean in certain markets in the
sunb belt there's a like you know not sunb belt but like DC for example is struggling to get more people back to the office whereas markets like San Francisco, New York, LA, Miami people are going back to the office. Just speaking anecdotally, our my my team is
back in the office 4 days a week where during COVID it was kind of you know whenever you can get to the office that'd be great but now it's a stricter 4 day mandate. um I commute into work, the trains are packed. We're seeing a lot more foot traffic um in the office.
Um so there's certainly a rent growth potential positive for for certain sectors, specifically office. So I would say on the commercial side that it's definitely trending. >> Yeah, and that's a great question and I'll add some additional context. So
commercial real estate really sold off in 23 and 24. uh last year we started to see a bottoming out and the first positive return for commercial real estate uh coming out of those drawdowns. Um and part of that again is office being leased up again. So we've had
weakness in the labor market over the past year. Um if you look at 2024 we averaged I believe it was 170,000 jobs monthly added to the jobs market. Uh last year it was about a tenth of that. Uh we had huge revisions at the end of
the year that took that down. um that the last 3 months we actually lost on average about 20,000 jobs. So we've reached an inflection point where coming out of COVID there's about two jobs per individual looking for employment. Now we're at less than one job per
individual looking for employment. And so that shifts the leverage back to the employer to say hey we want you in the office versus you know the employee being able to say I want to work remotely five days a week or four days a week. So we've seen that that increase in occupancy uh go pretty significantly
over the past few quarters in the commercial space. In addition commercial aspect of this portfolio he mentioned is somewhat of an index fund. So the index we use for commercial real estate is the nayree OTE and it's comprised I believe 29
different uh portfolio funds portfolio managers of commercial real estate who manages the uh commercial real estate portfolio for this fund has access they allocate to about 26 of those. So instead of being
directly allocated with one uh specific portfolio manager like JP Morgan or UPS and having say 50 to 100 150 commercial property you're exposed to you're allocated to 26 different funds with thousands of properties. So you're more
diversified and the impact of any one or two properties or property types underperforming has less impact on the performance because you're so well diversified in that space. Larry and uh Blake have kind of harped on the benefits of index investing on
public equities. This is that same approach but in the commercial real estate space. >> Yeah. And I would on page 14 just to add on that and thanks Mitch. Um you can see how the fund invests outside of just the four core property sectors. Right. So,
say there's a downturn, I mean, god forbid in office and you want to have um exposure out of office or even if you're invested in a fund that maybe has a specific uh you know idiosyncratic movement in the market that could impact
the rent growth on that property. Like Mitch mentioned, you're indexing all of your private real estate exposure. So that you know the odds of a negative rent growth uh event happening on a property impacting the broader portfolio is very slim. Um you're just
diversifying your exposure. Um on page 14 you can see um the the allocation to noncore and what we call next generation sectors. How a difference between the ODCE index and how it different differs to our strategy TF. you're getting more
expo- you're getting almost 6.9% more exposure to healthcare which by the way has been an incredible sector from a rent growth perspective right now there's companies like Welltowwer Ventos they do senior living um we're seeing demographic changes that are really
benefiting those sectors you're seeing data centers right that we talked about the rise of AI um AI utilization for data centers has improved dramatically so you're getting great rent growth in those sectors these are sectors that you're getting exposure through to getting exposure to through Tref, but
not with any fund within the ODCE index. So, um I would say to kind of put it all in one one sentence, you're getting much better liquidity. Specifically, you're getting 15x liquidity. So, it takes 15x quicker to get your money out of the
strategy versus a a comparable ODCE fund. You're getting outsized returns. Our expectation is to beat the Odyssey index by 2 to 3%. Um and then also you're getting diversification to all
nextgen sectors. So um we think it's a great strategy. Um we're seeing a very positive um you know response in the market for it and I think it could be a good fit. >> Thank you. >> Thank you. >> Yeah. So we would eventually allocate
the full it's roughly between 1.3 and 1.4 million and that's your current real estate exposure. So within our report you usually see on page 14. It's uh right in the middle of the page. Uh and that's I have a different than you but um it's the BCA report. It's on page 14
right in the middle of the page under that green line highlighted real estate. Uh so you currently have USE >> Yes. Sorry that one. Um you currently have the Schwab US REIT. So that's uh publicly traded real estate and then below that you have USQ for real estate which is your private uh real estate
exposure. USQ is liquidating so we're getting that back sleep. So recommendation be to start with that little over 100,000 to initially fund Cohen and Steers. Um and then as we get redemptions back that liquidation SQ uh allocate that to them as well. Um and that covers both private and public real
estate exposure. It allows them to be a little more flexible as he mentioned be tactical. So, as the market moves and shifts, instead of us having to come in quarterly and wait, you know, maybe 90 days, recommend shifting the money around, they'll be doing that actively on a day-to-day basis.
