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Home My WebLink About12-18-2018 Agendaana HOME OF PELICAN BlMlD PUBLIC NOTICE — POLICE PENSION BOARD MEETING December 18, 2018 The Police Pension Board will hold a regular quarter meeting Tuesday, December 18, 2018 at 10:00 a.m. in the City Council Chambers, City Hall,1225 Main St. Sebastian, Florida. Agenda ROLL CALL VOTE TO EXCUSE ABSENT BOARD MEMBER(S) APPROVAL OF MINUTES: A. October 5, 2018 Regular Meeting OLD BUSINESS A. Approval of Payments: a. Klausner, Kaufman, Jensen & Levinson - Sept./Oct. b. Graystone Consulting - July to September c. Boston Partners d. Fiera Capital, Inc. e. Renaissance Investment Management f. Brookfield Investment Management, Inc. g. Salem Trust Company — July to September h. Foster & Foster (Pending Receipt of Report) i. City of Sebastian - Board Member Moyer Conference Cost j. City of Sebastian — October to December k. City of Sebastian — Insurance Reimbursement — Less $100 1. City of Sebastian — Reimbursement for Minutes in. Klausner, Kaufman, Jensen & Levinson —November PUBLIC INPUT NEW BUSINESS Chairperson Chairperson Chairperson Chairperson Ken Killgore, Plan Administrator $ 7,767.42 $ 3,375.00 $ 1,858.84 $ 1,572.12 $ 1,876.41 $ 817.12 $ 5,015.00 $12,583.00 $ 449.51 $ 6,000.00 $ 2,585.00 $ 256.00 $ 467.50 Chairperson A. Report from Investment Monitor Scott Owens, Morgan Stanley a. Center Coast/Brookfield Presentation b. Recommendation/Approval of Updates to Investment Policy (If Any) c. Recommendation/Approval of Changes to Allocation Strategy (If Any) d. Recommendation/Approval of Expected Rate of Return B. Report from Investment Managers - Highland Capital C. Presentation and Acceptance of Actuarial Report as of October 1, 2018 D. Legal Updates — Klausner, Kaufman, Jensen & Levinson E. Board Member Reports and Continents F. Plan Administrator Reports and Comments a. Scheduling of Future Quarterly Meeting Dates b. Review of Annual Calendar of Board Activities 1. Confirmation of Renewal of Liability Insurance Policy 2. Update on 2018/2019 Budget/Actual Expenses 3. Consideration of Updates to Board Operating Rules B. Next Scheduled Quarterly Meeting: March 19, 2019 ADJOURN Grant McMurry, Highland Capital Doug Lozen, Foster and Foster Bonni S. Jensen, Board Attorney Chairperson Ken Killgore, Plan Administrator Chairperson Please note: In accordance with Florida Statue 286.0105: any person who desires to appeal any decision at this meeting will need a record of the proceedings and for this purpose may need to ensure that a verbatim record of the proceedings is made which includes the testimony and evidence upon which the appeal is based. In accordance with Florida Statute 286.26: Persons with disabilities needing assistance to participate in any of these proceedings should contact the Administrative Services Department at 1225 Main Street, Sebastian, Florida 32958, or telephone 772-388-8205. CITY OF SEBASTIAN POLICE PENSION BOARD MINUTES OF REGULAR QUARTERLY MEETING OCTOBER 5, 2018 1. Call to Order -- Chairman Jason Gillette called the meeting to order at 2:00 p.m. 2. Roll Call Present Board Members: Jason Gillette f V Christine Vicars Randy Moyer Paul Williamson Tim Wood Also Present Bonni Jensen, Klausner, Kaufman, Jensen & Levinson, Attorney for the Board of Trustees Ken Killgore, Plan Administrator Cynthia Watson, Human Resources Manager Grant McMurray, Highland Capital Management Peter Hapgood, Intercontinental Janet Graham, Technical Writer Courtney Grimmich 3. Aooroval of Minutes A. Regular Meeting of June 26, 2018 B. Briefing on August 28, 2018 on William Grimmich's Beneficiary Interest Motions to accept the Minutes of the two meetings listed above were made by Mr. Williamson and seconded by Mr. Moyer. Motions carried unanimously by voice vote. 4. Old Business A. Approval of Payments a. Klausner, Kaufman, Jensen & Levinson $ 1,695.00 b. Highland Capital Management, LLC 12,821.31 C. Graystone Consulting 3,375.00 d. Boston Partners 1,763.93 e. Renaissance Investment Management 1,631.70 POLICE PENSION BOARD PAGE 2 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 f. Fiera Capital, INC. $ 1,487.80 g. Brookfield Investment Management, Inc. 758.49 h. Salem Trust Company -- April to June 4,730.00 i. Klausner, Kaufman, Jensen & Levinson 2,550.00 j. Klausner, Kaufman, Jensen & Levinson 2,040.00 k. City of Sebastian -- Reimbursement for Minutes 80.00 I. City of Sebastian -- July to September Services 6,000.00 Motion to approve the payments as listed above was made by Mr. Williamson, seconded by Mr. Moyer, and passed unanimously by voice vote. B. Review of Annual Calendar of Board Activities Mr. Killgore reviewed the Calendar of Activities and Scope of Services. SEE ATTACHED. He stated all of the listed activities are up to date. He will discuss later in this meeting approval of the amendment to last year's budget and approval of next year's budget. A motion to receive and file the Calendar of Activities and Scope of Services was made by Mr. Moyer, seconded by Ms. Vicars, and passed unanimously by voice vote. C. Consider Amendment to FY17-18 Operating Expense Budget Mr. Killgore reviewed the spreadsheet that he had prepared. SEE ATTACHED. He described that the report shows a four-year history of expenses and shows the year ending September 2018- In the first column it indicates items that he feels should be amended. Mr. Williamson inquired as to which areas have been amended. Mr. Killgore pointed out the first two columns of the report where initial budget figures are set forth. Then the amended figures are listed, and he described how the figures were arrived at. Mr. Williamson queried why the budget for Salem Trust was so much higher than what was projected. Mr. Killgore reviewed that Salem Trust previously handled only one account, but when it was decided to have six or so different investment managers, those investments now are separated, plus they do a consolidated report which Mr. Killgore needs for the auditors. Mr. Williamson suggested, since most of the Board members are new, there be a meeting held to help educate them regarding these matters. Motion to approve the amendment as set forth was made by Mr. Williamson, seconded by Ms. Vicars, and approved unanimously by