H A P P Y holidays. From the Staff of the Police and Fire Pension Fund

Transcription

1 H A P P Y holidays From the Staff of the Police and Fire Pension Fund

2 PRESENT J A C K S O N V I L L E P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M R I C H A R D D I C K C O H E E B O A R D R O O M Lt. Richard Tuten III, Board Chair Richard Patsy, Board Secretary Lt. Chris Brown, Trustee Willard Payne, Trustee Nawal McDaniel, Trustee STAFF Timothy H. Johnson, Executive Director Plan Administrator Steve Lundy, Assistant Plan Administrator Joey Greive, Fund Treasurer Lawsikia Hodges, Office of General Counsel Dan Holmes, Summit Strategies via webex Pete Strong, Fund Actuary via webex Bob Sugarman, Sugarman & Susskind, Pension Counsel Denice Taylor, AAA Reporters CITY REPRESENTATIVES INVITED Greg Anderson, City Council Liaison GUESTS Chief Larry Schmitt, JSO Jason Gabriel, Office of General Counsel I. CALL TO ORDER II. PLEDGE OF ALLEGIANCE

3 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M P a g e 2 III. A MOMENT OF SILENCE WILL BE OBSERVED FOR THE FOLLOWING DECEASED MEMBERS: Larry J. Beck, Retired Firefighter Engineer Mark Douglas Fletcher, Retired Firefighter Dennie C. Haltiwanger, Retired Police Sergeant Donald K. Whitman, Retired Fire Lieutenant IV. LT. RICHARD TUTEN III RECOGNITION V. PUBLIC SPEAKING PERIOD VI. CONSENT AGENDA ITEMS (01-11)CA Board Action Requested CA Meeting Summary Approved 1. Meeting Summary of the Board of Trustees Meeting held November 16, Copies held in the meeting files CA Disbursements The listed expenditures in DISBURSEMENTS A & B have been reviewed and deemed payable. The Police and Fire Pension Fund Finance Manager certifies that they are proper and in compliance with the appropriated budget. Disbursements A thru NONE Disbursements B thru Transaction list of Accounts Payable distributions $ 23,516.98

4 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M P a g e CA Pension Distributions A. November 3, Regular Gross $ 5,459, Regular Lumpsum $ 11, Regular Rollover $ Regular DROP Gross $ 1,146, DROP Lumpsum $ 505, DROP Rollover $ 0.00 TOTAL $ 7,122, B. November 17, Regular Gross $ 5,456, Regular Lumpsum $ 2, Regular Rollover $ Regular DROP Gross $ 1,146, DROP Lumpsum $ DROP Rollover $ 0.00 TOTAL $ 6,605, All calculation and dollar amounts have been reviewed and calculated in accordance with accepted procedures. The following Consent Agenda items (04-07) were verified with supporting documentation and approved at the Advisory Committee meeting held on December 13, Vote was unanimous CA Applications for Membership CA Applications for Vested Retirement

5 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M P a g e CA Applications for Time Service Connections CA Applications for DROP The following Consent Agenda items (08-11) were verified with supporting documentation and received as information at the Advisory Committee meeting held on December 13, CA Refund of Pension Contributions CA Share Plan Distributions CA DROP Participant Termination of Employment CA DROP Distributions VII. COUNSEL REPORTS Lawsikia Hodges & Pedro Herrera 1. Joint Annual Status Report (Judge s Response) Jason Gabriel 2. Ordinance Reemployed Pensioners (& Impact Statement GRS) Lawsikia Hodges, Chief Larry Schmitt & Pete Strong Board Action Requested VIII. INVESTMENT CONSULTANT REPORTS Dan Holmes 1. Flash Report November 30, 2017

6 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M P a g e 5 2. Economic & Capital Market Update November 30, Allocation of Cash Contribution Board Action Requested IX. EXECUTIVE DIRECTOR S REPORT Timothy H. Johnson X. COUNCIL LIAISON UPDATE Greg Anderson XI. OLD BUSINESS 1. Share Plan Timothy Johnson & Lawsikia Hodges CA APPLICATION FOR MEMBERSHIP Board Action Requested 1. BENTLEY Jr., Thomas M. Previously approved under Trustee Rule 13.3 amended to cleared 2. HURLOCK, Ryan J. Previously approved under Trustee Rule 13.3 amended to cleared 3. REYNOLDS, Christopher P. Previously approved under Trustee Rule 13.3 amended to cleared 4. SWANSON, Anthony T. Previously approved under Trustee Rule 13.3 amended to cleared XII. NEW BUSINESS

7 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G A G E N D A D E C E M B E R 1 5, : 0 0 A M P a g e 6 XIII. NEXT SCHEDULED MEETING Friday, January 19 th, 2018 at 9:00AM XIV. ADJOURNMENT NOTES: Any person requiring a special accommodation to participate in the meeting because of disability shall contact Steve Lundy, Assistant Plan Administrator at (904) , at least five business days in advance of the meeting to make appropriate arrangements. If any person decides to appeal any decision made with respect to any matter considered at this public meeting such person will need a record of proceedings, and for such purpose such person may need to ensure that a verbatim record of the proceedings is made at their own expense and that such record includes the testimony and evidence on which the appeal is based. The public meeting may be continued to a date, time, and place to be specified on the record at the meeting. Additional items may be added / changed prior to meeting. SL

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9 PRESENT J A C K S O N V I L L E P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M R I C H A R D D I C K C O H E E B O A R D R O O M Lt. Richard Tuten III, Board Chair Richard Patsy, Board Secretary Lt. Chris Brown, Trustee Nawal McDaniel, Trustee STAFF Timothy H. Johnson, Executive Director Plan Administrator Kevin Grant, Finance Manager Joey Greive, Fund Treasurer Pedro Herrera, Sugarman & Susskind, Pension Counsel Lawsikia Hodges, Office of General Counsel Dan Holmes, Summit Strategies Pete Strong, Fund Actuary CITY REPRESENTATIVES INVITED Greg Anderson, City Council Liaison GUESTS William Scheu Paul Barrett, COJ Michael Lynch, JFRD Mark Muchowicz, JSO EXCUSED Steve Lundy, Assistant Plan Administrator Willard Payne, Trustee

10 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 2 I. CALL TO ORDER Chairman Richard Tuten called the meeting to order at 9:07AM. II. PLEDGE OF ALLEGIANCE III. A MOMENT OF SILENCE WAS OBSERVED FOR THE FOLLOWING DECEASED MEMBER: Wayne A. Clark, Retired Police Officer IV. PUBLIC SPEAKING PERIOD There were no requests for Public Speaking. Public Speaking Period closed. V. WILLIAM SCHEU RECOGNITION Timothy Johnson said that Bill Scheu has served the Police and Fire Pension Fund with distinction since his appointment by City Council. Timothy Johnson presented Council President Anna Brosche s letter of appreciation to Bill Scheu for his service as Trustee. He also presented a plaque to Bill Scheu. Greg Anderson said that Bill Scheu is a friend and a true professional, well known for his accomplishments as a lawyer. He said that Bill s community service is defined by his servant s heart. He thanked Bill for leading the Fund through tough times with a gentleman s touch. He said that Bill s counsel has helped make Jacksonville a better place. Richard Tuten said that Bill Scheu joined the Board in a difficult time, and that he appreciates his service as Trustee, noting that is not ea sy. Bill Scheu thanked everyone for the recognition. He said that Nawal McDaniel would bring great insight and fiduciary expertise to the Board as the new Trustee who will serve in his seat.

11 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 3 VI. CONSENT AGENDA ITEMS (01-10)CA CA Meeting Summary and Final Transcript Approved 1. Meeting Summary of the Board of Trustees Meeting held October 20, Copies held in the meeting files. 2. Meeting Summary of the Board of Trustees Personnel Committee Meeting held November 8, Copies held in the meeting files CA Disbursements The listed expenditures in DISBURSEMENTS A & B have been reviewed and deemed payable. The Police and Fire Pension Fund Finance Manager certifies that they are proper and in compliance with the appropriated budget. Disbursements A thru ACCESS $ 4, AAA Reporters $ Baker-Gilmour Cardiovascular $ 3, The Northern Trust Company $ 32, Klausner & Kaufman $ Brown Advisory $ 169, GRS $ 32, Eagle Capital Management $ 387, Tortoise Advisors $ 95, Loomis Sayles $ 210, Sugarman & Susskind $ 14, Michael Givens $ 8, Tim Johnson $ PBI $ 1, Commercia Bank $ 141, TOTAL $ 1,103,287.97

12 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 4 Disbursements B thru Transaction list of Accounts Payable distributions $ 21, CA Pension Distributions A.October 6, Regular Gross $ 5,406, Regular Lumpsum $ Regular Rollover $ Regular DROP Gross $ 1,115, DROP Lumpsum $ DROP Rollover $ 367, TOTAL $ 6,889, B. October 20, Regular Gross $ 5,458, Regular Lumpsum $ 2, Regular Rollover $ 9, Regular DROP Gross $ 1,148, DROP Lumpsum $ 160, DROP Rollover $ 103, TOTAL $ 6,883, All calculation and dollar amounts have been reviewed and calculated in accordance with accepted procedures. The following Consent Agenda items (04-06) were verified with supporting documentation and approved at the Advisory Committee meeting held on November 8, Vote was unanimous.

13 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e CA Applications for Vested Retirement CA Applications for Time Service Connections CA Rescission of DROP Participation The following Consent Agenda items (07-10) were verified with supporting documentation and received as information at the Advisory Committee meeting held on November 8, CA Refund of Pension Contributions CA Share Plan Distributions CA DROP Participant Termination of Employment CA DROP Distributions A motion was made by Chris Brown to approve the Consent Agenda items (01-10CA), seconded by Richard Patsy. The vote was unanimous. VII. INVESTMENT CONSULTANT REPORTS Dan Holmes 1. Investment Performance Review September 30, 2017 Dan Holmes said that the trends in early 2017 have continued through the end of the year. He said Central Bank accommodation, growth, and consumer and business confidence have all contributed to a great year for risk assets. Richard Tuten asked what has been driving the good performance of international equity markets.

14 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 6 Dan Holmes said the same drivers have been helping good performance of risk assets globally, giving the Central Bank accomm odations in Europe as an example. Dan Holmes discussed the performance of Fixed Income. Dan Holmes discussed the Fund s asset class allocation in relation to other pension plans on page 13. He said that the Fund s relative overweight to international stocks has helped to drive good performance. He also discussed the Fund s allocations to MLPs and Real Estate in relation to other pension plans. Greg Anderson asked if the PFPF building is included in the real estate allocation listed. Dan Holmes replied that it is not it is categorized separately. Chris Brown asked if the Fund should shift away from its high international allocation in the next year. Dan Holmes said not right now. He said that after Pete Strong finishe s his valuation, an Asset-Liability Study will be done. He said that after the study is completed, target asset allocation will be reviewed with the FIAC and Board. Greg Anderson asked if the low cash level relative to the median is an issue. Dan Holmes said that no, the low cash level is fanta stic. He said that the City s practice of advancing benefit payments at the beginning of the year is great noting that in the last fiscal year, the cash earned 14%. Dan Holmes discussed the fiscal year summary on page 14. He said the gross of fees return for the fiscal year was 14.5%. He said that net of fees, the Fund returned 14.13% for the fiscal year. Chris Brown thanked Dan Holmes for a good year. Dan Holmes joked that in good years, the credit goes to the Board, and in bad years, the blame goes to the investment consultant. Dan Holmes said that the Board has taken on more risk than its peers, and has benefited from it. He said that the good luck may not last, and that the Asset - Liability Study will help the Fund to dial down its volatility.

