--------- Good afternoon. Welcome to the city of Pala police officers retirement plan meeting. Um it is February 24th, 2026 and it's 1:30 p.m. Um the meeting will begin. Roll call, please.
Mayor Robera Carrera present. Chief Jason Shaw >> present. >> Matt Nukem >> present. >> Mr. Norwood is not here. Okay, we have quorum. Um, has everybody had an opportunity to read the minutes from
last meeting? >> Yes. >> Okay. And do we have a motion? >> Well, I'm sorry. I make a motion we accept. You were looking at me. I was like, today. What' you do to him? Okay, we have a motion. >> Thank you.
>> Motion a second. All in favor? I. >> Any opposition? >> Thank you. >> Mr. Madin, can you um please present the report from Capital City Trust? >> Yes. >> All right. Good afternoon. Dwayne Madan,
Capitol City Trust. And I think Kyle's going to put the report up on the uh screen there. If you go to the policy review page, we can look at the asset allocation of the fund and all of the asset classes are within the range
prescribed by the investment policy statement. We're holding a little bit more cash than normal as equities get expensive. Uh equities, by the way, just went up about 70% in three years. Unheard of. So stocks are expensive and
are wavering a little bit. So holding a little bit back in cash for now at 3 and a half% it's almost a bond surrogate. Not quite, but it doesn't hurt to hold a little cash. Uh if there's no questions on the policy status, then we can move
on to performance if Okay. If you um page down to performance for the fourth quarter, this is the equities not the bonds or the plan. So for the latest quarter, the
fourth quarter 2.29% equities return 2.47% bonds 1.75% cash.92. So um off to a decent start in the new
fiscal year, 2.29% 29% um and calendar year to date which was last year 16.37 equities 17.7 outstanding year for equities bonds 9.45
because high yield bonds are gave us a little bit extra push there and 4.38 on cash so returns have been good. Uh let me just um say that um last last quarter um if we learned anything it was that
diversification works because um money seemed to flow out of big technology companies like Apple, Microsoft, Nvidia and flow down to midcap and small cap and international equities. And so we're finally seeing
all parts of your policy work. So hats off to Burg Burgess Chambers and Associates because for a long time money has been concentrated up there in the large cap companies like Apple and Microsoft. But now it's flowing down to
other ends of the market and that's covered by the policy. And so I've noticed that returns are getting better because in the past midcap and small cap and international have lagged. Now they're pulling their own weight. So the
large cap portion doesn't have to work as hard. So um that was what we learned in the fourth quarter. Also um artificial intelligence is uh has been driving stocks and it's sort of slowing down a bit. Um potential headwinds are a
weakening job market, high levels of consumer debt, and ongoing geopolitical tensions like potential um invasions and wars between various countries around the world as we've seen over in the Middle East and Venezuela and wherever
else. So, um if there's no questions on performance on the fourth quarter, I I included January. By the way, if you turn the next page, turn the next page, page five, January was a great month, 2.29.
And so the equity portion fiscal year to date after only four months is about 5%. So you have eight more months to go and you already have 5% not counting the bonds. So that's not a bad thing. And I
want to share one chart with you. I have several charts, but I'm just going to page down to the one that says hyperscaler capital expenditures. Keep going there. That one. So, um I'll just share
with you one main issue out there in the equity market today and that is that the large technology companies in America have taken out a lot of debt. They're spending a lot of money on the infrastructure for artificial intelligence.
And when I say a lot, I mean five times what they normally spend, billions and billions of dollars to open up data centers to store the data or to provide storage for what artificial intelligence
need needs. Chat GPT is an example of artificial intelligence. So the narrative right now in the market and that's why you're seeing the market move slowly in February is that with all this debt, how are they going to pay it back
if they have not yet made a profit in artificial intelligence? Because remember AI hasn't fully arrived yet. They're building the information superighway to carry it right now. And when it's done, maybe this fall or next
year, that's when AI really starts making money. And so we're not exactly sure how much money they're going to make. And so that's making the market a little nervous. So as a result, you see gold going up and money flowing into hard assets like real estate of which
you have. And so um that's that's a good thing. you know, uh, safer assets, um, are doing their job because the equity market is a little bit fragile. So, we'll see how, um, that pans out throughout the year. And if you turn to
the asset allocation portion, Kyle, and that'll this will be the last part of my talk. So, this is without the private real estate and the infrastructure which are housed at another custodian, you
have 63% in stocks. If I add approximately 10% more for real estate and um infrastructure, then you're up close to 73%, which is a little bit high, but um so it's definitely a
portfolio that's designed to grow. Um and if you turn the page page 17, you'll see the uh index funds that we use. They're very coste effective, low fee uh mutual funds. And then there's one
active fund American fund Europacific. And then on the final page you see the Vanguard high yield bond fund. Sawrass is also custodied at capital city. So that's really all the comments I have. Any questions?
>> Anybody have any questions? >> No. >> Do we have a motion to approve the report as presented? >> Motion to approve the capital city report. >> I second. >> Motion is second. All in favor? >> I. Any opposition? Thank you.
>> Progress Asset Management, Lori Baylor and David Seagull. >> Hello everyone. Thank you for having us here this afternoon. I'm Lori Baylor. I'm a SARS asset management and I have with me today David Seagull, our fixed income um sorry fixed income portfolio
manager. We're based in uh Jacksonville, Florida, just up the road and we've had you guys as our client for a very long time. So we appreciate your trust um and ongoing partnership with these funds. I am been with Srass for 23 years and I've
been more back office to them and so I am moving forward into a client service role. So, I just want to take an opportunity to introduce myself to you. You'll start to see me accompanying David or one of our other portfolio managers at our meetings um and here to provide any sort of resources or
services um assistance we can with the um coverage of this account with you. So, thank you. Um David will cover the uh performance and all of our portfolio positioning as well as market out
inventory. Thank you, Lori. Good afternoon, everyone. >> Good afternoon. >> David Seagull, fixed income portfolio manager at Srass Asset Management. Um, Kyle, if you could just fast forward to the performance page. Um, so what I'll try to do today is not be too
duplicative. U, I know Dwayne and Mitchell are going to talk a lot about the economy. U, some of the macroeconomic factors that are affecting all asset classes. So I'll try to focus a little bit on fixed income in your portfolio and discuss some of the factors that are affecting the markets overall uh both fixed income and other
asset classes as well. And typically what drives fixed income is is interest rates which drives interest rates is the economy and inflation and and and labor growth and jobs. That's really what's been driving performance for the not just the last quarter, but really over the last couple years. Since back in
2022, the Federal Reserve raised interest rates substantially because of spiked inflation. That was a rough time for performance. Since since that point, however, we've been very fortunate. Uh the ability to reinvest at these higher interest rates and higher yields have produced some good performance. We've
seen a very friendly environment for fixed income and I think it's reflected in some of the performance numbers that we're seeing especially over here in the near term. So on a quarterly basis we were your portfolio was up a little over 1%. On a one-year basis you're up over 8% and on a three-year trailing basis up
almost 5%. So we certainly uh I wish I could sit here and say 8% is going to be the norm um for fixed income going forward. That's probably not the case. We are very happy however to be able to produce such a good performance number given a very high quality portfolio. So we invest uh primarily in investment
grade I'd say primarily solely in investment grade fixed income that includes corporate bonds, US treasuries and federal agencies. I'll get into a little bit of the specifics in terms of how we're investing and how we're allocating between those asset classes. But again, um, having such a high
quality portfolio and being able to produce a high return such as that, both on a one-year and a trailing three-year basis as well is certainly a positive, I think, for the portfolio. Um, Kyle, if you could just move, I think one slide. Yep, perfect. So, I mentioned inflation being a driver of performance and this
is really impacting what their Federal Reserve is doing and how interest rates are moving. So, inflation is made up of two components. Uh, there is the service side of inflation. So think housing, hospitality, transportation, what they consider to be the more sticky version of inflation. That is the black line as
you're seeing here. So it is trending in the right direction. It is trending downwards. It is still uh positive. Uh it is still above what the threshold for the Federal Reserve feels comfortable with. But however, it is trending in the right direction, which is a good sign overall uh you know for the economy and
for the consumer. The flip side is the uh the other component of inflation is what is what we consider the goods side of inflation. So think uh cars or fuel or the grocery store for example. I think that's what's you know what most people think from a retail standpoint is what is a consumer spending at the
grocery store. We know food prices have have gone up substantially over the last couple years. However, with that said, it is showing signs of moderation. So I think both components of inflation while still high higher than what the Federal Reserve may be comfortable with are
showing signs of moderation and that is that kind of stabilization is what the Fed is looking for in terms of how they're going to how they're going to move rates one way or the other going forward. Um just one slide two slides down Kyle talk a little bit just about jobs which I mentioned is really the
other major component of what the Fed is looking at and how interest rates are are being driven. If I was here six months ago, I would have talked about the strength and the resiliency of the job market. Um 23 and 24 were very a lot of positive job growth that was being shown in the economy. However, we have
uh you every year they come out with annual revisions and they take a look back and they get more readings primarily from the state. They get more readings on what the actual job growth was and those typically come with some revisions and sometimes they're fairly large. This was the largest revision ever uh in the history of as they're
producing these uh these jobs numbers. It was over 800,000 jobs that were revised downward. We've actually had some further revisions from that point on as well. So what was once thought of as a very healthy and robust or resilient labor market now in hindsight probably wasn't as strong as what we
initially were reading and the market was reading at that point. Um the Fed because of what was because of this supposed weakness now in the job market, the Fed actually was comfortable in terms of cutting rates three times back in 2025. Um now the question is as we move
forward, is the job market as healthy as we initially had thought. You throw on top of that a government shutdown which of course impacts some of the readings that come out of it. So there is a little bit of a you know lack of transparency or lack of certainty in terms of what jobs numbers are being reported. Throw on top of that some of
the recent volatility with AI that's going to impact the labor market going forward. Um so clearly it's what's driving markets right now. It's what's what's driving some of the decisions in terms of interest rates and that's something we're certainly keeping an eye on as we move forward. Um
if you could go I think two more slides, three more slides. There we go. Perfect. Um so all this begs the question of how are we positioning the portfolio? what are our concerns? So I'll I'll first thing I'll focus on is the yield of the portfolio in the kind of in the center
um 4.6% as of year end that is down from about 5 a.5% or even almost 6% at its peak. So rates have come down with all that being said 4.6% for a high quality portfolio is is still relatively high and something we're definitely we're happy with even if rates remain stable
and we're producing returns of about four and a half 5% for a high quality portfolio. Again, that's that's that's a good news. That's a good thing for the portfolio. Um, and we're okay with that. Um, we do think there's the expectation or the possibility that rates come down further. So, there is some upside to
that as well. Rates come down, prices go up. Um, there is some potential for some performance that's that would even go above that type of number. But all that being said, even at a 4.6% yield to maturity, I still think it's a relatively high and good opportunity for the asset class. Um, one thing I'll
mention, the uh, if you notice in the bottom of the page, the corporate bond exposure is a little bit underweight relative to the benchmark about 23% compared to about 27%. If you risk adjust that even more and look at the actual corporate bonds we own, which I mentioned were very high in quality.