voice vote. 5. Public Input -- None POLICE PENSION BOARD u�"'w°y;, PAGE 3 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 a 6. New Business A. Determination of Whether Benefits for William Grimmich Are Required to be Forfeited Under Florida Statute 112.3173 Ms. Jensen reviewed the history of Mr. Grimmich's case and how Florida Statute 112.3173 applies to his case. She provided to each Board member a copy of the judgment where the court adjudicated Mr. Grimmich guilty of trafficking in oxycodone and grand theft of a controlled substance. She also provided a copy of the arrest affidavit which was the basis upon which Mr. Grimmich pled guilty. She stated that, based upon this history, the Board needs to have a hearing as to whether his benefits should be forfeited as a result of his pleading guilty to the commission of these crimes. She further described case law applicable to situations such as Mr. Grimmich's. Since Mr. Grimmich has passed away, he is no longer able to provide his defense at a hearing. However, the Statute provides for publication of notice and the opportunity for interested parties to be heard. The notice has not yet been sent, and that notice being sent will result from the Board deciding today on a hearing to determine whether a forfeiture should be applied. A motion to hold a hearing according to Florida Statute 112.3173 was made by Mr. Moyer and seconded by Mr. Williamson. Motion carried unanimously by voice vote. Ms. Jensen stated that her office did send notice out to the beneficiaries and/or interested parties, giving them information on procedures that are available to them and notifying them that they have the opportunity of just receiving a refund of contributions, and the requirement of having a hearing would then be unnecessary. Under any circumstance, a member who is convicted of an offense, or their beneficiaries, are entitled to at least a refund of the member's contributions to the pension plan. In this case if the beneficiaries, through their guardians, were to waive the requirement of the hearing and elect to just take a refund of contributions, then there would be no need for the hearing. Ms. Jensen's office also notified the interested parties that they would need to formally become guardians of the minor beneficiaries. Florida law requires that if a child is going to be paid more than $15,000.00, there must be a guardian appointed by the court who will be responsible for that amount of money. In this case the amount of contributions is approximately $78,000.00, so each of the children would be entitled to more than $15,000.00, Ms. Courtney Grimmich was present at today's hearing and stated that she could not speak for the other party who is involved, but she herself is leaning towards just taking the refund of contributions. Mr. Gillette asked if there will be proof that the guardianships have been created before POLICE PENSION BOARD "' rA PAGE 4 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 any funds are released, and Ms. Jensen stated her office would make certain that that is accomplished. Mr. Williamson asked if it is usually the parent who is the guardian. Ms. Jensen stated that a parent is a natural guardian of a child for any amount up to $15,000.00; for any amount over that, there must be a formal appointment of a guardian by the court. Ms. Jensen advised waiting to set up the hearing until the guardianships have been set up. The matter could then be addressed at this Board's next meeting, and then the process could be started for the forfeiture if necessary. All members of the Board agreed with that plan. B. Consider Adoption of Fiscal Year 2018-2019 Operating Expense Budget Mr. Killgore drew the Board's attention to the last page of the packet attached to the Agenda. SEE ATTACHED. It describes the schedule for the previous four years, the amended 2017-2018 budget, and the recommended budget for the 2018-2019 budget year. Ms. Jensen explained that this budget is mandated by state statute. She stated that rather that a "budget," this is more of a forecast of what might be needed next year. The State statute mandates certain expenses be included in this report, administrative expenses in particular. She explained that this forecast procedure that must be gone through does not have to include the investment managers, although it can include them. She suggested that there always be included a contingency line, and the reason she suggests that is because this Board are fiduciaries, which means that every penny necessary is spent, but not a penny more. Taking into consideration that there might be a forfeiture procedure next year which might cost more money than this year, or a disability application is filed next year in addition to a forfeiture proceeding, it allows a little flexibility in the budget forecast without having to amend it. Mr. Killgore asked what the process would be if money is needed from the contingency for one of the other items, and does this Board even consider that. Ms. Jensen stated this could be brought before the Board, reminding them that when the forecast was created there was built in some flexibility. Thus, it would not have to go before City Council. Mr. Williamson asked how it is determined what number to put in the contingency account, and Ms. Jensen said it is usually a percentage that is used. Mr. Killgore brought up another item he would like the Board to consider. There is a State POLICE PENSION BOARD MINUTES OF REGULAR MEETING OCTOBER 5, 2018 PAGE 5 report that is required listing every police officer, what their pay was for the year, what their contribution was, etc. He described that there is a lot of time and work that goes into this report. The actuary has just recently offered to do the report, as they have the same information. The cost for the actuary to do the report is $3.000.00, and he is asking the Board to consider having it done by the actuary. Ms. Jensen stated that this forecast was to have been done by September 30, so the approval needs to be done. Mr. Moyer asked if the $3,000.00 could be included in the contingency line of the forecast and approved today. Mr. Killgore and Ms. Jensen said it could. Mr. Williamson asked, if the contingency goes over the forecast