General Employees' Pension Plan Board of Trustees Regular Meeting

? ? to support >> me. I it's 10, 30 will go ahead and call General employees Pension Plan Board of trustees regular meeting Jordan January 22nd 2026 to order. >> We'll start with a pledge allegiance. one nation under God next. We have the pledge of stability. We may disagree, but we will be respectful to one another direct all comments to issues and not engage in personal attacks. >> call Miss Martin. >> Chair chapter line there by Nicholas here. Secretary drinks, your treasure strict trust the raritan here. Testing Keeler here for us to that here. Any public input. >> Hearing none. We'll move on before the approval. The minutes understand we may need to. have some changes. The word of the day here on a couple of the specifically. Item 10 to one, 10.2 moving that after the approval of the retirement Quest. And then perhaps the ordinance moving or discussion moving that up. Yeah. Is that okay? I had as of Scotland's. >> Okay. So we'll have. Minutes time request. The new business item. >> And then the >> attorney matter of the ordinance. Yeah, that order, OK, that's OK, is consensus? Yes, yes, yes. All right. Thank you. >> So next item is the approval meeting minutes. We have first one of our tober 23rd 2025. Very comprehensive, by the way. Thank you, approve. >> I'll second that. Motion Christine Keeler, second by Vice Chair Nicholas, to prove the meeting minutes of the October 23rd 2025 meeting all those in favor say aye. I pose to both say that motion passes unanimously. Next item is the minutes of December 9th 2025. Well. I'll second that. Motion by for some second by by Nicholas approving the December 9th 2025. Minutes. Those in favor say Aye. Aye. chair votes. Aye motion passes unanimously. Next is the approval for time. Request Miss Martin. >> Yes, you have a early retirement for Thomas Strong at the age of 62 years old after 22 years of service and has requested the 50% to join a new as of October. 29 to 2025. A move to approve the retiree question. I'll second motion by trusty killer second-placed ridiculous approving the. >> Earlier time request of Thomas Strong of those in favor say Aye. I votes. Aye motion passes unanimously. Okay. So we'll now hear from our actuary under new Mister. Be Strong. For the presentation of the actual report. Pleasure to be for the record. My name is Pete Strong. Drs. Then you're actuary number. How many years going back to about 2011? And then for part of that, it was the pompous coming. Anybody remember, Steve? That's been a while. I bring good The plan had a good year. So one of the few things that's going down as the cost of this plan. So that and everything else out there >> let's turn to That's 2 and they report. Will contribution for the year starting next year. So it's clear 27 will be 6.6 for 9 Million. And that's down from 6.8, 8, 9 million and the current fiscal year that we're in so down about roughly $240,000. The percentage of pay. I would not pay attention to any more because we're down to 67. People left this plan. There used to be 500 about 20 years ago. There are 500 before the plan is closer. 450 to 500 people. This plan. So payrolls a fraction of what used to And so as a percentage of pay, I would not worry about that number. the dollar amount. And think if you looked at as a as a percentage of total payroll, it would be a much smaller percentage. So that the contribution that that is used. So that exact amount is what the month, what will be due next year, the 6 Million 6.49. for 21 the funded ratio is 81.6. That's an increase from last year. 79.2%. That would have been 82 point for this year prior to reflecting the required assumption change. We have to update for the new frs mortality Those are released once every 5 years by Frs and within 2 years of release of those tables, all plans have to use the same tables that frs adopted. And so we had to make that change this year. The tables in 2024. So this is the second I wish cycle since then. Those increase the contribution a little bit and reduce the funded ratio by 0.8%. At that. You did the 81.6%. I mean, anything north of 80%. We consider it. >> Really. >> Yes. Good Yeah. Specially considering the rate of return assumption, the best returns in the 6.2, which is much lower than the average out there. It's a good place to be considering your clothes plan. But yeah, the average return assumption we see is about 6.8, you know, 6.7 is what's currently used by 6 point to you. That means you're you're buying your liabilities, more conservatively and many ratios lower than it would be. If you're using a heart rate. There was an experience gained about 3.3 million and the experience gains for the year. Mostly driven by the return on your We're smoothing experience gains losses on the market or 5 years. And it's on a on a funding or actuarial basis the returns. 8.6 percent versus the 6.2% assumption. On the market by basis. We are an 8.1 that we had 2 really good years the previous 2 years. And 23 24 were also really good year source moving in all those games. And we ended up with funding that basis. Average salary increases were a little north of expected 6.3 average versus 5% expected. So that was an offsetting moss. Retirements were pretty much in Retirements versus 7 expected. Termination experience. You we're getting down to the point where everybody is getting eligible for retirement and not not terminating before being eligible for a time anymore. So very low turnover experience. We had a 16 during the year 14 to have a continuing beneficiary. The total reduction and retiring payrolls about 360,000. We expected 13 and a half. if all have going on, according to, you know, exact mortality assumptions so the expected reduction was 412 as we have with more deaths expected. But it was on lower average benefits. So the total reduction retired, there was a little less than expected 3.60%, for 12. So overall, the demographic experience resulted in roughly $800,000 loss but over. But we had about a 4.1 million dollar investment experience game. So overall, there's an experience gave 3.3 million and that reduce the contribution requirement. But 385,000. And change assumptions. I mentioned the new mortality table that change increase the contribution by about 2.70, at the top of the page to a 3. We're in a good spot relative to in the market value is about 5.3 million dollars higher than the smooth actuarial value. So we have some unrecognized gains that we're smoothing in. And once we recognize all those games, the contribution of partnership come down further. If we are using market by today, you'd be a 5.3 million, a set of 6.6 million. So quite a bit a decrease from you know what? Those gains are smooth. And as long as we don't have any offsetting losses over the next few years. When we recognize those games of the contribution will continue coming down. And a 5 year period has been we have like 2 years left. >> But next year as the last year, it's moving in 2022, his loss. So that's going to be. And we and we've well off 2020 once again. So next year is going to be a small boss as we roll off 2022. But that 1, 1, for some of the M. 23. 24 25 only after next year. That's when years we'll see. ramp down in the contribution. >> So let's turn to page the dash 2. >> The total normal cost for the plan. That's the cost of benefits earned. And this number used to be much higher than this. We have only 67 people of their earning a benefit. So the normal cost is just shy of 1.0. 