It's even probably a little bit more underweight relative to the benchmark. U, corporate bond spreads are at their tightest levels really in history. That means that they're really outperforming more so than they really ever have before. So for us, there's not a lot of upside to owning that asset class more
than what the benchmark is currently offering. Um we think there's going to be some weakness there. We're seeing that. We saw a little bit in the fourth quarter. We're certainly seeing that in pockets through the volatility of the last couple weeks. So as we move forward, um where we see opportunities to reallocate to that asset class, I
think we will be doing that. Um but again, because for us it's all about relative value and where is the best value within the portfolio and within asset classes. So, but right now we don't see corporate bonds as providing that best value. As we move forward, if the volatility we've been seeing
recently continues, there will be pockets of opportunity. And I could see us, if we sit here in 6 months or so, probably being a little bit more overweight, that particular asset class. Um, the flip side of that is you'll see mortgage back securities at about 61%, so almost double little over double what
we're seeing overall on the benchmark. I will preface this with these mortgage back securities are all federal agencies. These are all government guaranteed mortgages and securities. So there again, they are very high quality. They're very safe. I know there's always flashbacks when mortgage backs are being
mentioned of 2008 and some of the subprime prices, but these are not those types of securities. These are very good borrowers and very good issuers. Um they are providing good value right now um as well, especially relative to what we're seeing in the corporate bond space. But um again, it's a relative value game. uh
as we see those that that those mortgage backs have been a big driver of performance over the last year year and a half especially in 2025 um was probably one of your bigger drivers of of positive performance as those then become somewhat overvalued potentially that's where a lot of the money will
rotate out of that asset class and probably into into corporate bonds. So um overall we're very comfortable with the portfolio. I think you'll see some tweaking in asset allocation, but if rates were to move down, we're there to take advantage of that and, you know, take advantage of that potential upside.
To the flip side, if we see a bit of a correction in some of the risk assets because we're underweight corporate bonds, um, because we're high quality, our downside protection is also there to protect you if we have a little bit of a negative return scenario as well. So, I'll stop there for any any questions
you may have. >> Anybody have any questions? Do we have a motion to approve the SRAS asset management report as presented? >> I make a motion that we approve the report as presented. >> Second. >> Motion in a second. All in favor? >> I. Any opposition? Thank you. >> Thank you very much.
>> Thank you very much. Nice to meet you. Um BCA report Mitchell Brennan. >> Good afternoon. >> Good afternoon. >> Two reports to go with uh go through with go through with you. Um, first one,
market handout. It's, uh, got this cover page, just a highlight of how the markets performed in 2025 and some of our outlooks for 2026. Uh, and then we'll get into the numbers for the fourth quarter of your plan. Uh, so we'll kick it off on page two. Looks
like this chart right here. If you go to the middle of this bar chart, you'll see the US markets, US growth, US large cap, and US value up anywhere between 15 and 20% for the year, which is fantastic returns. another strong performance from US markets. I think any one of us would
take that in our personal accounts. However, you'll notice there in the middle of the chart. So, if you look to the left, international markets actually outperformed significantly in 2025. So, you can see whether it's developed markets or emerging markets where we include China and India, uh they were up
43, 35, 34, and 21% for the year. And we've seen that continuation so far in 2026. Emerging markets are up about 11% year to date. uh developed markets about 8%. And we've seen a rotation in our own market. So where we were dominated by
growth in technology uh in 23 24 and most of 25, we've seen the market rotate out of those mag seven names, the high-flying AI and software names and back into the value side of the market. So large cap value in the US year to
date is up about 6 and a half%. Large cap growth is actually down about five and a half percent. And then small cap and midcap, they're both having great years. Small cap's up about 7% year to date. So, a lot of those unloved areas that have not performed well over the past few years are really shining
through and uh adding some value in your diversified portfolio. Page three, I just wanted to highlight, as I mentioned, international significantly outperformed the US in 2025. It's really the first outperformance we've seen uh for a prolonged period since the great
financial crisis prior to the great financial crisis in 0 0708. Uh and the reason for that why did international markets do so well last year the dollar weakened? So the dollar was down about 10%. And when we get returns from international investments they're made
in their local currency and we convert it back to the US dollar. So in a weak dollar environment that boosts the returns even higher. On top of that, immense uh spending in defense sectors internationally. So just consider all the geopolitical conflict going on
internationally. Um it was announced a week or two ago Germany has run out of defensive air missiles. So they've been supplying their entire reserves and everything they've been building to the front lines in Ukraine. And that's on
top of the European Union spending $380 billion on defense spending last year, which is over 10% increase from 2024 and about a 60% increase over the past five years. So with all the uncertainty and conflict going on between Russia and
Ukraine, now a potential war with Iran, um defense spending is at an all-time high uh internationally. uh and we've seen that bleed through in their markets. The other thing, you know, keep in mind the crash in '08 was primarily led by the banking and financial sector.
That's much more heavily weighted in international markets versus the US were very techheavy. So the growth we've seen in tech over the past decade, 15 years um that's benefited our markets to a much greater extent than international and why we've outperformed uh over that
time period. The next page, this adds uh some additional context to our markets versus international markets. On page four on the left hand side, uh both of these charts show from the bottom in 2022. So if you remember,
that's the last time the plan really sold off for a prolonged period. Um and that was right after inflation spiked over 9%. The Fed raised rates significantly throughout 2022. So the market bottomed in October of that year. And since then, through the end of 2025
on the lefth hand chart, if you took our large cap market, the S&P 500, and you just pulled out Nvidia, we actually underperformed both Europe and Japanese markets over that stretch. Now on the right hand side you can actually see you know we talk about and we've really the
conversation's been dominated by the mag seven over the past few years but if you look the sectors that have actually performed the best since October of 2022 what I mentioned European aerospace and defense the best performer most of that coming within the last year Taiwan
technology so Taiwan semiconductor one of the uh biggest suppliers especially in the AI space for semiconductors uh and then international banks outperforming US growth. So, you know, the concentration of the MAG7 and in particular Nvidia has really carried our
markets for the past few years and now we're seeing that rotation where everything else is starting to perform a little bit better than just those uh large cap names. On page five, you know, you can see the story playing out just for the first month of the year. Uh you can see in the
top lefth hand chart you see 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, you know, 23, 24, and 25. Those seven dominated our market, 26, you can see
year-to- date again through uh the end of January. On average, those companies are actually down for the year. So, as of today, Nvidia is the only one of those seven that's up year to date. Uh all the other ones are down with the S&P about flat year to date, maybe up 1%.
