# Police & Fire Pension Board Meeting - February 14, 2024 > Auto-transcribed civic record · February 14, 2024 - **Permalink**: https://meetings.lexingtonky.news/meeting/6044 - **Source video**: https://lfucg.granicus.com/player/clip/6044?view_id=14&redirect=true - **Date**: 2024-02-14 - **Last revised**: February 14, 2024 - **Length**: 15,074 words - **Speakers**: Mayor > ⚠️ **Auto-generated content.** Audio from the official Granicus video was auto-transcribed with OpenAI's open-source Whisper large-v3-turbo model, run locally by The Lexington Times. Structured facts were extracted with GPT-4o; the narrative summary was written by Anthropic Claude. Verbatim wording may contain errors. See [methodology](https://meetings.lexingtonky.news/about/methodology) or [report a correction](mailto:editor@lexingtonky.news). --- ## Meeting Overview The Lexington Fayette Urban County Police and Fire Retirement Fund Board convened on February 14, 2024, at 9:00 AM with Mayor Gorton presiding. The board addressed two agenda items during the session, focusing on fund-related presentations and financial reporting. The meeting included a presentation by Greg Hosbein and Daniel McCormack, which served an informational purpose for the board members. The board also reviewed and approved the Treasurer's Report as part of their regular oversight responsibilities. The board conducted two votes during the meeting and heard no public comments from attendees. ## Attendance The following officials were present for the meeting on February 14, 2024: **Present:** • Mayor Gorton • Chief Wells • Daniel McCormack • Greg Hosbein **Absent:** • Tommy Hancock No officials arrived late to the meeting. ## Votes and Decisions The meeting included two motions that were both approved by voice vote. **Fee Agreement with Jennison** [timestamp: 02:30:00] A Commissioner made a motion to accept the new fee agreement with Jennison. The motion was seconded and passed by voice vote. No individual vote counts or roll call votes were recorded for this decision. **J.P. Morgan Strategic Property Fund Redemption** [timestamp: 02:45:00] Chief Wells made a motion to enter into the redemption queue for a full redemption from J.P. Morgan Strategic Property Fund. The motion was seconded and passed by voice vote. Like the previous motion, no individual vote tallies were recorded. Both motions were conducted as voice votes rather than roll call votes, so specific voting positions by individual members were not documented. The identity of the individuals who seconded each motion was not recorded in the meeting materials. ## Budget and Financial Actions The meeting addressed one financial item related to document management services. The board considered a contract for shredding of scanned files in the amount of $750. No specific vendor information or resolution number was provided in the available meeting materials for this contract action. *Note: Transcript timestamps are not available for this meeting's financial discussions.* ## Contested Items The meeting featured one primary area of contention regarding the city's real estate investment strategy. **Real Estate Investment Redemption Timeline** Community members expressed significant concerns about the projected timeline for redeeming investments from the J.P. Morgan Strategic Property Fund. The disagreement centered on the lengthy redemption period, with officials indicating that the process could take anywhere from 6 to 12 quarters to complete. The opposition focused on the extended timeframe required to access these invested funds, raising questions about liquidity and the city's ability to respond to immediate financial needs. Community members appeared troubled by the uncertainty inherent in such a wide timeline range, spanning from 18 months to 3 years for full redemption. While the specific individuals involved in raising these concerns were not identified in the available materials, the nature of the opposition suggests broader community unease with the investment strategy's accessibility and flexibility. The substantial time commitment required to withdraw funds from the strategic property fund became a focal point of debate during the proceedings. The outcome of this contested item was not clearly resolved in the available information, indicating that the concerns may require further discussion or consideration by city officials before a final determination is made regarding the investment redemption strategy. ## Presentation by Greg Hosbein and Daniel McCormack [timestamp: 00:05:00] Greg Hosbein and Daniel McCormack delivered a presentation focused on the investment strategy and performance of the Police and Fire Retirement Fund. The presentation centered on their firm's specialized approach to managing fixed income portfolios within the retirement fund's investment structure. The speakers outlined their investment methodology and provided an overview of how they handle fixed income securities as part of the broader portfolio management strategy. Their presentation included details about their firm's approach to managing these assets and the performance metrics associated with their management of the Police and Fire Retirement Fund investments. Hosbein and McCormack discussed their fixed income portfolio management techniques and shared insights into their investment philosophy as it relates to retirement fund management. The presentation appeared to be part of a regular reporting process to update stakeholders on the fund's investment performance and strategic direction. This was an informational presentation with no formal action items or decisions required from the meeting participants. The session provided attendees with an update on the current state of the Police and Fire Retirement Fund's fixed income investments and the management strategies being employed by Hosbein and McCormack's firm. The presentation served as a routine briefing to keep stakeholders informed about the investment performance and management approach for this specific component of the retirement fund's portfolio. ## Treasurer's Report [timestamp: 03:00:00] Daniel presented the treasurer's report, providing an update on the fund's financial status. The report highlighted positive performance, with Daniel noting an increase in the fund's overall value since the previous reporting period. The presentation included details on: • Cash flows during the reporting period • Current investment portfolio status • Overall fund performance metrics Daniel outlined the fund's investment activities and provided analysis of the financial position. The treasurer's report covered both incoming and outgoing cash flows, giving board members a comprehensive view of the fund's financial health. The report was approved following Daniel's presentation, indicating board satisfaction with the fund's financial management and performance during the reporting period. --- ## Decisions - **Motion** — passed (0-0): Accept the new fee agreement with Jennison - **Motion** — passed (0-0): Enter into the redemption queue for a full redemption from J.P. Morgan Strategic Property Fund --- ## Full transcript Music Thank you. Good morning, everyone. It's 9 o'clock, so I'll go ahead and call to order the Lexington Fayette Urban County Police and Fire Retirement Fund Board. And welcome, everyone. We do have a quorum. So we have several action items today and we'll start right off with our Siegel, Bryant, and Hamill folks who are here from Boston and Chicago. And if you'll introduce yourselves and take it away. All right. Very good. Thank you, everyone. Nice to see you here. Happy Valentine's Day. My name is Dan McCormick, and I am a member of our institutional investor relations team at Siegel, Bryant, and Hamill. And this good-looking young man to my right is Greg Hosbein. Greg is a senior portfolio manager on our fixed income team, and he has been with our firm for the past 27 years, and he has over 35 years of investment experience. We wanted to start today by saying thank you. Thank you for entrusting your assets with us since 2009, the past 15 years, which has been marked by some serious volatility in the markets. And we've put our results in this book for you to look at, both over the long term and more recent time periods. And we'll talk a little bit about those results. and we want to also talk about our philosophy and process we know there's some newer faces within this room since the last time we presented so we'll talk about how we manage money and want to make sure that you feel good about entrusting us going forward because we do see more volatility in future markets what I'll do is I'll cover the firm I'll talk a little bit about our investment team, and then I'll hand it over to Greg to talk about philosophy process results, and he's going to give his outlook. And after he gives an outlook, he's going to talk about the portfolio positioned and why it's positioned this way given that outlook. So let's start on page three, if you will, and there's a lot of facts and figures here, but I'd like you to bring your eyes down to the bottom of this page. And you'll see we've got 120 people at our firm. But what makes us different is that 60 of these folks, half our firm, are investment professionals focused in on delivering alpha and mitigating risk for our client portfolios. Our portfolio managers are seasoned through many market cycles, averaging 29 years of investment experience and two-thirds of our investors, 65%, are CFA charter holders. Now at the bottom right-hand side, $24 billion in assets under management. We're certainly not a small firm, but we're also not one of those mega asset gathering type of companies with hundreds of investment strategies. We believe that active management can work and add value if implemented correctly. So if you look at the top of this page, you'll see that all of our investment strategies are designed to add alpha in the most inefficient areas of the market. That's done by design. We take a team approach to investing. In a minute, you'll see our fixed income team that works for you. invest and we focus in on high quality investments utilizing deep proprietary research. And that's our brand as a firm. Quality research, quality investments through proprietary research. If you look at this last bullet, this talks about our ownership, we're owned by Coriant Holdings, which is the U.S. subsidiary of CI Financial. CI Financial is a $300 billion and wealth manager based in Canada and we are the US arm of their investment practice. So now in the interest of time we'll jump ahead a few pages and don't worry this is a big book we're not going to go through every page. If we go ahead to page seven this is our investment team and if you look at the top of the page you'll see that we're led by Jim Dodura and Jim has 30 years investment experience and he's been with our firm for 25 years. So your two portfolio managers are Greg and Jim Dodura and they've worked together at our firm for the past 25 years on these types of