4 million this year. Down from last year's 1.4, 6 million. That's going keep going down as there are fewer and fewer active participants in the plan. If the plan fully funded, that would be your contribution requirement. So I mean, the lion share your contributions paying off an unfunded liability, which just has about 40 million or so left. So that's where the contributions heading. You know, what's yours? You've paid off this mortgage payment, if you will, as million are even less once there's fewer and fewer active, you know, we're trying to get this paid down. You know, by the time everybody is retired. And, you know, we have about 12 years left in the amortization period right now. So you know, we're paying the F pretty aggressively, you know, 12 years. So 12 years from now. I mean, this this contribution, if you look at a 12 year projection of the contribution, this plan is going to keep going down. You know, once the unfunded liabilities pay off of falls to all to less than a million, and then once they're no act as leftists, pretty much just administrative expenses. So it's it's a on a trajectory of being, you know. Having everything you need always benefits. Do you have that protection available us in the next thing? I could do a procession for you. Yeah, I mean mean, wouldn't be freeze that something is in the lines of I we could do a projection that shows that, you know, playing out that way, though, Maybe I can add that to next year's valuation need to see it. You know that that that might be helpful. Yes, like, yeah. I mean, obviously they're, you know, larger conversations that with those of continue to dwindle, like you said, sure. >> Over 12 year period, Right. Yeah. >> I should probably talk to us about We're going to add a projection to the valuation important, you know. >> Many a small adjustment, an actuarial That would be something for approval. I mean, I think it could. Maybe both the FIA by 2000 for the valuation and then we can from that now include that projection and the valuation report. Yeah, do. >> The son of plant that not. You just sit here and tell us what >> yeah. Haha. >> end. It's like you're it's a crystal ball of the future. Came right right? It depends on experience playing out over time. That's for sure. >> Yeah. Maybe if it if we need it, if it's something that you comes up requested, I don't think and to automatically. Okay. All right. The paint on the availability of 5.3, 6 million down from the total contribution a little over 7 million down from 7.3 to last year. And what we take out the expected member portion where a 6.6. >> 4 million for the city. Let's turn to Page B 6. The actuarial liability for the plan. Very close to total electoral present value because I mean, we have. Only about 10 or 12 years of service left to be rendered by current practice. And so that present a costs, which is future services, gotten really low relative to the total liability. Of the total present, a future benefits U.S. 228 Million. The actuarial liability based on past services. 220.0, 7. So we compare that to the actuarial, assets of 180. You have an an unfunded liability of 40.6 million and a federation of any 1.6. On the next page. We so the pay down of those of all the layers of the emirate of the availability. We've been reducing that period by one year every year, including for new faces that are established. And so we have 12 years remaining now. once that gets below 10. New bases could add quite a bit of volatility so I mean, I I know the goal is to get this paid off within 12 years from now. But once we get down below 10, we might want to still advertise new basis over 10 years. I mean, it just in case there's unexpected volunteered. Once you get down to 5 years left and you have a big loss and damage as were just 5 years has create a lot of volatility, you know, on the city. So I I would say once we get down below 12 to just all all the current existing bases will still go down by one year of the year. But new bases that are established each year be over 10 years. That will help limit ballot. That will help reduce it does not eliminate that. It is no limit. I said, you know, it will limit volatility, right? And just in case you have any unexpected are changes that happen. You know what? You're getting less than 10 years left. So it's something we would take a look at and a couple years yet. Once we get down to 10, it will be 2 years now. But I I would then then we would have a proposal that next year, new basis over 10 years. yeah. All right. Let's turn to Page C Dash 8. The total inflows during the year. pretty constant your years about 7.7 million last year. And this year. The employee contributions keep coming down each year. City contribution was pretty level 7.2 97.3. Total investment earnings. 14.6 million this year versus 30.7 last year. Last almost 20% returns. Great. So you know, over 45 million, an investor turn over a two-year period, which is which is a great return. payments going out the door, 14 million, 14.1 for 2.7 last year. main difference there's is withdraws from the drop account. We have a lot of withdraw from the drop count the previous year and that was down 700,000 this year. Total. Add everything up together. You've got 192.0. 6 million. Take off the rim. Any drop account balance and your 191 million, 3.69. At the end of the year. Page C 9 We show how we're smoothing the assets and this will show what I meant earlier about next year being kind of flat faison year and then the phases really starting to ramp up to 27. 28 29. But if you look at our actual return this year was 14.6 million. The U.S. soon. The matter returns the fund. It earned 6.2% would have been 10 million, 4.70. And so the excess return this year was 4.1. And that is what gets moved in a 20% per year. 126,000 this year, and then each year going 4 through 2029. The phases from the previous years. Our 4.1 1.2, 5, negative 6.9. We have that big 2022 loss and then positive 4 that positive for poor neighbors falling off this next year. And so we're going to have a negative 6.0. 9 is the last year that we have to recognize. 22. And so we're going negative total Faison next year, 7 27,000. But then some really big positive faces. 27 to 20. Assuming no offsetting losses between now and then. So add everything together. The expected return, the the phases were at 180 million, which is about 11 million dollars less than the market So we have 11 million dollars and phase ends, you know, coming. As as that could smooth. On Page C 10. We show the history of the investment returns. The funds have the funds returns? Well, over the 6.2% assumption in recent years. 7 or 8.8 over the last 5 years, 7.9 over the last 10 and 6 and a half over the last 19 years, which includes the great. recession of 2008, 2009. So we're achieving the benchmark. The 6.2 assumptions is being. Met with a cushion. So I have no concerns with the 6.0. 