>> What if, just what if, >> sure, >> we try this for a year and we don't want to do it anymore? If it goes 366 days, do we get charged that 1.15 then or do we still get charged the 0.92? >> We would honor the discount on the
founders. I'm just saying just >> Yeah, we No, we would honor the discount. Yeah. >> Okay. I don't think we would. >> No. And and to your point, uh you would get the money back much quicker. I think there might be a slide in here. >> Yeah. If we want >> compared to the direct uh commercial real estate investment, say we went with JP Morgan or UBS, the time it would take
to get a full redemption back from one of those strategies versus this one is significantly longer. So, keep in mind 35% of it trade like stock like the stock market. So you have that access uh as well as instead of going to any one commercial real estate manager and
requesting you know say $10 million they're going to 26 different managers and saying hey we need 10 million we can get it from this manager and this manager this one's going to take two quarters to get money from. So there's much more liquidity on both sides of the portfolio. So um which you know not a
closed fund. So there's not an urgy that you know we have significant distributions from the are coming out on a quarterly basis but when the market moves you know 2022 when we had huge down uh down periods in the market when we want to rebalance any extra liquidity
we we can find where we can rebalance you know get into the stock market at a 20% down um that's a win for the for the plan over the long run. >> Yeah. Thank you. >> Appreciate it. >> Well that's it for me. Um, appreciate your time. Thank you for having me down. >> Thank you. >> Thank you.
>> Thank you. >> Yeah. And so, uh, our recommendation again would be to initially liquidate the Schwab US fund, uh, which is currently just over 600,000. Um, it's probably closer to 625,000. It's up about 8 and a half% year to date. Um so
we recommendating that and uh starting an initial um allocation of of that portion to Conan Steers and then as money comes in from USQ over the next couple quarters allocating that there as well. Um so I'll open that up for you to
discuss and make a motion on. >> One more question. I'm sorry. What what's the percent we pay for the Schwab? >> What's the >> the Schwab? It's pretty low. Um I can actually give me one I can pull for you. It is an index fund, >> right? >> Um, and then the USU is actually a little bit higher. It's a little over 1
and a.5%. And it actually has this a similar strategy and index approach where it's allocated to less managers. Believe it's 479 uh um nay ODCE managers. Uh but it's a little over one
and a half%. If you give me one second, I can tell you exactly what the Schwab reitense is. If I have a service, it is uh 07%. Mhm.
>> And this as far as investing with a say you want to just allocate to an individual commercial real estate manager they're typically the cheapest scene is8% uh all the way up to one and a half percent. So on average they're right around this maybe uh a little more
expensive about 1.2%. >> Okay. Thank you. >> And it keep in mind it also depends on the size of your allocation. They typically have tiered if you're over 25 million in assets with them it's a lower fee over 50 over 100. So we would because you're about one one and a half
million you'd be at that higher t from tier for for most of these unfortunately. >> Okay. >> I'll go ahead and second that. >> Okay. All those in favor I >> I. >> All right. Motion passes. So what we'll
do is we'll get the contract approved and once that's approved we'll go ahead and submit a letter of direction to in cash for extended period. We'll wait till everything's approved on the contract side before we uh submit the trades. >> Thank you. >> Thank you.