15 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 7 Dan Holmes said that equity returns drove the good performance of the Fund. He said that the good changes that the Board and FIAC have been making have been coming to fruition. Greg Anderson asked if expense ratios have played a part in the Fund s good performance. Dan Holmes said that they have played a minor positive role. Dan Holmes discussed the Fund s trailing 3 -year period on page 16. He said that over long periods, the Fund performs in the top third. Dan Holmes said that the Fund s internat ional portfolio finished in the 4 th percentile for the fiscal year. He said that Baillie Gifford is behind the stellar returns for the Fund s international portfolio. He discussed Baillie Gifford s style of stock selection, noting their tilt towards value even though they re a growth manager. Dan Holmes discussed emerging markets benchmarks with the Board and Joey Grieve. Richard Tuten asked how Quantitative Easing s unwinding would affect fixed income. Dan Holmes said that at this point, he thinks volat ility would pick up, and rates would rise. He said the question is how much and how quickly that would happen. Dan Holmes discusses the Real Estate portfolio, and MLPs, noting that managers performed within expectations. He discussed the difference in per formance between the two MLP managers, Tortoise and Harvest, highlighting their different management styles. Dan Holmes discussed the expected future returns of MLPs with the Board. Dan Holmes discussed possible impacts of federal tax reform on the Fund. VIII. EXECUTIVE DIRECTOR S REPORT Timothy H. Johnson

16 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 8 Timothy Johnson acknowledged Kevin Grant, the Fund s new Finance Manager. He said that he is excited to have Kevin aboard, saying that he has really hit the ground running. Kevin Grant said that he is looking forward to working together with everyone. Timothy Johnson welcomed Nawal McDaniel to the Board. Timothy Johnson discussed the dashboard, noting that it has reset for the new Fiscal Year. He said that pension contribution refunds have been s eparated from total refunds. He discussed the outreach section, noting that vesting workshops have been started, which target newer members approaching their vesting date. He also discussed the investment administration section. He described a year-to-date metric for each item which will be included starting in December. Timothy Johnson informed the Board that Jason Gabriel was unable to make it to the meeting, and will postpone his presentation until the December meeting. Timothy Johnson updated the Board on the Advisory Committee election, noting that ballots have been sent to retirees. Timothy Johnson said that Chris Brown ran unopposed and will start his second term in January, and that Michael Lynch, who also ran unopposed, will be the new fire trustee starting in January. Timothy Johnson said that the operating budget update will be completed by Kevin Grant and will be ready for the December meeting. IX. PERSONNEL COMMITTEE 1. Performance Plan Richard Patsy said the Personnel Committee has been wo rking on a revised performance evaluation for the Executive Director. Richard Patsy described the categories in the evaluation as attached. He said that the Personnel Committee is recommending that the Board adopt the attached evaluation for use for Tim s Fiscal Year 2018 evaluation.

17 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 9 Lawsikia Hodges said that she wasn t aware of the recent Personnel Committee meeting. She said that there are special laws governing special compensation, saying that the Personnel Committee needs to discuss this with Counsel to make sure it conforms to the law. Lawsikia Hodges said that by law, if there are bonuses for one employee, there needs to be a bonus policy for all employees. Lawsikia Hodges said that the wording disputes on page 5 relating to Building Coalitions should be changed to any issues. Chris Brown said that the Personnel Committee will meet again to discuss the bonus policy for employees, noting that the CEO level position, managers, and clerk level employees could have different ranges. A motion was made by Chris Brown to adopt the Performance Evaluation, striking the compensation section, and modifying the wording in the Building Coalitions section as Lawsikia Hodges sugg ested, seconded by Richard Patsy, discussion: Greg Anderson asked if the Fund has a performance bonus policy currently for employees. Timothy Johnson answered no, it does not employees get increases based on their Step Plan, not on performance. Timothy Johnson said that perfo rmance evaluations were completed in the past as one -off events. The vote passed unanimously. X. COUNSEL REPORTS Lawsikia Hodges & Pedro Herrera Lawsikia Hodges and Pedro Herrera have no new reports. XI. COUNCIL LIAISON UPDATE Greg Anderson Greg Anderson has no new updates.

18 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 10 XII. OLD BUSINESS XIII. NEW BUSINESS 1. DROP Interest Study Pete Strong Pete Strong said that the past practice has been to use a 2% load to account for the fact that the DROP interest paid is more than the expected return for the plan. The expected rate of return is 7.0%, and the DROP interest rate is 8.4%. He said that the 2% load wasn t enough to fully value the liability, and recommended an explicit evaluation of the actual entire experience of DROP payments. Pete Strong discussed the average payouts to DROP participants, averaging around a 30 year payout per member. Richard Tuten said that valuing the DROP will become more difficult in the future after possible benefit changes due to new collectively bargained contracts occur. Joey Greive said that from the City s perspective, they don t see any reason not to fix the problem. Joey Greive also said that the Board should also consider revisiting the DROP interest crediting method in the future. Richard Patsy said that it makes a ton of sense to use Pete Strong s new method for valuing the DROP liability. He said that it is much more accurate. Pedro Herrera said that the City needs to be comfortable with Pete Strong s recommended changes in actuarial methods before the Board approves them. Joey Greive said that he has talked about this at great length with Timothy Johnson, Pete Strong, and Mike Weinstein, and said that it is their collective thought that this problem needs to be fixed. He said that he thinks it would be in the wisdom of Council to fix this. Greg Anderson said that he reviewed Pete Strong s report; it has been distributed to members of Council by the Council President. He said he cannot speak for his colleagues but his sense is that the Council is focused on the right thing, and that is a fully funded pension plan.

19 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 11 A motion was made by Chris Brown to accep t Pete Strong s recommendation to change the DROP valuation method as described in his DROP Interest Study, seconded by Nawal McDaniel. Discussion: Greg Anderson asked if the impact from the change in valuing the DROP would be felt in next year s budget. Pete Strong answered yes. The vote was unanimous. Chris Brown asked if OGC should look at what the Board could do to fix the DROP interest calculation method. Lawsikia Hodges said that OGC is reviewing it currently and will get back to the Board. Chairman Richard Tuten recessed the meeting for a 5 minu te break. 2. DROP Retroactive Benefits Study Pete Strong Timothy Johnson said that resulting from the new collective bargaining under the 2017 pension reform, members who entered the DROP under the 2015 pension reform changes would be retroactively adjusted back to the pre DROP with an 8.4% DROP interest rate, and a 3.0% COLA. Pete Strong said that the members who entered the DROP between 2015 and 2017 received a variable interest rate between 2% and 14.4%, based on the return earned on the Plan. He said that in 2016, the interest rate was 2%, and in 2017 it was 10%. He said that depending on when members entered the DROP, a retroactive adjustment to 8.4% could increase or decrease their balance. Pete Strong said that out of 132 members who entered the DROP, 76 would see a small reduction in their DROP balance due to the r etroactive adjustments. He said that all 132 members would see their bi-weekly DROP payment increase due to an increase in COLA to a flat 3%. He said that the total increase in actuarial liability would be about $136,000. Richard Tuten said that he has legal questions regarding w hether accrued benefits could be changed for retirees.

20 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 12 Timothy Johnson said that this study posed two questions; first, who does and does not benefit from the retroactive adjustm ents; and secondly, do members have a right to object to changing their accrued benefits? Lawsikia Hodges said that these are questions that are being looked into by OGC lawyers. She said that it would be prudent to not take any action on this until the lawyers finish their review. Pedro Herrera said that this a novel issue and that all bases need to be covered before any action is taken. 3. Holiday Bonus & Share Plan Timothy Johnson described his letters to the Police and Fire unions which inform them of the balance of the reserve accounts, communicate the anticipated amount of the chapter funds to be received from the state, and inform them that these funds will be governed by the 2015 pension reform agreement. Timothy Johnson said that since the letters were sent, approximately $10.8 million was received from the state, of which 50% was used as a credit against the City s contribution this year, and the other 50% is at the discretion of the Board. Timothy Johnson said that last year, the Board funded a $3 million Holiday Bonus paid to retirees, and funded a $2 million Share Plan for active members. He said that Richard Tuten has asked to look at a 3% Holiday Bonus this year. Timothy Johnson said that he is not confident that the unions agree to the Board s view that this year s chapter fund money is governed by the Board. Pedro Herrera said that this is a situation where the unions and the City should sign off on the Board s interpretation of how it will use the chapter funds in a memorandum of understanding (MOU). Chris Brown said that Steve Zona had contacted him requesting that the Board issue a Holiday Bonus to retirees as it had last year. Richard Tuten said that a member of the firefighter union leadershi p contacted him and said that the Holiday Bonus shoul d be paid to retirees. Richard Tuten said that the Holiday Bonus should be paid at the same rate as it was last year.