2 assumption right now. I think as we as we get closer to being all retirees, which we're still several years away. Incremental productions, you know, maybe getting down towards 6 per be the best move. We don't to do that right now. So any questions? think 6, everyone weaving is that well, when a person to be the conservative. Once is. You know, we do have Sweden. A couple of close friends with her tires. Only a little sense a plan that closed around the same time as this plan that is currently at 6. So I mean, it I think 6 is a good goal. It depends on how can serve you want to get in and this this would come up conversations with, you know what the investment in Sultan. Thinking about what how many years left you have to pay benefits, you know, which is he still a long time horizon? You you can do something like. You know, having fixed income that will provide the next 10 years of benefit payments or something like that and do some type of capsule matching strategy there. And then have Morrissey. He asks for beyond 10 years because economic cycles are usually do next. And more than 10 years to 12 years with the ups and downs. So you're probably Your love him. A lot higher probability of achieving 6.2% over a 10 year period. Then you do a say over a 3 or 4 or 5 you know, you could you could. Kind of match liability durations for like I-10, years of payments with fixed income and it still have 50 or 60% of your assets that can be in even when you have all retirees. So I think I think 6 is still justifiable in that scenario, but it just depends on how far along you get an and how conservatives want to get with making sure you you preserve capital you have the plague U.S. 200% funded and you want to make sure preserve that funded status. And that would require getting a little more conservative in reducing it further than sense. So that concludes presentation. there any questions? Usually With all this going on haha. My wife would tell that I move around Haha. >> She complains a lot about that. And I often don't remember my I moved around. What was I doing with dreamy on Thank you. He is going cue. It doesn't pay motion. Would be in order That's right. Shep. Improves ration. >> Item 10 point. Well, okay. Except that than 10 point to a need to declare expect yet 2 separate separate motions. Okay. I make a motion to accept the valuation. As of September 30. And 25 motion by Trez are strict one second but received Thornburg accepting the violation. Report of those in favor say Aye. chair votes. Aye. The motion passes unanimously. Just for the record the motion required for the declaration of expected rate of return per Florida statute. statutory exercise that we have to do every year after we approve the valuation the language is that we are approving 6.2% is appropriate investment rate of return for the current year for each of the next several years. And for the long-term thereafter. I make a motion to what he just >> for the expected rate of return to remain at 6.2. Percent. Second. Motion Treasure. Strickland second, but risky Thornburgh the current expect a rate of return the future of 6.0. 2 1% of those favor say aye. Aye percent passes unanimously. Okay. All Thank you. Thank Thank Good to says some the maybe you can see and we it has to stay there and hot off the presses a week. >> Pass out a one-page memorandum. It's really just update and a reminder we sent it out to all of our plans regarding. >> What's to be posted on city as directed by the state Florida Statute. 1, 2, 0.6, 6, 4, So after does should be? It's going court pursuant to one, 12, 6, 6, 4, which is required by the state. And you have to look cast the 6 to 7 and you have basically do a run out. Has to where we have to assume that there are no new contributions coming into the plan. And if that's the case, when we expected to run out of money, you're asking somebody one of the cars can run out of gas, which was put into a law by state probably about 10 years ago. So that's a requirement the other thing it does, it has to measure B S it's my abilities. A 2% below what our investment rate of return is. So the and then Pete also does just some of the if it was 2% above discount rate. So if it 8.2, so that is on the audit on the website all required reporting are investing rate returns the last 5 years is required and it's a take a look at the website and you are totally in compliance with all It was just a a memo that we put out as a reminder, but snow action so. That just like in the pension section of the website he's got yeah, that disclosures to 60 days following approval of this report. And so we usually get those done in March. >> And yeah, like you said, it's it's a disclosure item that. Really doesn't make a whole lot of sense. I mean, the plans assume turns 6.2, yet the state wants to see it at 4.2. Right. And then you know, this run out the calculation of the show's, if you've never put any more money into the fund, here's how long the fun with lasting benefits. When you're required by state that you can put money into the fund. so that that doesn't make sense. Is there a disclaimer that affected the bottom of? Yes, okay. So it's okay. Yeah. Yeah. And the requirement to show it and to based to 2% more than assumed rate of return is not a state requirement but are from years ago. Got with the actuation were saying. >> Now we're showing it to pull out 2%, show that 2% year just to offset state required. So. And it was put into law when they were trying to. I mean, there's a push to I defined benefit plans close defined benefit plans. And that seems to have settled down. But it's still in the law. really be fun. just we're going remain quiet on the like to approach Legislature then. I have to South pretty And if you never like to see a projection, we're be happy to do I'm sure. >> you don't want to spend the money, it's it's it's a good exercise to see, you know, scenarios playing out. All right. We're going to see everybody thank you. Thank you season. Thank you. Okay. So next we're going to discuss. The proposed ordinance regarding in-service distributions. Item. 1.1 on the agenda. Sure. I could just Yes. after the last meeting we were directed to recapture the try to move the ordinance. Howard, on the city Commission. >> and it was actually placed on the agenda for 10 have discussions with city staff, which a lot has to the ordinance. And I think city was not really comfortable moving forward that point in time on the ordinance has drafted. So it is on the agenda today for further discussion as to whether or not move forward all. >> amendments that the city may want in order for it move forward. I think the the real issue is the city wanted to make decision as to whether or not to bring somebody back and reapply them rather than automatically at the end of and, you know, drop period separation from service that you could just stay on as an employee. So I believe him not speak for the city, but I think that that was the meeting, a driver there. And the issue that led to the holdup in the ordinance moving forward. >> We haven't Mason come to the table and talk to us about it for sure. Good morning, everybody see some HR director. Thank you, Kelly, for inviting kind of take a couple steps. to tell you a little bit of a history of why we're here today because you guys have talked about this, I think in October and make the motions. So I'll just step and a couple steps, but some sort what the attorney had presented. So we did have some concerns. Kind of get to that. When. I believe it was in October that the board voted on the revisions in the ordinance that was coming forward on an agenda. There. It was a little gap, I think in communication had not seen the revisions nor was called city management. Anybody in the management office city manager office. When we had a chance to look at it, it was pretty far into the process of the agenda are ready. I did