>> All right. So now it is my turn. So we'll actually start. I have a handout for you. I do have the same cover this time. So it looks like this. It's just a quick market update. Uh, and I apologize, Hannah. I we covered a lot of this yesterday when we uh reviewed the city's 457 plan, which I I should have
mentioned. So, uh, we actually offer the Conan Steers RE fund on your 457. So, you already have the city has exposure to that refund. It's one of the longest tenured uh, publicly traded real estate funds in the market and it has fantastic numbers. So, we have very high
confidence in Conan Steers and their their ability to execute this strategy. Uh but on page two of that handout, just a quick highlight, and I'll run through this because Blake covered quite a bit of this. Uh for 2025, you'll see in the middle of this chart the returns for the market. US growth was up 19%, US large
cap, so the S&P 500 up 18% and US value up 16%. Fantastic returns, right? I think we'd all take that in our personal portfolios. Uh but you'll notice those are in the middle of the chart. If you look to the left, it's all the international markets. So developed markets as well as emerging markets
growth and value all had huge years outperforming the US. Um two main reasons for that. One is the US dollar weakened uh by about 10% last year. So when we get national returns made in the local currency of where they're doiciled and we actually convert them back the
funds that you utilize convert those back into the US dollar. So when the dollar weakens it actually boosts those returns. So that's part of the story here. Uh second is we saw significant fiscal stimulus as well as loosening monetary policy abroad. Uh part of that
specifically was huge defense spending internationally especially in Europe. Um with all the geopolitical conflict uh there was huge news a few days ago. Um Germany actually announced that they've run out of air defense missiles. So
every air defense missile that they've had in reserves and been building out over the past few years have all gone to the front line in Ukraine. And so they I believe it was two days ago announced the rest of the European we simply have no more to provide. We need more spending and more development from the
other countries in the EU to fund and and send those to Ukraine. So again, that's an additional stimulus that's going to go into those aerospace and defense companies internationally and continue to boost those markets. Uh if you go to page three um just wanted to
quickly highlight this is a chart where the the purple bar anytime it's above the line that's periods where international markets have outperformed the US. Any anytime the purple line's below it's when the US markets have outperformed international and you can
see we've been in you know a 17 18 year period where US has significantly outperformed international. The big reason for that, the last time had extended outperformance by international was going into the great financial crisis 07 and08. So if you look at the composition of international and US
markets, internationally uh those markets are much more heavily weighted in sectors like financials and industrials and again in 2008 when the banking system collapsed a lot of those international banks sold off significantly and took a long time are still recovering in some aspects.
Whereas the US markets are heavily weighted in tech. we've had, you know, a huge trajectory in in development and growth in the tech sector. MA the MAG 7 has been the most recent uh example of that. And so that's why we've seen that significant outperformance uh really since 2008 from US markets.
If you go to the next page, um and Blake touched on starting to see a rotation in markets uh away from some of those mega cap tech names like Nvidia and Microsoft and and Alphabet. Um, but if you actually look the lefth hand chart on
page four, the S&P 500 covers 500 of the largest, most profit US companies. If you just took out Nvidia and went back to when the market bombed in 2022, which was when inflation peaked at 9% and the Fed was uh hiking rates at a a pretty
expeditious rate. We've actually underperformed, our market, excluding Nvidia, has underperformed Europe and Japan. So, this has been in the process over the past few years. It's just been hard to tell because Nvidia has done so well and it's such a huge portion of our US market. And if you look to the right,
as I mentioned, the biggest outperformer over that period was European aerospace and defense. And so over the last year, uh the EU spent over 380 billion uh in the defense sector. That was an 11% increase from 24 to 25 and over a 60%
increase over the past five years. So since 2020. So again, huge money going in there. um into that area and with all the geopolitical uncertainty and conflict, it doesn't appear there's any resolution on the horizon. So you can
kind of project out 10% growth going forward if you know things don't get resolved with Russia and Ukraine and and new conflicts arise. The next page uh just quickly wanted to look at um as
I mentioned the Mag 7. So that's Nvidia, Meta, which is Facebook's parent company, Tesla, Amazon, Alphabet, which is Google's parent company, Microsoft, and Apple. Uh 23 and 24, those names dominated the market. Uh 25, they outperformed the S&P 500 on average. Uh
however, it was really the terrific two. So Nvidia and Alphabet were the only two of those seven that actually outperformed. Uh and overall, it was by a much slimmer margin. So um in 23 and 24 they had huge outperformance relative to the S&P 500 much smaller margin in 25
and we started to see at the end of the year and for the first quarter you'll see the or excuse me the first month of the year through January the 26 year-to- date performance on average those mag 7 are actually down about 7%. So, the market has gotten away from some of the speculation and some of those
high-flying growth names and rotated more into the value side of the market and the quality uh positions like Sterling's large cap equity income and uh behavioral large cap funds that you have exposure to.