amount, what would happen, and Ms. Jensen said there would have to be a revised budget done. Mr. Williamson suggested the contingency be set at $15,000.00. A motion was made by Mr. Williamson and seconded by Mr. Moyer to add a line item for a contingency fund of $15,000.00 for the next fiscal year. Motion carried unanimously by voice vote. A motion was made by Mr. Moyer and seconded by Ms. Vicars to outsource the state report mentioned by Mr. Killgore. After discussion by the Board, motion carried unanimously by voice vote. Mr. Killgore stated he will present the adopted budget to City Council as well as a report on the actual costs. C. Report on Receipt of State Premium Tax Monies Mr. Killgore reported that the City received about $20,000.00 more than it did the prior year. Last year the City had received $168, 688.00. This year it was $188,923.00. This basically means that the City will have to pay less into the plan for the City's share of the cost. D. Report from Investment Monitor Mr. Mulfinger is not present, so that item will be rescheduled. E. Report from Investment Managers a. Highland Capital Mr. McMurray stated Highland Capital had changed their fee structure. Basically, instead of 55 basis points for everything, it will be 50 basis points for the equity and 30 basis Vd\ ,w POLICE PENSION BOARD : - t PAGE 6 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 d points for the fixed income. In addition to that, they are going to skip this quarter because under the new contract that has been drafted they are billing the pension in arrears. It has been decided by Highland that they will now be billing from the ending asset value. So Mr. Killgore will get an invoice in January based on the assets on December 31s'. He stated that the pension fund's performance has been good. It shows in the report that was received in August (SEE ATTACHED), what it is as of the end of September. These are the fiscal year numbers, and they show that it was 8.83% or maybe even more than 9%. He reviewed the market in general and reported that the equity market continues to do quite well. Part of that is probably due to the fact that bonds are not doing well. He stated that the market may be negatively affected if interest rates continue to go up. He also stated that he is cutting back on his workload, and he probably will not be coming to Sebastian as often as he has been. i. Approval to Move 5% or Less of Assets Between Accounts Ms. Jensen reviewed that at the last meeting Scott Owens left a letter that the Board will need to approve that will allow Highland to transfer monies between the large -cap value and the large -cap growth accounts that they manage. A motion to execute that letter will be needed A motion to approve the request for movement between growth and value within the parameters listed in the letter mentioned above was made by Mr. Williamson, seconded by Mr. Moyer, and passed unanimously by voice vote. Ms. Jensen stated there have also been revisions to the Investment Manager Agreement that Mr. McMurray mentioned which brings the Agreement up to date, and a motion is needed to authorize the execution of that Agreement to reduce the fees. After reviewing and discussing the amended fee schedule of Highland Capital as described by Mr. McMurray, a motion to accept the new fee arrangement was made by Mr. Williamson, seconded by Ms. Vicars, and passed unanimously by voice vote. b. Intercontinental Mr. Hapgood distributed copies of his report to all concerned and reviewed in depth this report. SEE ATTACHED. He informed the Board that they are now one of approximately 80 boards in Florida for whom Intercontinental provides services. He reviewed the POLICE PENSION BOARD PAGE 7 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 objectives of Intercontinental and how they work to achieve those objectives. He described their reporting methodology. He said more investors are turning towards real estate as a fixed -income alternative. He described that, after an entity is fully invested, they have the right to redeem at any time. At present, they are working with a 90-day period of time for a reimbursement. He pointed out that it is more liquid than in the past, but it is not yet as liquid as stocks. He described how appreciation of real estate affects the value of the assets and how interest rates impact the portfolio. He described how the management fees are based on the amount of money the pension fund has invested. He described how every property is fully appraised once a year. He explained the difference between core assets and core -plus assets. He explained what value -ad properties are. Mr. Williamson inquired about the management team. Mr. Hapgood described where their offices are located and how the majority of their properties are managed by a third party. Ms. Jensen asked what the impact was on Intercontinental's assets as a result of Hurricane Florence. Mr. Hapgood replied that they had very minimal damage to a couple properties in North Carolina. He stated they sent that information out to their investors. Ms. Jensen inquired about investments in cannabis and cyber, what extent do the real estate portfolios have in their warehouses and real estate spaces —any exposure to cannabis or CBD—and what are Intercontinental's rules regarding leasing. Mr. Hapgood stated they do not have any clients who have interests in any of those businesses. He further stated they have not made a general across-the-board rule. He stated that anyone in the cannabis business is not going to rent out a $50 million industrial site. He was of the opinion that in the future, if a business such as that was large enough, well run and legal, they would probably rent to them. Ms. Jensen's concern is regarding federal banking standards, since cannabis is legal in some states but not all. Mr. Hapgood thanked the Board for their business and informed the Board that Intercontinental has an Extranet system where their clients have access to information regarding their accounts. If anyone on the Board is interested in this, let him know and he will see that they are set up for that. For the record, Ms. Jensen stated that Mr. Killgore had sent out to members of the Board on September 13 the Graystone