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So we can start on page one, highlight what went on in the markets in Q4, and then what we're seeing so far year to date. The big thing impacting the markets have been interest rates, inflation, and then as of late, the tension between Russia and Ukraine. So I'll touch on all three of those. To start with, interest rates. We've seen interest rates rise for the first time in pretty much decades. As of right now, the markets are pricing in that the Fed is likely going to increase interest rates by 50 basis points, so half a percent, at the March meeting. The reason for that is primarily to combat inflation. So inflation numbers for January, the most recent update we saw that month over
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Year
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was
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since the early 80s. That was led by energy,
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The main contributor to that has just been the lack of semiconductors.
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the GPS, serious radio, all that kind of stuff from the dashboard. So unfortunately, there's still a shortage there. And so that's caused the supply of new and used vehicles to be limited and really pushed up the price over the past year. WTI, which is our gauge for the price of oil in the
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about $17 a barrel. We've seen that move up significantly. The end of the year, it finished at $75.20. And then as of yesterday, it closed over $92. So from that
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if you filled your truck up. I did mine yesterday to travel today, and it was well over $80 to fill up my tank. So
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But again, to fight this inflation, the Fed has a two-pronged approach. The first one is called tapering. So the Fed
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buy treasuries and mortgage-backed securities. And they've done that to really suppress interest rates, keep them low, allow for low-cost borrowing to stimulate the economy through the pandemic.
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that $120 billion bond buying program by about $15 billion a month, with the anticipated ending it, completely tapering it off in June of this year. The following month in December, when the new inflation numbers came out, they realized that they really needed to step up to combat inflation. So they doubled their efforts.
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And it's anticipated to completely taper off by March now. And so once we see that taper off in March, the second approach they're going to have is raise interest rates. And so what that does is, besides fighting inflation, they have to be careful because it increases the cost of borrowing. So mortgage rates, car loans, things of that nature, any borrowing cost is going to increase as they increase rates.
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recovery and growth that we've seen, they could cause that to reverse and put us into a recession. So they're walking a tightrope right now. As I mentioned, rates so far this year from the six-month Treasury all the way up to the 30-year Treasury have
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So that's what's anticipated for March. And so we'll see where we go from there.
[00:03:56] Speaker 2
Yes. You said a two-pronged approach. The second was raising the interest rates. What was the first?
[00:04:02] Speaker 1
Tapering. So tapering their bond buying program. And then the other interesting thing we saw in the markets is we finally saw a rotation from growth to value. Starting December 1st through yesterday, value, specifically large cap value, has outperformed growth by about 13%.
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longest duration assets. And when interest rates rise, things with high duration tend to ‸ perform poorly.
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rise. Consider a growth asset like a large cap tech stock. They have an even longer duration because essentially how we price those is we're looking at all their future cash flows, their earnings that they're going to have 5, 10, 15 years down the road. And we're discounting them all the way back to the present value to get a price for the stock that we think the company should be worth.
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Everybody started to rotate out of growth. And we saw that precipitous decline in January and even into February where growth
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I think as of right now through
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about 6%.
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and regain some of those losses. Any questions there? All right. All
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right.
[00:05:44] Speaker 1
Well, I'll hop over to page 4 and get into the important parts of the report, how we did. So for the fourth quarter, sorry, let me flip there. For the fourth quarter, we finished with a gain of 1.6 million, which was 4.1%. Just behind our strategic model, which was at 4.9%. I'll get into some of the reasons behind why we trailed that. But our best performers were large cap core was up 11%. Large cap value was up 9.1%. And then our global infrastructure was also up 9%. For the entirety of 2021, we're in 4.5 million, which was 12.5%, well ahead of our assumption rate at 7.5%. And our best performing categories were small cap up over 28%. Your private real estate portfolio was up 25.2%. And then mid cap core was up 24.8%. Longer term, for the past three years, you've generated 15.7 million in gains. And that's an annualized return of 17%, which ranked you in the top 14th percentile of other public pension funds. Five-year
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Any questions there? All right. We can flip over to page 6. And the most important part of this page is what's highlighted in green. So are we achieving the actuarial assumption rate? Are we achieving our strategic model? And are we ranked 50th percentile or better for the three and five-year periods?
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So achieving all those goals for the three and five-year periods. Below that is some of our active managers. ‸ Westwood, large cap value. See a few no's there. We're still comfortable with that position. Keep in mind our benchmark there is not entirely fair to them. It's 50% core, 50% value.