21 P O L I C E A N D F I R E P E N S I O N F U N D B O A R D O F T R U S T E E S M E E T I N G S U M M A R Y N O V E M B E R 1 6, : 0 0 A M P a g e 13 Lawsikia Hodges said that she, Mike Weinstein, Pedro Herrera, and OGC all agree that the chapter funds accrued prior to October 1 st and are the Board s responsibility. A motion was made by Chris Brown to pay the Holiday Bonus to retirees at the same rate as in December 2016, contingent upon the signing of the MOU by the union presidents before the deadline to submit the payroll for the first pay period in December, 2017, seconded by Richard Patsy. The vote was unanimous. Pete Strong suggested that a smooth actuarial value could be used for funding purposes for the Fund in order to manage volatility. He rec ommended that going forward, smoothing could be considered by the Board. XIV. NEXT SCHEDULED MEETING Friday, December 15 th, 2017 at 9:00AM XV. ADJOURNMENT Chairman Richard Tuten adjourned the meeting at 11:42AM. NOTES: Any person requiring a special accommodation to participate in the meeting because of disability shall contact Steve Lundy, Assistant Plan Administrator at (904) , at least five business days in advance of the meeting to make appropriate arrangements. If any person decides to appeal any decision made with respect to any matter considered at this public meeting such person will need a record of proceedings, and for such purpose such person may need to ensure that a verbatim record of the proceedings is made at their own expense and that such record includes the testimony and evidence on which the appeal is based. The public meeting may be continued to a date, time, and place to be specified on the record at the meeting. Additional items may be added / changed prior to meeting. SL Richard Patsy, Board Secretary To be approved at the Board of Trustees Meeting on December 15, 2017

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23 Case 3:13-cv MMH-MCR Document 125 Filed 10/13/17 Page 1 of 5 PageID 2091 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION RANDALL WYSE, JOHN LAMB, MARK ROBERTS, AND LATORRENCE NORRIS, Plaintiffs, Case No. 3:13-cv-121-J-34 MCR v. CITY OF JACKSONVILLE, and Defendant, JACKSONVILLE POLICE AND FIRE PENSION FUND BOARD OF TRUSTEES, Defendant. / JOINT STATUS REPORT AND MOTION TO REMOVE STATUS REPORT REQUIREMENT COME NOW the Parties, by and through their undersigned counsel, pursuant to the Consent Judgment [Doc. 119], and file a joint status report and move to remove the annual joint status report requirement contained in paragraph 2 (C) of the Consent Judgment [Doc. 119], and in support thereof, states: 1. On October 29, 2015, following a Joint Motion for Entry of Consent Decree, the Court entered a Consent Judgment [ Doc. 119], incorporating therein the Retirement Reform Agreement ( 2015 Agreement ) [ Doc ]. The Court, through the Consent Judgment [Doc. 119], dismissed the above-styled matter with prejudice but retained limited jurisdiction to enforce the 2015 Agreement with respect to any disputes between the parties arising from the

24 Case 3:13-cv MMH-MCR Document 125 Filed 10/13/17 Page 2 of 5 PageID 2092 Agreement s terms and conditions. The Court furthered ordered the parties to file an annual joint status report, stating: [Doc. 119, 2 (C)] Pursuant to paragraph II (F) of the Agreement, by October 15, 2016, and every twelve (12) months thereafter for the duration of the Agreement, the Parties must file a joint status report with the Court confirming their compliance with the obligation to make the unfunded liability payments set forth in paragraph III (D) on pages of the Agreement In late 2016 into early 2017, the City and the certified bargaining agents for Jacksonville s police and fire unions engaged in collective bargaining negotiations subsequently memorialized in written agreements. [Exhibit A, Ordinance E, including Agreement between City and fire union; Exhibit B, Ordinance E, including Agreement between City and police union] ( 2017 Agreements ). 3. The 2017 Agreements affected provisions of the 2015 Agreement subject to collective bargaining. Such developments resulting from collective bargaining negotiations were contemplated by the 2015 Agreement. Nothing in the 2015 Agreement shall be construed to impair the rights provided under Article 1, Section 6 of the Florida Constitution or Chapter 447, Florida Statutes. All subjects of collective bargaining, including but not limited to pension or retirement benefits, shall be subject to the requirements of Chapter 447, Florida Statutes. The City and any authorized certified bargaining agent shall have the rights under and be subject to, the provisions of Chapter 447, Florida Statutes, including, but not limited to, the requirement for negotiations, the term limitation set forth in Section (5), Florida Statutes, and the impasse process. [Doc , III (B), pp ] 1 The first joint status report in the above-styled matter was filed on October 14, 2016, in which the Parties confirmed their compliance with their obligations under the 2015 Retirement Reform Agreement. [Doc. 120] 2

25 Case 3:13-cv MMH-MCR Document 125 Filed 10/13/17 Page 3 of 5 PageID The parties to the 2017 Agreements, among other things, (i) agreed that the City no longer needed to pay the additional unfunded liability payments as set forth in the 2015 Agreement in light of a new long-term funding source identified since the 2015 Agreement, and (ii) redesignated the uses for the UALPA, CBSA, and EBA accounts administered by the Jacksonville Police and Fire Pension Fund Board that were at issue in the 2015 Agreement. Id. Now that a long-term funding solution is identified, it is agreed by the parties that the city and Police and Fire Pension Fund will no longer make the additional UAAL payments set forth in as these payment obligations were a placeholder for a long term solution to the unfunded liability. The Pension liability Surtax adopted by the State of Florida and passed by local referendum will now serve the purpose of addressing this issue. [Exhibit A, pp. 7-8 of Exh. 1; Exhibit B, p. 8 of Exh. 1] 5. Because the terms of the 2017 Agreements: (i) affect the 2015 Agreement due to collective bargaining negotiations between the City and police and fire unions, as contemplated by the 2015 Agreement, and (ii) the portions of the 2015 Agreement affected by collective bargaining could continue to be so affected as the result of future collective bargaining negotiations, the Parties respectfully request that the Court remove the requirement in paragraph 2 (C) of the Consent Judgment [Doc. 119] that the Parties file an annual joint status report. WHEREFORE, the parties respectfully request that the Court enter an order removing the requirement in paragraph 2 (C) of the Consent Judgment [Doc. 119] that the Parties file an annual joint status report. 3

26 Case 3:13-cv MMH-MCR Document 125 Filed 10/13/17 Page 4 of 5 PageID 2094 Respectfully submitted, /s/ Paul A. Donnelly PAUL A. DONNELLY Florida Bar No.: paul@donnellygross.com JAMES SULLIVAN Florida Bar No.: sully@donnellygross.com Donnelly & Gross, P.A NW 41 st Street, Suite A-1 Gainesville, FL Telephone: (352) Facsimile: (352) Counsel for Plaintiffs /s/ Christopher M. Garrett CHRISTOPHER M. GARRETT ASSISTANT GENERAL COUNSEL Florida Bar No.: CRAIG D. FEISER ASSISTANT GENERAL COUNSEL Florida Bar No.: MICHAEL B. WEDNER SENIOR ASSISTANT GENERAL COUNSEL Florida Bar No.: GarrettC@coj.net CFeiser@coj.net MWedner@coj.net Office of General Counsel 117 West Duval Street, Suite 480 Jacksonville, FL (904) (904) (facsimile) Attorneys for City of Jacksonville /s/ Rita M. Mairs JON R. PHILLIPS DEPUTY GENERAL COUNSEL Florida Bar No.: RITA M. MAIRS CHIEF, ASSISTANT GENERAL COUNSEL Florida Bar No.: JPhillips@coj.net MairsR@coj.net Office of General Counsel 117 West Duval Street, Suite 480 Jacksonville, FL (904) (904) (facsimile) Attorneys for PFPF Board 4

27 Case 3:13-cv MMH-MCR Document 125 Filed 10/13/17 Page 5 of 5 PageID 2095 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 12 th day of October, 2017, I filed the foregoing with the Clerk of the Court by using the CM/ECF system which will automatically send a notice to all counsel of record. /s/ Rita M. Mairs ATTORNEY 5

28 Case 3:13-cv MMH-MCR Document 126 Filed 11/13/17 Page 1 of 2 PageID 2140 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION RANDALL WYSE, MARK ROBERTS, LATORRENCE NORRIS, and JOHN LAMB, Plaintiffs, Case No.: 3:13-cv-121-J-34MCR v. CITY OF JACKSONVILLE, and Defendant, JACKSONVILLE POLICE AND FIRE PENSION FUND BOARD OF TRUSTEES, Defendant. / ORDER THIS CAUSE is before the Court on the Joint Status Report and Motion to Remove Status Report Requirement (Dkt. No. 125; Motion) filed on October 13, In the Motion, the parties request that the Court remove the annual joint status report requirement set forth in the Consent Judgment. See Motion at 1. No objections to this request have been filed. Accordingly, it is ORDERED: 1. The Joint Status Report and Motion to Remove Status Report Requirement (Dkt. No. 125) is GRANTED.

29 Case 3:13-cv MMH-MCR Document 126 Filed 11/13/17 Page 2 of 2 PageID The annual joint status report requirement set forth in the Consent Judgment (Dkt. No. 119) is REMOVED. DONE AND ORDERED in Jacksonville, Florida this 13th day of November, ja Copies to: Counsel of Record - 2 -

30 MEMORANDUM To: From: Tim Johnson, Executive Director Police and Fire Pension Fund Board of Trustees Jim McCain, Assistant General Counsel, Office of General Counsel Re: Date: November 21, 2017 Please find attached a copy of Ordinance , a proposal to amend Sections 120 (Corrections Officers Retirement Plan) and 121 (Police and Firefighters Pension Fund), Ordinance Code, to add three positions (chaplain, stable manager, and corrections officer mail coordinator) to the list of Sheriff s Office jobs that can be held by retired police and correctional officers without those retirees having their pension payments suspended and their becoming active members of the pension again during the term of their reemployment. Pursuant to Section , Ordinance Code, Ordinance is being forwarded to the Police and Fire Pension Fund Board of Trustees. This legislation is currently being considered by City Council. The City Council has scheduled a public hearing for the proposed legislation on November 28, Please forward any comments to the legislation to City Council. Thanking you in advance.

31 1 Introduced by the Council President at the request of the Sheriff: ORDINANCE AN ORDINANCE AMENDING CHAPTER 120 (GENERAL EMPLOYEES AND CORRECTION OFFICER PENSION PLANS AND ALL EMPLOYEES DEFINED CONTRIBUTION RETIREMENT PLANS), PART III (CORRECTIONS OFFICERS RETIREMENT PLAN), SECTION (VESTING, TERMINATION, AND RE-EMPLOYMENT), AND CHAPTER 121 (POLICE AND FIREFIGHTERS PENSION PLAN), PART 1 (POLICE AND FIREFIGHTERS PENSION FUND ADMINISTRATION) SECTION (PENSIONER S RIGHTS UPON REEMPLOYMENT BY CITY), ORDINANCE CODE; PROVIDING AN EFFECTIVE DATE BE IT ORDAINED by the Council of the City of Jacksonville: 19 Section 1. Amending Section , Ordinance Code Section (Vesting, Termination, and Re-employment), Part III (Corrections Officers Retirement Plan), Chapter 120 (General Employees and Correction Officer Pension Plans and All Employees Defined Contribution Retirement Plans), Ordinance Code, is hereby amended to read as follows: CHAPTER 120. GENERAL EMPLOYEES AND CORRECTION OFFICER PENSION PLANS AND ALL EMPLOYEES DEFINED CONTRIBUTION RETIREMENT PLANS. * * * PART III. CORRECTIONS OFFICERS RETIREMENT PLAN * * *

32 1 Section Vesting, Termination, and Re-employment. 2 (a) Except as otherwise provided in this section, all rights to benefits under this Plan shall terminate when a member s employment terminates for any reason other than normal service retirement or disability retirement. Any member who completes five years of credited service and whose contributions remain in the Plan has a vested right to accrued benefits from the System. No member who has completed less than five years of credited service shall have a vested interest in any accrued benefit. 11 (b) A member who leaves the service of the City prior to eligibility for normal service retirement, but who has completed five years of creditable service, shall be entitled to receive retirement benefits commencing at age 65 at a three percent accrual rate for each year of creditable service. Such benefits will be based on final monthly compensation and credited service as of the date of termination. 18 (c) Except as set forth in subsection (d), iif a retiree or separated vested member re-enters City service in a position covered by this Plan, benefit payments shall cease and the retiree or separated vested member shall again become an active member of the Plan. Upon subsequent retirement, the new pension benefit shall be computed with the original final monthly compensation and credit given for the additional service at the percentage accrual rate provided in Section (b). For periods of re-employment equal to or greater than four years, the final monthly compensation shall be computed based on the average monthly salary at the percentage rate provided in Section (b). In no instance shall total benefit exceed 80 percent of final monthly compensation. 2