On the next page, um just to further illustrate, you know, a broadening out of the market, all that means is it's a very concentrated market. It's like we saw in 23 and 24 when it's just the mag 7 carrying uh the market higher. A broning out means more companies are
doing well and lifting the market higher which is healthier and what we like to see. Um and so this highlights the blue bars are the contribution um for the top 100 and then the top or the bottom 400 in the S&P 500 from the start
of the year uh through peak concentration. So November 3rd, the top 10 names reached about 44% of the S&P 500. Um, and then they've subsequently uh fallen off over the past uh few
months, they're now just over 40%. But for that first portion of the year, the first 10 months, they those top hundred names contributed nearly 90% of the total return of the S&P 500. Now, fast forward November through the end of January, they're only contributing about
12% of the total performance. So, again, we've seen a huge rebound where um the bottom 400 is contributing over, you know, three4s of the total return of the S&P 500 over that time period. So, a much healthier market environment where
more companies are doing well, not just a handful. Um in page seven, um just quickly want to touch on this. This highlights kind of the struggles that we've seen with active managers in general, but especially on the value side. Uh Blake mentioned Berling's equity income underperforming for the
year. This chart on page seven applies to small cap. It's specific to small cap, but you can apply it more broadly to midcap and large cap. And it really shows when the market bottomed in April. So that was right after the original tariff announcement when markets got very spooked uh at some of the
significant tariffs that were being speculated of being imposed. We sold off market bottomed on April 4th and then that rally through the end of the year. The best performers in small cap were the companies that had no earnings. So the non-earners were up over 82% over
that time period. And then companies with no sales were up 83% over that period. Now, the second to last bar on the right, that RU, that's the Russell 2000. That's the benchmark we look at for small cap. It was up just 42%. And so, the last bar you see there, that
10.6, that's the percentage of managers, active managers in small cap that were actually able to beat the benchmark. So, nine out of 10 managers could not keep up with the benchmark because they're simply just they're not willing to hold those names. And frankly, we don't hire them to hold those kinds of names. uh
within the the non-earners and companies with no sales, a lot of that is biotech. So biotech companies that are developing new drugs and therapies that have no sales, they're pouring money into R&D. Very speculative. Again, active managers just aren't willing to hold those names
and uh put those in their portfolio. And then lastly, page eight. Uh just wanted to highlight we're in the same boat as Sterling. We're we're cautiously optimistic about 2026. um our market perspective in our report which I won't dive into just kind of covers some of
the headwinds we see for the consumer in 2026 uh household spending contributes nearly 70% of US GDP growth so it's really the economic engine for the US and so we just wanted to highlight some areas where the consumer may struggle in 2026 but on the flip side on page eight
this actually highlights one of the areas where we may may see some stimulus and a boost to the consumer in 2026 and that's with the average tax refund. So the bottom right hand chart, it actually shows it's projected that we're going to see about a 25% increase in the average
tax refund in 2026. So in 2025 is about 3,200. This year it's expected to be closer to 4,000. So with the extension of the 2017 tax code um in the passage of the one big beautiful bill last year, there should be more money coming back
to consumers through tax refunds. Uh and so we could see a little boost in the economy at the end of the first quarter, start of the second quarter. Typically that money that comes in for tax refunds goes right back out the door into the economy. And so again, we could see a nice little bump in consumption towards
the back half of this quarter and the start of the second quarter. Um any questions on that? Sorry, I know that's a lot, but wanted to just give you quick highlight of last year as well as kind of what we're seeing to start 2026. All right. So, with that, I'll I'll jump
in the report and we can start on page uh five and I'll I'll be brief. Uh for the quarter, very strong quarter, 505,000 investment gains, 1.4% return. Uh we unfortunately did uh miss the strategic model. We trailed it. It was
up 2.4%. Again, just some of those active managers on equality on the value side missed their benchmark as part of that junk rally and to end the year. Uh but your best performers international as I mentioned was up nearly 5% for the quarter. Uh global infrastructure was up
three and a half%. So again about 50% of that is international. So they benefited from that. And then large cap core your S&P 500 index was up 2.6%. For the entirety of 2025 you earned 4.5 million in investment gains or 13.8%
13.4 net of fees. And again that trailed your strategic model. you'll see some of the underperformance like from sterling equity income where they missed the benchmark by 10%. We don't expect that this year especially as the market has rotated back into their favor. Should see some outperformance there. Uh and so