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And a pure value, gauging them versus a pure value benchmark, some of those no's would be yeses. So we're comfortable with that. And they're actually holding up quite well ‸ for the start of 2022. Voya, on the other hand, has somewhat underperformed for large cap growth. You see the no's there. That's one I want to keep on watch. We did add the S&P 500 to kind of complement both our active managers on the value and growth side. I want to keep an eye on Voya. It's tough in the large cap growth space, specifically with the concentration and some of the bigger names within the space.
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Some of those positions, they're either underweight and didn't hold. And those are huge contributors to the benchmark. So we'll give them a pass this quarter. But I want to continue to watch them. And if they continue to underperform, we may consider adding a large cap growth index product there just to complement them. And again, it's tough for a manager to put, I think right now the large
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in one name when they're trying to diversify. So we'll let it slide for this quarter, continue to monitor them. And then if we need to make a change, we'll likely just complement them with a large cap growth index fund. Other than that, no long-term issues with any of the managers. We can flip over to page 8. These are some of the numbers I highlighted. But again, for the long-term history, if we go to the 10-year column all the way at the far right,
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the past 10 years.
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Page 9. Our targets versus where we're currently allocated. We're pretty much in line there, so no need to rebalance. Depending on how the markets finish out the quarter, we could use
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that cash.
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We could use some of that cash to rebalance.
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our other less volatile areas, like convertibles and infrastructure. And then page 13, I'll just quickly touch on some of the managers. As I mentioned, Voya underperformed for the quarter and one-year period. Again, it's really what they didn't hold or what they were underweight to that hurt them. So
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They initially didn't have NVIDIA, which is a semiconductor company. They didn't hold it. It ran up significantly through November. They added an initial position in November, and it kind of fell off the table there as investors rotated away from growth and into value. So just very poor timing there. And then they were about 4% underweight to Apple, which had a great quarter. So, again, tough market for an active manager in the large-cap growth space, but we'll continue to monitor them
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then.
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The other manager that underperformed, if we go to page, well, actually, quickly, staying on 13, we did have strong performance in your small-cap managers. You can see that right in the middle of the page. Virtus, your small-cap value, was up 7.3% versus a benchmark of 4.4. And then the new small-cap growth manager we added a few quarters ago was up nearly 4% versus a benchmark that was flat at 0% for the quarter. Right below that, your
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a total return of 9% between the two of them versus the benchmark of 7.7%. If
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reasons why we slightly trailed the benchmark for the quarter and the one-year period, the iShares convertible bond ETF. From a
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investments, which SSI does not. And
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Names like Mercado Libre, which is essentially the Amazon of Latin America, it was hurt by inflation fears. It didn't have Tesla, which, again, had a very good quarter, so it underperformed there.
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in one-year period, underperforming the benchmark for both. It was hurt by its overweight to emerging markets, which had a negative year overall.
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[00:13:07] Speaker 1
So, again, I touched on Mercado Libre. That was down about 20% for the quarter based on inflation fears. Some digital payments companies in Brazil as well. Two of those were down nearly 50% each. And they're kind of similar to if you're familiar with Square. If you go to any kind of independent retailer, they have those little smart terminals for the cash register. That's what these companies provide. But in South America, they were also hurt by inflation fears. And then a
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It's a digital entertainment and mobile gaming company. They were hurt by fears of slowing growth in the gaming market, as well as they invested a lot more than expected into e-commerce to grow out their business, which should play ‸ out over the long term, benefiting the company. But in the short term, it hurt some of their bottom line numbers that analysts expected.
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[00:14:09] Speaker 1
They were down about 30% for the quarter. Other than that, everything performed quite well. The big winner for the one-year period outside of equities was your TA Realty Core Property Fund.
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[00:14:29] Speaker 1
So, remember, we have two private
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is a ‸ little more high alpha. It's a newer portfolio, so it's got much more access to the types of properties that are trending, which right now has been industrial. So, with the growth of a lot of online retailers, Amazon, industrial, specifically warehouse space, has been the biggest winner in 2020 and 2021,
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issues. A lot of these online retailers have been just searching across the country for warehouse space where they can start building up inventory to fulfill orders. And so, that's just been a huge winner. And they're significantly overweight to their benchmark and their competitors in industrial because they have such a new portfolio that they're able to heavily invest in that area. So, great performance there. Your other manager did well. Between the two
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Any questions on any of the investments or any of the managers? All right. And, again, no recommendations as of right now, but we will continue to monitor Voya's large cap growth.