review it and reached out pretty immediately the pension Shayla, which opened the conversation, which I appreciate that I had just had a ton of questions on it. We had not had anyone go in our history, go from drop to stay employed. So it's the break in service that we were struggling with. It was the first time literally seeing that language. And I I didn't I had a lot of questions and that were great. And we even got attorney on the line to thank you for your time. too in one of the really questions I had as well. What problem we trying to solve here? I didn't know that we had a problem that we would change the ordinance on. On not having a break in service. That was a concern for the city which meant the language said that the city had or the employee had a right to stay without intervention from city management. So that would mean if somebody enter drop, which it's the 16 month we we plan is management for an exit of an employee. Whether we're going to fill that position with someone else. Women ate the position, downgrade the position. Those are all of our management rights. This was a little startling put that put that in the hands of the employee without any sale of what what we were doing. again, that pension administration, along with Shayla, very gracious to kind of hear some of our concerns there's a costing element also with no break in service of someone. That's a very senior A switch. A lot of individuals here sitting at the table of our trustees. It's your cost of wages this year. Attendance plans benefits all those costs. So when this kind of came for the discussion occurred with the management side. We had no cost analysis of the cost of the change in this pension ordinance. So the change you might have had an analysis of the impact of the plan, but there's an impact to the city costs for that. And there there was a backup for that discussion. So that was very concerning to us. So. Back to the support of this work challenge was supporting the language of the ordinance that came for the proposed changes. I didn't see a problem trying to solve. And I think it actually creates more problems with no break in service. I do want to say we're not oppose or never happen with pre employment for Reemployment, a retiree and that's in. That's in there. Some of challenges we've had with that language, which this might open up this conversation is the 59 and a half. That has been a problem when people return. I do not see that being solved in the ordinance proposal that came forward. That would be something I would suggest we maybe look at because that has been a stumbling block in the past. I would support along with the city management at the time not to move forward with. The revised language has put forward. Support a break in service. Someone is exit drop. They can always reapply, but that then is an application process rather than a guarantee of position. I would like to maybe have more conversations with them. Ford or, you know, if you guys want to consider looking that at the 59 and-a-half. portion of the reemployment, which what the attorney chime But I believe if you return, you got to stop your benefit. If you're not 59 and a half or above. So that has been a challenging point. So that I think is a problem we could solve. The other proposed that was voted. I think in October again, I didn't see the problem we were trying to solve on that one. It actually caused more conflicts and problems and is a cost to the city. But we have to consider going to support this. So that was kind of my point of of the year for any questions on the employment side. We have good contact the support and also everybody on this board. But when the and I will definitely engage a lot more. But if it would impact like city employment or cost the city, that would be something I'd like to be here and have those discussions on South. Tried it. The more where those discussions and come forward before, you know, ordinance would. The approved card, the city commission. So we make sure we have our cost analysis and every thought. On the employment side, take care of. You guys do very well on the cost the plan. But if it impacts the employment side, we have to probably do more analysis on them. In my concern was also that we need to be trial bring to the commission. don't have C manager support because then it could be a problem. >> My and I think we all need to be on the same page. We have. Things like this that need to be changed. That requires the city to kind of be on as So >> I'm glad that we have is this question? I don't know what of questions members have, but I just want to make sure will wear that, too, because if we don't have the support of the city manager's office in could possibly to not supported commission. So we see be wary of that careful there been an and any place that actually came back in? >> Have been employed. Yes, So it's something that I mean, it has a comment yes, absolutely. >> And I've even considered this is just against talking points for the board to consider that the 59 and a half has been a problem returning having their surprise. They have to stop there. >> Pension So as you know, I think we spoke a little bit about it. But, you know, the IRS position changed over the last couple years to allow foreign service distribution. So mean, I think we can eliminate that. 59 and a with regard to the benefit payments still allowed to go forward. Partly employment 59 have still it's still going to be an issue with regard to distribution of any drop account. What some benefit. But you get around a 10% early distribution penalty. A 72 to You know, the IRS code you know, we're qualified plan. We control over the benefit. We know the qualified retirement plan. So that's not an issue there. But did you prefer drop lump sum payments 15 a half. But with regard to the monthly benefit we can change the ordinance to get rid of the 59 and a half year for the benefit to be suspended until unemployment reaches age. I-15 and half and I mean currently kids age number time in 65 in 10 years or just 30 years, regardless of age. So pretty you know, if if you need the requirements for normal retirement on the plan, the IRS will not have a problem with in-service distributions. So comfortable saying that we can get rid of that. 59 and a half a limitation with regard to suspension And that maybe that's something that the city has appetite for Absolutely. Yeah. >> But the reemployment, 2 or 3 sections of Reemployment. I can. So we're not concerned about the I mean, we welcome the people coming back. If that's the choice puts the city in the applicant, make, you I would I would even prefer a longer break in service to be honest. But, you know, the board has approved something that that's the total opposite of I would suggest. I would mirror more for us where you're required break up 6 months before Reemployment. Possibly Mike. The attorney said way the 59 and-a-half. But again, that's that's something for you best not to decide today, but that's the concern. I I think we had a ordinance proposal in front of us not solving any problems that we've seen in the past. Some of the different suggestions myself problems we have seen where people could freely come back without having to stop that monthly benefit. Some for your consideration. Was the question. The time has >> so don't know. I will leave ordinance to get rid of that 15 and a half age limitation and bring it back for the board of