reports. F. Legal Updates -- Klausner, Kaufman, Jensen & Levinson Ms. Jensen addressed the memorandum in the Agenda packets regarding the Florida Constitutional Revision Commission. SEE ATTACHED. She stated that in the next POLICE PENSION BOARD �J'� PAGE 8 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 election there will be voting on changes to Florida's Constitution. There are 12 amendments, of which only one may have an impact on members of the Board of Trustees, which is Amendment 6. There are three different subjects covered in Amendment 6, and the one that may have an impact on members of boards such as this one is the proposal to change the standard of review that a court would have of an administrative decision the Board would make when interpreting a state law. For example, the Grimmich forfeiture is under state law. The standard of review that the court now has is a standard of deference, which means that they defer to the Board's decisions as long as they don't represent manifest injustice —that the Board has followed the rules as they are set forth. In other words, where reasonable people may disagree, the court will not substitute their judgment for the Board's. The standard that is being suggested to be changed is what is called a de novo review, which means that starting at the beginning of a case they would substitute their judgment for the Board's if they disagreed with the Board's decision. So that could be impactful to the Board in the forfeiture provision. The Board's entire pension plan document is based on state law because it is based on Florida Statute 185 provision. So it could impact this Board if someone challenges their decision and the case goes to court. She wanted to bring this matter to the Board's attention. Also included in the packet is a proposed memo explaining the impact of divorce on members and their benefits (SEE ATTACHED), and a copy of this memo can be given to members to present to their attorneys in divorce cases. Ms. Jensen explained that governmental pension plans do not have to accept qualified domestic relations orders, which is a standard method under the Internal Revenue Code of dividing pensions in divorce situations. Unless the Board has specifically adopted provisions that allow it to accept qualified domestic relations orders, they are not applicable to the Board's plan, and the Board is exempt from ERISA, which are the private sector pension rules or laws. G. Board Members Reports and Comments Mr. Williamson stated he has looked into going to the trustee school, and he was told when he attempted to register that this Board was not a member, and for him to attend those classes it would cost approximately $600.00. Ms. Jensen stated that the State is having their conference in Orlando on November 14, 15, and 16. Ms. Vicars stated she recalls that she got the information on the seminar she attended from the City Clerk. Mr. Kiligore will try to get information on it. Mr. Williamson is in favor of having a separate meeting for the Board members where representatives of the investment entities are present, so the Board members can be better educated on fee structures, the process of investment managers, etc. Ms. Vicars agreed. Mr. Killgore suggested having a representative from Morgan Stanley and have POLICE PENSION BOARD PAGE 9 MINUTES OF REGULAR MEETING OCTOBER 5, 2018 the contract provided ahead of time so that the Board members can review it. Mr. Williamson requested that Salem Trust should be invited as well. Mr. Killgore will contact Morgan Stanley and Salem Trust in order to come up with some dates for a special meeting. H. Plan Administrator Reports and Comments a. Scheduling of Future Quarterly Meeting Dates Mr. Killgore stated he has been in contact with Ms. Jensen regarding a date for the next meeting, and he will contact the Board members regarding a date. b. Cessation of Disability Payments to Timothy Zelinski Mr. Killgore informed the Board members that Mr. Zelinski has passed away. He has been contacted by Mrs. Zelinski, and Mr. Killgore contacted Salem Trust regarding this matter. Mr. Killgore also reviewed that the Board had considered leaving Salem Trust at one point because of a negative report on their audit, but that has been rectified, and the Board decided to stay with Salem Trust. I. Next Quarterly Meeting — To be determined. 7. Adfourn -- Chairman Gillette called for any further business. Hearing none, the meeting was adjourned at 4:30 p.m. 0 Jason Gillette jg ausner, Kaufman, Jensen & Levinson A Partnership of Professional Associations Attorneys At Law 7080 N.W. 4th Street Plantation, Florida 33317 Tel. (954) 916-1202 www.kiausnerkaufman.com Fax (954) 916-1232 Tax I.D.: 454083636 SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM October 31, 2018 Attn: KEN KILLGORE Bill # 22613 1225 MAIN STREET SEBASTIAN, FL 32958 CLIENT: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 MATTER: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 Professional Fees Date Attorney Description Hours Amount 10/01/18 BSJ TELEPHONE CALL WITH CINDY 0.20 85.00 WATSON REGARDING QDROS AND DEATH BENEFITS 10/01/18 BSJ REVIEW AND REVISE DEATH BENEFIT 0.40 170.00 APPLICATION 10/04/18 BSJ REVIEW AND REVISE MEMO; DRAFT 1.00 425.00 EXHIBITS, INCLUDING PLAN PROVISIONS 10/04/18 CW DRAFTED OPERATING RULES AND 0.30 127.50 PROCEDURES 10/05/18 BSJ REVIEW AND REVISE INVESTMENT 0.70 297.50 MANAGER AGREEMENT; EMAIL TO STEVE STACK; REVIEW RESPONSE 10/05/18 BSJ TRAVEL TO AND FROM MEETING 3.00 637.50 10/05/18 BSJ ATTEND MEETING 2.50 1,062.50 10/08/18 BSJ REVIEW AND RESPOND TO EMAIL 0.80 340.00 REGARDING BRANDES DIVORCE; TELEPHONE CALLS WITH CINDY WATSON; TELEPHONE CALL WITH ELIZABETH MCHUGH; REVIEW FINAL JUDGMENT OF DISSOLUTION. MARITAL SETTLEMENT AGREEMENT AND OTHER DOCUMENTS 10/09/18 BSJ TELEPHONE CALL WITH COURTNEY 0.40 170.00 GRIMMICH; TELEPHONE CALL WITH KEN KILLGORE 10/10/18 BSJ RESEARCH SHARON GRIMMICH 0.40 170.00 OBITUARY; TELEPHONE CALL WITH CINDY WATSON Continued ... Client: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM October 31, 2018 Matter: 170042 - SEBASTIAN POLICE OFFICERS' RETIREMENT Page 2 Professional Fees Continued... Date Attorney Description Hours Amount 10/22/18 BSJ REVIEW ARTICLE REGARDING