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environment,
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probably complement it with an index fund. Lastly, I'll flip over to page 20. And here, Paul and I were talking about this earlier, but one of the most important pages, a lot of statistical data, but two things that I'll draw out here is on the far right-hand corner, you see alpha. That's a measure of risk-adjusted return. ‸ Anytime you have a positive number there, it means you're producing a higher return than expected based on how much risk you're taking. And so, for
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fund. So, it means we're outperforming our benchmark in terms of risk-adjusted return. So, we always look for that. And with that, I'll conclude my report to any questions.
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[00:16:58] Speaker 1
We're likely flat, maybe slightly positive, half a percent through February so far because of the volatility we've seen so far this year.
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[00:17:17] Speaker 1
Yeah, absolutely.
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[00:17:20] Speaker 1
All right. Yeah, thank you again.
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[00:17:26] No voice detected
Thank you.
[00:17:29] Speaker 2 + overlapping voice
If we go back to the minutes, I have a comment before we take that.
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page three, ‸ he had said
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[00:17:50] Speaker 2 + overlapping voice
So, I've already inserted that change for the record. So, with that, unless there are
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[00:18:02] Speaker 3
I'll make a motion to approve of that. I'll second.
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Almost there.
[00:18:08] Speaker 4
Aye.
[00:18:09] Speaker 2
Who seconded?
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See you next time.
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then.
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Yep.
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[00:18:35] Speaker 4 + overlapping voice
I think it, you know, does make sense to save just a little money when there's nothing urgent for me to report on, just to allow me to do it either by phone or video, just to save you some travel-related costs, especially when we're not sharing travel on two meeting dates because
[00:18:53] Speaker 4 + overlapping voice · Unclear audio
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[00:18:56] Speaker 4 + overlapping voice · Unclear audio
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[00:18:58] Speaker 4 + overlapping voice
meet at least once a quarter. So, you know, I think it makes sense just to save those costs. I don't want to, you know, charge you travel-related fees when it's really not necessary. Your money's better spent elsewhere. ‸ So, nothing plan-related to report on. I just do have a brief legislative update for you. We had talked in the past about a bill that was going to be introduced in the Florida Senate and House regarding a presumption for public safety officers who contract COVID and suffer a disability or death as a result thereof. There would be a presumption similar to the heart bill and the ‸ cancer bill for fire that any disability or death related to COVID would be considered, presumed, to have been incurred in the line of duty. The bill, when initially drafted, had a requirement in there that in order to be entitled to the presumption,
[00:19:54] Speaker 4 + overlapping voice · Unclear audio
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[00:19:59] Speaker 4 + overlapping voice
That was amended and written out of the bill. So, the bill that was introduced and is going forward does not contain that vaccination requirement in order to be entitled to the presumption. I checked a little while ago to see if the bill has gotten any legs. And ‸ it's just been referred to three committees in both the Senate and the House. And there has been no action taken in any of those committees. So, you know, we'll just keep an eye on it and see if it comes out of the committees and makes its way to the Senate and House floors for a vote. And then it will be required to be signed off by the governor,
[00:20:37] Speaker 4 + overlapping voice · Unclear audio
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[00:20:40] Speaker 4 + overlapping voice
But as of now,
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[00:20:44] Speaker 4 + overlapping voice · overlapping voices
probably more likely than not that it's not going to ‸ get passed this year. A similar bill last year never made it. So, you know, hopefully the only thing that we can be hopeful about is that, you
[00:21:00] Attribution uncertain
know,
[00:21:00] Speaker 4 + overlapping voice
hopefully we don't have to deal with any disabilities or deaths that come up as a result of COVID. You know, it's been a lot more prevalent on the police officer side than it has on the firefighter side
[00:21:11] Speaker 4 + overlapping voice · Unclear audio
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[00:21:16] Speaker 4 + overlapping voice · overlapping voices · Unclear audio
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[00:21:20] Speaker 4 + overlapping voice
COVID for police officers down in South Florida particularly. And even without that presumption, however, we've treated them all as line of duty incidents and paid death benefits accordingly. So that is the one pension bill I wanted to report on this afternoon. The other bill is not pension related, but it does have to do with public safety and workers' compensation benefits related to PTSD. And a law was just approved by the Senate yesterday and is going to go through for a vote in the House, which just changes the amount of time you have to file a workers' compensation claim regarding any claim related to PTSD. So the present law provides that. You have to file a notice of injury within 90 days of the actual incident or manifestation of PTSD in order to have a timely filed workers' compensation claim. The bill proposes to change that 90-day requirement so that the time period would start running when they're actually diagnosed by a doctor with PTSD, which is for the benefit of first responders because, you know,
[00:22:46] Speaker 4 + overlapping voice · Unclear audio
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[00:22:52] Speaker 4 + overlapping voice
So now you have that additional time to file a workers' compensation claim and the notice of injury 90 days from the time that you actually receive a diagnosis from a doctor. So, you know, that's a good thing. You know, again, hopefully we don't have to deal with too many PTSD claims. Other than that, everything, all was quiet
[00:23:14] Speaker 4 + overlapping voice · Unclear audio
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[00:23:19] Speaker 4 + overlapping voice
although, you know, I may have comments later on in items that are brought up on the agenda. So
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[00:23:32] Speaker 3 · Unclear audio
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[00:23:36] Speaker 2 · Unclear audio
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[00:23:48] Speaker 2
wants to go, you know, let me know and we'll get you set up. Everything else is just informational. And our next quarterly meeting is going to be on May 18th at 1 p.m.