the next meeting. >> If you'd be so kind, well, make sure that you get it way ahead of. The meeting and what we have discussion. I guess if there was any community lack of communication from from my side, I certainly And that's probably the first time forward. You know, substantive ordinance since I've been counsel for the planners and about 2 years well. >> In house alive, you know, I know there was support on this board is you have reason why? feel like this year. It's something that we should for to hear from that, too. you know, and just be OK, killing it media. Both sides. Everybody's they have a clear why. I want this to go forward in year from city lie. So thanks the city so everybody can be full clear on what is truly about. So no one is. And sure I don't want to be an issue. doing in talking about actually did have one question show up and reemployment >> says employee Courtney join for us as a new member. Yes, okay. So is the concern if. There's no break in servers, you know, the play finishes drop they have, I guess the right to continue on employment without. Department director. Having heard this question, if they want to retain that person or not right there, that's the main concern that will the language just kept them in the position. Sure. I mean, you know, the cities it has been tension has been a problem. So other states have moved forward with something similar. But if you don't have that. retention problem here and you know, it really and I can understand that concern. I mean, would there be could there be an ability to? Give that department discretion if they choose to retain employees after. That was completed, the drop. So it's not just a right. They get to stay on. It's more of department decision. If they feel they need retain that employ for institutional knowledge, experience, etcetera in their budget allows and tear. But but they have they have the decision over its not just a right for the employee to continue. Yes, that's correct. In your current ordinance ordinance with the Reemployment. >> You just have that are breaking service. Your drop limits you to the 60 months you back said you can be re-employed. >> Okay. So the break in service. But you mentioned 6 months but doesn't matter if it's a day, a week, a month. U.S. to require meaningful separation from service with no pre planned return to employment >> which, you know most there's nothing in stone, but 60 days was really. You know, the baseline for us per statute required to have that 6 month break. But it's nothing that's required federal law. So. >> I was just suggesting this 6 month. I mean, that said just a break in service and we have put in number and really up to yes to what they want to break that serves up. Yeah. And I know we do some coordination with the pension because people pull their benefit. Know the 59 will help us. Let's say they're gone for 2 months. They're getting their retirement pay for 2 months and they have to pause it to be re-employed. Right? So what we're might be solving is the where they don't have to pause it. But in terms of timing, sometimes that has an impact if they're getting and I don't want to speak over you, but if they're getting a monthly payment, where's that? Pima falling versus when they're coming back because you can overlap. Can't get that. That's correct. Yeah. I guess question and the reemployment. That implies that coming in. I presume at a much lower rate than which they retire deserve. And play at that point. >> Or or is their inability or flexibility? Again within the department's budget. If they have the ability to re-hire that employee at the other previous rate as long as the budget for that. >> The way I would phrase that is in applicant that would come forward with the experience, whether it's the retiree or someone else, we pay them according to their experience and their education for that position. So there's no re-hire weather there are really retiring or somebody that worked 10 years ago that they're going to get this rate of pay that they left at. There's no guarantee, I guess on that. But there's a negotiation rates. >> Just asking the crux of the issue. If you're hiring player, they will make a comeback at. It, potentially a much lower rate, right? Right. And I don't think that's an issue for us. And that's not no, it's not just more of a logistical thing, but >> mentioned that looking at the proposed ordinance that it looks like we're trying to fix a problem that really doesn't exist necessarily. what are your thoughts regarding? Are you recommending that we we scrap this. We don't move forward. >> Yeah, it's not support it at this time. I as but advisors and with what we talked about would be something that does sell things and then people that they do want to return. That is not a barrier for them. I would >> moving forward having the the attorney work on the revisions that we've discussed and coming back for further discussion. So motion. But Rusty Thornburgh second, are struggling too. >> Have the attorney come back with a proposed amended ordinance for? discussions. All those in favor say aye. pose for a vote. Said that motion passes unanimously. Okay. Thank you board very much giving me time and for signs. >> Thanks to fish Thank Have a thing. is not nothing further on airport's. Okay. >> Thank you, sir. >> All right. Well, now we will go back to our investment performance item. 8.1 review as of December. 31 2025. Mister Owens. Well, how's everyone stuff. morning, All right. Thank you all. Coming up to be here today, TJ is going to be taking the lead on this. I I do have a. Another I have depending on time frame. have to cut out a little early to clean our ask that you take the lead on this. And we have a lot of stuff to talk about. All right. So we have a performance review at the last meeting. What we talked about this and educational, private private credit we didn't have all the members. So we wanted to make sure all the members are here to talk about that. And just to. As a refresher with there's no push to go in any direction. We just wanted to say, hey, what else can we consider? What else can we think about what else can we talk about? We want to bring. Resources and that say this is what would happen if you were to do this. And so but private credit, private equity or a lot different than anything that we currently have. So we want to provide all that education on that. Talk about what it is, why it's different, how it works and why would make impact in the portfolio we also talked about moving from just have just small-cap because something happened to me. Look over my let me know if I should duct. >> Have fought for. That's Only We talked about maybe adding going from small small-cap manager to a small mid manager and again, so we brought some information about that as well. It wouldn't. That's a lot more benign. We just it's just a different capitalization. You know, just what can we do differently? I think at the end of the day that you can see some we'll see where there's there's some impact. Nothing that's going to change the world. I think that's going to you know that. But that's where we are now. We have a very, very efficient portfolio. And what we're trying to do is just make adjustments in the margins, right? If we can just keep keep improving a little bit about what you know, whatever with whether it's additional asset classes are different managers. And then that's what we're going to