The market's rallying today. Um but even if you look back at 2025, it really wasn't the MAG 7, it was the terrific two. Nvidia and um Alphabet, Google's parent company, were the only two that outperformed the S&P 500. So we slowly started to see that rotation in the back half of last year, and it's really
playing out so far in 2026. on page six. Uh this just highlights again um these two charts show the performance of the market from the end of 2024 through no the start of
November and then November through the end of January. And that November third date the importance of that that was when the market kind of peaked in terms of concentration. So that was when the top 10 names in the market reached 44% of the total index. So that's the highest concentration we've ever had in
the top 10 names. You can see leading up to that, the top 100 names in the S&P 500, they were contributing nearly 90% of the total performance of the index. Fast forward, those top 100, top 10 names have pulled back significantly. The top 10 is now
less than 40% of the index. And over that last three-month period through the end of January, now the bottom 400 names, the broadening out of the market, they're contributing about three4s of the total performance. So again, much healthier market environment where not just a couple names are adding all the
performance. It's broadly many more companies doing well and providing positive returns. Page seven uh just highlights again some of that rotation. So uh year to date through last week again the market S&P 500 is basically flat year to date but
you can see the areas that have done well and those that haven't. So uh the biggest leaders to the downside have been tech as I mentioned the roll off of the mag 7 but also financials. Financials are down about 5%, the worst performing sector uh primarily based on
uh a selloff when the president suggested that he would like to see a cap on credit card rates at 10% uh for credit card companies and banks. A lot of those companies sold off and that's why they're still underperforming year to date. Again, no legislation or
anything has passed. there hasn't been anything implemented but just the suggestion that some regulation may come through in regards to that has sent uh financials to the downside. Uh on top of that we've seen again a rotation into value. So the cyclicals, energy,
materials, industrials doing extremely well year to date. Uh and again we'd expect that to continue to play out this year as more investors seek to get away from some of the riskier investments, some of the high-flying investments and back into those value areas. Um even if you look at you know not any
investments we have here uh but the more speculative risky areas of the market Bitcoin in particular here's a quick look at small cap. Um, but it really applies across the board. Last year, the market bottomed April 8th. So, that was right after the
original tariff tariff announcement uh by the Trump administration. And after that point, we had a huge rally in markets, especially within small cap. So the index for small cap was up over 40% from the bottom in April through the end of the year. But the
best areas within the index, the biggest outperformers, you can see to the on the left uh those left couple bars, companies that had no earnings, non-earners, and companies that had no sales were the best performers in that index. M. Now, I don't know about you, but if I'm investing money with a
company, I don't know if I'm looking for the non-earners and those without sales first. But that was the rally that we saw, what we would call a junk rally. And so, the last bar you see here, that 10.6%, that's the percentage of active managers who were able to beat the benchmark over
that junk rally. So, again, nine out of 10 managers are not going to hold names that don't have earnings and don't have sales. So, it's just been an extremely tough period for active managers to outperform. And that's one of the reasons your plan has done so well. You have a lot of index exposure where not
only are you allocated to the quality side of the index, but you do have exposure to the non- earners and those without fails. And that's why your performance looked very good for the entirety of the year, especially relative to your peers. Um and then lastly on page nine um just quickly I
want to highlight in our report we have a market perspective a research piece that we put together uh internally and it touches on some of the headwinds for the consumer that we see in 2026. So uh from a growth standpoint household
spending contributes about 70% uh towards GDP growth in the US and so it's very important that we have a healthy consumer that's willing to spend money and grow the economy. Um, so we just dive into some areas where we think there's some headwinds. So if you're bored tonight, have trouble sleeping,
I'll let you read through that with it today. But on page nine, on the other side, one of the areas where we think there may be some stimulus in the market, especially maybe the end of this quarter, but most likely in the second quarter, is in regards to tax refunds.
So because we extended the 2017 tax code as well as the passage last year of the one big beautiful bill, it's expected that the average tax refund is going to be increased by about 25% from last year. So on average was about 3,200 last year. The expectation is it's going to
be closer to about 4,000 this year. And what we know about tax refunds is typically they come in and they go right back out the door into the economy. Uh and so again, that could be a nice little boost uh in terms of growth in spending most likely in the second quarter when people start receiving
those tax refunds. And then with that, I will conclude that update. Uh open it up if you have any questions or anything you'd like to discuss before we jump into the report and your performance. >> Okay. Thank you. No, no questions. >> All right. So in your report, I'll be brief. On page five, first bullet for
the quarter, the plan earned 289,000 or 1.9% net of investment fees and that just trailed your strategic model. So the benchmark we compare ourselves to uh which was up 2.3. Uh the big difference between performance really you took a
more conservative allocation. You were underweight US equities which had a good uh a good quarter and we had a larger position in cash. So whenever we have strong returns in equities and we're underweight and we're overweight cash, which doesn't make as much, we're going to trail the benchmark a little bit. But
frankly, based on the performance we had for the entire year and the volatility we've already started to see to start um 2026, I'm very happy that we have that cash available and we're overweight that position so that Dwayne can rebalance into the market as we see further
sell-offs and opportunities. Um the best performers, international again was your biggest winner. uh between your two international funds, the Vanguard Footsie developed markets was up 6% for the quarter. Uh American Funds UPAC was up 4.6%. And then the Vanguard
Institutional Index that tracks the S&P 500 that was up 2.7%. For the entirety of 2025, you earned 1.9 million or 14.4% 14.2 net of investment fees in line with your strategic model which was up 14.7%. And again, the
slight difference, just that overweight to cash relative to US equities. Again, best performers international up 35.2 and 29.6%. And then your S&P 500 index up just shy of 18%. For the past three years, you've earned 4.9 million in investment uh
gains or annualized return of 13.3%. For the past five years, 4.3 million in earnings or 6.8% annualized return. Keep in mind that fiveyear includes 2022 when the plan was down. So as that number rolls off, your fiveyear is going to
look much better next year. Um and then for the past decade, you've earned a cool 10 million and you've averaged 8.5% annualized over that period, well ahead of your actuarial assumption rate at 7.4%. So fantastic job. And again, we we
typically like to focus on the longer term numbers because it shows that full market cycle, how the plan has performed, not just when the market's been doing well, but to the downside as well. And so through all the volatility we've seen over the past 10 years, again, you've outperformed your benchmark as well as your assumption
rate over that period. And then we can skip over to page eight. Uh these are the numbers I highlighted. The only one I didn't touch on was uh the total plan assets as of the end of the quarter, $15,185,720.
And then if you go to the far right column for the past 10 years, so you started with about 9.7 million in assets 10 years ago, you've distributed a little over four.5 million for benefits and expenses. You've generated just under 10 million in investment gains and
again finishing at that 15.2 2 million in tangible assets annualized returns net of investment fees 8 and a half%. Um and then lastly page 13 and 14 uh dives into your individual uh
investments in your portfolio. And again very happy with the performance of these funds. No recommendations to make any changes. I did want to give you a quick update. As of yesterday's market close, and this shouldn't change because it looks like the market's up today, every
one of your investments was up. So, the S&P 500 index was up.1%. Midcap and small cap, as I me mentioned, are outperforming. Your midcap fund was up over seven. Small cap up about 6%. Cohen and Steer's global infrastructure fund
is the biggest winner so far year to date, up just shy of 12%. Uh, convertible bonds up over 5 and a.5%. Your international managers are up 6 and a half and 11% year-to date. Very strong performance there. And then fixed
income, I don't have Sawrass's specific numbers, but the index is up about 1 and a.5%. So, I'd expect them to be up 1 to 2% as well. And then your high yield fund is a little bit lower. It's up 7%. So, again, very great start. Last quarter was the first quarter of your
new fiscal year, the 2026 fiscal year. Uh so this is looking like a continuation of a strong second quarter for your fiscal year. So very happy with performance. No recommendations to make any changes of this time. Uh and then I'll just conclude my report and open it up for any other questions.
>> Any questions? >> No questions. >> Do we have a motion to approve the report as presented? >> I make a motion we approve report as presented. >> Second. >> Motion is second. All in favor? >> I. Any opposition? Thank you. Thank you.
On to Claus McCauleman, Jensen Levenson, Miss Parish. >> Hello. Good afternoon, everyone. Um just some quick updates on my end. Um there was a change to the um IRS um mileage
calculation. So, if you have a situation where um you're traveling to a conference um and you're getting reimbursed uh based on that mileage rate, just kind of an FYI that it did increase as of January 1st. It's now
72.5 cents per mile. Um a a positive update on the partial lumpsum option ordinance. It did pass on first reading. Um I did check the calendar um and with the clerk. It is up for second reading
um at the meeting on the 26th. There weren't any questions. Um I don't think there was any confusion about the purpose of the ordinance and that it's a no cost item. So I am anticipating that this should pass on second reading um
just later this week. So if that is the case, I will request um that signed ordinance and I will send that on to the state um so that they're kept aware of everything we are doing and so MUN code can be updated accordingly. So that is good news. Um that was the
ordinance that affected all three of the plans. Um so it's nice to kind of get that done all at once. Um I had spoken with Mr. Nukem. Um I think Kyle, do they have that draft ordinance?