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[00:24:07] Speaker 2
And then, unless there are questions on that,
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[00:24:14] Speaker 2
expenses, actual paid administrative expenses in the preceding fiscal year. This has been a statutory requirement for several years. And then I will provide this to the actuary and they file it with the state in conjunction with our annual report.
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[00:24:35] Speaker 2
We did not exceed our budget, which is good. So, what we would need would be
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[00:24:53] Speaker 2
submittal to the city, the plan numbers, and the actuary for the 2021 annual report.
[00:25:04] Speaker 3
I'll make a motion to approve the administrative expenses for FY 2021. I'll second. All in favor? Aye.
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[00:25:24] Speaker 2
for distribution in the PDA, okay?
[00:25:27] Speaker 1
Okay.
[00:25:31] Speaker 2
And we have no old business. So, the next item would be our ratification of our expenses and deposits.
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[00:26:05] Speaker 3
I'll make a motion to approve the disbursements.
[00:26:08] Speaker 5 + overlapping voice · overlapping voices
I'll second. All in favor? Aye. Move?
[00:26:15] Speaker 2 · Unclear audio
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[00:26:20] Speaker 2
21, and I'm going to change that. And I'll change that in the record agenda. It was January of 22.
[00:26:26] Speaker 3
Well, he's already coming out of it.
[00:26:27] Speaker 2 + overlapping voice · overlapping voices
Yeah, I know. I just barely got him in.
[00:26:30] Attribution uncertain
I
[00:26:30] Speaker 2 + overlapping voice · overlapping voices
know. That'll be on the next. Levine.
[00:26:32] Speaker 3 + overlapping voice · overlapping voices
Oh, yeah. Retiring for like the fifth time. Yeah.
[00:26:35] Speaker 2 + overlapping voice · overlapping voices
But anyhow, I've corrected that in here.
[00:26:37] Attribution uncertain
I
[00:26:37] Speaker 2
just noticed that.
[00:26:38] Speaker 3 · Unclear audio
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[00:26:45] Speaker 3 · Machine re-recognized
Where is
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[00:26:46] Speaker 3
he going? Space Center. Yeah.
[00:26:48] Speaker 2 + overlapping voice
Rob, did you get
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[00:26:53] Attribution uncertain
It's
[00:26:53] Speaker 3 + overlapping voice · overlapping voices
just a Douglas. Yeah, okay. Good. I was busy
[00:26:56] Speaker 2 + overlapping voice · overlapping voices
correcting that. Yeah, yeah. Okay.
[00:26:58] Speaker 3 + overlapping voice
Yeah.
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[00:27:03] Speaker 2 + overlapping voice · overlapping voices
Our next item is, and the attorney referred to it, we do have a member report under this next section for trustees reports. So the chairman has something he wanted to discuss.
[00:27:19] Speaker 5 · Unclear audio
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[00:27:33] Speaker 2
He wanted to be sure we're continuing to pursue the 13th check. And when I talked to the attorney, he
[00:27:40] Speaker 2 · Machine re-recognized
has
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[00:27:41] Speaker 2
some good suggestions as to how we might proceed.