try to do I'm going to start off on talk a little bit about the market and the economy and then I'm going to flip the TJ. He's going to talk about the performance of the portfolio and the managers. And depending on time frame all talk of a start talking about a little bit about the education process like I said, I'll try to stay here for the for the entire thing. not today, will be and is capable hands. This year has been a fantastic year. The defense has to get doesn't feel that way because we had to it was been very, very bumpy ride to remember. You're going want about this right? If it I'm looking at Page 4. But if you look at the 12 month returns or a long-term average, 10. You know, last 7 or 8 years. It's been a lot more than that. If you take a look at the 3 year average, it's, you know, Mid 20's and 30's, right? But the long historical average of the markets about 10%. We're the high and mid teens for the 12 months. But during this 12 months, if you remember. Liberation Day, the market was down 20 20% large cap, 30% smaller. All right. So at that point, Lighthouse House is going to work and then we had different different time periods. Where with that. Like an eight-day losing streak for a seven-day losing streak. And TJ coined that coined the term last year, which I stole from him. That was that that was the 40's. That was taxes, tariffs, tweets and Trump. Right. And and that's been instilled yesterday. just saw what happened when, you know, all of a sudden we're going to take over Greenland by force in the market was down 900 points. And then the next day was like, I'm not really we're not going to do that. Now the market's up 6 or 700 points. Not sure what it's doing today, but but that's what's been driving the market. And additionally to what's been driving the market. It's been very, very interesting from our perspective, because these these return numbers don't really tell the truth. The markets really been driven by a handful of accept right up until about October of this year. it's been driven by megacap stocks that AI stocks. That's what was driving every asset class, the smalls, the It's that's just that's that sector. That space. And that's that was. So when you think of when you think about the market, right, we look at it was all the S and P 500. The market. But the S and P 50500 stocks. And what's interesting, all 500 of them stocks have performed the same. As a matter of fact, this year. Yes. And so there's there's when we look a little deeper. So we look at that. There's all different sorts of benchmarks that we look at. So you that what we see here is that cap weighted index, the S and P 500 cap weighted index bigger companies have a more of an impact smaller companies. We also look at the Heat Cool Weighted index exactly the same constituents. But with the Equal Weighted Index, nobody has more impact than the other. This year. The S and P 500 that we're seeing here. Correlates has a higher correlation with video. One stock. Then it does with the Equal Weighted Index with its actual. All its own constituents. And it just goes to show that that's what's driving. In a deep UL weighted index. If you took in video, which is the largest company you want to sell a million dollars worth of it and you were to buy a million dollars worth of the smallest thing in the index. The index would change all the money stays right? So neither one of them have more or less impact. In the capital aided index. If you want to sell and video and by a smaller next, the index would actually go down. That's great. And that's what we've been fearing that it's great when it's going up. But when it goes down, what's going to happen? Right? And so we actually saw some of that. There in the 4th quarter. The other thing that's happened and I just don't think all that sustainable. Prior to 2017, the world had never seen a trillion dollar company. Never been there. 2017. Apple was the first trillion dollar company this year. We've got about a dozen or so some of ballpark. End video. It's for trillion dollars. 78 days later, it hit 5 trillion dollars. So 100 plus years we couldn't get a trillion dollars in value. In 78 days. Trillion dollars about now. It's it's waffle around that. But that's not sustainable, right? So. And that's what we were kind of concerned with where it really great returns, right? But you know, when you when you look at some of these things in the large, the only place that you needed to you that you need to be for return is in the large cap growth space. diversification didn't work small-cap, make none of the things that or have worked in the last 2 or 3 years. We think that that's that. And that's not to say absolutely not stable. We think that's starting to turn the corner now. We'll see if you take a look at Page 4. I'll show you were talking about. So take a look at the Russell 1000 value us. 1000 index up 2.4 was kind of the middle of the page. The values of 3.8. The growth was up. 1.1, 2. If you take a look at the mid cap value is actually positive about one and a half and mid cap growth is down 3 and a half. And then the small-cap index again value outperform growth right? If you take a look at the 12 months, that's not the case. Growth outperform value. And we've got their periods of this where value actually did better than the growth and that that lasted about 2 or 3 years. I was a couple years ago and we were making changes. But what we've what we've seen in the 4th quarter, if you take a look at the different sectors, you see technology is not the leaders of 1.4 to right in the middle of the pack. So what's happening is you're starting to see market participants sell out of the Max 7 and start buying other things right? Not a bad way. It's not. it's actually I think that's very, very positive. You want everything to do. Well, you don't want to be so concentrated, but some say we made a lot of money in this. Let's sell out of this. And let's start by some things that have a very, very high probability of of problem. And that's very, very important. So we get into we get into the small and mid cap index. What happened this year? It was it was one of the roughest years for active managers in the small and Mid cap index. So what was happening? So the following cap index was down about 30% after Liberation Day. Right? The the large that was down about 20 so market participants started piling into the it. What was happening was a lot of the non institutional retail buyers. We're buying anything that I attached to the name. That's that's where video started. That's where pollen tear start in that in that space. So everybody was looking for the next home run, right? And all these things. So they were just buying stuff based on all of the price went down. Let's buy it. They were looking at profit about half roughly half of the constituents in the benchmark have negative earnings are losing money. you're active managers are compliant. They're not. They're not going to buy companies that they're going to be selected. You know, the what what has has fiduciary If you roll the dice, that's fine. You can do that. Let's let's focus on price appreciation. That's what in the pension fund. Historically, what traditional finance will tell you is that price matches, maybe a little better profit growth. So most of your companies are going to look for. Most of your managers are going to look for companies with high earnings growth. We've got 12 or 15% earnings growth. Their expectation is that it's going to have 12 or 15% from price appreciation. In this space. That hasn't been the case as if it wasn't a I it doesn't matter if your earnings growth was 20% probably wasn't get purchase, right? That's starting to roll over now we're starting to see. We're starting to see that. Hey. Making money actually matters when you're buying stocks right so so that's that's I'll show you some of that and that we get into the managers are party show you the other thing that happened this year with said discussions about. Why are we an international and the Nationals kind of been holding us back a little bit. Look at this year. Look at Page 5. 