>> They do not. >> They don't. Okay. So, um is there any way we could put that up? >> Yes, that'll be fine. I'll get it. One second. >> Okay. Thank you. So, just a little bit of background. Um this is a draft
ordinance that mirrors um the fire plan that would allow for a fixed multiplier. um as of a yet to be determined effective date. Um we are if this is approved I will present this to the city
um and see if they will be in agreement with this. Um, we would need I would need direction from the board um to ask Patrick to provide an impact statement that has to accompany all of the ordinances that has
to be provided to the city clerk, I believe, in between the first and second reading, if not sooner. I would like to present them with everything um all at once just because I think if they have all the information up front um it just prevents any confusion down the line. So
hopefully Kyle can put this ordinance up. Um it's pretty straightforward. You'll see that previously you've had a multiplier that changes. Um this would allow for a fixed percentage. Um and
that would be at 3.2%. Excuse me, 3.27. I apologize. I just mailed it over to Virginia as soon as she's able to get it up on the screen. Also included in the meeting packet is the operating rules that have
been adjusted to match the firefighter ones that need to be voted on. >> Yes. So I did actually Kyle in in going through my notes I did see a couple other things um that we didn't discuss. if the board is okay. Um especially
since hopefully we'll have a resolution of the PLOP ordinance um as well as this ordinance if we table those operating rules till next meeting since they'll need to be um likely updated again if the board is okay with that. That way I
can include everything all at once. >> Fine. Can we get a motion? I was just going to ask a motion please. >> Do we have a motion to approve Parish's request? Yes, I make a motion to approve a request. >> Motion to table till the next meeting.
Yes. >> Yeah. So, if that could just please be placed on the agenda for the next meeting. Um and hopefully we can finalize everything all at once and I will also update the SPD uh accordingly. >> We have a motion. Do we have a second? >> Second.
>> Motion to second. All in favor? >> I. Any opposition? Thank you. >> Okay. Um hopefully once you see this ordinance we can um
take a vote on that >> the ordinance I just sent a copy of the from the fire group There he is. Thank you so much. >> I'm sorry. >> The draft ordinance is up on the screen. >> Okay, great. So, you'll see um it it's
very simple. We're just adding that one line down at the bottom. Um again, this does mirror the fire change that was recently made. Um, >> yeah. >> If approved, um, I would send this to
Patrick and have him prepare the accompanying impact statement. >> Do we have a motion to approve the changes made? >> I make a motion we approve the changes made and the ordinance submitted.
Second. >> Motion is second. All in favor? I. Any opposition? Thank you. >> Okay, great. So, I will um keep everyone informed um on next steps for this and I will also make sure to let Kyle know
once I hear from the clerk about the partial lumpsum option ordinance. >> Thank you. Is there anything else? >> That's it for me, but happy to answer any questions. >> Thank you. Any questions? >> Thank you. >> No, thank you. Um Miss Tintelon to the
resource center. Thank you. In your packet is the FPPTA membership brochure. This is when we talked about the last meeting for um trustee education. This is another group outside of the division
of retirement that has a specific school and conferences for trustee training. This is more general than the uh division which is focusing on 175 185
plans but is still very helpful. The fire uh board did accept to join and have a membership. It's $750 for the year for the entire board and then if you choose to attend any of the
conferences or the school there are additional charges for that. Okay. Um, any thoughts or do we have a motion to approve membership? >> Okay. >> Any questions? >> Are we We're not a member of any of
these other boards though, correct? As far as like like what this is or associations? >> No, you are not. >> Not right now. And you just said that this is the same one that the fire agreed to be a part of. >> That's correct. >> Okay. I make a motion we approve the
membership or joining the membership or the >> second. >> I wasn't sure if you >> for the for the 26 pension board membership brochure. >> We have a motion in a second. All in
favor? I. Any opposition? Thank you. >> And that's all I have. Okay. Thank you. Financials in your packet are just to be received are the uh quarterly financials and then
we also have the warrant which needs to be approved. There was nothing out of the ordinary. They were just the typical expenditures for the quarter. We need a motion. >> Yes, we do need a motion. I'm waiting to see if everybody's finished reading.
>> I make a motion we accept the reports as presented. >> Second. >> Motion to second. All in favor? I. >> Any opposition? Thank you. >> There. Anything else? >> Nothing. Thank you. >> At this point, I'm going to open the
floor to public comment. Although I don't see anybody from the public here. Is there anybody here for public comment? Seeing none, we'll close public comment. With that, is there a motion? >> Motion to adjurnn. >> Thank you. >> Six.
>> We're all set. Thank you everyone. >> Thank you everyone. And I need to sign these things. >> I just had a question. And Anna, are you available if we move this meeting to earlier in the day? >> Yes. What time would that be? >> 12:00. >> Is that reasonable
>> for the next meeting >> for from now on? >> Yes, that actually would be preferred. >> Okay. Thank you very much. We will do that and I'll send it to the clerk so she can adjust it in the newspaper for the great photos. >> Thank you. Thank you. Bye
>> bye. Part: 2
Marcia Cardi >> here. >> Brent Dennis >> present. >> Alan Bush not available. Shantel Pierre. Chair, we have a quorum. >> Please proceed with the meeting.
>> The minutes are in your packet for your review and approval. >> I don't see that in the packet. I don't see that at all. And where would that be? Do you have minutes? >> Should be page two. >> It should be page two.
>> We only have two pages up here. >> We have >> Oh, we should have grabbed. >> Was that deliberate? >> My stuff. Say it's not your fault. You got your stuff in. >> Okay. Thank you so much. >> No, I had the other stuff. I was like, "God, man." I like it.
>> Yeah, that's why I was kind of thrown off. Okay, so we did roll call tick. Approval of minutes is where we are. May we proceed now? >> I make a motion we approve the minutes as as written.
>> So move. All in favor? >> Someone needs second. >> Okay. All in favor? >> I >> I Sorry, >> you're very quiet. >> Sorry. >> Okay. >> First time, not you know.
>> All right. We move forward with the BCA report. Michael Brenman. >> Before we continue with that, we have a new trustee that um can be um sworn in. >> That's a that's wonderful. Is that new
trustee here? Yes, we have Amber Kuier Ku and Mitchell is going is a notary and he's going to swear her in. >> I appreciate that. Thank you. >> All right. I, Amber Coover,
>> a citizen of the state of Florida >> citizen of the state of Florida >> and of the United States of America. in the United States of America >> in being an officer of this sorry in being an officer >> in being an officer >> of the city of Palaca general employees
retirement plan. >> Can you please smell that please? >> Yes. Yes. Sorry. of the city of Palaca >> city of Palaca >> general employees >> general employees >> retirement plan >> retirement plan >> and a recipient
>> and a recipient >> of public funds >> as such officer >> as such >> do you hereby >> do you hereby >> solemnly swear >> or affirm >> that I will support
>> the Constitution of the United states and of the state of Florida. >> Congratulations. Thank you. >> Welcome. >> Now, may we move forward to item number three, BCA report.
Mitchell Brennan. >> That is me. I have a few handouts for you. The first one we'll go over is the market overview. >> Yes. >> Uh so it's a quick update on the market, how uh different asset classes performed in 2025 and then kind of our outlook and
some updates uh so far in 2026. Uh then we'll jump into your quarterly report for the quarter ending December 31st, 2025. And then last, the last handout I have for you, um, is an RFQ for custodial services. So, if you remember,
uh, Truist exited the space last year, so you transitioned automatically to principal. Um, I'm not sure how your experience has been so far with principal. Um, I'd love for you to share kind of that experience. I know our firm and your plan administrator,
historically, we've not had great experiences with principal. So, we want to make sure you're with the right custodian, that you're getting the proper service you deserve. Um, so we can review kind of a template uh that we can send out a request for u quotation to some other custodians that work in
the public fund space. Um, and our goal, if you would like to make a change, uh, I will send this out, um, after this meeting to a handful of custodians that, uh, we work with that have done a great job in the public market space. Um, I'll get those responses back prior to the
next quarterly meeting. Um, at which time I can either shortlist them for you based on their uh, proposals and have a few finalists come in to present to you. Um, or I can kind of break down all the proposals for you and just give you a
recommendation based on those proposals. Uh, it really depends how you want to handle it. Um, and if you should elect to make a change, our recommendation would be to make the change effective where the new custodian starts benefit
payments January 1 of 2027. The reason for that is your retirees will receive just one tax document from principal for 2026 and then they'll start clean in 2027 with a new tax document uh from the new custodian. So,
>> may I ask something? >> Absolutely. because you're discussing this item now about the possibility >> sure >> of a movement. What are the uh difficulties that are being experienced with principal and then we could figure out whether or not it relates to the
experience that we have. >> Yeah. So I'm happy to share kind of the experience he has difficulty wise and then you know Kyle can also add hers. Um, again, I'm I'm not on your end, so I don't know from a client standpoint what difficulties other clients have had, but um, from our end, our analysts are the
ones that bring in your, uh, monthly statements for all your investments, >> uh, reconcile them, put them into our reporting software um, to generate these reports for you. >> Additionally, anytime we have trades or anything like that, we provide letters
of direction, send that to your plan administrator, then it goes to the custodian to make those trades. Our experience with principal is they're the last custodian to get statements to us. Um so that delays our process to getting your your reports to you. Uh their
customer service is not great. They're not very responsive when we reach out when we need, you know, wiring instructions, we need something changed on a letter of direction, something like that. Um and then just in general, just a very slow response uh time. So that's
kind of our that's the experience that my team has shared with me. Again, I don't work directly with principal. Uh it's more of our analyst team that does, but that's kind of their frustrations that they've shared with me. >> So, how long have we allowed Principal to serve us?