FEE 0.10 42.50 TRANSPARENCY; EMAIL TO GRAYSTONE Total for Services 9.80 $3,527.50 Costs Date Description Amount 09/12/18 FEDEX COURTNEY GRIMMICH 31.23 09/12/18 FEDEX SHARON ELIZABETH GRIMMICH 31.23 Total Costs $62.46 CURRENT BILL TOTAL AMOUNT DUE $ 3,589.96 Past Due Balance 4,177.46 AMOUNT DUE $7,767.42 �4 lausner, Kaufinan, Jensen & Levinson A Partnership of Professional Associations Attorneys At Law 7080 N.W. 4th Street Plantation, Florida 33317 Tel. (954) 916-1202 www.kiausnerkaufinan.com Fax (954) 916-1232 Tax I.D.: 45-4083636 SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM September 30, 2018 Attn: KEN KILLGORE Bill # 22445 1225 MAIN STREET SEBASTIAN, FL 32958 CLIENT: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 MATTER: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 Professional Fees Date Attorney Description Hours Amount 09/07/18 BSJ DRAFT LETTERS TO GRIMMICH 2.00 850.00 FAMILIES REGARDING BENEFICIARY AND FORFEITURE ISSUES; EMAILS WITH CINDY WATSON 09/12/18 BSJ TELEPHONE CALL WITH CINDY 2.00 850.00 WATSON; PREPARE EXHIBITS; FINALIZE LETTERS 09/12/18 BSJ REVIEW AND RESPOND TO EMAIL 0.10 42.50 FROM STEVE STACK; EMAIL TO KEN KILLGORE AND CHARLIE MULFINGER 09/13/18 BSJ REVIEW AND REVISE LETTERS TO 0.40 0.00 GRIMMICH FAMILIES TO CORRECT MEETING DATE; DRAFT COVER LETTER 09/14/18 PARA PREPARATION OF MATERIALS FOR 0.30 37.50 UPCOMING MEETING. 09/17/18 BSJ REVIEW AND RESPOND TO EMAIL 0.50 212.50 FROM STEVE STACK REGARDING FEE REDUCTION; DISCUSSION WITH STEVE STACK; REVIEW EMAIL FROM CHARLIE MULFINGER 09/17/18 CW REVIEW OF ICC/HIGHLAND CONTRACT 0.60 255.00 ANDADDENDUM 09/18/18 BSJ PREPARE FOR MEETING; ATTEND 1.30 552.50 MEETING (NOT POSTED); DISCUSSION WITH KEN KILLGORE 09/18/18 BSJ TRAVEL TO AND FROM MEETING 1.50 318.75 09/18/18 BSJ TELEPHONE CALL WITH COURTNEY 0.10 42.50 GRIMMICH REGARDING REFUND OF CONTRIBUTIONS Continued ... Client: Matter: Date 09/19/18 09/27/18 09/27/18 09/28/18 SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM September 30, 2018 170042 - SEBASTIAN POLICE OFFICERS' RETIREMENT Page 2 Professional Fees Continued... Attorney Description BSJ EMAIL WITH JASON GILLETTE AND KEN KILLGORE REGARDING GRIMMICH FAMILY CW DRAFTING OF INVESTMENT MANAGER CONTRACT. REVIEW OF SUNBIZ BSJ REVIEW AND REVISE INVESTMENT MANAGER AGREEMENT FOR HIGHLAND CW GATHERED INVESTMENT POLICY. TELEPHONE CONFERENCE WITH GRAYSTONE. DRAFTED EMAIL TO MONITOR. REC'DAND READ EMAIL FROM GRAYSTONE Hours Amount 0.10 42.50 1.60 680.00 0.20 85.00 0.30 127.50 Total for Services 11.00 $4,096.25 Costs Date Description Amount 09/12/18 FEDEX TO COURTNEY GRIMMICH 31.23 09/12/18 FEDEX TO SHARON ELIZABETH GRIMMICH 31.23 PHOTOCOPIES thru 09/30/18 18.75 Total Costs $81.21 CURRENT BILL TOTAL AMOUNT DUE $ 4,177.46 ctober 18, 2018 rutty°tlrrlt�1191rIIII�hlrrhtlllllll,i,�nu�llh,��ll ^I I 000021 MSHS9SA1000D00745070 CITY OF SEBASTIAN POLICE ATTN: KENNETH KILLGORE 1225 MAIN ST. SEBASTIAN FL 32958 Graystone Consulting - A business of Morgan Stanley Invoice Number: 10129918291 Graystone Consulting Tampa, FL Financial Advisor w .morganstanley.com IMPORTANT NOTICE INVESTMENT ADVISORY FEE PAYMENT REQUIRED ACTION REQUIRED — PLEASE REMIT PAYMENT IN THE ENCLOSED BUSINESS REPLY ENVELOPE We value you as a client and thank you for the opportunity to serve your investment needs. Please see below for the investment advisory feels) due. ACCOUNT CLIENT NAME TOTAL FEE AMOUNT 745-038962 CITY OF SEBASTIAN POLICE $3,375.00 Total Fee: $3,375.00 Prior Balance: $0.00 Net Amount: $3,375.00 For additional details please see Invoice Detail and Remittance Instructions on pages to follow. 3, 371< " l(�3/�8 t �i Inrasimrnts and stmicts offered 16roud6 Alorgan Stanley Smith Ilamey LLC. Manner SIPC. ' Graysione Consulting is a Imsinas of Alorg:m Stanley. On0O21 MSHS9SA1 OW051 raystone Consulting A business of Morgan Stanley ADVISORY INVOICE DETAILS Invoice Number: 10129918291 Account:745-038962 Billing Period Number of Days Hard Dollar Fee Fee Amount 07/01/2018 — 09/30/2018 �'�' Wtstnimts and scruices offered ibrou b Morgan StanleySniab Barn LLC. Mcmbcr SIPC. Graystona Consulting is a business of Morgan Stanley. 92 $13,500.00 $3,375.00 1 '3of5 000021 MSH595AI 000062 f" Boston Partners 10 Ken Killgore City of Sebastian 1225 Main Street Sebastian, FL 32958 Invoice Date: 09/30/2018 Invoice Number: 20180930-690-A Billing Portfolio(s): 00844 - City of Sebastian Police Officers' Retirement System Billing Period: 07/01/2018 to 09/30/2018 SUMMARY FOR INVESTMENT SERVICES Current Period Amount Due: $ 1,858.84 Current QUARTEREND Fee Invoice Period Due 30-60 Days 60-90 Days Over 90 Days Total City of Sebastian Police Officers' Retirement 20180930-690-A 1,858.84 1.858.84 System Total Amount Due 1,858.84 1,858.84 Please contact James Vitelli directly at 212-908-0149 with any billing inquiries. As always, you may also direct any questions to your Relationship Manager. We would appreciate receiving your payment along with the remittance slip within 30 days of receipt of this Invoice. WIRE J TRANSFER FUNDS TO: JP Morgan Chase; ABA #021000021; ACCT #066-654610 REFERENCE: Boston Partners Ref Acct #: 00844 MAIL REMITTANCES TO: Accounts Receivable Boston Partners 909 Third Avenue, 32nd Floor New York, NY 10022 Email ivitelli@boston-partnem.com Thank You FIERACAPML November13, 2018 Ken Killgore 1225 Main Street Sebastian, FL 32958 City of Sebastian Police Officer's Retirement System - 3040002573 FIERA CAPITAL INC. SUMMARY OF MANAGEMENT FEES For The Period Third Quarter 2018 Portfolio Value as of 09-30-18 $ 838,466.06 838,466 @ 0.75 % per annum 1,572.12 Quarterly Management Fee $ 1,572.12 TOTAL DUE AND PAYABLE $ 1,572.12 Asper SEC Rule 206141-2, we urge you to compare this report with your custodian statements. It is the client's responsibility to verify the accuracy of the computation. The custodian will not do an independent verification of the accuracy of the computation of fees. ACH Instructions: Citi Private Bank 1 Court Square, 22nd Floor Long Island City, NY 11120 Routing #: 021000089 Acct. #: 4974013748 Account Name: Here Capital Inc. To pay by check: Payable to Fiera Capital Inc. Attn: Myron Charas 10050 Innovation Dr, Suite 120 Dayton, OH 45342 Billing inquiries should be directed to: Myron Charas and Billing FCI COfieraca p ital.com 937-388-1437 renaissance Investment Management October 03, 2018 Mr. Kenneth W. Killgorc Administrative Services Director City of Sebastian 1225 Main Street Sebastian, FL 32958 Billing Period: FROM 0710112018 TO 09/30/2018 Custodian Account No:3040002591 Account #: IE0496- City of Sebastian Police Officers Retirement System Portfolio Value ................................................... $1,145,298.67 Amount Due, PAYABLE. UPON RECEIPT: ........................... S1,876.41 FEECALCULATION '(aate•Portfolio Value) x(# of daysln quarter/# elders In year) // Rate plied: &LASsets Under Manaaement AmAunt Due 0.6500 e/ On the remainder. 