31%. That's about double anything in the United States. And you're like, wow, it's got a lot of that has to do. Is the value of the dollar going down, which is true. But if you look at your local currency still 21%, which is better than anything in the United States. So they're low. They're markets up. 21%. That's what they got over there. But the value of the dollar with down, which is a benefit to So we have 31%. So about 30% of that 31%, 10 percentage points was due the the value of the dollar. The dollar went down. We talked we talked about this a year or 2 ago that the value of very high because we have very high interest rates. We had some of highest interest rates on the planet. We have one of the safest economies on the planet. So sovereign nations were coming year. If they want to invest in our country, first thing do is buy dollars. They got to sell their dollars in that made the value of the dollar. Well, because they were getting 5% risk free. Plus, as that goes the other way. They're going to sell out of dollars and buy their currency back. And that's what's happening. And it's it's happening. You know. methodical way. It's not something fires over rates go down. We still have very good rates and our money. So as rates go down, you're going to continue to see the value of the dollar. Now. got a got put that caveat that qualifier. That of Trump says things like that. Like you said on Monday, everyone. The dollar collapse trip because it was like the dollars. You know, they they got away from U.S. assets because he's saying that we're going to takeover agreement by force and so. Economics effective. you take the field, the political tweets out of it, that should be methodical and a drone power. This is another thing that's the drone houses that rates are neutral right now. So there's not a there's not inclination to lower are raised on this kind of where we think we should be. But of course, President Trump thinks we should have lower rates and and everyone that he wants to take over for power and 6 months is a cause of So that which means that there. They lean into Lowery's. So. Politics. It is unfortunately playing a role in what's going on in the market. But at so it's a bumpy bumpy ride. But then today it's been a good ride, right? It's been better than the historical average. You know, I like to say that, you know, the markets, the market, but its reach to the upside. So there's going to be bad days, but so long. Lastly, because interest rates are going down, interest rates go down. The value of bonds go up. Take a look at the one. Your number on the AG. 7.3%. Our target, 6.2. That's a full percent above our talk take all that that we can get. It's been and we've been saying the whole thing this year, but it's been a long time since we've been able to have any type of return with fixed income. So so that's great. I'm still if you take a look at the 5 year number. Still a negative number rights, which includes is this great year. And that's because when rates go up, the value goes down. So it from down. I'm going to turn it over to Jay and asked that he take over with Any questions, any comments, concerns questions? All that's going to feed into what we've seen. >> For the last year. If we're in a portfolio, we construct our portfolio. Be a little bit more conservative. And a market continues to go up 3 years in a row in a meaningful way. And that concentrated position where those concentrate names of stocks, we expect to be a little bit behind the benchmark and that's what we're going to show. But it is we go back to chair was asking earlier the actuary from Pete. Hey, can we reduce our actuarial rate? Should we change our portfolio? Construction? But we've taken that into consideration when we build a portfolio and we look at tell risks, right. And Scott talking about the managers looking for companies that are profitable, are going through and looking at the managers, you're going to see that we really focus on risk management there that were just trying to get to 6.2, we don't we're not trying to hit grand slams in home runs. We're really trying to get singles and doubles. And when we get to the next section of the presentation talking about private equity, private credit and we look at the S and L occasion study is going to show that's what we're focusing on. Still that's bringing that tell recess. Focus on getting to 6.2 percent with the least amount of risk. And we we we accomplish that for the fiscal year. And if you book Page 7. We look for what we've done for 2025, we're 11.6, 3% for the one year. That's in line with what we've done over the last 3 years of 11.8%. So strong performance. And you look at the benchmark up 13% for the last 3 years. But we always focus on that right side of this page. Right? We're looking at risk in return. We're the blue box. Our benchmark is circle in that harder. The cross hairs were up into the left over the long term. We've had higher returns, but we're having a lot less risk. Sony Year 3 years have been straight up, were keeping up. And when the market volatility does pick up, we would protect on the downside. So if you look for 2025 middle of the page, we started 2025 with 180 1 Million. 974,000 dollars. We took out 7.4 million, 829,000 fees. We're kinda, not that one. Your column. We have 4.1 million dollars in income game loss of 16 million, 313,000 to end 2025. with 193 million, $171,000. So good. Strong year. Good place to be with the portfolio. And looking for if we go to the point, which is really important. So. >> So why do we need that downside protection? Well, if if you take a look what he point out, you're spending about 8 million dollars. You're 7 or 8 million dollars a year and that spender Nets. So but the market's going up. That doesn't matter. But what if the markets down 20 or 30%? We only want to be down 10 or 11, right? Because we have to raise funds at some point to pay your bills. So we're very concerned with the downside. You know that the downside capture, right? We really want to protect that in those That's what he talked about. Tail risk. That's what he's talking about. Averages are fine. But what happens in that year? Our to the markets down 20%, 2 years in a row. Now you've got to you've got to sell 40 million dollars worth of stuff in a down market. It's going to be real hard to recover from that. So that's why that and at the end of the day since 1993. 