33 1 2 This section shall not apply to retired members rehired as poll workers. 3 (d) The provisions of subsection (c) shall not apply to any retiree of this Corrections Officers Retirement Plan employed in a full-time, part-time, or temporary capacity by the City or any of its officers as (i) court bailiff, (ii) logistical and technical support officer, (iii) corrections bond custodian, (iv) chaplain, (v) stable manager, (vi) corrections mail coordinator, (vii) aviation supervisor, (viii) court bailiff supervisor, or (ix) inmate work crew supervisor. Being employed in one of the positions identified in this subsection (d) shall not prevent a retiree of this Plan from continuing to receive such retirement benefits as would be available had the retiree not begun employment in one of the previously-mentioned positions. Being employed in one of the positions identified in this subsection (d) shall not permit nor require a retiree of this Plan to be a member of one of the pension plans created by Part II or III of this Chapter or a member of the pension plan created pursuant to Chapter 121. Being employed in one of the positions identified in this subsection (d) shall not permit a retiree to acquire any time service credit in any one of the pension plans created by Part II or III of this Chapter or created pursuant to Chapter 121.Notwithstanding any other law or ordinance to the contrary, any correctional officer retiree of the Corrections Officers Retirement Plan, who otherwise qualifies, may be re-employed by the Office of the Sheriff as a Temporary Part-Time Court Bailiff or a Logistical and Technical Support Officer without loss of retirement benefits from the Corrections Officers Retirement Plan because of such reemployment. Under no circumstances can any such retiree 3

34 1 2 acquire time service credit during such employment for the Corrections Officers Retirement Plan. 3 4 Section 2. Amending Section , Ordinance Code Section (Pensioner s rights upon reemployment by City), Part 1 (Police and Fire Pension Fund Administration) of Chapter 121 (Police and Firefighters Pension Plan), Ordinance Code, is hereby amended to read as follows: CHAPTER 121. POLICE AND FIREFIGHTERS PENSION PLAN. PART 1. POLICE AND FIRE PENSION FUND ADMINISTRATION Section Pensioner s rights upon reemployment by City. (a) Except as otherwise provided in this Section,Notwithstanding any provisions to the contrary contained in Laws of Fla. Ch (1937), as amended, or Laws of Fla. Ch (1945), as amended, any pensioner of the pension funds created by this Chapter these acts who is retired or elects to retire under the provisions of his respective fund for time-service retirement or vested retirement and who has been or is thereafter reemployed by the City shall cease to receive his or her pension or pension entitlement during such period of reemployment, except as further provided by this Section. The pensioner upon reemployment including appointed positions, shall be required to join the applicable pension fund and make the required contribution payments into the fund and shall be entitled to the benefits of the fund, except for participation in the DROP Plan as created in Section for those reemployed Members who were former DROP participants, during his or her period of reemployment not inconsistent 4

35 with the intent of this Section. (b) A pensioner of this Chapter the pension funds listed in subsection (a) of this Section who has been reemployed by the City for a continuous period of at least four years shall be entitled to receive time-service credit in whatever increased pension benefits as are provided for under the pension fund for his or her former period of employment by the City as if such former period of employment and the period which he or she served upon reemployment were continuous or consecutive years; provided, that the computation of such reemployed pensioner s retirement benefit entitlement shall be based on the average monthly salary he or she received over the last five years of his or her employment by the City; and further provided, that, in the event a pensioner is reemployed by the City in a position which requires that he become a member of pension fund other than the one from which he or she retired and such pensioner elects to receive the additional benefits provided by this Section, the retirement benefits payable to such pensioner upon subsequent retirement from the City shall be prorated between the respective pension funds to which the pensioner contributed during his periods of employment with the City. (c) Application for the time service-service credit and increased benefits provided for in this Section shall be made to the Board pursuant to the rules and regulations promulgated by it for the administration of this Section. (d) The provisions of subsections (a) through (c) shall not apply to any retiree of the Jacksonville Police and Fire Pension Fund employed in a full-time, part-time, or 5

36 temporary capacity by the City or any of its officers as (i) court bailiff, (ii) logistical and technical support officer, (iii) corrections bond custodian, (iv) chaplain, (v) stable manager, (vi) corrections mail coordinator, (vii) aviation supervisor, (viii) court bailiff supervisor, or (ix) inmate work crew supervisor. Being employed in one of the positions identified in this subsection (d) shall not prevent a retiree of this plan from continuing to receive such retirement benefits as would be available had the retiree not begun employment in one of the previously-mentioned positions. Being employed in one of the positions identified in this subsection (d) shall not permit or require a retiree of this plan to be a member of the pension plan created pursuant to this Chapter 121 or a member of one of the pension plans created by Part II or III of Chapter 120. Being employed in one of the positions identified in this subsection (d) shall not permit a retiree to acquire any time-service credit in the pension plan created pursuant to this Chapter 121 or in any one of the pension plans created by Part II or III of Chapter 120. Notwithstanding the provisions of any other law or ordinance to the contrary, any retiree under the City of Jacksonville s Police and Fire Pension Plan, who otherwise qualifies, may be re-employed by the Office of the Sheriff or the City in a full or part-time capacity as a Temporary Part Time Court Bailiff or a Logistical and Technical Support Officer, Corrections Mail Coordinator, Aviation Supervisor, Court bailiff Supervisor, or Corrections Bond Custodian, without loss of and with the continued payment of retirement benefits from the Police and Fire or 6

37 Corrections Pension Funds because of such employment. Under no circumstances can any such retiree acquire timeservice credit during such employment for the Police and Fire Pension Fund or any other City Pension Fund Section 3. Effective. This ordinance shall become effective upon signature by the Mayor or upon becoming effective without the Mayor s signature Form Approved: /s/ James R. McCain, Jr. Office of General Counsel Legislation prepared by: James R. McCain, Jr. GC-# v2-10_09_17_JSO_Chapters120_121_Amend.doc 7

38 December 7, 2017 Mr. Timothy Johnson Executive Director Jacksonville Police and Fire Pension Fund One West Adams Street, Suite 100 Jacksonville, FL Re: Jacksonville Police and Fire Pension Fund Dear Tim: We have reviewed the proposed Ordinance which amends Section , Pensioner s rights upon reemployment by City under Part 1, Police and Fire Pension Fund Administration, of the City s Code of Ordinances with regard to the Jacksonville Police and Firefighters Pension Fund. This Ordinance introduces to Section a subsection (d) to allow retirees who are re employed as either a court bailiff, logistical and technical support officer, corrections bond custodian, chaplain, stable manager, corrections mail coordinator, aviation supervisor, court bailiff supervisor or inmate work crew supervisor, to continue to receive retirement benefits as would be available to the retiree who had not begun re employment in one of the mentioned positions. Such retirees shall not enter or be permitted to acquire additional time service credit in any of the City s pension plans during re employment. In our opinion, these proposed changes would have no actuarial impact on the current cost of the Plan. Therefore it is our opinion that a formal Actuarial Impact Statement is not required. However, we recommend that you send a copy of this letter and the Ordinance to the Bureau of Local Retirement Systems before the final public hearing on the Ordinance. Peter N. Strong is a member of the American Academy of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The undersigned actuary is independent of the plan sponsor. If there are any questions, please let us know. Respectfully submitted, Peter N. Strong, FSA, EA, MAAA Senior Consultant and Actuary The above communication shall not be construed to provide tax advice, legal advice or investment advice.

39

40 City of Jacksonville Police & Fire Pension Fund Flash Report November 30, 2017

41 2.24% 3.18% City of Jacksonville Police & Fire Pension Fund Asset Allocation vs. Target Allocation November 30, 2017 US Equity 2.89% US Equity % International Equity 2.61% International Equity Core Fixed % Core Fixed Core Plus 0.29% Core Plus 0.52% Senior Bank Notes 0.00% Senior Bank Notes 0.01% Real Estate % Real Estate % MLPs/Energy % MLPs/Energy % Cash % Cash % % % % 0.00% 2.00% 4.00% 6.00% % % % 0.00% 2.00% 4.00% 6.00% Allocation Differences Allocation Differences November 30, 2017 Market Value ($) Allocation (%) Target (%) US Equity 803,504, International Equity 433,673, Core Fixed 74,676, Core Plus 302,913, Senior Bank Notes Real Estate 206,519, MLPs/Energy 96,464, Cash 366, Total Fund 1,918,120, August 31, 2017 Market Value ($) Allocation (%) Target (%) US Equity 716,229, International Equity 434,097, Core Fixed 116,927, Core Plus 299,951, Senior Bank Notes 119, Real Estate 203,237, MLPs/Energy 101,522, Cash 279, Total Fund 1,872,364,

42 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year 15 Year Total Fund 1,918,120, Apr Total Fund Policy Excess Return Total Equity 1,237,178, Jun US Equity 803,504, Jan US Equity Index Excess Return International Equity 433,673, Feb International Equity Index Excess Return Fixed Income 377,590, Jan Fixed Income Index Excess Return Real Estate 206,519, Apr NCREIF Fund Index - ODCE (VW) [M] Excess Return NCREIF Property Index Jan MLPs/Energy 96,464, Mar S&P MLP Index Excess Return Cash 366, Dec Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Gross of Fees November 30,

43 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year 15 Year Total Fund 1,918,120, Apr Total Fund Policy Excess Return Total Equity 1,237,178, Jun US Equity 803,504, Jan US Equity Index Excess Return International Equity 433,673, Feb International Equity Index Excess Return Fixed Income 377,590, Jan Fixed Income Index Excess Return Real Estate 206,519, Apr NCREIF Fund Index - ODCE (VW) [M] Excess Return NCREIF Property Index Jan MLPs/Energy 96,464, Mar S&P MLP Index Excess Return Cash 366, Dec Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Net of Fees November 30,

44 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year Eagle Capital Management 216,136, Apr Russell 1000 Value Index Excess Return Loomis Sayles 99,771, Sep Russell 1000 Growth Index Excess Return Sawgrass Asset Management 101,324, Nov Russell 1000 Growth Index Excess Return Pinnacle 87,147, Mar Russell 2500 Growth Index Excess Return Wedge Capital Mgmt 78,619, Sep Russell 2000 Value Index Excess Return Silchester 157,046, Aug MSCI EAFE Value Index (Net) Excess Return Baillie Gifford 149,062, Mar MSCI EAFE Growth Index (Net) Excess Return Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Gross of Fees November 30, 2017 US Equity NT S&P 500 Index Fund 220,492, Jan S&P Excess Return Brown Investment Advisory 12, International Equity NT EAFE Index Fund 1,344, Apr MSCI EAFE Index (Net) Excess Return