>> So, I think they started at the end of last year, December. Uh and I believe they probably started benefit payments January. Um and that was that decision was forced on you. Um because Truis exited >> I don't remember how' that how'd that
take place? >> Yeah. So, uh, truest elected to leave the public market space >> and gave no notice. Just boom. >> He gave about 90 days notice. Unfortunately, I believe it was after we had met. Um, and so >> they had selected a transition partner
in principal, >> right? >> Um, other clients we work with who used Truis, if they met after that announcement, they kind of went through this RFQ process either with their attorney or with us or their plan administrator. Um I will share the majority of those did not select
principal um as their final custodian. Um and then the ones that did transition like you to principal, I think almost all of them are in the process right now of kind of reviewing other custodial options and making changes. >> Miss Cal, what was your experience?
>> It's been a very rough transition. >> Um there's a lot of pieces that fell through the cracks. >> Okay. So, we're we're not very pleased with the response we get. Um, we're usually spoiled. Capitol City is very
responsive and if we have questions, they walk us through the process. They don't send us a document and say, "Here, this is how you do it." >> And that is so not effective. >> No, I agree. >> That methodology is totally ineffective.
>> Correct. So um on our side what have we experienced any experience on our side or we we just because it hasn't been a long time you know basically the same thing um normally when we send out say our retirees want to pull money from
something normally they get that when we're with truest get they get their information get the form filled out get it over to the resource center and they would have it that hasn't been the case because with principal it just didn't move as fast so And that just has the retiree calling us saying, "How is this
process going? Where's my money? Where, you know, where did I get it?" So, >> I think >> so. >> We've had a couple of retirees that um has had a lot of issues trying to get things and I think we had some lag on
actual payments to the retirees like their monthly payment. >> So, um >> monthly that they move on. Yeah, it, you know, I rerouted a couple of those calls and poor Ruben, but we we got it taken
care of. Um, but yeah, I mean, it's not been a very good transition, the little bit that I've been involved with. >> And then for the financial statements that we receive for accounting, we we don't even know we do we know
anything really. Uh, >> unfortunately the team member that handles that is currently on vacation. >> Okay. >> Um, and I don't handle it directly, so can't really speak on it at the moment. >> Okay. So, I guess we would go by the
recommendation of >> Well, we're going to get a a sampling of choices to go with, right? >> Yeah. There's a handful of other custodians that kind of um focus specifically on the Florida municipal market. Uh so we'll send out this questionnaire to them, get their
responses. Um it'll kind of aggregate the services they provide as well as the fees they charge so you can compare it to uh principal is honoring the fee agreement you had with Truist on a I believe a one-year guarantee. Um so they, you know, we don't know what
they'll do after one year. Um but you'll at least get with most of these we request at least a three-year guarantee. Um, most of them have been even more accommodating. If you request a four or fiveyear guarantee, uh, they can do that. The last piece of information I need, which Kyle just sent to me, was
some of your plan specific demographic data. So, how many retirees, benefit payments, things like that. Um, so she sent me the actuarial valuation from 2024. >> If we get 25 >> before I send this out, I'll update it with that, but the 24 numbers will will
work just fine. They just need an idea of how they'll be servicing your plan. And you said something um it almost felt like principal does not service Florida >> too much.
>> Uh they're more national. I'd say they're a much smaller player in the overall Florida market. The custodians we work with uh on a larger scale would be Salem Trust who I'll send this to. Uh Fifth Third Bank who I'll send this to. >> Oh yeah. Yeah.
>> Um I understand that by now. Thank you. >> Okay. >> All right. >> Do we need a vote on that? >> Oh, sorry. >> Sorry. I was just going to say, can we have a motion on that to have the RFP? RFQ. Sorry. >> RFQ.
>> Motion to issue the RFQ. >> I don't see a date. Um, but motion to issue the RFQ. >> Second. >> All in favor? I. Any oppose? So, the motion >> has passed.
>> Sorry to interrupt. Mitchell, are you going to handle the RFQ? >> Uh, yes, I can. Uh, would you like to be included on it? >> Um, whatever you would prefer. Um, I don't have a problem facilitating, you know, sending it out,
um, and getting the responses, but if you want to handle that, that's completely fine. Yeah, I can I'll copy you on it when I send it out, but I'll >> I'll plan on aggregating kind of the responses and bringing those back to the board. >> Okay. Because we >> if any any questions or anything come up that I can't answer that may be more
catered to to you, I'll I'll send them. >> Okay, perfect. Because we had this issue um with fiduciary trust, how they kind of just stopped. Um so we we've >> had a lot of this. So, okay. Thank you. >> It's been a the past six months, you
know, just for broader context. two custodians have left the municipal market in Florida. >> So, we've been doing this process with a lot of our clients. So, we're very familiar with >> all the all the players and you know who's going to respond and and give you uh hopefully better service and
principal. So, um >> we have a new um member as we see and uh can the young lady on the Zoom could she be introduced as well? >> Oh, yeah. Anna, did you want to introduce yourself? >> Yes. Hi, my name is Anna Clausner
Parish. I am the attorney that um helps take care of your fund. Um our firm is Clausner, Kaufman, Jensen, and Levvenson, but I am the main attorney signed to this plan. So, if you ever have any questions, um please feel free
to email or give me a call. >> Okay. >> All right. >> The only other piece to that is do you have a preference? would you like the finalists to come in and present to you in person? We can keep them short, you know, 10 15 minute presentations. Um I
think one of the things we're going to discuss today is if the board would like police is moving their meeting up to noon uh next quarter. So if you would like to move your meeting up as well to say 2 o'clock to meet a little earlier, >> give us some additional time. Uh I don't think we'll go past, you know, two hours
anyways. But um >> are they having a presentation at their meeting? Uh they uh are already with Capitol City, so they weren't with Truist, so you were the only one impacted by this, unfortunately. >> Okay. >> Yeah, I think that they're just moving up for the sake of moving up. >> Yeah, the police usually met we we meet
at uh 10 and then 1:30, so there was a lot of dead time. So, we just asked if they wanted to meet at noon. >> So, if you'd like to move your meeting up if that works better for your schedules and and uh work day, >> I think that'd be fine. Sure. >> Yeah. 2 o'clock. Will it work?
>> Works well for HR. >> Okay. >> Would you please do a motion? >> We'll make a motion to move the meetings to 2 p.m. >> Second. >> Okay. Thank you for seconding. All in favor? >> Yes.
>> I seem like the yeses and the eyes have it. >> I did not hear a nay. >> So therefore, the vote has passed. I will contact the city clerk and have her notice it in the newspaper for public notice that all of the mo meetings from
now on will be at 2 o'clock for the general employees. >> Yes. >> Thank you. Thank you. >> And then I don't believe you need to make a motion for this, but do you have a preference? Would you like kind of the finalists to come in and present to you or would you like us to just make a recommendation based on their responses?
>> I truly think that you have the expertise. That's what I was about to >> You know, we have a lot of work. >> Well, >> and breathing in between is scarce. >> You're the most knowledge and guidance.
>> Absolutely. So, we will leverage our experience as well as your plan administrator and >> Right. That's fine. >> Once we get those proposals in, we'll come up with a recommendation. Great. >> Thank you. >> Perfect. All right. Great. Man, we are accomplishing a lot and I haven't even jumped into my report. That's fakaco for
you. >> Yeah. >> So, we can jump into this handout real quick. Mark it up. >> Ready? >> On the second page, page two, uh you'll see this nice bar, blue bar chart. Yeah. >> So, I'll direct your attention to the middle of it. You'll see US growth, US
large cap, and US value. So, this is the performance of different asset classes for 2025. And you'll see US markets were up between 15 and 20% for 2025, which is fantastic returns. I think any of us would take that in our personal portfolios. However, you'll notice
they're in the middle of the chart. So that means to the left of them there's a few areas that did a little bit better and that's actually international markets. So developed and emerging markets were up anywhere from 21 to 43% last year. Um and that trend has
continued so far in 2026. So emerging markets are up another 11% year to date. Uh developed markets up another 8%. Uh and then if we look at our own markets in the US, we've seen a rotation. So the past few years, our markets have been dominated by the large cap tech and AI
firms. Um they've been named the Mag 7. So it's Nvidia is the big one, but Microsoft, Apple, Tesla, those companies have really dominated our markets and they fall under large cap growth. Well, large cap growth is actually down about five and a half% year to date. Large cap
value that's trailed the past couple years is up about six and a half percent. So nearly a 12% spread between those two so far year to date. And even small cap who has underperformed large cap that's up nearly 7% year to date. So we've seen that rotation and I'll get into that in a few few slides. But one
more thing I wanted to highlight on this page. You know international markets have underperformed the US for an extended period. I'll show that on the next chart. But really the big there's two main reasons they outperformed in 2025. The first of which the US dollar weakened. So the US dollar was down
about 10% last year and when we get international returns those are made in their local currency. We convert it back to the US dollar and in a weak dollar environment it actually boosts their return. So that's one of the reasons on top of that we saw fiscal stimulus and
an immense amount of defense spending internationally especially in the EU. So think of all the geopolitical uncertainty and conflict going on right now. uh you know was announced I think two weeks ago uh Germany came out and said we are out of air defense missiles. We have provided everything we have and
we've dipped into our own reserves to supply the front line of Ukraine. We need more money spent in this sector from other European Union uh members. And so again, that trend, I'll get into some of the numbers, but they spent over
€380 billion euros last year on defense spending, the EU, which was about 11% more than they did the previous year and a 60% increase since 2020. And I don't see any of that conflict going away in the near term. And so I only see that
trend continuing. And so we'd expect some continued outperformance and growth in that space just from the sheer amount of money that's being poured into it. Two questions. >> Yes. >> One. Um, okay. >> Any I noticed you didn't say anything about tariffs.