1,145,299 1,876.41 ^ C� Total Fee: 1,876.41 / Plum mmpom (Nr fee bill prepvmd by our bm ro Yaur cutlodlvl nttaunt r4lmaat for my dtrrr<pvnelet atbmr vurWiom mvyeemr bmmcaf rryornn# delm,rttrusl .,,had. orletnertsnddlvldead;and vlbertrelom.Yovrwtlodwavenlma Irtheef0elalmrnrd oryeur¢wont. Ifpu aro not rt Ylnpnelemwe tramyourearinnaa at ken gamMJ. iftbm heve ben anydun#m In ywr Maac4l sitwtle•, Inmtment obdtttlm,ar a)nu .drb la bldnv ar madlfy tray mvmnble rmhktlonr an the many#em<et •fywr aeooeq Plnm va11fY a4rY btcl•m vi 513d}3-ISSe ar m<mQmnlar.com. Return this section with your fee to the address below 01' in the enclosed envelope: RENAISSANCE INVESTMENT MANAGEMENT 3551 Solutions Center U773551 Chicago, 1L 60677-3005 Acct: IE0496 Custodian Account No: 3040002591 50 EAST RIVERCP.NTER BOULEVARD • SUITE 1200 COVINGTON. KV 4tell • 600.837.31163. 513.723.4500• PAX 513.723.4512• wvr.r<nin..rv,n rookfield Investment Management Inc. 250 Vesey Street, 15th Floor New York, NY 10281 Bill To: City of Sebastian Police Officers Retirement System 3040002617 DESCRIPTION Management Fee for the Quarter ending 09/30/2018 Current Quarter Ending Balances: Annual Fee Rate Brookfield September $ Average $ 0.50% $ DATE: INVOICE # FOR: October 24, 2018 2018-0930 Management Fees AMOUNT 648,363.93 648,363.93 817.12 $ 817.12 Total Fee This Statement: 1$ PAYMENT DUE UPON RECEIPT WIRE / TRANSFER FUNDS TO: JP Morgan Chase Bank, NA ABA # 021000021 SWIFT: CHASUS33 For Credit To: Brookfield Investment Management Inc. Account # 907-153925265 MAIL REMITTANCES TO: Brookfield Investment Management Inc - 7916 Dept 781716, PO Box 78000 Detroit, MI 48778 _- j7l-7. A ? 817.12 If you have any questions concerning this invoice, contact Larry Castrovinci by telephone at (212) 549-8349 or by e-mail: BPSGaccountsreceivable@Brookfield.com ity of Sebastian Debbie Krueger 1225 Main Street Sebastian, FL 32958 SALEM TRUST C O M P A N Y Fee Advice for Period Detail of Calculation: Flat Fee $500 for 6 additional accounts July 1, 2018 to Annual Fee $5,000.00 $3,000.00 $5.00 Security Transactions Current Period Year To Date 9/30/2018 903 903 12/31/2018 903 3131 /2019 903 6/30/2019 903 (300 included in annual fee) Total Total Amount Due These fees will automatically be charged to your account. If you have any questions, please contact Mindy Johnson at 813.288.4990 October 3, 2018 M05348 Sebastian Police September 30, 2018 $5.00 DEERFIELD BEACH TAMPA 1715 N. WESTSHORE BLVD., SUITE 750 TAMPA, FL 33607 TEL (87) 382-5268 FAX (813')301-1295 ,v ,.salemtrast.ron, Quarterly Fee $1,250.00 $760.00 $3,015.00 $5,015.00 $5,015.00 D CONSULTANTS FOSTER ACTUARIES N& FOSTER Phone: (239) 433-5500 Fax: (239) 481-0634 data@foster-foster.com www.foster-foster.com City of Sebastian Police Officers' Retirement System 1225 Main Street Sebastian, FL 32958 Invoice 11/21/2018 13569 Net 30 1 12/21/2018 Benefit Calculations: JOHNSON, WITT 400.00 Annual online benefit calculator fee commencing November 1, 2018 ($16 " 37 active members). 592.00 Electronic filing of 10/1/2018 valuation report to the Division of Retirement. 300.00 Preparation of the October 1, 2018 Actuarial Valuation and Report. 8,041.00 Preparation of GASB 67 Statement with measurement date of 09/30/18. 1,250.00 Preparation of GASB 68 Statement with measurement date of 09/30/18. 2,000.00 Balance Due $12,583.00 Thank you for your business! Please make all checks payable to: Foster & Foster, Inc. 13420 Parker Commons Blvd, Suite 104 Fort Myers, FL 33912 aLr a SER"LMN HOME OF PUJCAN ISLAND CITY OF SEBASTIAN INVOICE BILL TO: Sebastian Police Pension Trust Fund 1225 Main Street Sebastian, FL 32958 DESCRIPTION Invoice #: 19-059 Date: 11/27/18 Amount: $ 449.51 AMOUNT Reimbursement for Randy Moyer's attendance at the 48th Annual Police Officers' and Firefighters' Pension Conference Nov 14 - 16, 2018 in Kissimmee, Florida Hotel (11/14/18 - 11/16/18) - Grand Orlando Resort $ 250.76 Mileage (204 miles @ $ .545/mile) $ 111.18 Per Diem per City Travel Policy $ 84.00 Tolls $ 3.57 Payable Upon Receipt TOTAL AMOUNT DUE $ 449.51 REMIT TO: CITY OF SEBASTIAN Administrative Services 1225 Main Street Sebastian, Florida 32958 �p (772)388-8207 Account Numbers (fa off'" use only) GAR Cr. 001001-115001 (Accounts Receivable) 11130 CITY OF SEBASTIAN VOUCHER FOR REIMBURSEMENT OF TRAVEL EXPENSES Dale 11/14/18 11/16/18 111141 18 I11l15 ill h 1116118 [11/16118 1/14118 11/16/18 TRAVEIM Randy Moyer DEPAKI'MrWr Administration IB'stDENcccm• Sebastian - Prr Dicnl or Hot ir of " Mrals for Ac4ml Travel Performed from mint of 063in To Airposc or Reason Dol ureand class AA 13 lodgins o"linalion (Name orconfcrence) Hoorof Return Travel Expenses Sebastian to Kissimmee Kissimmee to Sebastian Meal Per Diem / Lodging Meal Per Diem i Lodging Meal Per Diem / Lodging Personal Mileage Tolls Tolls 481h Annual Police 8. Fte8fy,ler Pension Canfmolxe 5:36 - AM S S return 4:00 PM M $29' 39 M �SW34 M SAT 16 $250,76 Travel Eapensrs Paid Directly by file Cily (Registration, Cotnu,on nbenm r Ooly Carrier,1101011 etc.) $0 kDVANCE CHECK NUMBER: - CHECK DATE: I I 1,erebyeer10o,.tTom Ilxlthe aboz•<utxwswxra ndwlly incurred by mesa Flea ry bevel exPemu mthe pednrma nee of my 01116.1 dulaz; afilm.neo.1...Wercre. or eonvcNion ua.d'ueclfy mlaled In affzei.l dubs, ahhe oily, any o.h or ImSin, inducted in acoedere,zee neeommuloA rc tnlralmn feex'h.vc been ddueled from Ihu Ir.vel.4im; and th.1 llffeelaitn it Irue and.oMet in every mefcriol,neuer and same exmfsnan, in e.6y re.pcq wifh the reauircmenb of uelinn i mxfGi, n r!dd. Sfx�fufm Travelers Sig? �_ _ Date: tuneC / Q ORGANIZATION C0111: orlIncr coln: nlap A1ileasc Clainfed Amounl 102 s $55.59 102 $55.59 $3.57 0 A'I:Io,;:Cz Calimw Tolnl CnLgnn TnUl Ulumn'Ibl:d s &Y-00 s 250.76. s sas I s 114.75 LFSS ADVANCE RF.CEtvED Hotel on Travel Card NET AMOUNT DUE TO EMPLONTX NET AMOUNT DUE TO CITY i•� f70100b1t�0aJ � �14s.