far the the new fund that was added the Sterling Behavioral Large Cap Value Fund is outperforming its benchmark by over 2% year to date. So very good timing uh with Blake's recommendation to enter that at the end of the year. So happy happy to see that paying off in the short term. Um and then lastly, uh for
the past three and five years, three years you've generated 12.8% on an annual basis. For the past five years, uh 6% annualized. Keep in mind that 2022 when we were down significantly when the market sold off is still in that 5-year number, but that should be rolling off
uh pretty soon after this year. Um so that's why you see that big difference between the three-year where we don't have it and the fiveyear where we do. Um, page six, uh, we review your investment policy statement and highlight
everything here. Uh, the good news is in the short term, the three years, you've exceeded your strategic model as well as your actuarial assumption rate, that's 7 and a quarter. Uh, and I'll also add that the new tactical real estate fund by Con and Steers, it's targeting somewhere between eight and nine%. We're
more conservative. We're hoping for somewhere between six and 8% which puts you right in line with your actuial assumption rate. And the money we've allocated to real estate is coming out of bonds. So you'll see in here, you know, we made the assumption rate with bonds this year about 7.3% which is fantastic. We certainly don't expect
those kind of returns from bonds going forward, especially with rates coming down. So you can kind of gauge bond returns based on their yield. The yield in the portfolio right now is somewhere between four and 5%. So, we'd expect about four or 5% returns from bonds over the next year or two. Um, if rates come
down further, we'll get a little appreciation, so maybe a little higher, but then going forward, those bond returns will be even lower. Um, so again, allocating to somewhere else from bonds where we're going to have a higher probability of hitting that assumption rate is going to make a healthier return
for the plan. Um, and then down the board, you'll see really the areas that we we saw underperformance, large value, again, we talked about that, just the quality bias. unfortunately not paying off. So, no issues there. No recommendations to make any changes with your funds. Um, page seven is kind of a
compliance review and all of your uh funds in terms of equity exposure, foreign equity exposure, and uh individual fund exposure were all in line there. So, no compliance issues. Um, page eight highlights the numbers I went over. Um the the only one I didn't
touch on the 5-year column at the far right on page 8. You'll see you started with 30 uh 33.7 million in assets 5 years ago. Uh you've distributed a little over 5 million over that time period. You've generated 9.2 million in investment gains over that time period.
And so we sit at the end of uh December 37,677,000. So great growth in the plan. Very happy to see that. Um, page nine are your targets versus your current allocation. Uh, I do want to recommend so we did receive uh December 5th the city
contribution of about 1.1 million. Uh, so that's currently in cash. Uh, and so our recommendation is to reallocate um about 1.125 million of that. So it's roughly 3% uh of the balance as of the
end of December 31st. And we would like to send that over to Sterling to allocate 1% about 375,000 to small cap where you're underweight. You can see you're about 2.2% waiting at at the end of the quarter versus a 5% target. Um
and then 2% which will be about 750,000 uh to large cap value where you're underweight. So you have a larger exposure in large cap core which has been great. Uh it's slightly up this year versus growth down 5 and a half%. most of your peers are unfortunately overweighted growth uh which is
hindering their portfolio this year. Uh but relatively you're underweight value so we'd like to to add some uh some exposure there to get you back equal weight uh compared to value and growth. Um so I'll pause again. And that recommendation is if you want to from a
percentage standpoint to move about 3% to Sterling to allocate one uh% to small cap as they see fit and uh percent to large cap value as they see fit. >> Yeah. >> Motion to go with the recommendation of
Burgess Chambers. >> I'll second that. >> Okay. All those in favor? I >> I >> All right. And then other than that, I' I've taken up far too much of your time. Um page 14 just highlights all the individual funds. Uh and I'm very happy
to report I won't go through all of them, but all of your funds with the extent of Lumis uh Lumis sales large cap growth are up yearto date. So uh a lot of those are up pretty significantly. As I mentioned, the REIT funds up 8 and a half%. Uh your global infrastructure
funds Conan Sears and Lazard are up 11% each. Um and a lot of the value uh like midcap values up 12.3%. Uh large cap value. Uh the new strategical strategic uh sterling excuse me sterling behavioral large cap value
is over 8%. Uh so very happy to see some of the areas that have underperformed the past few years really uh shining to start 2026. Um, so with that, again, no recommendations other than just that rebalance of cash. Um, so I'll conclude my report and just open it up to to any
questions or discussion. >> Any questions? >> Thank you, Mitchell. >> Thank you. >> Um, the next item we have on the agenda is Foster and Foster has the actuarial valuation reports and we have Doug Lozen here to present them.