200 basis points above our target on average every year. The 8 million that you referenced is is regarding. Distributions. They are paying the participants. And that's going to celebrate at some point. All right. That's what we're talking about earlier in may be becoming more conservative and he was able to buy bonds to pay all fees in the short term over. >> 10 year period. That's something we can consider in the future. I don't think we're there yet. Right? We're looking at the 7 and a half million. That's still less than 10% of the portfolio Valley, even 5%. So I think we're not there yet, but it's something we want to be concerned with over the time as we have more Tyrese, more pension pension ears drawn down on this. That is something to consider at that point. do want to be more in fixed income to want to continue to focus on that. But that is we're not there yet. If you look at SFO asset allocation on Page 9, this is the biggest decision we make is committees trustees. We've been overweight. Equities. We're at 68% at the end of the quarter. Our target is 65 quick reminder, the boxes are allowable range. Our target is the blue line in the middle of the number next to it. And we're the upside down triangle. So little overweight, equities, we're underway, fixed income, which has been a benefit equities have done better than fixed income. Slightly underweight alternatives. We're going to talk about this complete page in more details once we get through the managers. So we'll spend a little bit more time we get there and talk about any recommendations may have Page 10 is just more details of where we are overweight and underweight as you'd expect for a little overweight growth is growth is done. The best. So that continues to grow everywhere else. We're almost on top of our targets. Minus a fixed income and a private real estate which we spent a lot of time talking about private will say and we'll spend time after this part of the presentation real estate as well. >> The other thing we consider is fixed income work. So we have a target of 0 for cash, the cash we're going 3 and a half percent. We're getting a good return. So with the way we look at it, we we think about as you combine the fixed income with the cash. You're right on top of your target for But then within a percent. So that's that's part of that. He says. >> With managers, we've had Hudson previously on Page 11 for a long period of time outperforming recently over the last year, a little bit below on the last 3 years, 5 years since inception in line with the benchmark a little bit behind a little bit higher risk. It's something we've watched, but we've seen Hudson Edge turnaround in recent times. So we had a recommendation to make a replacement. As we've seen performance improve. So no continue. No recommendation. Continuing to keep a watch on them. But we've seen improvement over the last 10 years. outperformed the benchmark 5% for the last decade. When we look clear bridge, this is a story teed up and we've passive investment in the large cap growth space Page 12 13 are 2 large cap growth managers. One being active clear bridge, which is typically a little bit more defensive. And then we have and are passive fund on Page 13. only way to outperform the benchmark overweight and video for the next 7, which is what? 10 stocks making up over 50% of the benchmark. That's why we're pairing the 2 right now. If he does calm and video misses. I starts roll over clear we're just going to do better. But we have exposure there with a passive investment. So we think that is the right way to be having both passive and active investment in that space and then rebalancing overtime, right? Gives us a lever to say, okay, we've seen pass do well as at a back to active or active Stone really well recently. This at the passive. So we have those levers to pull. But we're at a point right now that pretty much in line. But with Dan Carter or the benchmark in better a little overweight, but no reason to rebalance at this time. Where we've seen some weakness in the portfolio is in a small cap space. But it's got talk about it earlier. Small-cap companies. We've been in a risk on environment, I stocks have been doing well. Bitcoin has been doing really towards the end of last quarter. The market is looking for risky assets and they've been rebalancing from the large cap technology to the small cap technology and these companies that don't have earnings don't have revenue. That's what did very, very well in the 4th quarter. But I have J in our small cap value. A small cap growth manager to me about they focus on earnings and earnings have been good. But that's not where the investors are moving their money. So when we look at performance compared to the benchmark on Page 14 for a small cap over the last year. They're positive up 2.4%. But the benchmark was up 12.6. If we went back a quarter before all of that, if we went through the 3rd quarter, the benchmarks were actually negative through the 3rd quarter of last year. All of this came in the 3rd quarter. And the 4th quarter is where we've seen the rally in this sector long-term, still good. We're aware and we're being conscious of okay is going to continue to trend. Do we need to address this category overall? But when we look at all the active managers, Scott said it earlier. They underperformed in the small cap space because they focus on earnings. And that's what we want to focus on over the long term. We think that's what matters. And the same is on Page 16 with Geneva off. So bigger difference, though, if you look at that one year, they're actually negative 7% for the one year when the benchmarks up 13. >> when you take a look at the longer term results so that, you know, the 3 year that when you look at J the 7, you know, every quarter we met, they weren't doing poorly, rather. We we've got rid of a long time ago. What happened is really bad years now. Part of that average. So, Brooke, that brought the average on. If you look at their quarterly numbers, are just not going out of the park. So, you know, at end, I say that because it went bad that went that very quickly. They can go good just as quickly as well. And that's when you have small cap. That's kind of the ideas. Various the most fall classes most. A small managers, you know, had the same experience exactly right. >> There's there's there's there's various is that there's a couple few that actually did well but very far and few between in very very high beta. A lot of them are traders. So they were, you know, by and, you know, we were just looking at that. They were looking a away shuns is as much as as profit. and then I really have to ask myself with that. Look. You know, they just overweight the tax to act. But, you know, I they're down captors would be yes, no 5% like that's exactly right. That's right. That's exactly right. We're looking for consistency there. >> So that is the one area, the poor fully we are watching. We understand with a portfolio or what's happening in that sector. We're continuing to monitor it. But we think over the next. 2, 3, 4 years that should right itself as we see normalize. But if we go to 17 with Temple thin, they're doing really well or international managers have done or our turnaround. We see Templeton's up 3, 3, 62 for the quarter. A little bit behind up. 26, though, for the last year. But long-term, good numbers. 3, 5, 7, over the long term since 1994 above that benchmark. And if we go and look at Renaissance International, we've had a lot of discussions about Renaissance on Page 19. There's a period with their low benchmark, but they've really turned it around in the last year, 3 years. Now, 5, 7, above the benchmark long-term about the benchmark. So good returns in the international space, not just as an asset class, but our manage