�s 04882e CAUer Ujv ncec Summary'rnf:d I S 449.51 s ($25 I s 196.7575 5 0 PorsnaNIn$edinn II2D61Wit.),limit. llerehy certif, or f fin. zhM In the hen of my km,wkdSe lox.bo <Iravdcr wu m, i>Reial huineax M Ilx Cnyof 3elm.4iea mel ,rn, pMnnnrd by t{x pm�mx(s7 singed Mre. /� ��ii((//"yi�ypp//,�.. SUPLRVISOWS SIGNATURE' ` C;1: DATE APPROVED ti a�- 33±� / f/ CITY MANAGER'S SIGN/t'rUR}. DATE APPROVLE 127/i� White/Traveler Carla rylTbiarlam Departmen i m a 5E� HOME OF PELICAN ISLAND City of Sebastian 1225 Main Street Sebastian, Florida 32958 INVOICE TO: Sebastian Police Pension Trust Fund INVOICE:I 11225 Main Street Date: 11/13/2018 �Sebastian, FL32958 I Amount:1 $6,000.00 AMOUNT DESCRIPTION DUE Agreement With City of Sebastian Dated June 14, 2017 for Plan Administrator Services for October, November and December 2018. S6,000.00 PAYMENT DUE UPON RECEIPT. PLEASE RETURN COPY OF INVOICE WITH PAYMENT THANK YOU. TOTAL AMOUNT DUE $6,000.00 Remit To: City of Sebastian - Attention Ken Killgore' 1225 Main Street Sebastian, Florida 32958 Account Code 001501-349620 age 01 of 03 TRAVELERS,, 06354 -L6 Account Bill LSJ INSURANCE AGENCY INC 100 E SYBELIA AVE 375 986OK9214 MAITLAND FL 32751 ACCOUDt NO. Date of This Bill 10/12/18 CITY OF SEBASTIAN POLICE OFFICERS' RETIR 1201 MAIN STREET SEBASTIAN FL 32958 Account Name CITY OF SEBASTIAN POLICE OFFIC ACCOUNT BILLING SUMMARY POLICY PRINCIPAL/INSURED POLICY PERIOD 0106195885 LB CITY OF SEBASTIAN POLICE 0 11/01/18 TOTAL BALANCE TRANSACTIONS SINCE LAST STATEMENT Total Transactions (See Transaction Detail Section) TOTAL BALANCE TRANSACTION DETAIL POLICY NUMBER 0186195885 LB LiabilitY 11/O1/18 Renewal / 2,685.00 y� a2,%iJ,D7 �laD'00 $2,685.90 a•S��-0 T 8EIAD reoA P"Sro,J &AA-D TOTAL BALANCE $2,685.00 MINIMUM DUE — $2,685.00 PAYMENT MUST BE RECEIVED BY: NOVEMBER 01, 2018 MIN. DUE $2.685.00 $2,68".00 BALANCE CO $2,685.00 12 $2,685.00 +2,685.00 $2,685.00 TOTAL TRANSACTIONS CONTINUED ON NEXT PAGE Please detach the payment coupon and mail with your payment in the enclosed envelope to: TRAVELERS CL REMITTANCE CENTER, PO BOX 660317, DALLAS, TX 75266-0317. .......................................... ........................ .............. .... .......................................... � 6488428 2018295 9247 247 ODF024 Payment Coupon Make checks payable to: TRAVELERS LSJ INSURANCE AGENCY INC CITY OF SEBASTIAN POLICE OFFIC 986OK9214 17 Include Account Number on the check. Change of Address? Place an "X' here. Print changes on reverse side. PAYMENT MUST BE RECEIVED BY TRAVELERS CL REMITTANCE CENTER NOVEMBER 01, 2018 PO BOX 660317 DALLAS, TX 75266-0317 •111I•hl"11•'PintP1l.v„n..l.l"h•m•I••l1•gl'411Li•1 9939383630113932313440393939393800026850000026850086 TOTAL BALANCE $2,685.00 MINIMUM DUE $2,685.00 AMOUNT ENCLOSED ; PL 9837 ccount Name CITY OF SEBASTIAN POLICE OFFIC Account No. 9860K9214 SPECIAL MESSAGES Page 03 of 03 Date of This Bill: 10/12/18 Hassle Free Payments - Call 877-307-4202 to make a quick and simple payment. For all other customer service inquiries (other than making a payment) Please call 800-252-2268. You must pay at least the minimum due or up to the total balance due. If at any time you Pay us more than the minimum due, and it covers your future installments, you will not receive a bill or be charged an installment charge. If you pay by installments, a charge will be added to each installment bill. The installment charge is calculated at a rate of of interest not to exceed 18 percent simple interest per year on the unpaid balance. The charge per installment will not be more than $3.00. If your payment is not received by the due date WE HAVE THE RIGHT, WITHOUT ADVANCE NOTICE TO YOU, TO TERMINATE YOUR OPTION TO PAY IN INSTALLMENTS AND TO REQUIRE FULL PAYMENT OF THE OUTSTANDING BALANCE ON YOUR POLICY. WE ALSO HAVE THE RIGHT TO ASSESS A LATE FEE OF $10.00. Make payments on-line! With our on-line Payment options you can make single payments or You can schedule Automatic Recurring Payments. It's fast and easy, enroll today! To learn more visit our website - https://self service. travelers,com/business/registration. If you are paying with a check from a Personal Checking Account, you either use information from your check to make a one-time electronic Your account or to process the payment as a check. If you are paying Business Checking account, we will process the payment as a check. authorize us to funds transfer from with a check from 648842H 2O18285 9247 247 ODFG24 CLDBILL2 onfirmEPAY Aft TRAVELERSJJ Page 1 of 1 "A- (? -Pafor Business Insurance Payment Confirmation Thank You for the Payment: Account Policy Number Policy Form 9860KS214 Total: Paid With: VISA--2393 Print Confirmation Done Amount$ Confirmation Number 2685 36999107 $2,685.00 Gl0099 — -5),3t, https:llepay-cl.travelers.com/epaylConfirmEPAY.aspx?InstID—O&PageToGo=Ebi11 V iew... 10/31 /2018 JAN ET GRAHAM TECHNICAL WRITER 97 Overlook Drive Sebastian, FL 32976 Jeanette Williams, City Clerk City of Sebastian 1225 Main Street Sebastian, FL 32958 INVOICE FOR SEPTEMBER 2018 Police Pension Board 8-28-2018 Police Pension Board 9-18-2018 (No hearing held) Construction Board 9-24-2018 Total for September 2018 iPROJECT — 1 -NT, $ DATE: T 7 29 18 I i DEPT. HEAD: - 5 Pages Appearance Fee 8 Pages F� $ 80.00 32.00 128.00 $ 240.00 I PnC)J_CT nnnouvT: $ _ no DATE: 2 7 OEP7 HEAD:/-- -! f Jeanette Williams, City Clerk City of Sebastian 1225 Main Street Sebastian, FL 32958 INVOICE FOR OCTODYR 2018 Veterans Board 10-01-2018 --N tural Resources 10-02-2018 --Planning & Zoning 10-04-2018 Police Pension Board 10-05-2018 — Special Magistrate 10-16-2018 —Planning & Zoning 10-18-2018 TOTAL FOR AUGUST ACCOUNT: C�lOC�9-S33ye0 _' P.O. #: PROJECT #: _ AMOUNT:$ Jb.ec DATE: i DEPT. HEAD: Natural Resources ,COUNT: _OI00TO —5-3313-0 ':UECT #: I1�tlT�S ;RUNT:$ TECHNICAL WRITER 97 Overlook Drive Sebastian, FL 32976 October 25, 2018 6 pages $ 96.00 5 pages 80.00 7 pages 112.00 9 pages 144.00 3 pages 48.00 7 pages 112.00 $592.00 Planning & Zoning ACCOUNT: 01 DOTO — 5-331 