>> All right, >> good to see everybody. loaded up on the iPad. >> 4362 should be close rather far away. talking on stage, I guess. Very happy to be here in the brand new
city hall. It's nice to see everybody here seems thrilled with it. >> I think this is what they're doing on my side of the state on the Fort Meers and you're on a lot of damage for Santa. So, everybody seem to be taking their homes and doing
what's happening here. I don't remember. Have you guys ever had a surge here in Coco Beach? long time. Yeah, we lost all of our little bungalows in Fort Myers.
Anyway, so beautiful city hall. Good to be here. Um, I am here to present the latest valuation for the general employees pension plan. We go through this exercise every year because it is a pension plan. The benefits are payable
as the life annuity that you know to the retirees. It's a monthly check that they cannot outlive and it's based on a formula. It's a percentage of pay. And so it's our job as the actuary to come to you every year, the board of trustees and give you
a valuation report with a recommendation for how much the city should invest, how much is the contribution, and then we go in and with uh Mitchell and Burg's group along with the managers that help you ch
ideally would grow at at least at 7.25%. We have to come back every year and I call this a true up because um we're using a batch of assumptions without getting too far in the weeds to let you know what we have to do as the
actuary. Every year we collect data from the city. Sorry. >> Sorry. You're >> Oh, I'm sorry. I need to be back there. Sorry. appreciate that. Thank you. I forgot I have to be I'm recorded. So, um we
collect data from the city. Every valuation it's as of September 30th. We want to know who's who's in the pension plan, how much are you paying them, male, female, years of service, uh what their contributions are, and
then we look at all of the retirees that are drawing benefits. And our job, believe it or not, is to get out the magic crystal ball and project into the future every one of those people from the youngest, lowest service employee to
the oldest beneficiary, every check that will ever be cashed from the pension plan. We discount it back to today. And we have to go through this every single year because we have projections. We use assumptions.
We're projecting how long do these members live. How what's the probability that a member when they get hired will make it to retirement? And if so, what will their be what will their check be? We have to estimate when will somebody pass away and if so, is there a benefit
that continues to a retire to a beneficiary? So, our job every year is to come to you and say, well, we're using these assumptions. here's what actually happened and we're never going to be dead on. We
have about seven different metrics that we have to measure. And so then I come to you and say, well, here's where we beat it, the assumption. Here's where we fell short. And now we need to do true up. So this is why I always start here on the summary page. Here's the true up
for this year. The true up is going from 12.1% of payroll to 14.6. 62%. And what so what that means is that in this current fiscal year,
the city's requirement is 12.1% of payroll. So Hannah would just add up the payroll of all the active members in the plan on which they are making contributions. We call that pensionable pay. They're putting in 5% the the active
members. payroll right now is we'll round it off and call it $8 million. So the city's requirement for this year is going to be that 12% times about $8 million. So back of the envelope math and it's about a million
bucks for the current year. The true up is going into next year Hannah should budget 14.62%. Now that percent is locked in. We'll leave that alone. The dollar amount will be an estimate until fiscal year 27
closes. And I'm sure Hannah's already estimated what payroll is likely to be next year for 2627 fiscal. And she'll just have to multiply 14.62% and budget that amount for 2627.
So now the burning question is all right that's true up. Where did it come from? by the two main there's there's three main components there's a lot of moving parts but I focus just on the main ones
about onethird of that increase is due to a mandated mortality assumption the state tells all of us around Florida all these public pension plans there's about 400 of them the state tells us how
long we're all going to live That's kind of tongue and cheek, but um there is a statute there's a law passed about 10 years ago uh that required that public sector pension plans in Florida must assume life expectancy
using the same tables that the Florida retirement system uses. And whenever the Florida retirement system makes a change, then we have to make a change. And because the Florida retirement system uses actuaries like you do me, they go through an exercise called an
experience study every 5 years. Florida retirement system did that. They change life expectancy tables. We have to adopt it. That is about onethird of this increase here. The other twothirds are due to larger than expected salary
increases. This is like the fifth year in a row when the city has increased individual salaries average more than expected and spoiler alert that's going on everywhere in the state. There's fierce
competition for workers. Uh and the other component is on the investment side. You recall I see familiar faces up there. I think you trustees recognize that when we do the valuation report,
we're using what's called an actuarial return for investments. It's a 4-year average. We call it the smoothing average. The reason we do that is we want to avoid uh Blake already brought this up, the volatility. We know that from one year to the next on
investments, you can be way up or way down relative to your seven and a quarter. And we don't want to give the city whiplash. For instance, four years ago, there was a double-digit negative, almost a negative 20.