portfolios. The top part of this is our portfolio managers on the bottom under Troy Johnson that is our analyst credit analyst team and our portfolio managers average 25 years of investment experience just on our fixed income side. So at this point I'd like to hand it over to Greg to talk about philosophy and process. Thank you Dan. We'll go to page eight. So how do we manage this portfolio? It's a it's an investment grade fixed income portfolio. What differentiates us is that what we try to do, we strive to do, is we take advantage of the inefficiencies within the credit or mortgage or all fixed income securities by investing in higher yielding, higher quality, overlooked securities. You think about it, the bond market, everyone talks about the stock market and the magnificent seven but the bond market is where the action is there's thirty one trillion dollars in the bond market and it's all traded over-the-counter it's not traded you can't punch up a ticker at the stock exchange so what we've done for the last twenty five years is we've captured and tried to find these really you know higher quality bonds that offer a measurable yield advantage to other securities. But we do this within a really disciplined, focused guardrails of we don't want to buy lower quality securities. We have a role in the portfolio. We want to do well, particularly when your other assets are doing poorly, because pensions need to rebalance. They need to make their payments. So we're kind of your all-weather portion of the portfolio. And that's the goal, we want to do well in all periods with an emphasis on downside protection. If you look at the guidelines on page 9, it's very consistent, the way we manage our philosophy and process is consistent with the guidelines. And of course we are in compliance with the guidelines. So how have we done? If you look at page 10, we've got our returns. Any questions on the processor philosophy? Great. You've been with us 15 years, and I will say, in spite of the low interest rate environment, there is something called the power of compounding. The initial market value was $64 million. As of 12-31-23, after a contribution of $14 million, it's $103,657,000. And that's a change of $24 million. So it's that compounding interest that really adds over time. If you look at the specific returns in percentage, the fourth quarter, it's finally some good news. 6.5%, 6.53% return. And for the full year, 5.76%. After multiple years of zero interest rates, I can say bonds are back. We've got interest rates back. We're earning some money again. And it's a good feeling. The majority of the returns, and I'll talk about this a little bit later, happened in the fourth quarter. It was a great fourth quarter for bonds. If you actually look back, the two months of November and December combined were the best two months for as long as I've been in this business. I've been in this business since 1986. So that's 40 years almost, 38 years. It was the best two months in a row. And I'll get into why that happened, but first let me just talk about how we're positioned from a portfolio stance. If we go to page 13, so on the bottom here, what we've graphed is in dark blue is the investments in the portfolio, and then we have to benchmark it against something. We benchmark it against the Barclays Aggregate Index, which is all investment-grade bonds with maturities 1 to 30 years. We look at the statistics, a couple highlights, the yield to worst. So if nothing changed and all the bonds matured and you earn the money, it's 4.81%. That compares favorably to the benchmark. It's a higher yield than the benchmark, which yields 4.54%. So the collective amount of bonds in the universe yields 4.5%. We yield a little more. That was part of the driver of our returns. We earn more income, you get a higher return. One of the interesting things is we can do this with a quality measure of AA. So we're not taking a ton of risk relative to the benchmark. It's the exact same as the benchmark, AA. And we do it also, we've got a modestly short duration that measures how much interest rate risk there is. how long the bonds are so we're at about 94 percent of the benchmark when you look at how do we get that incremental yield and you look at distribution by sector on the very bottom so these are the different sectors of the market there's the treasuries the main ones are mortgages corporates there's also they have taxable municipals super and foreign national bonds what this portfolio owns what it is overweight is mortgages you know get into that why these are government-backed mortgages like ginnie may and fannie may and corporate bonds that's how we add that incremental yield in return for the portfolio but what's interesting about the corporate bonds and i go this kind of goes back to our philosophy if you look at page 14 we took all the corporate bonds in the portfolio and did a pie chart of their ratings and also the top holdings and then how long they are and we compared that to the corporate bonds in the benchmark and you'll see the corporate held by the police and fire retirement they're higher quality that's consistent with our saying we are looking for higher quality overlooked securities that have a yield advantage they actually have a shorter duration and that means there's less interest rate risk in our corporate portfolio compared to the to the average corporate bond out there but i think you'll find most interesting are top holdings we find a lot of value in utilities first mortgage utilities uh industrial companies if you look at that union pacific it's a what's called an equipment trust not only does union Pacific the railroad owe us money but if they get into trouble we also are backed by rails again all these are very higher quality kind of overlooked bonds and then you compare it to the top 10 holdings those people who issue a ton and ton of debt and you think about it well it's all the banks bank america jp i have nothing against banks but today when people are leaving their bank to go buy a t-bill for five and a half percent because jp morgan only pays one percent and they've got a bunch of commercial real estate loans on the books that are probably worth about 70 cents in the dollar we don't want to own a ton of banks and it's a big differentiator we're going to have a a lot less volatile fixed income securities a portfolio than the market because of the nature of our holdings. Any questions? So I think that's a big differentiator, and it also explains kind of when you looked at our performance, if you think about it, we had a good year last year. We were outperformed on the whole year. We did particularly well when the riskier assets were doing poorly through the first ten months. The last two months when it was a crazy rally and risk did really well, we didn't keep up as much as the market. And that's what you'd expect from this type of both philosophy and portfolio. So let's take a look as far as the outlook and what happened last year. I think I'm doing okay for time. And this starts on page 20. I mean, it was a crazy year, 2023. But if you looked at it from start to finish, these are the top, this is the difference in treasury yields. The dark blue is how we ended the year. The light blue is how we ended the year, the dark blue is how we began the year. It's somewhat indifferent because if you look, yields from December 31st to December 31st, they didn't move a lot. The 10-year was a 4% a year ago, and it was 4% when we ended the year this year. Short rates came down a little bit, long rates came up. So what kind of returns did that produce? We did different asset classes, and a couple things I want to point out. If you look at high yield, it's the junkiest, riskiest part of the market. It was 13.39%. I mean, wow, that's a big return. Corporate bonds, this is why we were able to do better in the market. 7.29% intermediates, the average corporate bond 8.5%. Without a big move in interest rates, those are some big numbers, and it was really driven by riskier assets came down and yield spreads compared to treasuries declined as well. So you had not only a big income, but you saw a little price performance. It wasn't like that all year, though. If you look at page 21, as I mentioned, this is a graph of the 10-year Treasury. And we went through the first seven months. It stayed close to around 4%. And then on July 31st, the U.S. Treasury came out with their quarterly refunding plan. How much debt are we going to borrow? It would be like if Lexington all of a sudden said, we need X amount of dollars to, you know, I love this courthouse, but to build a new courthouse. They came out and said, we're going to borrow a billion dollars. And all of a sudden, the U.S. Treasury all of a sudden came out and said, we're going to borrow. And it was a very large amount of money. This was in July 31st. And a lot of it was, if you recall, I mean, I've got, remember the government shut down? They depleted their checkbook of the TGA, the Treasury General Account. They had to refill it up. So they issued a ton of debt. Interest rates went from 4% to 5%, which was a big move. It was a very large move. And you saw risky assets did very poorly. Actually, for the three months, high yield was negative. Corporate bonds were negative. It was a difficult market. so what changed and if you look at page 24 25 actually two things happened on october 31st the treasury came out with their new borrowing plan And what they said was we're not, we need to borrow a lot of money, but we're not going to borrow long term money. We're only going to borrow T-bills. And they're rolling over and issuing a massive amount of T-bills. And so if you take all that long investment out of the market, you're taking a lot of the risk out of the market. All of a sudden people aren't concerned about, oh, long term rates are going to go real high. And interest rates went from 5% to 4%. And then to throw gas on the fire, so to speak, Chairman Powell of the Federal Reserve said, we're done raising interest rates. We think inflation is going to come down, and we're not going to increase interest rates anymore. So what you had is, as I said, the best two months in the market. So it was really a year of 10 months. It was pretty difficult. I'm glad I wasn't in here October 31st because our numbers would be negative. to the best two months that I've seen in 40 years how did the how did the Treasury how is the Treasury able to just issue T bills if they're running deficits people say well we're running budget deficits till you know as high as I can as I've ever seen well they can do it because the Fed the federal government found a new buyer if you recall there's four and a half and you can see how it's accelerated there's 5.75 trillion dollars in money market funds today it's an enormous amount of money and good for the the u.s government and maybe maybe you know longer term depending upon your view of interest rates it may be more prudent to term out some of your