>> I I'm happy I don't have anything in here, but I'm happy to talk about it. >> Okay. And then the second one is um it was something about the um Yes. I was just wondering based upon these returns,
did that or would that influence the mix of your assets that you're recommending investing? Like for instance, you see how you have 43% 35. >> Yes. Mhm. >> You know, so those did that do anything
to helping you decide the mixture of the investments that we have in our portfolio? Yeah, it's a great question. So I the first one I'll address the asset allocation. So when we develop an asset allocation and if you open your report, you can actually go
we lay it out on page page 13. Page 13 highlights. So within your investment policy statement, we have a section that lays out how we're going to allocate your investment. So, how much we're going to invest in US equities, international equities, fixed
income, other alternatives. On page 13, the yellow bars, that is the target that we're aiming for. So, that's how much we're trying to to allocate. The blue bar is what your current allocation is. So, there's always going to be some deviation depending on how the investments perform relative to one
another. Uh, so you can see here, you're relatively in line across the board. You're a little overweight US equities and a little overweight international equities. and that's why your performance has been relatively strong because those areas have performed well. Um, at this time we don't have a
recommendation to make any changes. Um, you're a little underweight private real estate. Uh, we started to see a bottoming out in real estate last year. So, if you look back over the past few years, commercial office has been a big drag on that portfolio. A lot of people
working from home. Uh, that trend started to change. Uh if you look at you know one of the big impacts there is the labor market coming out of COVID there was about two job openings per person seeking employment. We've hit an inflection point now with a weakening
labor market last year. There's less than one job opening per uh person seeking a job right now. So all Yes. Go ahead. So that means that that's one of the motivating factors for why there was
some kind of proclamation made to uh you all come back into the office the direction of the federal government. >> Yes. >> Was to get people back. Remember that that was correct almost nine months to a year ago. >> Yes. >> So now you're starting to see the impact
>> correct >> of that mandate. >> Yes. >> Okay. That's why that labor market was going out of >> Yeah. And and one of the reasons they made that proclamation is that was kind of during the Doge period when they were trying to and that was a pseudo way of
firing people without directly firing them, saying, "Hey, come back in or you don't have a job." >> Um, but that inflection point where there's not as many jobs available, that's moved the leverage from the employee where you could say, "I have all these job opportunities. I want to work a hybrid schedule or I want to work
remote. if you want to hire me, you're gonna have to accommodate what I want. Right >> now, it's to the point where that leverage is shifted back to the employer where they said, >> "Oh, that's so >> yeah, you you don't have the same opportunities you did. Now you're going to have to play by our rules. You're have to work, >> okay, >> in the office more than not, things like
that." So, yeah. Um, and then your other question, tariffs. Um, so, >> uh, man, that's a big topic. Okay, so the recent news that you probably saw is the Supreme Court deemed
their implementation using IEPA, which is the International Emergency Economic Powers Act, uh was illegal. So they were implemented, it was unconstitutional. Um now the president has come out and said he'll use other avenues and he uh
set forth I believe it's a 15% now tariff across the board. Um the impact it had on our markets and consumers last year on our markets created a lot of uncertainty. So we saw the selloff in April, the original tariff announcement when it was like 30% here, 20% there,
all these big numbers that the market didn't expect. The market cratered for about a week and then they walked back a lot of that and started, you know, negotiating uh trade deals across the board. The market, you know, V-shaped rally back up. um the uncertainty of
tariffs on, tariffs off, this level, no this level. Oh, I don't I don't like your tone on this call. I'm going to increase it here. Right? >> Um you know, now we're we're negotiating. I'm going to decrease it here. That uncertainty creates kind of panic in the market. That's why we saw a lot of volatility, right?
>> Um we saw markets rally when they were ruled illegal because that gave some certainty >> and then we saw the market sell off on Monday when it was announced that, you know, now we're gonna have 15%. That's >> so from a there's a great chart I'll bring it in uh next next uh quarter. There's a
great chart that shows the statutory rate of tariffs. So what's stated what the stated rate is versus the effective rate. So what we actually experience, >> right? >> The reason there wasn't as big of an impact from tariffs on say inflation as we expected. Most people thought inflation would kind of blow back out
because, you know, adding 20 30% to anything is going to increase cost. >> The reason we didn't see that is the effective rate was much lower than that. So the stated rate at the end of the year was about 15%. 16 15%. The effective rate was about 11%. And that
gradually increased. So in April when the the stated rate was 30%. And this chart um it actually goes back to 1900. So 125 years of tariff data. >> Wow. We've never had tariffs at 30%. So that stated rate of 30% is why people panicked. The effective rate in April
was I believe less than 6%. So we didn't see the full impact of you know those stated rates. However, we saw a constant trend and that's why inflation where we're trying to get it back down to 2% has remained relatively elevated closer
to 3% because there is some impact from that. We've gotten two recent studies, one from the New York Fed and one from Goldman Sachs. So, two of the most respected either public or private institutions on economics. They've both stated that about 90% of the cost of
tariffs has been that burden has been placed on the consumer. >> So, it was originally thought a lot of companies were going to absorb that. >> Most of these companies, >> yeah, they're especially if they're publicly traded, >> yeah, >> they don't want to impact their bottom line too much. And so most of that was
passed on to the consumer. >> Now the big question is >> we're supposed to re they're supposed to refund what? >> Right. That was my question. Yeah. >> Yeah. And >> unconstitutional. So they have to pay it back. All right. >> Yep. And that's why we saw at the end of the year last year several companies
suing the administration on on tariffs specifically to extend the window in which they could request that refund because if not once 2025 closed out they would have forfeited the right to to a refund on that. Now additional companies are suing saying all right how
are we getting that money back? So ultimately you know that money I'm assuming will go back to those companies. How do >> Right. They passed it through to us and >> how they're going to get it how they gonna give it back to us. >> Exactly. So, okay. You know, we were the burden. How will they funnel that to it?
You know, hopefully some way they'll they'll make the consumer whole. I'm not hopeful, but um you know, the good news from a pension standpoint, right, >> is that money we could see a nice little pop in their earnings for, you know, the quarter receive that >> because now it won't be there. Thank you so much.
>> No, absolutely. >> I mean, take up so much time. Thank you. Absolutely. Um and then uh I I'll run through some of these other charts. Page three just highlights uh again it's been a long time since international markets have outperformed uh the US. So that purple
purple line when it's above the chart those are periods when international outperformed below the line periods where uh US has outperformed. And so you can see really going back to 2008. of the great financial crisis. That was the last time we saw extended outperformance
by international. The reason for that from a composition standpoint, international markets are much more heavily weighted to financials and industrials. If you remember what sold off and what collapsed in 2007 and 8 were the banks and so their markets have
really been pressured downwards by that over that time period. Our markets are much more heavily weighted in tech. And we've seen the tremendous growth in tech over the past 15 20 years that's benefited our markets tremendously. And so uh the rotation kind of away from tech that we
started to see at the end of last year that's benefited uh international markets. Uh page four just highlights again that rotation. So left hand side of the chart u Nvidia has really been the big winner over the past couple years. Uh these charts show from the
market bottom in 2022. So that was when inflation spiked over 9%. The Fed raised rates, the market sold off by 20%. So from that bottom through the end of this year, if you took the S&P 500 and you just pulled out Nvidia, we actually underperformed. Our market
underperformed both Europe and Japan over that time period. So we we don't we wouldn't have known that if you hadn't pulled out Nvidia because it's been so dominant over that period. And on the right hand side shows the different sectors internationally that have actually outperformed US growth which
has been the big winner you know relative uh up until uh this last year. The big one as I mentioned European aerospace and defense, Taiwan technology. So the big one there is Taiwan Semiconductor which is a major player in the artificial intelligence
space and then international banks as well. And so again, uh that trend we'd expect it to continue this year and so we're comfortable with your slight overweight position to international to take advantage of that. Uh page five looks at those mag seven I talked about.
So Nvidia, Meta, which is Facebook's parent company, Tesla, Amazon, Alphabet, which is Google's parent company, Microsoft, and Apple. They really dominated markets in 2023 and 2024. 2025 they outpaced the market but at a much
smaller extent and it was really the terrific two Nvidia and Alphabet Google's parent company were the only two that outperformed the S&P 500 and now to start 2026 on average these companies are actually down uh year to date Nvidia is actually the only one
who's in positive territory. Uh so again we've seen the market kind of rotate away from those high flyers into other areas. Uh page six is just a quick look um when that rotation started away from the mag seven and the the top of the market to
broadening out to other areas of the market. And so this chart on page six on the left hand side that's the top 100 names in the S&P 500. So from the end of 24 through November 3rd the importance of that date is that was when the market
kind of peaked in concentration. So the top 10 names, those mag seven plus a few others represented about 44% of the S&P 500. Um the top 100 names contributed were contributing about 90% of the total
return of the index. Now fast forward after November 3rd, we started to see the MAG 7 sell off. They're now the top 10 is under 40% of the index concentration. Now, the bottom 400, the kind of unloved companies in the S&P 500, they're
actually contributing about three4s of the total return. So, that's what we mean by a broadening out. There's more companies doing well. It's not just the performance uh catered to a handful of names at the top. And that's frankly a much healthier market environment.