Had we not used a smoothing, I would have come back to the city in the year following and said, "Uh, buckle up because your contribution requirement is going way up. It's going to spike next year." But then the following year I came back
and what the prior year I had mentioned was a negative almost a negative 20. The following year was a positive 10. And so I would have given Hannah whiplash in the other direction. And so then she'd be going to the city council every year like what's going on here? It's up. It's
down. So we use a four-year smoothing. So the four-year average with this report is 4.4%. 4%. We assume 7.25. So looking at the summary page, that is the
other component. So again, I'm going to summarize here and then move on to just one or two more pages and that can be done. The increase from 12.1 to 14.62. One/ird is due to the mortality change. The other two/irds is large salary
increase and your actuarial return on investments. being below percent. Now, here's where I'm going to give you a segue. Um, I'm going to get in a time machine here and go forward one year. Next year, at this time, you're four
years smooth. I have I can't tell you what it's going to be. If I did, I could give it to you now and you wouldn't have to see me. What I do know is that the the the fiscal 22 return that almost negative 20 falls off. If we get a return this year anywhere
close to your assumption, your four-year average, your smooth could be over 11 or 12% next year. So, there's still a little bit of whiplash there, you know, going from a 4 to an 11, but it's a lot
better than going from a negative - 20 to a positive 10. So, I'm hopeful that next year at this time when we put that 14.62 62 in the right column and I give you a new number for the following year. Um, fingers
crossed it's at least stable or perhaps might go down a bit. Again, going back to where I started with all this about 10 minutes ago, we have a lot of assumptions we need to measure. It's not just uh the in return. So, have to look at all of the other assumptions
and see how they measured up against reality. So, let me show you one other page here and then answer questions and then I'm almost done. I have one following recommendation after this report. Yes, sir. >> Just because we're on this page, yes, >> that last sentence
>> they were offset by favorable turnover. >> Yes. >> What does that do? We we do have an assumption for the probability that someone leaves employment every year based on service. And what that means
favorable means we had more leave than we expected. And if a member leaves before retirement, they're either getting a refund of their contributions only or they're freezing the small benefit and they're going to draw at age 62. >> So high turnover is favorable for
pension plan. >> So people four years is good. >> Yes, correct. Uh let me get you an update on your funded status. There's a table in the report. It would be page 16.
It's a 10ear, it's a graph, a lot of green bars. It's a 10-year history of your funded status. And you can see for a long period of time, it was very stable. well into the 90s even cracking 100%. It has been falling the last I
think well call it since co and we're currently at about 85% or so the yes 85. So the question is is this a concern? Uh no it's not a concern. There's an answer for it. There's an
explanation as to why the last 5 years I've had salary increases since co I'm I'm saying since co because it was about that time I started seeing this everywhere. That's also the time inflation started to really hit. So it makes sense that salaries would have to
go up to kind of keep pace with inflation. Um but then we had the mortality change in there as well. And I think we may also in that first year have lowered the investment assumption. We used to be at 7.75
uh through 2021 and then we lowered to 7 and a quarter. So I think in the first year there was also that. But I'm I'm not concerned. I mean there's an answer to it. Hannah knows this well. If she would go back and pull out the last five years of reports the city's contribution was, you know, in
the single digits, maybe seven or eight% and now it's at 14. That's that's the solution in the short term to a funded status that's decreasing is more money to be invested and that will reverse the course. So I I owe concern
that you have gone down you know for the last couple of years. You can see in any given year it does not change a lot. There's just a little bit of a pattern here. So with that said, let me answer any questions on this report and once answered then we can approve it and then
I said I have one other recommendation. >> Any questions from the board members? >> No. >> Do you also do police and fire? >> Yes. >> Is it appropriate to ask how are in general? >> Yes. I I I just delivered those
recently. I haven't presented them to the board yet. They had salary increases above the assumption and their investment performance was the same. The four-year they're in the same boat. The four-year average is below the assumption. Um, it'll be opposite and their salary
increases were greater than expected. >> Are they? >> I forget off the top of my head. I I believe I believe they're in the 80s as well.
Um, and if not, they're not far off. >> Okay. >> Yeah. No, fair question. It's three different pension plans here, and everybody likes to compare. >> Well, you know, one does bad, the others, everyone looks at the other. >> Oh, sure. Yeah, that's common.