done, but if you can issue and fund these deficits, you realize that there's an enormous amount of money in these money markets. It's going to keep interest rates at least low for some time. It's going to help the technicals of the market. It's going to bring that money out of the money markets into treasuries, which then will turn around and transmit into other securities as well. So it's something that we're watching, how much of that drawdown, the money markets come out. So far it's been very manageable. They just, in January 31st, came out with their new plan as far as quarterly refunding, And it's been extremely manageable. And the markets seem to have taken it well. The other part, that Federal Reserve part, the Fed said that they're not going to raise rates. And the market, as the markets do, all of a sudden said, well, they're going to cut rates like 1.5% in the next two weeks. You know, actually, they said the first cut's going to be in March. We think that's very unlikely. And we think as we go through time here, the Fed doesn't want to make the mistake that they did in the 70s where they eased too much. As we get to a point where the Fed will not raise rates, but if it's not priced in to where the market doesn't think they're going to cut rates, we think yields are very attractive at that point as well. So where are we investing? And if you look at page 32, any question on kind of the outlook or does it, it was really a fantastic two months. And it wasn't because the Fed cut rates or the economy did great or inflation came crashing down. really because the U.S. government managed to figure out how to fund this large amount of debt that they had. And it really took a big risk out of the market. Question, sir? Over here. Okay. If you don't see that the rates will come down in March, if you're not forecasting that, then when do you think that might happen, or do you have the crystal ball to tell me? It's data dependent, isn't that what the Fed always say? So I think that what we forecast is, it's likely that the Fed will eventually lower rates. It is very much data dependent. If they can feel comfortable, they've said it, with low inflation, getting back to 2%, Right now they think rates are too high relative to, you know, you've got 5.3% Fed funds, and you've got like a 3% inflation. So if inflation comes down to 2%, they'll feel comfortable to do that. And you know, that's just a matter of kind of time, oil price behaving, and the dollar remaining strong. I would suspect that that will happen towards the second half of this year. So don't refinance your mortgage yet. Where do we see value? If you look at page 32, we've got an overweight in corporate bonds. You can get close to 5% in the average corporate bond in the market. And it's in a lot healthier position than it was certainly in 2020 and 2021. If interest rates go up 1%, at least you have that cushion, that yield, where you're going to get significantly better return from that bond because the income is coming in. So it's a healthier spot, particularly short and intermediate bonds in the corporate space. So we like those, we're overweight those. And then mortgages. If you recall, the Federal Reserve bought trillions of dollars of mortgages as part of that quantitative easing during the pandemic. So at the time, a bunch of banks bought mortgages. So all these two huge institutions, our banking system and the Federal Reserve, just piled in and basically gobbled up every mortgage that we all refinanced and got issued in the market. And at the time, yield spreads as a result of all these buyers. The yields relative to U.S. Treasuries was close to only a half a percent more for a mortgage. It wasn't a good deal. We didn't own them at the time. We were very, as they called, underweight. When the Fed stopped buying and the banks stopped buying, mortgages, the yield difference between a treasury and a mortgage, and this is a big move, went up from .75 percent to close to two percent over treasuries so me to think about today i can buy a a jimmy government-backed six percent mortgage with a eight-year average life at par at six percent we can earn six percent it's it's an attractive yield because there's less buyers out there because the fed isn't buying because banks banks don't have the money everyone's leaving to go by t-bills so they're losing deposits they don't want to turn around and buy a bunch of mortgages so we found a lot of value we're happy to provide that liquidity uh... and i think the pensioners are happy to earn that government backed uh... return without without having to fight the banks and the fed for for the parts so those are the two areas that we really like and as i showed earlier that's where we were overweight relative to the average index any other questions was this helpful i think it's hard being a bond manager it's very esoteric i mean you have a very calm demeanor You don't see me in the trading room. Come on. A couple people yawning actually. No, it was very helpful. Thank you. Are there any questions? Well, I think we're in for an interesting year. It's an election year. We have an election. We've got an economy that keeps on growing and hopefully an inflation problem that's going away and hopefully happy happy markets it's nice after the last 15 years of zero interest rates you can earn four or five percent yep thank you very much to both of you thank you we appreciate it right on time to this at a half an hour okay very good we didn't know what your time limit was so thanks again safe travels right right our calen folks john jackson james o'connor are here for the quarterly report Good morning, everyone. Morning. So everyone has their day, and fixed income is sexy these days. So the equity folks have had a long time in the spotlight, and the fixed income, this is certainly an exciting time for them. I'm going to spend a few moments this morning just giving you the summary of the performance and give you the highlights of the fund for the period ended December 31. As Greg indicated, we certainly saw a very pleasant fourth quarter as we saw the markets rebounded in a big way. So we avoided a third year of negative returns in the fixed income market. So that's our anchor to win word. And certainly it's historic from the standpoint that both equity and fixed income markets declining in tandem in the prior year. So we saw a really tough 22 and a really nice bounce back in 23. So what occurred? Well, we had a couple things working in our favor. You've got a resilient economy. Consumers continue to have confidence. Consumer spending was strong. We saw easing inflation again from June 2022, where inflation was around 6.6%. We saw it ended. CBI was at 3.4%. And the Fed's preferred metric, the personal consumption expenditure was down, was less than that at 1.9%. So again, near that 2% target that they'd been striving for. In terms of the catalysts for this, we saw the Fed pivot. once again, in November, December, and as recent as this past January, the Fed held rates steady, no increases, and more importantly, it was a messaging that came out in December saying that not only were they in their vigilant fight to stamp out inflation, we're going to continue to increase rates to have a policy of higher for longer moderated. So more dovish comments coming out. And then the market embraced that maybe to an extreme level. To Greg's point about anticipated reduction, when will Fed cut rates? Certainly their indication was that it is data dependent. They were looking in their projections to have rates at about 4.6. Currently it's at 5 to 5 and a quarter of the overnight rate. They were saying year end 2025 at 4.6. But messaging was that it may be towards the latter part of the year. Well, you had the market was building in cuts and rates, which is stimulative as early as March. So again, a little bit of disconnect there too, but there's certainly an exuberant market. And as a result, risk was rewarded in the fourth quarter. So we're going to spend a few moments talking about some of the metrics in connection with that theme. If you turn to page one, this is just touching on the highlights. Fund assets stood at a $909 million, and that was an increase of about $60 million from the prior quarter end. And again, that was $67 million positive due to investments, and then a $7.5 million, which was cash flows for benefit payments. In terms of asset allocation, again, we did see a lot of volatility in terms of the balances. Overweight to domestic equity by 3.5%, domestic fixed income in line with the benchmark, and international equity a little bit under its benchmark. So public equity, both domestic and international together, certainly well within its target range. What about the performance of the fund? Up 7.9% for the quarter versus 8.5%. So again, trailing a little bit, but this put this right at the median of its peer. but in the last year, the total fund returned 12.9%. So again, we enjoyed a strong return for a diversified portfolio. This was ahead of the 12.76 for the policy benchmark, and again, right around median. Last three and five years, again, we've had a significantly negative 2022 where equities and fixed income were down, but built into that, we had the fund posted 2.7% annualized for the three-year period and a little bit over 9% over the last five years. So performance continues to be strong. Longer term, if we look to the 10-year annualized return, up about 7.2%. So that's clipping a return of 7.2% per year over that horizon. and that puts you in the 36 percentile, meaning outperforming 74 percent of similar size funds. So what do we see in the last five years? 