45 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year Acadian Emerging Mkts Equity II Fund 126,219, Jan MSCI Emerging Markets (Net) Excess Return Neuberger Berman 176,715, Jan Blmbg. Barc. U.S. Aggregate Excess Return Loomis, Sayles & Company 126,198, Feb Blmbg. Barc. U.S. Aggregate Excess Return Thompson Siegel Fixed 73,842, Aug Thompson Policy Index Excess Return Principal Global Investments 50,043, Apr NCREIF Property Index Excess Return Tortoise MLP 48,363, Mar S&P MLP Index Excess Return Cash 366, Dec Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Gross of Fees November 30, 2017 Fixed Income NTGI Aggregate Bond Index 834, Feb Blmbg. Barc. U.S. Aggregate Excess Return Eaton Vance Instl Senior Loan Trust Real Estate JP Morgan 156,476, Apr NCREIF Fund Index-ODCE (VW) [M] Excess Return MLPs/Energy Harvest MLP 48,100, Mar S&P MLP Index Excess Return Total Fund 1,918,120,

46 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year Eagle Capital Management 216,136, Apr Russell 1000 Value Index Excess Return Loomis Sayles 99,771, Sep Russell 1000 Growth Index Excess Return Sawgrass Asset Management 101,324, Nov Russell 1000 Growth Index Excess Return Pinnacle 87,147, Mar Russell 2500 Growth Index Excess Return Wedge Capital Mgmt 78,619, Sep Russell 2000 Value Index Excess Return Silchester 157,046, Sep MSCI EAFE Value Index (Net) Excess Return Baillie Gifford 149,062, Mar MSCI EAFE Growth Index (Net) Excess Return Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Net of Fees November 30, 2017 US Equity NT S&P 500 Index Fund 220,492, Jan S&P Excess Return Brown Investment Advisory 12, International Equity NT EAFE Index Fund 1,344, Apr MSCI EAFE Index (Net) Excess Return

47 Asset $ Asset % 1 Month 3 Month CYTD FYTD 1 Year 3 Year 5 Year 10 Year Acadian Emerging Mkts Equity II Fund 126,219, Jan MSCI Emerging Markets (Net) Excess Return Neuberger Berman 176,715, Jan Blmbg. Barc. U.S. Aggregate Excess Return Loomis, Sayles & Company 126,198, Feb Blmbg. Barc. U.S. Aggregate Excess Return Thompson Siegel Fixed 73,842, Aug Thompson Policy Index Excess Return Principal Global Investments 50,043, Apr NCREIF Fund Index - ODCE (VW) [M] Excess Return Tortoise MLP 48,363, Mar S&P MLP Index Excess Return Cash 366, Dec Since Inception Inception Date City of Jacksonville Police & Fire Pension Fund Asset Allocation & Performance Net of Fees November 30, 2017 Fixed Income NTGI Aggregate Bond Index 834, Feb Blmbg. Barc. U.S. Aggregate Excess Return Eaton Vance Instl Senior Loan Trust Real Estate JP Morgan 156,476, Apr NCREIF Fund Index - ODCE (VW) [M] Excess Return MLPs/Energy Harvest MLP 48,100, Mar S&P MLP Index Excess Return Total Fund 1,918,120,

48 City of Jacksonville Police & Fire Pension Fund Asset Allocation Compliance November 30, 2017 Target % Actual % Total Fund ,918,120,228 1,918,120,228 - Total Equity ,131,690,935 1,237,178,238 (105,487,303) US Equity ,066, ,504,803 (55,437,914) Large Cap ,289, ,737,778 (35,448,026) Large Cap Core ,484, ,492,596 (21,008,092) NT S&P 500 Index Fund ,484, ,492,596 (21,008,092) Large Cap Value ,402, ,136,611 (14,733,987) Eagle Capital Management ,402, ,136,611 (14,733,987) Large Cap Growth (0.02 ) 201,402, ,108, ,053 Brown Investment Advisory ,884 (12,884) Loomis Sayles (0.05 ) 100,701,312 99,771, ,914 Sawgrass Asset Management ,701, ,324,289 (622,977) Non Large Cap ,777, ,767,026 (19,989,888) Wedge Capital Mgmt ,888,569 78,619,380 (5,730,811) Pinnacle ,888,569 87,147,646 (14,259,077) International Equity ,624, ,673,435 (50,049,389) International Developed Markets ,536, ,453,708 (38,916,876) NT EAFE Index Fund (0.93 ) 19,181,202 1,344,433 17,836,770 Baillie Gifford ,233, ,062,300 (60,828,769) Silchester (0.21 ) 161,122, ,046,976 4,075,123 International Emerging Markets ,087, ,219,726 (11,132,513) Acadian Emerging Mkts Equity II Fund ,087, ,219,726 (11,132,513) Fixed Income ,033, ,590,912 (3,557,468) Core Fixed Income (0.11 ) 76,724,809 74,676,946 2,047,863 NTGI Aggregate Bond Index (0.96 ) 19,181, ,565 18,346,637 Thompson Siegel Fixed ,543,607 73,842,381 (16,298,774) Core Plus ,308, ,913,864 (5,605,228) Neuberger Berman (0.09 ) 178,385, ,715,162 1,670,019 Loomis, Sayles & Company ,923, ,198,702 (7,275,248) Senior Bank Notes (103) Eaton Vance Instl Senior Loan Trust (103) Real Estate (4.23 ) 287,718, ,519,802 81,198,233 Real Estate excluding Haverty & Admin (4.23 ) 287,718, ,519,802 81,198,233 JP Morgan ,906, ,476,179 (60,570,168) Principal Global Investments (2.39 ) 95,906,011 50,043,622 45,862,389 Non Core Real Estae [TBD] (5.00 ) 95,906,011-95,906,011 Total Alternatives Composite (0.47 ) 105,496,613 96,464,317 9,032,296 MLP's/Energy (0.47 ) 105,496,613 96,464,317 9,032,296 Tortoise MLP (0.23 ) 52,748,306 48,363,887 4,384,419 Harvest MLP (0.24 ) 52,748,306 48,100,429 4,647,877 Cash (0.98 ) 19,181, ,960 18,814,242 Difference % Target ($) Actual ($) Difference ($) 8

49 City of Jacksonville Police & Fire Pension Fund Historical Hybrid Composition As of November 30, 2017 Total Fund Policy (%) Jan-2017 Russell 3000 Index MSCI AC World ex USA (Net) Blmbg. Barc. U.S. Aggregate 4.00 Blmbg. Barc. U.S. Universal Index NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 5.50 Citigroup 3 Month T-Bill 1.00 Sep-2016 Russell 3000 Index MSCI AC World ex USA (Net) Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 5.50 Citigroup 3 Month T-Bill 1.00 Mar-2016 Russell 3000 Index MSCI AC World ex USA (Net) Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 5.50 Mar-2013 Russell 3000 Index MSCI AC World ex USA (Net) Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 7.50 (%) Apr-2012 Russell 3000 Index MSCI AC World ex USA (Net) Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 5.00 Jun-2011 Russell 3000 Index MSCI EAFE Index Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] S&P MLP Index 5.00 Jul-2009 Russell 3000 Index MSCI EAFE Index Blmbg. Barc. U.S. Aggregate NCREIF Fund Index-ODCE (VW) [M] Oct-2008 Dow Jones US Total Stock Market Index MSCI EAFE Index BofA Merrill Lynch Gov Corp Master NCREIF Fund Index-ODCE (VW) [M] Apr-1989 Dow Jones US Total Stock Market Index MSCI EAFE Index BofA Merrill Lynch Gov Corp Master NCREIF Fund Index-ODCE (VW) [M] 5.00 US Equity Index (%) Jul-2009 Russell 3000 Index Jan-1988 Dow Jones US Total Stock Market Index International Equity Index (%) Oct-2009 MSCI AC World ex USA Feb-1999 MSCI EAFE Index Fixed Income Index (%) Jan-2017 Blmbg. Barc. U.S. Aggregate Blmbg. Barc. U.S. Universal Index Jan-1976 Blmbg. Barc. U.S. Aggregate Thompson Policy Index (%) Oct-2009 Blmbg. Barc. U.S. Aggregate Dec-1975 BofA Merrill Lynch Gov Corp Master

50 Summit Strategies Group (Summit) has prepared this report for the exclusive use by the client for which it was prepared. The information herein was obtained from various sources, such as the client's custodian(s) accounting statements, commercially available databases, and other economic and financial market data sources. While Summit believes these sources to be reliable, Summit does not guarantee nor shall be liable for the market values, returns, or other information contained in this report. The market commentary, portfolio holdings, and characteristics are as of the date shown and are subject to change. Past performance is not an indication of future performance. No graph, chart, or formula can, in and of itself, be used to determine which securities or investments to buy or sell. Any forward-looking projection contained herein is based on assumptions that Summit believes may be reasonable, but are subject to a wide range of risks, uncertainties, and the possibility of loss. Accordingly, there is no assurance that any estimated performance figures will occur in the amounts and during the periods indicated, or at all. Actual results and performance will differ from those expressed or implied by such forward-looking projections. Any information contained in this report is for informational purposes only and should not be construed to be an offer to buy or sell any securities, investment consulting, or investment management services. DISCLAIMER 10

51 Economic and Capital Market Update November 2017

52 Oct-69 Oct-73 Oct-77 Oct-81 Oct-85 Oct-89 Oct-93 Oct-97 Oct-01 Oct-05 Oct-09 Oct-13 Oct % 2.9% 2.9% 2.6% +2 bps November 30, 2017 Economic Perspective Economy Global economic data released during November continued to reflect strength across all major regions. As a result, the International Monetary Fund recently increased its global growth forecasts for 2017 and 2018 by 10 bps to 3.6% and 3.7%, respectively. While the revisions are modest, they mark a notable increase from 2016 s 3.2% growth rate. Equity markets have reacted to strong 2017 earnings and rising global growth forecasts; MSCI ACWI IMI gained 2.0% in November and is up 22.0% year-to-date. US employers added 228,000 jobs in November and the unemployment rate was unchanged at 4.1%, matching its lowest level since December The US economy has experienced positive job growth for 86 consecutive months, the longest streak since labor market data collection began in the 1940s. Wage growth, as measured by the change in employees average hourly earnings, was 2.5% over the 12 months ending in November compared to 2.4% in October. Real GDP in the US grew at a 3.3% annualized rate during the third quarter of 2017, according to the second estimate released by the Bureau of Economic Analysis. If the BEA s upcoming final estimate of third quarter GDP remains above 3%, it would mark back-to-back quarters of 3% growth for the first time since Continued strong household demand, rising business investment, and increased exports stemming from strong global growth have contributed to the rise in GDP in recent quarters. Purchasing Managers Indices (PMI) remain at high levels, suggesting increased activity in both the service and manufacturing sectors of the US and global economy. The US ISM Manufacturing PMI decreased 0.5 points in November to 58.2; an Index reading over 50 indicates expansion in the sector. Manufacturing has now been a boost to US growth for 15 consecutive months. The Non-Manufacturing (or services) PMI also continues to reflect strength, declining 2.7 points in November to 57.4 from its nineyear high in October. US services have expanded 95 consecutive months. Global PMI levels have also been consistently high in 2017, reflecting the broad-based pickup in global economic activity. Yield Curve The spread between 2-year and 30-year Treasuries tightened 24 bps to 104 bps in November, declining to its lowest level since October Over the past two years, the 2-30 spread has tightened by 92 bps; long-term yields have declined despite stronger US growth, while short-term yields have been lifted by Federal Reserve rate hikes. The 20-year average spread between 2-year and 30-year Treasuries is 192 bps. 12% 10% 8% 6% 4% 2% 0% 4% 3% 2% 1% 0% -1% Source: Bloomberg. 2.0% 1.9% 1.3% 2.4% 2.3% 1.8% +8 bps +5 bps Unemployment Rate Treasury Yield Curve Years to Maturity November 30, 2017 October 31, 2017 November 30, 2016 Monthly Change Summit Strategies Group