Um, and then page seven, uh, you know, I feel like I'm beating a dead horse, but this just highlights so far year to date kind of that rotation. You'll see on the right the sectors that are underperforming, tech down 4%. And then financials, the big loser, the main reason for that. Earlier this year, the
president suggested that we should impose a cap on banks and credit card companies for their credit card fees of 10%. And that sold off many of those credit card names, whether it's Mastercard, Visa, and the banks. >> To that I thought that was
>> so that is the thing. It was just a suggestion. No legislation was passed, no one's apply uh no one is complying with it. But the the the fear that it will be imposed is what is pressuring th those institutions to the downside. So
that's the main reason we find them there uh to the downside. Even healthcare, you can see it's up just 2%. Uh but part of that is um the I think the payment rate for Medicaid and Medicare was much lower than it was expected this year. And so um
>> because uh froze the federal government for a moment of some. >> Yeah, I mean the the government shutdowns we've seen the past year and a half or so has certainly kind of hindered it's added to the uncertainty, but it's also impacted some of those sectors as well. And then we've seen, you know, the value side of the market,
the cyclicals, so energy, materials, industrials, they're having fantastic years, 24%, 16, 14%. So again that's why you have a diversified portfolio you have growth investments you have value we have large mid and small
a year like this when we see this volatility and rotation is when that diversification pays off. Uh and then the last two pages here, um page eight, um this chart is specific to small cap. Uh however, you can kind of
apply it broadly to midcap, large cap, uh because it really dives into quality verse junk is what we would refer to. Uh and the reason I say that, so uh I mentioned the market bottomed last year, April 8th. There was a huge rally in
markets from April 8th through the end of the year. This is specifically looking at the Russell 2000. So that bar that's listed as RU at the bottom, it's the second from the end. It was up 42.4% uh through that period through the end of the year. Now what you see to the
left are the different sectors that kind of outperformed underneath that um that index. The two I'll highlight non-earners. So that's companies that had zero or negative earnings and no sales. So companies with no sales, they were the best performers in the Russell
2000. So they were up 82.4 and 83%. And I don't know about you, but if I was lending money to a company, I don't think I would look first at the ones with no sales and no earnings. But those are the companies that outperform. And so the last number you'll see on the
far right, that 10.6%, 6% that's the percentage of active managers. So who we invest with that actively manages a portfolio that were able to beat the benchmark over that period. One in 10 because we're not hiring them to buy
companies with no earnings and no sales. We're investing in them to have a quality portfolio of companies that have sustainable earnings that they're going to grow over the long run. So, um, that's kind of a microcosm and you'll see it in some of your active managers, especially on the value side where they underperform their benchmark because
quality didn't win last year. Now, that's changed this year and I'll give you some updated numbers where those managers are outperforming and that's what we expect when quality starts to outperform. Uh, but again, just wanted to give you that kind of highlight. It's just, you know, somewhat of an
anomaly and, you know, period where we go through where, you know, qualities and fundamentals of things you think would be rewarded in the market just aren't. And so it gives a little context to some of your manager's performance. Um, and then the last page, page nine. Um, we provide a market perspective, our
own research, uh, in your quarterly report. It's the first two pages um, on this quarter. I won't bore you with it because it's a lot, but if you have trouble sleeping tonight, feel free to read it and put yourself to bed. Uh, but it touches on the US consumer. You know, household spending contributes nearly
70% to our GDP growth. Um, and so we just wanted to take a look, you know, how healthy is the consumer right now? What are some headwinds for them in 2026? So, it kind of dives into that. This is a little different on page nine. This highlights maybe an area where we could see some some tailwinds for the
consumer and a little bit of stimulus to the economy and that's that bottom right hand chart. Um so last year we extended the 2017 tax code and uh Congress passed the one big beautiful bill and because of that it's expected that the average
tax refund for 2025 is going to see about a 25% increase from 2024. So the average in 24 was roughly 3,200. It's expected this year it's going to be closer to uh $4,000. And so what we know about tax refunds is traditionally that
money comes in when you get the refund and goes right back out the door into the economy. >> Discretionary. >> Exactly. And so um so we would expect probably we may see a little bit of it at the end of this quarter, but more more likely than not uh in the second quarter after you know April May uh a
little jump in sales and earnings across the board because of that money. So, that's kind of a a positive area that we we may see some stimulus in the economy. >> All right. And then what you've probably been waiting for, and sorry I took so long to get to it, page three of the
quarterly report, I can highlight your performance for uh the periods ending December 31st, 2025. So, the first bullet there, uh, for the quarter, the plan earned $423,000 or 1.8%. uh we did slightly trail your strategic
model. So that's the benchmark we can pair ourselves against. Uh that was 2.3%. Most of that was due just again your active managers that were more quality bias, they underperformed their benchmarks. And so we'll take a look at that. But your best performers international, your two international
funds were up 4.7%. And then your large cap value manager Verdice Seridex was up 3.1. For the entirety of the year, 2025, your plan earned $3 million or 13.6%. Again, behind the benchmark, but most of
that was from your large cap value manager. And small cap, as I mentioned. So, interesting fact, we're invested in the spider small cap, S&P 600. So, there's two indexes you can use in small cap. The Russell 2000 was that chart I showed you. The S&P 600 is where we're
invested. The only difference between the 600 and the 2000, the numbers represent there's more companies that are represented in the 2000. The 2000, about 40, a little over 40% of those uh companies in there don't have earnings.
The S&P 600, there's a quality qualifier. You have to have positive earnings. So, that's the difference. We're in the more quality side of small cap. So, if we're going to take risk with small cap, we chose to do it in a safer way. Uh unfortunately that didn't pay off. So small cap the S&P 600 was up
about 6% last year. The Russell 2000 was up about 12. So those 40% of nonprofitable companies added 6% outperformance relative to the S&P 600. So uh again those are the two areas that caused underperformance. But your best performers international you were up
about 30% large cap growth you were up just shy of 19% and then convertible bonds you're up over 18%. For the past three years, you've earned 7.8 million or annualized returns of 13%. Well ahead of your actuarial assumption rate. For
the 5-year period, you earn 6.2 million or annualized returns of 6.1%. The reason that's lower than your three-year, keep in mind 2022 when the market sold off. We're still carrying that 2022 in your 5year, that'll roll off next year. So that number will get a
nice boost assuming we finish out this year strong uh for fiscal year 2026. Um and then for the 10-year period, the past decade, you've earned annualized returns of 7 and a half% uh just ahead of your assumption rate, which was at 7.4. So very happy with that
performance. Now, if we flip forward, uh page nine highlights all of those numbers I just covered. Uh the one thing I didn't touch on what you finished with in total assets. So you uh
finished over 25 million 25,215,547. That's the total amount of investments in the pension fund. Uh and then if you go down that 10-year column again, 10 years ago, you were at 16,747,000. You've distributed nearly 6 million uh through expenses and benefit payments.
over the past decade, you've generated nearly 14 a.5 million in investment earnings over that time period. And that's where you finish out at that 25.2 million in total assets. Um, and then we covered your current asset allocation. So the last two pages
I'll touch on, uh, page 16 and 17 highlights at the very top your total fund as well as the strategic model. So that's the benchmark that we compare you to and that's based on the uh asset allocation that we have in your investment policy statement and then all
the underlying funds we're invested in. And I'm happy to note that all of the funds with the exception of your large cap growth, so the Voya large cap growth and the Fidelity large cap growth are up year-to date. So the S&P 500's up 0.1%. Uh Seridex large cap value is beating
its benchmark by about one and a half percent. That's up 7 and a half. And keep in mind that was if you look at their one-year number, so it's the second column, they missed their benchmark again with that quality bias last year. Now they're outperforming that the markets rotated back to
quality. Uh your midcap fund is up 5.2. Your small cap index fund is up 7.3. It is well it is also outperforming its benchmark by about one and a half%. So as I mentioned, you can see the one-year number 6.2 versus 12.8. Now that quality
is back in favor, it's outperforming. So very happy with that. Um the big winner so far year to date, Conan Steers is up 11.7%. That's your global infrastructure manager. Uh your convertible bonds are up over six. Your international funds
are up 8.6 and 6 and a half%. And then your bonds are up one and a half and 7%. So overall, I'd say you're up another one to one and a half percent conservatively this quarter. And when we finish this quarter, we'll be halfway through your fiscal year for 2026 since
we start October one. >> So, all this great, wonderful, awesome news. >> Yes, ma'am. >> Like, um, why is it okay on page 19? This is just something. >> Yes.