2023 up 12.9 percent, 2022 was down 16 percent. So again, tough 2021 was up 14.4, 2020 was up 17.7, and 2019 was up 21.2. So those are really exceptional returns. When you consider long-term the S&P 500, if we go back to 1926, we're looking at an equity return of about 10.5%. So again, these returns are significant given the fact that we're looking at an allocation of about 65% equities in the portfolio coupled with fixed income. So I'll take a pause there and ask for any questions that you may have encountered or have been thinking about that I can address with respect to the fund. Are there any questions? Okay, let's push on. Page two, again, a lot of data on this slide, but it's probably the most comprehensive. But I talked about the themes in here just to put a little color on the numbers behind it. If you look to the gray box, you see the S&P 500 was up 11.7% for the quarter and over the one-year period up 26.3%. Non-U.S. equities, that's the world ex-U.S. was up 10.5% and up 18% for the one-year period. Fixed income up 6.8%, extraordinary, for the quarter, which translated to 5.5% for the one-year period. Soft spot in the markets where Lexington has exposure is real estate. So when you look at the increased property index, that's an unlevered index, was down 3% for the one year, down 8%. So we're going to, certainly the real estate market, they continue to see write downs in terms of the properties. Again, there's a lag effect that takes place so it's not as, the market doesn't react as quickly as you might see in the public markets, but in the private real estate markets we're continuing to see write downs. Offices challenged a lot of the cities. The vacancy rates have increased. So again, that poses a challenge. certainly also residential is another area that was challenged particularly as we look at the performance of J.P. Morgan, your real estate manager. Jim is going to spend some time talking about the managers, but just going to highlight J.P. Morgan's got a few things going on that we're going to touch on. So with that, let's turn. Overall growth, GDP, as measured by GDP, was up 3.9%, so we continue to see strong, I'm sorry, 4.9% for the third quarter. and the one part of the, I guess the market that was, another part that was punished in the equity front was energy. So we saw oil prices plummet. Oil was as high as 124 in April and finished up 71. So gasoline prices also coming down. So energy was kind of the soft spot of the equity markets. With that, let's turn to page three. This is the Callan Periodic Chart. A lot of colors here, but what I'm going to highlight is where you see 2022. This is the Encreef Odyssey, that burgundy color, if you will. You'll see that was at the top of the chart, the 7.6%. And all the equities, again, in 2022 were negative. of the equity strategies, but again, this is this lag effect that I'm talking about. The write-downs had not been experienced in the real estate markets at that point in time in 2022, so you can see in 2023 falling to the bottom. So the Odyssey is a private market benchmark. It does contain leverage, and you see that was down 13.3%. Turning to page 5, so we, if you look to the blue bars in the middle, you see the S&P 500 was up 11.7% for the quarter, as we said, and over the one-year period up 26%. If you, we talk about growth managers and value managers, growth managers having a higher concentration of technology. So when we talk about the Magnificent Seven, right, we saw this concentration in terms of the performance in 2023, concentrated in these seven or so securities. And again, they are the, you know, the darlings of the markets. You have Microsoft. And then you have AI with NVIDIA, while you've got Tesla in there. So these seven securities, the Magnificent Seven, really accounted for an outsized portion of the returns in the markets. And the concern was that, okay, too much concentration is not necessarily a good thing. So for the latter part, the fourth quarter, we did see some broadening out of more widespread appreciation in the equities. And again, if you looked at a chart to the bottom, you see that these are the sectors of the S&P 500. And across the board, again, we saw the real estate listed there. Those are REITs. Those are REIT stocks. So they're more aligned with equities than private property. Energy was down 6.9%. That was the one negative sector that I highlighted. Turning to page six, non-U.S. markets, again, nice return for the quarter, still lagging the U.S. markets. What I would highlight, that one negative number you see for China in the blue bars, China continues to experience, and it represents about 25% of the emerging market index. So what does that mean for those that are invested in that portion of the market? And capital, your emerging markets manager has an overweight to China and an underweight to technology, and both of those were headwinds for their performance. Again, if you look over the one-year period, emerging markets was up 9.8%, and China, which represents 25% of that index, was down 11.2%. So again, China continues to struggle in terms of the level of growth, but also their real estate markets have been punished pretty severely. I'm not going to spend any time on, well, I'm just going to spend a moment on fixed income. We'll have to turn to page 7. So, returns from fixed income securities are going to come from two sources. They're going to come from the credit quality of the securities you're holding. If you're holding risk to your securities, low rated, you're entitled to a higher yield because you're taking more risk. So, you want to be compensated for that. And the other is term risk, the duration or the length of those investments. The longer you are, the more sensitive you are to changes in the interest rates. Shorter you are, more defensive, less sensitive. So you heard Siegel talk about their positioning is they are holding a larger portion of corporates, corporate bonds versus treasuries, which means they're taking a little more credit risk, and their duration is shorter. Well, in an environment where rates came down, the shorter duration doesn't help you. It helps the longer term investors, the longer duration bonds. So again, so that was kind of a headwind versus the benchmark, but the fact that they were holding more corporates than treasuries, that benefited. So if you look at the bars to the right, you see the Bloomberg Treasury returns was 5.7%, and the Bloomberg investment grade credit was up 8.2%. So again, that's where Siegel really benefited. Your other fixed income manager, Optimum, has got a different approach. They're holding more treasuries, which means that they're holding more treasuries than the benchmark, so they're going to have a little bit less return, but they also hold longer term. and that helped them this particular quarter. So again, the two act as complements, and we're perfectly fine with that longer term. They both outperformed the aggregate. They just get there in different ways, and we kind of like that blend. Any questions on that? Okay, let me turn to the, I'm going to touch on the total fund performance, and then I'm going to hand it over to Jim, and he's going to go through the managers. We've got a few things to talk about there. Suffice to say, when we look at page 8, we have moving from left to right, the asset class, the dollar amount, the percentage of the portfolio, the target, and then the difference. If you look at that percent difference column, you see that domestic equity is a little bit overweight at 3.5 percent, and international equity is underweight by 2.4. So we're a little bit heavier on the domestic side, less so on the international side. Together, it's within 1 percent. So that's kind of the point here. And when we are advising staff to raise cash for distributions, typically we go into the asset class that's overweighted and use it as a rebalancing mechanism. So we're going to illustrate that on the next page. Turning to page nine. Here we show, this is kind of a cash flow statement if you will, on the far right, the way to read this is right to left. So we start at September 30th, we saw the value was $849.7 million, the investment return was $67 million, and the net new investment, that's the net cash flow, we took $7.5 million out to pay for distributions, bringing to your ending balance of $909 million. And with respect to the cash outflow, you'll see that domestic fixed income, which is still just a little bit overweight versus its target. We took $4.4 million out of domestic fixed income, and then we took $2.2 million out of domestic equity to fund those distributions. Any questions on that? Okay. If we turn to page 10, this gives you a periodic reference on how the fund performed, and again this at the bottom line you show the total fund versus the total fund benchmark. Here we're showing 12.9 for the last year versus 12.8 over the last five years over 9% versus 8.5 for the benchmark in the last decade 7.2 versus 6.6. So again, strong performance versus the benchmark. If you turn to the next page, it shows that performance relative to peers. And again, same numbers for the total fund. The way to read this chart is you look at the floating bars at the top and the number in parentheses, the blue number is your percentile ranking. So over the last five years at 46, that's above median. Over the last three years at 84, below median due in large part to a difficult 2022. So let's go to the calendar year performance on page 12. And as you see, this kind of gives you a year-by-year snapshot, and you'll see that relative to its policy target, this fund has outperformed eight out of the last 10 years. That's the good news. The bad news is when, where it underperformed was more recently in 2022, where the fund was down 16% versus 13%. So that's the blemish, but we see that if you look, as I quoted the calendar year returns for the last five years, but even if you go farther back, 2015, 16, 17, 18, 19, 20, 21, consecutive years of outperformance, very tough 2022, and then a nice 2023. So that summarizes the total fund performance. Happy to take any questions on that. If not, I'll turn it over to Jim. Yes. Maybe I'm a little slow sir, but I do nothing but S&P 500 index funds. That's what I recommend to all my friends. And while 12.88 looks great on its face, S&P 500 index fund earned 26%. How do I defend this portfolio to our members? They're asking me all the time, they're like, why aren't we earning 12.88 when my personal portfolio is earning 26? How do I defend that? Sure. Strategic asset allocation is a long-term approach that putting 100% into the stock market, when you have the global financial crisis down 37%, a fund that had a drawdown like that would be in dire straits. And that would be a difficult number to explain to your participants experiencing a 37% drawdown in a market like that. So again, it's anytime you are generating that level of underperformance. So if you are down 50% in any given year to get back to where you were, it's not a 50% return. Now you've got to get a 100% return to get back to where you are. And from that standpoint, it creates a significant burden. And the idea here is that volatility is a drag on performance. So we want to have that anchor to windward. And does it all work in all periods? Well, we saw that it didn't in 2022 for sure. But that happens in a very small minority of the cases where we see both fixed income markets and equity markets decline at the same point in time. So the answer is balanced allocation, level of risk. So when we look at the risk in connection with the S&P 500, domestic equities, you're looking at about a 17% standard deviation of risk. When you add in fixed income, which is a volatility of a third of that, it baffles that total fund volatility. So from a fiduciary, protecting the assets in the down period is a significant benefit. Chief Wells. Thank you. If we could, can we go back to page nine? Nine? Sure. So I understand taking the cash outflows to try to rebalance the portfolio more toward the target asset allocation. My question is, when you do that, is that just sort of a hard, fast rule that we're underweight in this and overweight in this, so we're going to take X amount, or does thought go into what's happening in certain sectors? For example, the real estate sector, we know