>> Yep. >> They get theirs right away. >> After their 20 years or 25 years, right? Don't they won't they don't they get their pension after 20 or 25 years? >> 20 25 and out. They can work 25. Yeah. Standard for police and fire in Florida.
Earlier retirement compared to general employees, >> right? No, I'm just making a statement. >> Yeah, it is 25 and out, >> right? >> Thank you. >> Okay. Um, other questions? Happy if then let's go ahead and approve this. We have to make a motion to approve it. from the
audience or >> is there a public comment session on this? I >> do need a motion. >> Um yes, it will need to be approved. >> Okay. Motion to approve the valuation report presented by Foster and Foster. >> Okay.
>> All those in favor? >> I motion passes. >> Okay. Now, there's an exercise immediately following what you just did. It's a requirement for about the last 20 years. I can give you the I'll give you the background to it and then I'll I'll give you the language because it's a
cumbersome wording. Um the the background isness to it. There's a long retired actuary at the division of retirement. And before he retired, he required that everyone every pension plan in the state go through something called the declaration of returns. every year when
you approve the valuation. I we don't know the exact logic to it. It's the same exercise for the last 20 years. But every the people I've talked to are guessing that this actuary wanted to make sure that pension boards were discussing their instrument return assumption and thinking about it.
Well, clearly you do you have quarterly meetings. You've got your consultant here who brought in a manager as a potential different source of investing. So clearly this is being done ne nevertheless this exercise is required for this purpose we always recommend
that you use your assumption for this letter which is seven and a quarter. So with that introduction, I'll give you the language. Somebody needs to say so moved and then a second at a vote. For the next year, the next several years and the long-term
thereafter, the board expects a 7 and a4% net of fees investment return. And then this is where >> you >> do we have to state it as said >> you can just say so move from what I
just said and it's on the record. >> I'll second the motion bill. >> All those in favor I >> I >> again it's an exercise every plan in the state has to do it. There's no penalty for being wrong. Like if you get a 7%
this year instead of seven and a quarter, it's okay. Duly noted. It's just an exercise. >> Yes. >> Um so now where I will finish up is part of my presentation I did for the last 15
minutes of talking about assumptions and an exercise every five years to review the assumptions. All actuaries do this. The Florida Retirement System actuary does it. We've done it with your plan every 5 years. We do it with all of our plans in Florida. So, uh the last
experience study we performed for you, reviewing all the assumptions and seeing if we need to make appropriate changes is time. The last time we did that was 2021. And the purpose of that reviewing
all the underlying assumptions is that true up going back to the summary page I just showed you that true up every year that true up is relative to the last time reviews which was 2021. We want to go back and review that batch
of assumptions against reality to make sure that they're still on track or whether we need to make recommended assumptions. And a bit of a spoiler will I'm probably going to reckon increasing the salary scale as I've done I can't think of any plans I haven't done that
with in the last five years that I've done experience studies in Florida. Um that is the assumption for individual annual increases in pay but we need to look at all the other assumptions um turnover retirements
disability early retirements u and I do want to revisit the investment return assumption to give you a whatif scenario if the board's interested in glide pathing down ever so slightly towards the seven which is average in state state. So, what I
need from you is approval to I call it an update because we've been doing it every 5 years here. And I'm thinking the best meeting to do that is probably at the August meeting. Um, but I'll leave that up to you. I can probably make the main meeting if you would like. Otherwise, August makes
sense. >> I'm okay with the August meeting. Are you guys okay with that? >> Okay. >> So, I just need your approval to do that and then I'll get to work on it. >> Okay. Motion to approve the update. >> Experience study. >> The experience study.
>> I'll second that. >> Okay. All those in favor? >> I. >> Okay. All right. Um I think I'm done. >> Other questions? I'm happy. I'll sit down. I can jump back up if you need me. >> Okay. >> Thank you.
>> Great. Thank you. >> Okay. forformational items. I just wanted to notify the board that since the last meeting, I did provide Salem Trust with a memo requesting that dividends are reinvested. Um, and then secondary, I just wanted to let you guys
know that in your packets you have an assumption agreement. This was signed from or signed for Sterling Capital. They had an acquisition agreement. It's included in the agenda packet, but I just wanted to make it known to the board members.
Um, our next quarterly meeting is May 21st, 2026 at 3 PM. >> And >> do we have to approve the expenses? >> Um, we did under consent. >> Okay. Uh, that's that's fine.
>> Okay. Um, being that there's no other business before the board, this meeting's adjourned.