>> Why is it okay for cash to be a negative and that's not considered like, you know, like >> Yeah. Uh, great point. Yeah. So, these reports are just a snapshot as of December 31st. Yeah. So, likely what happens is benefit payments went out. It
was overdrawn and that was corrected. I don't know if Kyle has the information as when when we reer that cash. Uh but this is just as a snapshot. So, you don't have negative cash right now. Uh I can assure you that again it's just a function of it just being cut off the end. Yeah.
>> CPA blah blah. >> Yeah. No. >> Yeah. No, absolutely. >> Yeah, >> it yeah. >> Yeah. >> No. >> Yes, it happens. It usually doesn't
happen the day the quarter ends when we do these reports. So, unfortunately, that's why it shows here. Uh but I I do know the custodian will reach out to us whenever there's an overdraft. Um and we'll provide a letter of direction to raise that money accordingly. So, um,
>> yeah, >> right. >> Yeah. And that that's one of the things the custodian they make sure whenever there's a they send us an email immediately that there's been an overdraft. So, >> yeah. >> Make sure it's
>> Yeah. And >> a fiscal year. >> No, absolutely. And that's a function. >> Yeah. Unfortunately, that's a function, too. We try to stay fully invested in your portfolio and every once in a while benefit payments will be a little larger than the balance and so we we raise that
cash. The good news is all your funds with the exception of your private real estate are extremely liquid. We can get in and out of them on a daily basis. So um whenever we fall into a situation like that, we can raise the money within a day.
>> Absolutely. Uh and that concludes my report. So, I'll just open it up to any other questions or discussion. >> Oh, thank you. >> Appreciate it. >> I'll make a motion that we accept the report as given. >> Second.
>> All in favor? >> I >> Any nays? >> The motion has passed. Thank you. >> Thank you. >> Uh our next item is resource centers. Cal, please. >> Um, I think the attorney is next.
>> Oh, I I missed and wrote something there. I'm so sorry. No, no. >> Attorney, uh, Anna Glossner Parish, could you please? >> Sure. Um, just a quick update for everyone. Um, there is a memo regarding
um, an increase to the IRS um, mileage. If you were in a situation where you needed to be re reimbursed, typically that is done so at the IRS reimbursement rate. So that rate was recently raised as of January 1st. So just keeping you
aware of that change. Um second, the partial lumpsum option ordinance passed on first reading. It is up for second reading at the council meeting on the 26th. Um there were no questions or concerns during the first reading. So I
am anticipating that will be the case um at the next meeting as well. So that is good news. Um and as soon as I have an update on that following the meeting, I will request that ordinance from the city clerk um and make sure that that
gets sent to um the division of retirement so that MUN code and the plan document can be updated accordingly. That was the um the partial lumpsum option ordinance which gave members the
ability to take um a certain percentage lump sum um upon retirement and then their benefit would be um revised based on that selection. So just giving participants um some additional
benefit options. >> Okay. >> Um my last thing is there were some changes made to the operating rules. Um as I did with the other two boards, I'm requesting that this get tabled for now and moved um to the next meeting. Um
that way I can update both the operating rules and the SPD with the new trustee um and the operating rules assuming that the um ordinance that I just mentioned gets passed. So that way I can have everything allin-one um and I don't think we should be waiting on any other
information for those updates at the main meeting. >> I move that we table that item. >> Thank you. >> Second. All in favor? I >> I >> motion is passed. >> Thank you.
>> Madam chair, can I add something to that? >> Of course. >> There were some questions that we went over line by line practically for the fire group. All of those changes and revisions were added into this >> operating rules. >> Operating rules for you. So what they
agreed on that all of the contracts would be reviewed by the attorney. That line was added in. So all of the things that the fire and the police have added in have been added into yours and uh they have also agreed to table it till the next meeting.
>> And when we say review by the attorney, are we referring to Miss Anna? >> Yes. Yes. >> Okay. All right. Thank you. >> Just to make sure that nothing um should be signed without prior approval from the attorney. >> I agree. Thank you.
>> Great. That's all for me. >> Okay. Um, thank you so much. Our next item >> would be Cal Resource Center. >> Thank you. In your packet, I put a brochure from FPVTA. It's the Florida
Public Pension Trustees Association. >> Yes. >> Um, the other two boards um made a motion and agreed to join the membership. It's $750 for the entire board to join. >> Oh, wonderful. And once you join, you'll
be getting emails and messages, flyers. They send out a lot of information, but it lets you have access to go and attend the school, the trustee school, which is encouraged by your investment policy statement, not required, but encouraged.
Um, they have an annual conference usually in the Orlando area, and then they have schools twice a year. So, um I'd like to see if the board would like to go ahead and join this um group and
um later on we can get the dates for the different schools and conference if you're interested. >> Is there a motion on the board? >> I I make a motion to um become a member of the Florida Public Pension Trustee Association for the general fund.
>> Thank you. So, >> can we have a discussion? >> Certainly. >> So, my discussion is looking at the um brochure and seeing the event registration. I guess that's for the school, right?
Uh the third page. >> Yes. Uhhuh. >> Okay. Or fourth page. And um I know that um the finance director have an annual requirement of those eight hours or
you know investments. Would that qualify? Would that >> continue education? >> Yeah, they have to do finance directors have to do eight hours >> of investment training annually. Um, and I was just wondering, do we know
if this particular training >> I don't, but I can find out for you. >> Okay, I appreciate that. >> You know that the um if you go in for any of the higher classes, the CPPT, which is a certificate program that they have, levels and that kind of thing.
>> A lot of um finance people go to go to that kind of >> program. So, they do attend. It says on the page before that um continuing education credits CEUs required to maintain certification are available at
all schools and conferences. So it looks like >> they could be >> okay. Well, we can always follow up. >> Yep. >> Thank you. U do we now vote? >> Yes. >> Would you all like to vote?
>> I >> Yes. >> Oh, yeah. The vote is all I therefore the vote has passed. >> I know I didn't say it in the traditional way. >> Sure. >> All right. We're non-traditional. >> We are non-traditional. That's right.
>> Well, I have for my report. >> Did you want to go? Okay. May we So, we'll go to the next item, the financials. >> Yes. I have the um financials for you to receive and file and then I have the warrant for you to
vote on to ratify them. >> We have a problem with the financials if I may identify. >> Oh, certainly. >> If I may, unless I'm confused. >> I'm I Oh, I understand better. So, what
it says is fiscal year ending September 30th, 2026. Then it identified that this is the information for October, November, December. Correct. >> Got it. Thank you. >> Right. I got it.
>> Yes. You just receive and file the financials, but the warrant you need to approve. >> So, may I have a motion to approve the warrants, please? And the financials. Correct. Just the orange. Okay.
>> Motion to approve the warrants as listed. >> Is there a second? >> Second. >> All in favor? >> I >> I the motion has passed. I did want to inform the board uh the
last time we met the people that um did not have a forwarding address for their alive and well letter. I was directed to turn off their pension, their pensions have been turned off and I have not heard back to many of them. Um there was
like four people. Uh, one gentleman we were in touch with his divorce attorney and I specifically called her and advised her his pension was going to be turned off if he didn't come to me given a live and well certification that he
was alive and she said she would pass along the information. I still never heard from him. >> And how long does that indefinite period last? like how long >> until they get um an alive and well letter and a change of address and update their information which is their
requirement to do um the pension's turned off >> and there's no uh limitation with how long it's turned off. >> No, >> I just turned off. We're we're trying desperately to avoid any fraud
>> if someone has passed away. Um, I don't want to send money to an account for someone. We've had notification in other cities of years of people stealing parents' pensions. So, >> thank you. >> That was the only report. Thank you.
>> And you said there was four >> four members were completely turned off. >> Okay. Moving forward to benefit approvals, right? Yes. >> And what what is the action that you
would like? >> We had a distribution to Alan Bush >> from his account. >> I see that. >> So, we'd need that approved. >> We like a motion to approve. And it's only one.
>> Yes, I think that's the only one. >> Okay. Motion to approve benefit approvals. >> A second. >> Well, I think I need someone to make the motion. >> Sorry. Thought you were doing >> motion to approve the
benefit approvals. >> I second that. >> All in favor? >> I >> I apologize. There are more than just >> because I was looking behind. That's what I was trying to >> I'm sorry. >> I said Peter Wilot.
>> No, Peter. Yes, I do now that now I said the name. Yeah. Oh, I know these people. >> Yes, you do. >> Wow. >> I make a motion that we approve the additional um
distributions. >> Thank you. >> I second that. >> The uh motion has passed. Well, I think we Yeah, the motion has passed. >> We need to move. >> Oh, could you please vote? I think I'm tired. I >> I
>> I >> Okay, motion is passed. We will move to the next item. Uh is there anyone here visible or invisible to make a public comment? >> We have no comment from the public.
>> No human. I can't see anyone. So therefore, we will go past that item. We will move past that to other business. Is there are there any other business that we need to discuss? Hearing none, I would like a motion to
adjurnn. I didn't hear any other >> motion to adjurnn. >> Second it. >> Did someone have other business? I don't mind going back. >> Okay. Okay. >> Motion to adjurnn. Is there a second? >> Yes. Second and third.
>> All in favor? I. >> This meeting has now been officially adjourned. >> Thank you. >> Thank you.