that it was lagging and it was likely to not do well, so was there thought into that, or is it just kind of a standard? Yeah, it's largely mechanical. Because we have a long-term allocation and we do these projections in the asset liability study, the idea is to achieve that projected return, you need to have that allocation. To make the interim, those are tactical decisions. And again, the orientation from a total fund perspective is strategic. So we try to keep it as close to that target allocation as possible, which means, unfortunately, oftentimes, taking from the winners and bringing them more in line rather than taking away from an underperforming asset class. So real estate has its own wrinkles because it's not liquid. So there is a redemption process in place that Jim is going to talk to that you put in for a certain amount to redeem from that fund, and you may get a portion of it back based on what the underlying assets and liquidity is in that total fund. Yes. So the strategic decision making is happening, I guess, in concert with the tactical moves? Yeah. The tactical decisions are really taking place at the manager level. So when you hear Siegel Bryant talk about how they're deviating from the index where they see values, the same thing's happening on the equity side, where you've got managers that are overweighting or underweighting information technology as they see fit to generate return. Any other questions? All right. Thank you very much. Welcome, Mr. O'Connor. Good morning, everyone. I didn't wear my red tie today. How dare I forget that it's Valentine's Day. So in the interest of time, I'm going to give some qualitative updates on some of your managers. So why don't I start with the Jenison CIT fee update? I think everybody has a copy of that. So in January, Jenison reached out to staff and provided some good news. They are going to propose a lower fee for your current investment. So Jennison is your large cap growth manager. Should I just pause to make sure everyone has it? Looks like everyone's kind of flipping through there. Where exactly is it? It's in the agenda. It's right past the JPMorgan Bank staff. Where the agreement is? Yes, ma'am. So it's in your agenda packet. Thank you. So I'll maybe start over real quick. So Jenison, your large cap growth manager, whose parent company is Prudential, came to staff with some good news. And they sent them an amendment where the fees for your particular investment, investment, your vehicle that you're in, which is called a collective trust, are coming down. So currently it is a tiered structure, so that's based off of assets, and it's moving to a flat fee. So based off your rough estimates of the current assets, the fees were roughly 44 basis points. The new proposed fee in this amendment is actually 38 basis points, so this is a positive development. What I will add is that actually they came back and there's going to be an amendment to the amendment and the fee is actually going to be 35 basis points, so going in the right direction. So coming down from 44 to 35, they are going to send an updated copy of the amendment to staff and Callen is supportive of this fee change. So no changes to the investment process, no changes to the investment team, no changes to the vehicle that you're in, just a lower fee, and it's going to be flat. And then the last thing I'll just add there is this will be effective, I believe, April 1st. And since the fees are booked in arrears, you have until the end of the second quarter to return that document. So there is a little bit of time, but that's kind of the timeline that they've laid out. So would this be a good time for questions? This would be a good time for questions. Are there any? I have one. Yeah, my question, I don't want to complain, but why? This is counterintuitive to everything else we're seeing. So I just would be curious to know as to if they gave a reason for why the fees are coming down. Yeah, good question. You know, I think it's a really competitive market, particularly in the active management side. So, right, there's passively managed funds, there's actively managed funds. Fee compression is real, and it's happening particularly not only with passive funds going, you know, race to zero basis points, right? It's happening on that active side as well. So managers are getting very aggressive. They want to keep their current business that they have. They want to keep their clients happy, but they also want to have an attractive fee going forward for their other prospective clients. Other questions? So mine is a technicality. I am not sure, and I'm just asking whether you realize that we went to the legislature a couple years ago and changed the name of our fund. So in the amendment number two, as well as exhibit B, it has the old name, Policeman's and Firefighter's Pension Fund. So, but it's correct in the confidential memorandum. So should we not have that, the current name or does this just dependent on something in the past? May, can I interject? Of course. Yeah. We have been trying to change our name with the IRS. It has been a lengthy process and it still hasn't been completed yet. So even though the legislation has changed our name, we have not been able to get it finalized and get a certificate back from the IRS that says our name is changed. So until that happens, we have to use the old name. Okay, for these sorts of documents? Yes, and then once we get the certificate of the name change, then I will send it to all of our fund managers to get that name changed. Okay, that explains that. Do we know when that will happen? Any idea? It's been a year and a half, so it's a very slow process. Okay. All right. Thank you very much for explaining that. Yes, thanks, Susan. So do you need a motion to accept this? Yes, please. Okay. All right. Commissioner Hensley moved and Commissioner Armstrong seconded to accept this new agreement. And I'll entertain questions or discussions. Did you have a question? I did. So this is a motion for the early So this is a motion for the early So this is a motion for the early Yeah. Yeah, so the new document hasn't been furnished yet. It should be arriving, I think, this week. But yeah, the intent is for it to be 35 and not 38. Any other questions? All right. All those in favor, please say aye. Aye. Is anyone opposed? Okay, that motion passes. Okay, great. Moving on, got a couple manager updates just want to bring to your attention. So I'm going to flip back to the Callan executive summary and start on page 17. So Acadian, one of your international equity managers, I'm sure you know them well. They were in here at the last meeting that we attended in November to give a presentation. A little bit of personnel update on their front dropping in December. So they announced that their CEO, Ross Dodd, it was going to be replaced by the chief marketing officer, Kelly Young. And Ted Noon would become, would backfill Kelly's role as chief marketing officer. Kelly is a 15-year veteran at Acadian, and Ted is a 20-year veteran at Acadian. And, you know, when we reached out, it just appeared that the relationship between Ross and Acadian's parent company was a bit strained and not very productive. And so they decided to go a different direction. You know, certainly we see this often a fair amount throughout our work with managers. You know, we don't think that this reflects poorly on the firm or the team or the strategies itself, but it is something that we are going to monitor. And our research specialists that cover this asset class have a meeting scheduled with Ms. Young later this year just to get her thoughts on sort of the future of the firm and, you know, making sure they're keeping the best clients' interest in mind. So I wanted to just give you an update there. We don't have any major concerns, but it's certainly something that we are monitoring. On page 18, Bailey Gifford, which is one of your other international equity managers, they announced earlier this quarter that effective March 1st that they are adding a member to what they call their portfolio construction group. So this is the group that oversees the portfolio and makes decisions on buys and sells. So they are adding Alex Summers, so the team is increasing from five to six. Alex brings a particular skill set of emerging market investing experience to the team. I think the, you know, without bearing the lead here, you know, we think this is a positive development and don't have concerns because there's no turnover with the team. They're just adding to it. So again, no action required here, but just a note that we're, you know, staying on top of this development. Any questions about those two updates? Okay. So shifting to the last update that I wanted to cover, and that is the J.P. Morgan Strategic Property Fund. So we have a note here on page 19, but I'm going to focus my comments more related to the memo that we provided. So like I said, we see this time and time again, right? Personnel changes. You know, some are more important or material than others. And, you know, this is one that I think kind of falls in that camp. So the lead portfolio manager, Kim Adams, for the strategic property fund has chosen to depart J.P. Morgan. So this was at the end of last year. So over the last couple of months and quarters, we've had a couple touch points. We have a real assets consulting group. Again, that's specialists that focus on the real estate market. They had an opportunity to have a conversation with the new team members. So the team, when Ms. Adams was the lead portfolio managers, made up of three people. So it was Kim Adams, Sue Colossa, and Mr. Curran, I'm sorry. Jason. Jason, thank you, and Jason Curran. With Ms. Adams' departure, the team is going to a co-portfolio management structure, and there's going to be three PMs and one assistant PM. So Sue Colossa and Brian Kern will stay on. Brian is going to serve as an assistant portfolio manager. And they're going to add two more resources to the team, Brian Nottage and Caitlin Simon. So, you know, with that being said, I mentioned that our research group has had a couple touch points. And, you know, their takeaway is that this is a material change. And, you know, think the world of Kim Adams as a portfolio manager. She's one of the, you know, top portfolio managers, or at least in their mind in this space. She was very transparent during times of bouts of underperformance. when there was a plan that she put in place or said that she was going to put in place, she did it. So while the fund had bouts of underperformance, we still were very confident in Kim Adams. But with her departure, we're less so confident in the team going forward. And so what we would recommend is the fund consider entering the redemption queue, which I'll talk about in just a minute, and potentially conducting a search and looking for a replacement. Can you explain exactly what that means? Yes. So when an investor enters a redemption queue for a real estate fund, and I