53 2 November 30, 2017 Growth Assets Public Equities Global equity markets gained once again in November, led by the US on rising optimism surrounding tax reform. MSCI ACWI IMI extended its streak of consecutive monthly gains to 13, the longest since the inception of the Index in As the growth style has continued to outperform value, growth performance and valuations relative to value are now at levels last seen prior to the Tech Bubble in the early 2000s. Master limited partnerships (MLPs) declined modestly, due in part to outflows from year-end tax-loss selling. Distributions have remained strong in 2017, contributing over 7% to total returns, but have not been able to offset price declines. Year-to-date, distribution yields have increased 100 bps to 8.1%. Public Debt High yield bond spreads widened by 6 bps during the month, ending at 344 bps. Despite widening during the month, spreads for the broader high yield index have tightened by 65 bps year-to-date and remain near post-crisis lows. Local currency-denominated emerging market debt returned 1.7% in November, with currency serving as a tailwind of 1.4% and rates contributing 0.3%. EM local currencydenominated bonds ended November yielding 6.2%. Private Assets Fundraising slowed in Q3 2017, as Preqin estimated total commitments of $96M versus $137M the quarter prior. However, of note is that Apollo Global Management raised the largest private equity fund in history at $25 billion in total commitments, indicative of the ongoing frothy environment for private equity. This increase in capital has caused LBO purchase price multiples to rise above 10x EBITDA, following a slight decline in Leverage multiples have increased to over 5.5x EBITDA in 2017, following a decline in We continue to see robust demand for private debt funds, as momentum increased in Q This ongoing demand from investors has helped support higher leverage levels and kept a ceiling in place for average loan spreads. Hedge Funds Risk parity gains in October were driven by equities and commodities. No asset classes were major detractors. The largest gains across the growth hedge fund universe continue to come from long/short equity, which has been supported by a rising equity market. During October growth hedge funds in aggregate gained 1.1%. MSCI ACWI IMI S&P 500 Russell 3000 Russell 1000 Russell 1000 Value Russell 1000 Growth Russell 2000 Russell 2000 Value Russell 2000 Growth MSCI ACWI ex US MSCI EAFE MSCI EAFE Small MSCI EM Alerian MLP Blmbg. Barc. High Yield JPM GBI-EM Global Div. *Risk Parity *HFRI Equity Hedge 1 Month 3 Months 1 Year 2.0% 6.3% 24.6% 3.1% 7.6% 22.9% 3.0% 7.9% 22.3% 3.0% 7.7% 22.6% 3.1% 6.9% 14.8% 3.0% 2.9% 2.9% 2.9% 8.4% 30.8% 10.2% 18.3% 10.3% 13.4% 10.2% 23.7% 0.8% 4.6% 27.6% 1.0% 5.1% 27.3% 1.6% 6.2% 33.3% 0.2% 3.3% 32.8% -1.4% -4.8% -6.8% -0.3% 1.1% 9.2% 1.7% -1.5% 15.0% 2.5% 4.0% 10.9% 1.1% 3.2% 13.2% -20% -10% 0% 10% 20% 30% 40% *Data was not available at time of publication returns are previous month s. All returns are USD. Summit Strategies Group

54 -5% 0% 5% 10% *Data was not available at time of publication returns are previous month s. All returns are USD. 0.1% 0.0% 0.1% 1.1% 0.1% 1.2% N/A 0.9% 1.9% 1.6% 2.1% 2.1% 2.3% 3.2% 3.9% 3.7% 5.0% 5.1% 6.2% 6.0% 1 Month 3 Months 1 Year 6.5% 6.7% 9.2% November 30, 2017 Income Assets Public Debt The yield curve continued to flatten during November, with the 2 s-10 s curve flattening by a further 15 bps and ending the month at 63 bps. There was further flattening along the longer end of the curve, with the 30-year key rate being the only key rate to decrease in yield during the month. The 10-year US Treasury yield ended November at 2.4%, up 3 basis points from October. At the end of November, the fed fund futures market implied a 96% probability of a rate hike by the Federal Reserve at its upcoming December meeting. The Bloomberg Barclays US Aggregate returned -0.1% in November, bringing year-todate returns to 3.1%. Corporates were the best-performing sector in the Index, with long-duration issues outperforming the short-duration sector as rates fell along the long end of the curve. The Bloomberg Barclays Global Aggregate returned 1.1% for the month of November. Currency was the primary driver of performance, adding 1.0%, while principal detracted 0.1% and coupon payments added 0.2%. Public bank loans, as measured by the Credit Suisse Leveraged Loan Index, returned 0.1%. Three-year discount margins increased by 4 bps, ending the month at 421 bps. Relative Value Hedge Funds Relative value hedge funds gained in October, led by equity market neutral strategies. Convertible arbitrage also contributed, while volatility arbitrage was flat. There were no detractors at the strategy level for the quarter. Core Real Estate Core real estate returns for the third quarter of 2017 were 1.9% gross and 1.6% net, bringing the one-year gain for core funds to 6.7%. Strong but declining gains in the commercial real estate market have been supported by the US cyclical expansion, with strong labor market growth fueling demand while supply remains limited. In recent quarters price appreciation has slowed compared to prior in the expansion, with a larger percentage of real estate gains now being generated through income. Blmbg. Barc. US Aggregate Blmbg. Barc. US Universal Blmbg. Barc. US Government Blmbg. Barc. US Govt/Credit Blmbg. Barc. US Corporate Blmbg. Barc. US MBS Blmbg. Barc. US Credit Blmbg. Barc. Global Aggregate Blmbg. Barc. Global Agg. ex US Credit Suisse Leveraged Loans *HFRI Equity Market Neutral -0.1% -0.5% -0.2% -0.4% -0.1% -1.1% -0.1% -0.6% -0.1% -0.1% -0.4% -0.1% -0.2% *NCREIF ODCE Summit Strategies Group 3

55 -1.1% -0.1% -0.3% -1.0% -0.3% 0.1% 0.09% 0.27% 2.0% 1.1% 1.9% 0.77% 4.1% -10% -5% 0% 5% 10% *Data was not available at time of publication returns are previous month s. All returns are USD. 4 November 30, 2017 Diversification Assets Inflation TIPS showed modest gains during November, returning 0.1%. Ten-year inflation expectations remained flat during the month, and have declined 9 bps since the beginning of 2017 to 1.9%. Despite increasing economic growth and continued tightening in the labor market, financial markets are implying that the Federal Reserve will be unable to reach its 2.0% inflation target over the next ten years. Deflation The Bloomberg Barclays Long Treasury Index returned 0.7%, with both the coupon and principal contributing to returns during the month. Rates at the long end of the curve fell, with the 30-year Treasury yield declining 5 bps to end the month yielding 2.8%. Blmbg. Barc. US TIPS Blmbg. Barc. US Treasury Blmbg. Barc. Int. Treasury 1 Month 3 Months 1 Year Commodities The Bloomberg Commodity Index returned -0.5% despite strong performance from energy and soft commodities. Oil prices rose 5.6% for the month, due in part to OPEC s agreement to extend production cuts from March 2018 to December Copper and other industrial metals were the main detractors for the month, declining on concerns of Chinese demand in Over the trailing twelve months, the Bloomberg Commodity Index has returned 0.5%; industrial metals and precious metals have been the largest contributors to commodity gains over the trailing year, in addition to oil s 16.1% increase. Tactical Trading Tactical trading hedge funds gained in October, led by strong gains in trend following CTA strategies. Discretionary global macro also contributed. 0.7% Blmbg. Barc. Long Treasury -1.5% 6.1% -0.5% Bloomberg Commodity 1.5% 0.5% 5.0% *CS Managed Futures HF 5.0% 0.1% 0.8% *CS Global Macro HF 1.3% 90 Day US T-Bill Summit Strategies Group

56 Summit has prepared this presentation for the exclusive use of its intended audience. Any information contained in this report is for information purposes only and should not be construed to be an offer to buy or sell any securities, investment consulting, or investment management. The information herein was obtained from various sources, which Summit believes to be reliable. Summit cannot assure the accuracy of any third-party-generated numbers. Past performance is no guarantee of future results, and no graph, chart, or formula can, in and of itself, be used to determine which managers or investments to buy or sell. Any forward-looking projection contained herein is based on assumptions that Summit believes is reasonable, but which are subject to a wide range of risks, uncertainties, and the possibility of loss. Actual results and performance will differ from those expressed or implied by such forwardlooking projections. This report may contain opinions developed by Summit. Summit does not guarantee the accuracy or completeness of the information contained in this report. The opinions, market commentary, portfolio holdings, and characteristics are as of the date(s) shown and subject to change. Private investments and hedge funds are subject to less regulation than other types of pooled vehicles. Alternative investments may involve a substantial degree of additional risk, including the risk of total loss of an investor s capital and lack of liquidity, and therefore may not be appropriate for all investors. Clients should review the Offering Memorandum, the Subscription Agreement, and any other applicable documents prior to investing. Summit does not provide legal or accounting advice. Clients should consult with their own legal advisor and/or accountant on these opportunities, including the review of any Subscription Document, Offering Memorandum, or Partnership Agreement. Summary statistical data such as standard deviation (risk), Sharpe ratio, and tracking error is calculated using industry-standard methodology. Details regarding these calculations are available upon request. 5 November 30, 2017 Disclosures 2017 Summit Strategies Group. All rights reserved. Summit Strategies Group

57 Summit Strategies Group 8182 Maryland Avenue, 6th Floor St. Louis, Missouri City of Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution December 8, 2017