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[00:27:48] Speaker 2
and the chairman, timing-wise, I think what we recommend is to do whatever we're going to do to approach the city.
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[00:28:02] Speaker 2
and have a document in hand as to how well we've done and,
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[00:28:12] Speaker 2
And with that, Stu, if you would address what you, you know, may recommend to the board.
[00:28:18] Speaker 4
Absolutely. So, yeah, I mean, it does make sense to wait after the
[00:28:22] Speaker 4 · Machine re-recognized
valuation.
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[00:28:23] Speaker 4
You know, what I've been seeing so far is that is a decrease in the city contribution just due to the, you know, fiscal year investment return, which is probably the best you've seen in, you know, 25 years, probably in excess or around or in excess of 20% for the last fiscal year, which is great. So, let's get the numbers and hopefully we'll see a decrease in the city contribution. So, you know, even though we had reached out and given our, you know, we volunteered our services and advice to the union, you know, they never, I guess, took us up on our offer. So, the question is how best to contact the city and bring this to them for consideration.
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[00:29:17] Speaker 4
to retirees and not active members, we can take the position that because a union has no duty or obligation to bargain on behalf of retirees, it is incumbent upon the pension funds to seek a benefit for ‸ retirees because they are not otherwise represented by the union. So, you know, even though pension benefits are a term and condition of employment, which usually has to be bargained between the union and the city, if we take the initial position that, you know, this is a, just a retiree benefit, that it's our position, it's not subject to bargaining because it's not a term or condition of employment for any current members of the bargaining unit, ‸ and it would only be applicable to retirees. Therefore, you
[00:30:08] Attribution uncertain
know,
[00:30:08] Speaker 4
if you go around the formal requirements of having to, you know, sit down at a table and negotiate the benefit if, you know, if they want to get the union involved, I'm sure, you know, hopefully we get the union to be on board that they would have no objection to the benefit for retirees. But, you know, I think we
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[00:30:37] Speaker 4
So, you know, we'll have the evaluation presented. Hopefully we get some good news and then we could just have more discussion at the next meeting about how we want to approach the city. You know, I'll probably just recommend me writing a letter to get things going and take it from there and we'll see how we want to structure it at the main meeting. We'll have more discussion and we'll be there in person at the time.
[00:31:05] Speaker 5
Okay. Have you ever had any experience with it in the past here?
[00:31:14] Speaker 4 + overlapping voice · overlapping voices
Yes, but I mean, more so where there is actually no union for any of the plan members. Just the police force or the firefighters are just not unionized at all. So in those instances, we'll see, you know, the board actually, you know, recommending benefit changes to the city. And then,
[00:31:37] Speaker 3 + overlapping voice · overlapping voices
you know,
[00:31:37] Speaker 4
it's certainly up to the city as to whether or not they want to pass something. So it's sort of, you know, the same ‸ position.
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[00:31:49] Speaker 2
next meeting? Yes, we will. It'll be, ‸ I guess, would that be new business or old business? I guess old business.
[00:31:58] No voice detected
I
[00:31:58] Attribution uncertain
mean,
[00:31:59] Speaker 4
you could just put it under attorney's report, discussion of benefit improvements. But just make sure that you put my report after Doug's actuary support.
[00:32:12] Speaker 2
Okay. And we'll just put it as continued discussion of the benefit.
[00:32:21] Speaker 4
Yep.
[00:32:22] Speaker 2 + overlapping voice · overlapping voices
Okay. I think that's a good way for us to
[00:32:26] Speaker 2 + overlapping voice · overlapping voices · Machine re-recognized
proceed. You know, once
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[00:32:28] Speaker 2 + overlapping voice · overlapping voices
Stu said, ‸ I thought, geez, I should have had a VA. ‸ Right.
[00:32:31] Attribution uncertain
I
[00:32:31] Speaker 2 + overlapping voice · overlapping voices
think of that. Okay. Okay. Well, we'll do that at the next meeting then. Thank you, Stu.
[00:32:39] Speaker 4
Yep. Makes sense.
[00:32:42] Speaker 2
Are there any other members' reports? Okay. So quiet in here. Okay. Then if there's nothing else, Chairman, are you ready to adjourn?
[00:33:00] Speaker 3 · Unclear audio
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[00:33:08] Speaker 1
All right.
[00:33:09] Speaker 3 · Unclear audio
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[00:33:11] Speaker 3
Take
[00:33:11] Speaker 4
care.
[00:33:12] Speaker 2
Okay.
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