just will add that you're actually currently in the queue for a partial redemption. So what that means is when you no longer want to be invested in this particular fund, for example, you will give them notice and say that, you know, we want to withdraw our money. It's not a public market, right? It's not a publicly traded vehicle. So it's, you know, not as liquid as, say, a stock or a bond. So you enter the queue. There are other investors in the queue right now. And, you know, over time, they will give you your money back, for lack of a better way of putting it. And so that process is currently underway. So if you recall, in 2022, when the public markets sold off, stocks went down, bonds went down. Well, real estate didn't go down. So it became an overweight within your portfolio. This happens across a lot of our clients. So that's what we call the denominator effect. Well, fast forward to 2023, markets came back. Real estate doesn't react as quickly or it has a little bit of a lag. We're seeing write downs occur now, and we expect them in future quarters. So the reason I share that part is you entered the partial redemption to try to get some of your money back to bring you within closer to your target. So that was occurring. You're now closer to your target. And we would recommend, you know, going forward to be a place of full redemption for your assets to be part of the queue and eventually get your money back. and then that would be used to invest in a new real estate manager. Does that make sense? Hopefully that is clear. So what part of our, take me back and tell me what part of our investments this represents. So this is your real estate allocation. So on page 9, the real estate allocation within the portfolio is approximately, at the end of the year, about $74 million, or about 8% of the total fund. Questions? That's a yes, please. Major Swiderski. How long do you think it will take to get the redemptions? Good question. So there are a lot of factors that are played in to when real estate managers are going to be able to fully pay down all of their queues. So J.P. Morgan is not alone here. There are other managers that are managed in a similar fashion that have to deal with a Q as well. So I just want to make that clear. What we're, you know, what we've been told is it could be anywhere from 6 to 12 quarters to potentially, yeah, to get the assets back. Yeah. So in the meantime, we would conduct a search, and we can bring forward, you know, three candidates that we think would do a great job. Have that search ready to go, identify a manager going forward, so when, you know, when the redemption is fulfilled, you'll be ready to then invest into the new manager. What other questions do you have? Yes, Chief Wells. Would you say that it is best practice for us to utilize or for us to have all of our real estate in one manager? Or would we be better off not having all of our eggs in a single basket? Yeah, that is a good question, and what I would say is at the level of assets that you currently exist, so at about 74 million or about 8% of the plan, I think we're comfortable with one manager. Programs that are a little bit bigger in size or have a larger allocation, at least relatively speaking or on an absolute percentage would probably be better served with having potentially two to three managers. I think that's something that we can evaluate as part of the asset allocation and asset liability study that we plan on bringing forward to you later this year. It's more of a structure question and the asset allocation is more of a sort of top down exercise but certainly it's something that we can we can talk about and add into for for context but I think at your level we're comfortable with one manager and again I John and I have clients where it's it's a single manager or a multiple Commissioner Hensley so just for the history have we always had roughly 8% invested in real estate. If not, when did we go to that? And I assume that was a recommendation. The strategic target has been unchanged for, I'll have to go look and see in my notes, but it's been a long time. And so we, as part of the asset allocation project that I just alluded to, that's something that we look at and evaluate. And at the last time we did it, roughly two to three years ago, the board decided to keep those, you know, keep the total fund target the same. That looked really good two to three years ago. So, and you know, I know you're kind of, you guys seem a little nervous to tell us this, which, you know, we don't hold you all completely responsible for all this, just so you know. My other question is, and I assume I know the answer, but entering the queue doesn't stop the clock on our losses, right? We'll continue to experience until we're divested in all of those. We will still be invested. Yeah. Yeah. Just had to ask. Yes. Thank you. Other questions? Can you tell me how much, you said part of this is already in the queue? Yes. If I understand, is that part of the $74 million that's already in the queue and how much is it? It is part of the $74 million and that exact figure I will have to get back to you on. Yes, I'll have to get back to you on that number. I apologize. Okay. Because it's changed since we, it's changed over the last several quarters when we entered at a partial amount because they have been paying out roughly 5% of their queue. So it's kind of a dynamic number. But I can tell you it's a few, I don't know, a couple percent of that total, 74 million or so. It's not a large amount. Oh, okay. And so I think you said six to 12 quarters. Is that correct? That's our conservative estimate, yeah. It's, again, managers, again, it's not just J.P. Morgan, right? It's all real estate managers, core open-end. They're hesitant to give you a time period because transactions have been so low in the market that they haven't been able to sell properties. So in order to meet those redemptions, that's part of the process. And so as valuations continue to come down in the next couple quarters, certainly we're not going to call where the bottom is in the real estate market, but we would think that once that sort of settles down, and again, that lag that appears in real estate sort of levels out, we would think that transactions would increase and therefore sales will occur. but again please don't hold me to that because we're not entirely sure and I don't think the real estate managers are entirely sure either so it's it's a it's it's a wide range that I'm giving you I realize that and it sounds like a while but it it could be quicker we might we might be able to get a new fire engine in that amount of time no it takes us a long time to get one so I I'm just trying to understand. So if I understand you, the queue would take longer because there are more managers in front of us who want out. I mean, is that a fair statement or not? Yeah, there are other investors within that queue. Okay. Yeah. That's a fair statement. So those who stay in longer, and of course we wouldn't have a choice, I guess, if we're in the queue. It's just when those who stay in longer, in a way, take their chances with the value that they get out of it. Am I making sense? Right, yeah, I think I'm following. So I guess regardless if you're in the queue or not, you're going to be experiencing the performance of the fund. I guess one point I should make, too, is there is some optionality within entering the queue. You can, if you decide to, for whatever reason it may be, again, we're not suggesting we do this, but you can say, we want to do a full redemption, submit it. Two or three quarters can go by and say, we want to rescind that, and we no longer want to be in the queue, and we're comfortable with this manager and we're comfortable where we are within our total fund, so on and so forth. So there is some optionality where when you enter the queue, you can get out, you can partially get out. But, again, we're not suggesting that. But I do want to make that clear as that's how the queue does work. Okay. Other questions, Chief Wells? Okay. Are there any other questions? Do you want to come to the microphone, please? and then we'll get your message. Did you have a question, John? So I just want to be clear in response to your question, you talked about the reason why your pace of redemption is impacted is because other funds were in there before you. It's not exactly the case. So what happens is you put in a redemption request, and each quarter they look at the redemption requests that are outstanding. So in other words, if you put in on 1231 and in 331 when they look at the queue, because you put in a redemption request earlier, that doesn't mean you're at the top of the heap. They're basically looking at the redemption queue at that point in time and distributing the cash that's available rattably. Okay. That makes sense. I mean, it's a nuance, but I think to the point is your benefit to going in earlier is that you might have one quarter more of a redemption period than others, but it doesn't put you in the queue ahead of them. Okay, I see. That makes more sense. Okay. Any other questions? Yes. Go ahead, Officer Jennings. Thank you. You keep talking about the queue and excuse me, I'm relatively new to large investments. Is this because this is real estate or because these aren't very liquid assets and they basically have invested other places and can't just give us our money back? they have to liquidate some assets to give us our funds back? Yes and yes. So you're looking at an investment in private real estate. So whether it's at point, you know, we talked about a few years ago where the equity markets were punished. So portfolios, their rentable allocation to real estate increased. Now they were over their targets, and people were putting in redemptions to get back to Target. And at that point in time, the idea was, okay, we need cash to replenish other asset classes. You put in, you're in a queue. Whether you can be in a contribution queue or redemption queue, they netted out the point is that differing periods of time, people may want their money out and that's certainly the case here as it is most real estate funds real estate is underperforming some are saying hey we're going to deploy the other assets elsewhere so you're looking at a redemption queue of now JP Morgan's queue rather as a percentage of the total fund is larger because they've had a portfolio manager change no question but But within the industry, they all have cues. And the idea is like, okay, how do you raise the cash for that? You are, in the exercise of their normal management, they're disposing of properties. Property sales are down. They don't have the cash for reinvestment or to distribute to the investors. and the idea here is that you're investing in an asset class that has illiquid investments if they have a redemption cue they are not necessarily going to go in and say hey we need to sell these real estate properties at any price to give the money back because the