58 Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution INVESTMENT OPTIONS Hold in Cash Maintain ~6% Allocation to cash ($113 million) Motivations Protracted rally in financial assets this is an opportunity to lower risk asset allocations Cash allocation would provide dry powder in the case of a market correction Willing to cede upside to protect capital in this environment Cash Reserve and Deploy to Eligible Managers Maintain a $5 million cash reserve Deploy $108 million to pro rata available managers Motivations While valuations may be elevated, giving up the opportunity cost may be unattractive The Plan has a long time horizon and the ability to recover in the event of a market correction Cash Reserve and Overweight Fixed Income Maintain a $5 million cash reserve Deploy ~1/3 to domestic equity, international equity, and MLPs Deploy ~2/3 to fixed income Motivations Overweight fixed income to provide cash flows and downside protection in the event of a market correction assumes limited short term surprises in interest rate hikes Increase International and MLP Exposure, Excess to Fixed Income Maintain a $5 million cash reserve Allocate 23% international equity and to target in MLPs Deploy the balance to fixed income Motivations Valuations in MLPs and international equity are relatively attractive when compared to other return seeking assets Fixed income would provide income capital appreciation assumes limited short term surprises in interest rate hikes 1

59 Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution HOLD IN CASH 2

60 4. Cash/Paid Receipts 113,366, % 20,254, % 113,366, % 4.6% 93 C. Total Real Assets $302,063, % $415,207, % $0 $302,063, % -5.6% ($113) 1. Real Estate 205,599, % 303,810, % 205,599, % -4.8% (98) JPM RE Strategic Property 155,913, % 101,270, % 155,913, % 2.7% 55 Principal Global Investments 49,685, % 101,270, % 49,685, % -2.5% (52) Non-Core Real Estate (TBD) 0 0.0% 101,270, % 0 0.0% -5.0% (101) 2. MLPs / Timber / Commodities 96,464, % 111,397, % 96,464, % -0.7% (15) Harvest MLP 48,100, % 55,698, % 48,100, % -0.4% (8) Tortoise MLP 48,363, % 55,698, % 48,363, % -0.4% (7) D. TOTAL FUND $2,025,403, % $2,025,403, % $0 2,025,403, % Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution City of Jacksonville Police & Fire Pension Fund Rebalancing Plan (Market Values as of November 30, 2017) $ Actual $ from Target (in mm) % Actual $ Current % Current Reallocation Ending $ Ending % % from Target Target Target A. Total Equity $1,234,943, % $1,194,987, % $0 $1,234,943, % 2.0% $40 1. Domestic Large Cap Equity (70% of Domestic) 634,955, % 635,976, % 634,955, % -0.1% (1) NT S&P 500 Index Fund 220,492, % 210,641, % 220,492, % 0.5% 10 Eagle Capital Management 216,136, % 212,667, % 216,136, % 0.2% 3 Brown Advisory 12, % 0 0.0% 12, % 0.0% 0 Loomis Sayles 96,989, % 106,333, % 96,989, % -0.5% (9) Sawgrass Asset Management 101,324, % 106,333, % 101,324, % -0.2% (5) 2. Domestic Small/Mid Cap Equity (30% of Domestic) 165,767, % 153,930, % 165,767, % 0.6% 12 Wedge Capital Mgmt 78,619, % 76,965, % 78,619, % 0.1% 2 Pinnacle 87,147, % 76,965, % 87,147, % 0.5% International Equity Developed 308,000, % 283,556, % 308,000, % 1.2% 24 NT EAFE Index Fund 1,344, % 20,254, % 1,344, % -0.9% (19) Baillie Gifford 149,447, % 93,168, % 149,447, % 2.8% 56 Silchester 157,208, % 170,133, % 157,208, % -0.6% (13) 4. International Emerging Markets 126,219, % 121,524, % 126,219, % 0.2% 5 Acadian Emerging Markets 126,219, % 121,524, % 126,219, % 0.2% 5 B. Total Fixed Income $488,396, % $415,207, % $0 $488,396, % 3.6% $73 1. Core Fixed Income 74,676, % 81,016, % 74,676, % -0.3% (6) NTGI Aggregate Bond Index 834, % 20,254, % 834, % -1.0% (19) Thompson Siegel Fixed 73,842, % 60,762, % 73,842, % 0.6% Core Plus 300,352, % 313,937, % 300,352, % -0.7% (14) Loomis Sayles 123,299, % 125,575, % 123,299, % -0.1% (2) Neuberger Berman 177,053, % 188,362, % 177,053, % -0.6% (11) 3. Senior Bank Notes % 0 0.0% % 0.0% 0 Eaton Vance Instl Senior Loan Trust % 0 0.0% % 0.0% 0 3

61 Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution CASH RESERVE AND DEPLOY TO ELIGIBLE MANAGERS 4

62 4. Cash/Paid Receipts 113,366, % 20,254, % (108,000,000) 5,366, % -0.7% (15) C. Total Real Assets $302,063, % $415,207, % $8,000,000 $310,063, % -5.2% ($105) 1. Real Estate 205,599, % 303,810, % 205,599, % -4.8% (98) JPM RE Strategic Property 155,913, % 101,270, % 155,913, % 2.7% 55 Principal Global Investments 49,685, % 101,270, % 49,685, % -2.5% (52) Non-Core Real Estate (TBD) 0 0.0% 101,270, % 0 0.0% -5.0% (101) 2. MLPs / Timber / Commodities 96,464, % 111,397, % 104,464, % -0.3% (7) Harvest MLP 48,100, % 55,698, % 4,000,000 52,100, % -0.2% (4) Tortoise MLP 48,363, % 55,698, % 4,000,000 52,363, % -0.2% (3) D. TOTAL FUND $2,025,403, % $2,025,403, % $0 2,025,403, % Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution City of Jacksonville Police & Fire Pension Fund Rebalancing Plan (Market Values as of November 30, 2017) $ Actual $ from Target (in mm) % Actual $ Current % Current Reallocation Ending $ Ending % % from Target Target Target A. Total Equity $1,234,943, % $1,194,987, % $76,000,000 $1,310,943, % 5.7% $ Domestic Large Cap Equity (70% of Domestic) 634,955, % 635,976, % 674,955, % 1.9% 39 NT S&P 500 Index Fund 220,492, % 210,641, % 13,000, ,492, % 1.1% 23 Eagle Capital Management 216,136, % 212,667, % 13,000, ,136, % 0.8% 16 Brown Advisory 12, % 0 0.0% 12, % 0.0% 0 Loomis Sayles 96,989, % 106,333, % 7,000, ,989, % -0.1% (2) Sawgrass Asset Management 101,324, % 106,333, % 7,000, ,324, % 0.1% 2 2. Domestic Small/Mid Cap Equity (30% of Domestic) 165,767, % 153,930, % 175,767, % 1.1% 22 Wedge Capital Mgmt 78,619, % 76,965, % 5,000,000 83,619, % 0.3% 7 Pinnacle 87,147, % 76,965, % 5,000,000 92,147, % 0.7% International Equity Developed 308,000, % 283,556, % 326,000, % 2.1% 42 NT EAFE Index Fund 1,344, % 20,254, % 18,000,000 19,344, % 0.0% (1) Baillie Gifford 149,447, % 93,168, % 149,447, % 2.8% 56 Silchester 157,208, % 170,133, % 157,208, % -0.6% (13) 4. International Emerging Markets 126,219, % 121,524, % 134,219, % 0.6% 13 Acadian Emerging Markets 126,219, % 121,524, % 8,000, ,219, % 0.6% 13 B. Total Fixed Income $488,396, % $415,207, % ($84,000,000) $404,396, % -0.5% ($11) 1. Core Fixed Income 74,676, % 81,016, % 78,676, % -0.1% (2) NTGI Aggregate Bond Index 834, % 20,254, % 1,000,000 1,834, % -0.9% (18) Thompson Siegel Fixed 73,842, % 60,762, % 3,000,000 76,842, % 0.8% Core Plus 300,352, % 313,937, % 320,352, % 0.3% 6 Loomis Sayles 123,299, % 125,575, % 8,000, ,299, % 0.3% 6 Neuberger Berman 177,053, % 188,362, % 12,000, ,053, % 0.0% 1 3. Senior Bank Notes % 0 0.0% % 0.0% 0 Eaton Vance Instl Senior Loan Trust % 0 0.0% % 0.0% 0 5

63 Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution CASH RESERVE AND OVERWEIGHT FIXED INCOME 6

64 4. Cash/Paid Receipts 113,366, % 20,254, % (108,000,000) 5,366, % -0.7% (15) C. Total Real Assets $302,063, % $415,207, % $8,000,000 $310,063, % -5.2% ($105) 1. Real Estate 205,599, % 303,810, % 205,599, % -4.8% (98) JPM RE Strategic Property 155,913, % 101,270, % 155,913, % 2.7% 55 Principal Global Investments 49,685, % 101,270, % 49,685, % -2.5% (52) Non-Core Real Estate (TBD) 0 0.0% 101,270, % 0 0.0% -5.0% (101) 2. MLPs / Timber / Commodities 96,464, % 111,397, % 104,464, % -0.3% (7) Harvest MLP 48,100, % 55,698, % 4,000,000 52,100, % -0.2% (4) Tortoise MLP 48,363, % 55,698, % 4,000,000 52,363, % -0.2% (3) D. TOTAL FUND $2,025,403, % $2,025,403, % $0 2,025,403, % Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution City of Jacksonville Police & Fire Pension Fund Rebalancing Plan (Market Values as of November 30, 2017) $ Actual $ from Target (in mm) % Actual $ Current % Current Reallocation Ending $ Ending % % from Target Target Target A. Total Equity $1,234,943, % $1,194,987, % $27,000,000 $1,261,943, % 3.3% $67 1. Domestic Large Cap Equity (70% of Domestic) 634,955, % 635,976, % 648,955, % 0.6% 13 NT S&P 500 Index Fund 220,492, % 210,641, % 5,000, ,492, % 0.7% 15 Eagle Capital Management 216,136, % 212,667, % 5,000, ,136, % 0.4% 8 Brown Advisory 12, % 0 0.0% 12, % 0.0% 0 Loomis Sayles 96,989, % 106,333, % 2,000,000 98,989, % -0.4% (7) Sawgrass Asset Management 101,324, % 106,333, % 2,000, ,324, % -0.1% (3) 2. Domestic Small/Mid Cap Equity (30% of Domestic) 165,767, % 153,930, % 169,767, % 0.8% 16 Wedge Capital Mgmt 78,619, % 76,965, % 2,000,000 80,619, % 0.2% 4 Pinnacle 87,147, % 76,965, % 2,000,000 89,147, % 0.6% International Equity Developed 308,000, % 283,556, % 314,000, % 1.5% 30 NT EAFE Index Fund 1,344, % 20,254, % 6,000,000 7,344, % -0.6% (13) Baillie Gifford 149,447, % 93,168, % 149,447, % 2.8% 56 Silchester 157,208, % 170,133, % 157,208, % -0.6% (13) 4. International Emerging Markets 126,219, % 121,524, % 129,219, % 0.4% 8 Acadian Emerging Markets 126,219, % 121,524, % 3,000, ,219, % 0.4% 8 B. Total Fixed Income $488,396, % $415,207, % ($35,000,000) $453,396, % 1.9% $38 1. Core Fixed Income 74,676, % 81,016, % 97,676, % 0.8% 17 NTGI Aggregate Bond Index 834, % 20,254, % 20,000,000 20,834, % 0.0% 1 Thompson Siegel Fixed 73,842, % 60,762, % 3,000,000 76,842, % 0.8% Core Plus 300,352, % 313,937, % 350,352, % 1.8% 36 Loomis Sayles 123,299, % 125,575, % 20,000, ,299, % 0.9% 18 Neuberger Berman 177,053, % 188,362, % 30,000, ,053, % 0.9% Senior Bank Notes % 0 0.0% % 0.0% 0 Eaton Vance Instl Senior Loan Trust % 0 0.0% % 0.0% 0 7