people that are standing side by side side of you that are remaining invested in there they're being suffering a detriment right so their approach is like we are going to be thoughtful about disposing properties we're going to manage that the best interest of all the participants in the fund so that's where the variable component it's not as simple as like let's go in and sell it no matter what it's It's opportunistic selling in accordance with their discipline. Thank you. I think Commissioner Hensley is next. I apologize. I technically would love to know how this will work. So if we are in a queue and we only redeem portions at a time, so say $5 million we get back, what will happen with that money? Will you all reinvest it? Will you spread that in our other opportunities or will we just hold on to that until we get enough back where we come back and reinvest in real estate. You bring us a recommendation. Technically, how do the mechanics of that work? Yeah, so ideally what will take place is we do the search, we come back, we select the manager. As the redemption money comes in, that's deployed to the new manager. That's how it would work. Okay, any other questions? I think Chief Wells has a motion. Thank you, Mayor. I'd like to make a motion that we accept the recommendation, enter into the redemption queue for a full redemption, and then direct Callan to return with some recommendations on prospective managers. Second. All right. Commissioner Armstrong seconds. Any questions to the motion? I think this is the first time we've ever done this. All those in favor say aye. Aye. Anyone opposed? All right. Thank you very much. Thank you. That passes. Okay, appreciate you. Now, we'll go back to our agenda, and it's time for our Treasury Report and our authorization letter, and I think Dale Morgan's with us today to do that. Welcome. Welcome. Good morning, everyone. I'm Dale Morgan with the Finance Department, and I'm filling in for Mr. Hancock. You should have in your packet the financial reports compared to net assets for the months of November and December, as well as the fund reconciliation report, bank statement, and letter of transmittal for the month of February. The value of the plan as of Tuesday yesterday was $914,005,732.13, and last month's evaluation was $899,021,835.38. We all appreciate you came and brought us good news. All right. And you all see the transfer letter as well in your packet. Do I hear a motion? Motion to accept the report, approve the transfer letter, and order him to come back next month. Only if he has good news, right? Is there a second? All right. Sergeant Hawkins. Any discussion? All those in favor, say aye. Aye. Is anyone opposed? All right, that motion passes. Thank you very much. Thank you. And we have minutes for December and January. If I could have a motion to approve and then we may have a correction. Could I hear a motion to approve? Motion to approve. Thank you, Chief Wells. Do I have your second? All right, Major Swiderski. So the only thing that I noted is on the, well, the page that's, page one, where it says attending Chief Wells, but then it says absent was Chief Wells. and I'm thinking that might be the meeting you were absent. Susan, do you see where that is? So can you? On the December, he was absent, so he just wasn't deleted at the top, so I'll make that correction. You'll remove that. Okay, thank you. And are there any other corrections or additions? Anyone has? Any? No? All right. All those in favor of approving with the correction, say aye. Aye. All right. Anyone opposed? All right. That motion passes. And Susan, do you want to take us through the new business, please? Yes, Mayor. New business item number one is ghost time purchases for Paul Bowles, Trenton Bray, Jarvis Harris, Matthew Merker. I need a motion to approve. I hear a motion. Thank you. Do I second? All right. Any questions? I do, actually. Yes. After reviewing this, one of these seems grossly less than the rest on the amount. I'm not trying to cause anybody any trouble here. I noticed the same thing, and looking back at it, it looks like the other two or the other three have purchased time previously. It looks to be the difference. Okay. They purchased time. Assuming age would play into this, then we don't have that information available. We can take a look at it again, but that seems to be the thing, making those individuals closer to retirement, which does play a role in the calculations. I'm not trying to cause a rift, but do you see the difference in the prices? Do you have that in front of you? I'm sorry, yeah. again not not the second guess your all's judgment or the calculation just you know making sure this isn't a typo or I noticed the same thing as well this morning otherwise I'm if they feel comfortable with understanding that we have that concern and they're going to double check. I think I'm okay with the motion. Okay. Okay. You're more intimately familiar with that, the personal side of this than I would be. So thank you. Okay. Also a variable that I hadn't quite considered in just looking at these numbers. Sure. Sure. Okay. That's all, Mayor. Thank you. All right, any other questions about the motion? All right, all those in favor, please say aye. Aye. Anyone opposed? Motion passes. Item number two is a widow's annuity for Shelly Carter. I need a motion to approve. All right, Commissioner Hensley moves. Second. I'm sorry, who got it? Okay, Rock Vance. Any questions about this one? All those in favor, please say aye. Aye. Is anyone opposed? Okay, that motion passes. Item number three is a contract or a quote from Shred It for us to shred our OnBase files that we've already scanned into OnBase. So that is to pick them up, destroy them, and get rid of the permanent copies. Mayor, I make a motion to approve the request for the quote from Shreddit not to exceed $750. So moved. Right. Sorry, who seconded? Okay. Director George. All right. Are there any questions? No, ma'am. I would just like to commend the ladies. This has been a huge task, getting everything scanned and accessible, and I'm just, they've done a wonderful job, and I'm appreciative. That's great. Thank you. Thank you all. Any other comments or questions? All those in favor of the motion, please say aye. Aye. Is anyone opposed? All right, that motion passes. Item number four is disbursements for February. They're listed on the agenda. I need a motion, please. Is there a motion? Motion to approve, Mayor. Thank you. Second. All right. Chief Wells, second. Any questions? All those in favor, please say aye. Aye. Is anyone opposed? All right. That motion passes. Next on the agenda are service retirements. I'm going to lump the two police together. So we have Edward Thurman, Division of Police, Service Retirement Effective January 11, 2024. Also, we have Eric Taylor, Division of Police, Service Retirement Effect of February 10, 2024. I need a motion. I hear a motion. All right, thank you, Sergeant Hawkins, Officer Jennings. Any questions? Comments. Comments? I want to congratulate Eddie and Eric for their retirement and their time and their service. Eddie, the valued and respected member of our neighborhood resource officers, he will be missed. And Eric, informal leader for our patrol officers. And he also was a background investigator to help ensure that we got quality applicants and quality people serving on our police department and their services greatly appreciated and valued. So I wish them luck and congratulations on their retirement. All right, very good, thank you. Any other comments? Yes, Sergeant Hawkins. I worked with both Eddie and Eric for a long time. Wish Eddie the best of luck in his future endeavors and wish Eric luck he's going over to the VA police, so it's a good fit. Very good, thank you. Anything else? Commissioner? I just wanted to, I don't know Eric or Arthur, but I just wanted to thank Officer Thurman for all of the additional shifts picked up on Versailles Road, providing safe travel inbound. We may have met once. Just thank you. We will ask no details. Very good. Anything else? Well, I will just say I appreciate both of them and their service and the support they had from family and friends to do their job and wish them a good retirement. So with that, all those in favor, please say aye. Is anyone opposed? All right. That motion passes. Next for service retirement is Arthur Ashley, Division of Fire, Service Retirement Effective January 26, 2024. I need a motion, please. So moved. All right. Thank you. Motion and a second. Any comments or questions? Chief? I do want to recognize Captain Ashley for his in excess of 30 years of service, so we're grateful for that. Yes, very grateful. Anything else? I appreciate his service very much. Yes, Rob. Actually, Arthur Ashley was there when I was there. That's how long ago he served. from an mostly outsider looking back in Arthur seemed to take aerial trucks slash ladder trucks from mostly parades and mopping up water to the extensive work they do today I don't know that he's solely responsible however I'm sure he has got a large part of it and I'd like to congratulate him on the number of years he put in Thank you very much. We appreciate his service very much. All those in favor of approving, say aye. Aye. Anyone opposed? All right, that motion passes. Next on the agenda are disabilities. We have Jesse Harris, Division of Police, application to convert an existing service retirement to a total permanent occupational disability. We also have Albert Johnson, Division of Police, application to convert an existing service retirement to a total and permanent occupational disability. I need a motion to send to appropriate doctors. Do I hear a motion? So moved. Chief Wells moves. Chief Weathers seconds. Any questions? All those in favor, please say aye. Aye. Is anyone opposed? All right, that motion passes. Next on the agenda is Jason Green, Division of Fire. His third medical report is completed and distributed. I need a motion, please. Do I hear a motion? I make a motion to approve the reports instead of the appropriate rate. Thank you. Is there a second? Second. All right. Lieutenant Abel. Any questions? All right. All those in favor, please say aye. Aye. Aye. Is anyone opposed? All right, that motion passes. Next are tributes, we have several. Mary Foster, widow of Robert Foster, Division of Fire, passed away on January 8th, 2024. Anderson Carter, Division of Police, passed away on January 16th, 2024. Carolyn Story, widow of Paul Story, Division of Fire, passed away on January 27th, 2024. Mary Lou Scalf, widow of Ollie Scalf, Division of Fire, passed on January 29th, 2024. Are there comments on the tributes? Chief Weathers? I want to issue my condolences to the families of fire and police and may we keep them in our prayers. And as for Major Anderson Carter, he was a great police mentor and leader. And during my career, he was my lieutenant, my captain, and my major. And I'm proud to have had the opportunity to work for him. I definitely