65 INCREASE INTERNATIONAL AND MLP EXPOSURE, EXCESS TO FIXED INCOME Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution 8

66 4. Cash/Paid Receipts 113,366, % 20,254, % (108,000,000) 5,366, % -0.7% (15) C. Total Real Assets $302,063, % $415,207, % $16,000,000 $318,063, % -4.8% ($97) 1. Real Estate 205,599, % 303,810, % 205,599, % -4.8% (98) JPM RE Strategic Property 155,913, % 101,270, % 155,913, % 2.7% 55 Principal Global Investments 49,685, % 101,270, % 49,685, % -2.5% (52) Non-Core Real Estate (TBD) 0 0.0% 101,270, % 0 0.0% -5.0% (101) 2. MLPs / Timber / Commodities 96,464, % 111,397, % 112,464, % 0.1% 1 Harvest MLP 48,100, % 55,698, % 8,000,000 56,100, % 0.0% 0 Tortoise MLP 48,363, % 55,698, % 8,000,000 56,363, % 0.0% 1 D. TOTAL FUND $2,025,403, % $2,025,403, % $0 2,025,403, % Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution City of Jacksonville Police & Fire Pension Fund Rebalancing Plan (Market Values as of November 30, 2017) $ Actual $ from Target (in mm) % Actual $ Current % Current Reallocation Ending $ Ending % % from Target Target Target A. Total Equity $1,234,943, % $1,194,987, % $20,000,000 $1,254,943, % 3.0% $60 1. Domestic Large Cap Equity (70% of Domestic) 634,955, % 635,976, % 634,955, % -0.1% (1) NT S&P 500 Index Fund 220,492, % 210,641, % 220,492, % 0.5% 10 Eagle Capital Management 216,136, % 212,667, % 216,136, % 0.2% 3 Brown Advisory 12, % 0 0.0% 12, % 0.0% 0 Loomis Sayles 96,989, % 106,333, % 96,989, % -0.5% (9) Sawgrass Asset Management 101,324, % 106,333, % 101,324, % -0.2% (5) 2. Domestic Small/Mid Cap Equity (30% of Domestic) 165,767, % 153,930, % 165,767, % 0.6% 12 Wedge Capital Mgmt 78,619, % 76,965, % 78,619, % 0.1% 2 Pinnacle 87,147, % 76,965, % 87,147, % 0.5% International Equity Developed 308,000, % 283,556, % 328,000, % 2.2% 44 NT EAFE Index Fund 1,344, % 20,254, % 20,000,000 21,344, % 0.1% 1 Baillie Gifford 149,447, % 93,168, % 149,447, % 2.8% 56 Silchester 157,208, % 170,133, % 157,208, % -0.6% (13) 4. International Emerging Markets 126,219, % 121,524, % 126,219, % 0.2% 5 Acadian Emerging Markets 126,219, % 121,524, % 126,219, % 0.2% 5 B. Total Fixed Income $488,396, % $415,207, % ($36,000,000) $452,396, % 1.8% $37 1. Core Fixed Income 74,676, % 81,016, % 104,676, % 1.2% 24 NTGI Aggregate Bond Index 834, % 20,254, % 22,000,000 22,834, % 0.1% 3 Thompson Siegel Fixed 73,842, % 60,762, % 8,000,000 81,842, % 1.0% Core Plus 300,352, % 313,937, % 342,352, % 1.4% 28 Loomis Sayles 123,299, % 125,575, % 17,000, ,299, % 0.7% 15 Neuberger Berman 177,053, % 188,362, % 25,000, ,053, % 0.7% Senior Bank Notes % 0 0.0% % 0.0% 0 Eaton Vance Instl Senior Loan Trust % 0 0.0% % 0.0% 0 9

67 Disclaimer: Although Summit Strategies Group (Summit) believes the modeling contained in this document to be reliable, the modeling of complex financial transactions has inherent limitations. Summit does not guarantee the results to be obtained by the use of this model. This model is developed by Summit based on information obtained from sources which Summit believes are reliable, but Summit does not warrant or guarantee the accuracy, completeness, or reliability of such information. Any information contained in or provided in connection with the model is for information purposes only, for the exclusive use by the client for which it was prepared, and is not intended and should not be construed to be an offer to buy or sell any securities, investment consulting or investment management services. No model can, in and of itself, be used to determine which securities or investments to buy or sell. All forward-looking projections are based on assumptions that Summit believes may be reasonable, but are subject to a wide range of risks, uncertainties and the possibility of loss. Accordingly, there is no assurance that any estimated performance projections of any model will occur in the amounts and during the periods indicated, or at all. Actual results and performance will differ from those expressed or implied by such forward-looking projections. Any decision to use or not use the model and any information accompanying or produced with the model remains solely with the client. Jacksonville Police & Fire Pension Fund Allocation of Cash Contribution 10

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69 POLICE AND FIRE PENSION FUND ONE WEST ADAMS STREET, SUITE 100 JACKSONVILLE, FLORIDA We Serve...and We Protect Phone: (904) Fax: (904) Date: December 9, 2017 To: PFPF Board of Trustees From: Timothy H. Johnson, Executive Director RE: Executive Director s Monthly Status Report DASHBOARDS FY17TD Nov-17 FY18TD Benefits Nov-16 Retiree Payroll ($) $13,053, $23,918, $22,655, Pension Contribution Refunds ($) $2, $13, N/A Pension Contribution Refunds (#) 3 5 N/A Other Refunds ($) $205, $1,078, N/A Other Refunds (#) 1 4 N/A Total Refunds ($) $208, $1,092, $759, Total Refunds (#) Disability Applications Disability Appeals Deaths Pension Estimates Buyback Applications Reclamations ($) $0.00 $0.00 $ Reclamations (#) DROP Rescissions Outreach DROP Workshop Attendance - 22 Vesting Workshop Attendance - 7 Newsletters Published Phone Calls Received Phone Calls Made 410 1,036 Investment Administration Allocations ($) 0 0 N/A Allocations (#) 0 0 N/A Rebalancing ($) 0 0 N/A Rebalancing (#) 0 0 N/A Terminations 0 0 N/A

70 Retirements Total (Minus Enter DROP) Full Retirement Vested Retirement Enter DROP Exit DROP Disability Survivor Children Retirement Appointments DROP Appointments Public Records Requests Requests (#) Completed (#) Response Pages Produced (#) Records Retention Access Records Scanned (#) 94, ,360 17,227 In House Records Scanned (#) UPDATES Dashboard: Now includes FYTD comparisons. For example you will see a 44% increase in contributions and over 100% increase in the number of refunds due to an abnormally large DROP class concluded in October, 2017, and a significant amount of those people leaving took large refunds. YTD help us to make comparison we did not make in October when that data was not reported. Holiday Bonus: Attached letters received from unions. Retiree bonus paid 12/1/2017 to 2,510 members pay period in the amount totaling $2,137, Elections: See attached certified results. Quarterly DROP Statistics: See attached. Year-end review postponed to the January Board meeting. Next Month (January 2018): FY 2017 Operating Budget Review and 10/1/2017 Actuarial Report. Retiree Supplement Payment: Looking at this recommendation in the context of the way our supplement law is written. See attached GEPP recommendation PFPF Calendar: Attached. Board Action Requested. 2 P a g e

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73 Jacksonville Police and Fire Pension Fund Analysis of DROP Enrollment Statistics From FY1999 to January FY2018 As of 12/5/2017 Average Age at: Average Whole Fiscal Year New DROP Enrollments Years of Service DROP Enrollment DROP End (1) FY (2) FY (2) FY FY FY FY FY FY FY FY (4) FY FY2010 (3) FY2011 (5) FY2012 (6) FY2013 (7) FY2014 (8) FY2015 (9) FY2016 (13) FY2017 (14) FY2018 (15) Total (1) This column represents the ages of DROP participants at separation from service assuming they remained employed for the full 4 or 5 year DROP authorization period. (2) The initial two years of the DROP Program carried a DROP participation period of 4 years. This participation period was extended to 5 years for new DROP participants commencing in (3) The average whole years of service for the 25 members enrolling in the DROP class of April 3, 2010 was the lowest (at years) of all prior 45 DROP classes since The 38 members tentatively enrolled in the DROP class of July 10, 2010 was the second highest enrollment class over the last 9 years. (4) 47 of this total of 101 came from the last quarterly DROP class of FY2008. Prepared by Lundy, Steve 12/11/2017

74 (5) FY2011 is composed of the following details: October Class January Class April Class July Class Total (12) (6) FY2012 is composed of the following details: October Class (7 Fire, 12 Police) January Class (5 Fire, 32 Police) April Class (10 Fire, 35 Police) July Class (24 Fire, 10 Police) Total (12) (7) FY2013 is composed of the following details: October Class (4 Fire, 40 Police) January Class (7 Fire, 8 Police) April Class (10 Fire, 8 Police) July Class (10 Fire, 18 Police) Total (12) (8) FY2014 is composed of the following details: October Class (8 Fire, 8 Police) January Class (10) (2 Fire, 6 Police) April Class (10 Fire, 21 Police) July Class (10 Fire, 20 Police) Total (12) (9) FY2015 is composed of the following details: October Class (10 Fire, 21 Police) January Class (13 Fire, 32 Police) April Class (10) (10 Fire, 14 Police) July Class (5 Fire, 16 Police) Total (12) (13) FY2016 is composed of the following details: October Class (2 Fire, 12 Police) January Class (9 Fire, 16 Police) April Class (7 Fire, 17 Police) July Class (8 Fire, 7 Police) Total (12) (14) FY2017 is composed of the following details: October Class (7 Fire, 16 Police) January Class (10 Fire, 21 Police) April Class (18 Fire, 18 Police) July Class (11) (0 Fire, 14 Police) Total (12) Prepared by Lundy, Steve 12/11/2017

75 (15) FY2018 is composed of the following details: October Class (5 Fire, 22 Police) January Class (9 Fire, 5 Police) April Class July Class Total (12) (10) Every enrollment for the January, FY2014 DROP class and every Police enrollment for the April, 2015 DROP class had no more than 20 whole years of service at DROP class commencement. (11) For the first time in the history of the program, there were no Fire enrollments in the July, 2017 DROP class. (12) The total average whole years of service, average age at DROP enrollment, and average age at DROP end are all weighted. Prepared by Lundy, Steve 12/11/2017

76 Certification of Results and Audit Report on Activity and Integrity December 6, :46 EST Prepared by: Votenet Solutions PRIVATE AND CONFIDENTIAL Page - 1