benefited from his wisdom and his humor. Mm-hm. He'll be truly missed. Thank you. Chief Wells. Thank you. We certainly want to extend our condolences to the Foster story and Scow family as well. And then as it relates to Major Carter, although I didn't work with him directly, I do have his son in my organization, Anderson Morris Carter III. And that family has a tremendous history of public service. In fact, I believe they've been continually serving for over 100 years. So condolences to the entire Carter family and all of those that were lost. Thank you. Thank you. Anyone else? Commissioner Hensley. I'd just like to share my condolences with the members of FIRE that passed away. I had the unique privilege of knowing and growing up with Andy Carter. I'm really sad that Tommy is not here today because I am certain there are some good stories there that probably shouldn't be shared. but just wanted to send my condolences to his family as well. Thank you. Thank you. Anyone else? I will add my voice to these families' condolences for each and every one of them for their loss. I believe Andy Carter was in the Lafayette band with my husband, And I believe, if I recall, he played trumpet. It's always interesting to learn a little bit of the personal story of each person that they bring. He was a great guy. So, all right, thank you. Now, this brings us to subcommittee updates. Now, two are Tommy Puckett's. I can do the first one. Okay, you can do the first one. And Aaron will tag team on the second one. The first one is the continuation of subcommittee. We do have one gentleman that we are looking at. We are working with him as well as his attorney to see if he can come. He lives out of state. So we're looking at possibly him coming before the board to talk about his current position in probably April. But that's a continuing thing. Okay. Thank you. Are you able to talk about the second one? That would be Commissioner Hensley. The legislative subcommittee. All right. Commissioner Hensley. The legislative subcommittee met, I think, most recently in January. There are a lot of issues that we are looking at as a whole, but it became abundantly clear through the course of conversation that several of us are new and don't have maybe the experience that we would like to have to be able to really evaluate and talk about some of these decisions. So I would like to request on behalf of members of the committee a workshop for anyone on the board to attend that can give us some education and insight as to other pension funds around the country, what other people are doing, other recommendations. I know our staff have done some significant research into what's out there, and I know that we have some contributing members from our unions that are very well educated and had some training that's been provided to them as well so I'd like the opportunity to have that shared with the members of the board so I make a motion to request that we have a workshop and really get caught up to speed on on what all is out there and and how we might be able to evaluate those for our fund okay do I hear a second Commissioner Armstrong seconds Did you have a date in mind or is it premature? Well, we're going to wait and see when Tommy gets back. We'll work on a date, Mayor. We don't have one at this time. Okay. All right. Very good. So this has to do with legislation. We've been brought a number of different ideas for consideration as far as the legislation that's currently out there. but also things that are done around the country. And it's really, if we're going to be evaluating these kind of options, it's good that the entire board is able to hear it and not just one time when a subcommittee would bring you a recommendation. And so I think it's important that we all kind of get educated at the same time with all of that information so that we can really evaluate the choices that we have in front of us. Okay, very good. Any questions? Yes, Rock. Mayor, every workshop I've attended before, I want to make sure that this works the same way. Doesn't it occur at these workshops that the newest member of the Pension Board has to furnish lunch for everybody? I do believe that is how it works now. We're looking at Clint. You lucked out. Any other questions? All right. All those in favor of motion, please say aye. Is anyone opposed? All right. That motion passes, and I guess you'll look at some dates so that we can get a good group of people here. Yes. Okay. very good thank you now lieutenant abel do you have organizational there's nothing earth shattering to bring to you we haven't met recently since the last meeting um i think there's some news coming in regards late breaking that's um with their job classification reclassification and that job description i think our goal is to look over that it's just so new we'll send it out to our organizational subcommittee decide if we need to meet on that or if we can just bring this probably to a whole board meeting. Otherwise, everything's quiet. Very good. Yes, ma'am. Thank you. Is there anything else for the good of the board? All right, Brock. Thank you, Mayor. First topic is my typical broken record. The Fed announced yesterday that inflation is 3.1, down from 3.4. But what that really means is that our poorest retirees lost 1.1% buying power for that period of time into that soapbox. 2013 was the 20th year anniversary of Brenda Cowan getting shot and killed in the line of duty. Saw Chief Wells on the news, and he spoke eloquently regarding Brenda. I did have the pleasure of knowing both her and Chuck Williams. But I'd also like to remember the other people that were there that day, Jim Sanford and Mike Souter. Jim Sanford also got injured in that. 217 is the anniversary of Chuck Williams' death, and it's easy for us to remember the ones that passed away, but I'd like to remember Jerry Ray, who was also in that fire. and I believe I was told his son is in the current fire recruit class. So I'd like to remember those members who died in the line of duty. Thank you. Thank you. Very well said. I think we all certainly add our voices to that. Anything else? All right. I'll entertain a motion to adjourn. Thank you. Second, anybody? All right. All those in favor say aye. We are adjourned. Thank you very much, everyone. Thank you. guitar solo To approach her Chalking up the heart We live and we learn But we both Keep long enough to know That we say it all right now For just one minute I feel loved Real love I need to believe that Real love Real love, darling Real love Oh, just for real love, baby Real love, baby Just for real love, baby One, two, three, stop! Thank you. I got a message on the radio, but where it came from I don't really know. And I heard these voices calling all over the world. All over the world. Everybody got the word. Everybody got the word it's gonna be tonight. Oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh, oh We're going to hit the night down in Gatsby. We're going to hit the night down in Gatsby. We're going to hit the fatigue all over the world. Everybody got the word. Everybody and the worry's going to feel tonight. All over the world. Thank you. Everybody everywhere is going to fit tonight Everybody all around this world Gotta tell you what I just heard Everybody walking power and free I know a place where we all can be Everybody's gonna have a good time Everybody will shine till the daylight All over the world Everybody got the world Everybody and the world is gonna feel tonight All over the world Everybody get the word All over the world Everybody get the word All over the world Everybody get the word Thank you. We'll be right back. Thank you. We'll be right back. Thank you. Thank you. Oh, here it comes That funny feeling again Winding me up inside Every time we touch Hey, I don't know Oh, tell me where to begin Cause I never ever felt so much. Hey! And I can't recall any love at all. Oh, baby, this goes the wrong way. It's got what it takes. So tell me, why can't this be love? Straight from my heart. Oh, tell me why can't this be love? I tell myself, hey, only fools rush in Only time will tell if we stand the test of time Oh, I know, you've got to run to win I'll be damned if I get hung up on the line Hey! No, I can't recall anything at all. Oh, baby, this falls a long way. It's not what it takes. So tell me, why can't this be love? You want it straight from the heart. Tell me, why can't this be love? Bye. It's got what it takes So tell me why can't this be love Straight from the heart Tell me why can't this be love Baby, why can't this be love Got to know why can't this be love? I want to know why can't this be love? Turn left at the old hotel I know this boulevard must turn well It hasn't changed since I've been gone Oh, this used to be my way home They paved the road to the neighborhood I guess the county finally fixed it good It was getting rough Someone finally complained enough Bought the tears back with their smile Stop and look for a little while Oh, it's plain to see The only thing missing is me That's my house and that's my car That's my dog in my backyard There's the window to the room Where she lays her pretty head I planted that tree out by the fence Not long after we moved in There's my kids and that's my wife Who's that man running my life? If I pulled in, would it cause a scene? They're not really expecting me Those kids have been through hell I hear they've adjusted well Turn around and the neighbors drive I'd be hard to recognize in his pickup truck It's just an old fixer-up Drive away one more time A lot of things running through my mind I guess the less things change The more they never seem the same That's my house and that's my car That's my dog in my backyard There's the window to the room Where she lays her pretty head I planted that tree out by the fence Not long after we moved in There's my kids and that's my wife Who's that man running my life? Yeah, that's my house and that's my car That's my dog in my backyard There's a window to the room Where she lays her pretty head I planted that tree out by the fence Not long after we moved in There's my kids and that's my wife Who's that man running my life? Who's that man running my life? Who's that man? Who's that man? Who's that man running my life? Who's that man? Who's that man? Who's that man running around? You sheltered me from harm Kept me warm Kept me warm You gave my life to me Set me free Set me free The finest years I ever knew Were all the years ahead of you And I would give anything I own Give up my life, my heart, my home I would give everything I own Just to have you back again You taught me how to laugh What it's all What it's all You never said too much But still you showed the way And I knew I'm watching you. Nobody else could ever know. The part of me that can't let go. And I would give anything I don't. I would give up my life, my heart, my home. I would give everything I'd call Just to have you back again Is there someone you know You're loving them so But taking