2-D DJECTp: M,NurES Z.?,IDUNT: I DATE: I DEPT. HEA� Special Magistrate PROJECT ! AMOUNT: $ fl'1 . lausner, Kaufman, Jensen & Levinson A Partnership of Professional Associations Attorneys At Law 7080 N.W. 4th Street Plantation, Florida 33317 Tel. (954) 916-1202 www.klausnerkaufnan.com Fax (954) 916-1232 Tax I.D.: 454083636 SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM November 29, 2018 Attn: KEN KILLGORE Bill # 22786 1225 MAIN STREET SEBASTIAN, FL 32958 CLIENT: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 MATTER: SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM :170042 Professional Fees Date Attorney Description Hours Amount 11/01/18 BSJ REVIEW EMAIL FROM TIMOTHY 0.10 42.50 HAVGAARD REGARDING FEE REPORTING FOR INVESTMENTS 11/02/18 CW REVIEW OF OPERATING RULES AND 0.20 85.00 PROCEDURES. MADE EDITS TO PROCEDURE POLICY 11/14/18 BSJ REVIEW EMAIL FROM CINDY WATSON 0.10 42.50 REGARDING CARLIN PARKER DISABILITY 11/25/18 BSJ REVIEW DISABILITY APPLICATION 0.70 297.50 FROM CARLIN PARKER WITH ATTACHED DOCUMENTS; RESEARCH ISSUES; RESPOND TO EMAIL FROM CINDY WATSON; PREPARE PROCESSING Total for Services 1.10 $467.50 CURRENT BILL TOTAL AMOUNT DUE $ 467.50 Sebastian Police Pension Asset Allocation As of December 8, 2017 Highland - Large Value 15.00-25.00% 21.25% 4,631,982 32.86% Highland - Large Growth 15.00 - 25.00% 21.25% 1,666,085 11.82% Boston Partners - Small/Mid Value 2.50 - 7.50% 5.00% 710,653 5.04% Apex - Small/Mid Growth 2.50 - 7.50% 5.00% 732,852 5.20% Highland -International Value 2.50-7.50% 5.00% 732,357 5.190/0 Renaissance - International Growth 5.00 - 10.00% 7.50% 1,029,246 7.30% Total Equity 65.00% I 9,503,175 I 67.41 % IFixed Income I I I I I Highland- Core Fixed Income I 20.00-30.00% I 25.00%I 3,869.710I 27.45%I Total Fixed Income I I 15.00% I 3,969,710 I 17.45% I (Alternatives I I I I I Center Coast - MLPs I 0.00 - 10.00% I 5.00%I 613,122 I 4.35% Intercontinental - Private Real Estate 0.00 - 10.00% 5.00% 111,772 0.790/a TotalAlternadves I I 10.00% I 724,8941 5.14% Receipt & Disbursement I I I Receipt & Disbursement I I 0.00°i°I 99,754I 0.71%I TotalAssers 100.00% 14,097,779 l00.00% The prices, quotes, or statistics contained herein have been obtained from sources believed to be reliable, however, the accuracy cannot be guaranteed. 1 City of Sebastian Police Officers' Retirement System Fiscal Year Return & Asset Allocation Analysis As of September 30, 2017 luiv /.14 o.4y N/A N/A N/A N/A N/A N/A 2011 (1.52) (2.08) N/A 60.00 40.00 0.00 0.00 40.50 2012 14.62 14.00 14.56 60.00 40.00 0.00 0.00 49.55 2013 12.38 11.77 11.91 60.00 40.00 0.00 0.00 52.44 2014 10.26 9.67 9.62 60.00 40.00 0.00 0.00 64.43 2015 0.29 (0.27) (0.28) 60.00 40.00 0.00 0.00 65,96 2016 9.95 9.38 9.28 60.00 40.00 0.00 0.00 67.20 2017 11.61 1,098.00 10.98 65.00 25.00 10.00 0.00 65.39 (1) %Cash = cash held in Deposit & Disbursement account and not cash held by investment managers in their accounts N/A N/A N/A 8.00 45.05 0.00 14.45 8.00 42.56 0.00 7.88 8.00 39.30 0.00 8.26 8.00 29.19 0.00 6.39 7.75 31.46 0.00 2.58 7.60 28.72 0.00 4.08 7.60 27.75 4.65 2.21 7.45 Note: Graystone Consulting began independently calculating performance effective January 31, 2011; therefore, information shown above prior to that time was obtained using Information provided from the plan's prior consultant. The prices, quotes, & statistics contained herein have been obtained from sources believed reliable; however, the accuracy cannot be guaranteed. Past performance is not a guarantee of future results. Kenneth Killgore From: Dulce Zapata-Escalante <dulce@robertdklausner.com> Sent Friday, October 12, 2018 11:39 AM To: Kenneth Killgore Cc: bsjteam Subject: Sebastian Police - 2019 meeting dates Hello Ken: Happy Friday ... I wanted to get back with regarding the 2019 meeting dates for the above reference matter the dates are as follow: All meeting starting at 10:00a.m March 19 June 18 September 17 December 10 Should you have any questions, please contact our office. Regards, Dulce Zaoata-Escalante Legal Assistant Klausner, Kaufman, Jensen & Levinson 7080 N.W. 4I" Street Plantation, Florida 33317 Telephone: (954) 916-1202 Fax: (954) 916-1232 Website: www.klausnerkaufman.com 1 EXHIBIT A CITY OF SEBASTIAN POLICE OFFICERS' PENSION PLAN CALENDAR OF ACTIVITIES AND SCOPE OF SERVICES Updated September 2018 r_M5 L*��sai011I:141T, 1. Verify and process payments from Trust Fund: a. Board Member travel expense reimbursements. b. Payments to Consultants. 2. Coordinate Board Member appointments: a. Election of Police Officer Board Members. b. Appointment of City Council Board Members. c. City Council confirmation of Board appointed Member. 3. Maintain records of contracts and insurance. 4. Prepare Information Packet for New Board Members: a. Ordinance and Operating b. Current Contracts and Insurance Policy. S. Maintain file of approved minutes. 6. Maintain information on members: a. Roster of retirees receiving pension benefits and health insurance. b. Beneficiary information on each member. 7. Monitor Monthly Statements from Custodian (record accounting entries). 8. Handle processing of member request(s): a. Discuss benefits with members. b. Research details of members history/vesting status. c. Provide correct forms for member request(s). d. Submit benefit calculation request to Actuary. e. Coordinate with member(s) to complete paperwork: I. Send members the actuarial calculations. ii. Assist with completion of proper forms. iii. Submit proper forms: 1. For approval by Pension Board. 2. For setting up regular payments by Custodian. 9. Handle Inspection and Copying of Public Records Request and Insure Redaction on Documents. 10. Monitor proposed changes to State Law. 11. Track items needing Board action at the next quarterly meeting. 12. Handle Special Board Meetings: a. Compile agenda and back-up materials. I. Minutes from prior meeting. ii. Invoices to be paid. iii. Provide information on presentations and items for Board action. b. Coordinate attendance dates: L With Consultants. ii. With Recording Secretary. iii. With other parties. c. Send agenda and back-up to Board Members or make arrangements for pick-up. d. Post Public Notices of the meeting. 13. Coordinate presentation to City Council of proposed Ordinance changes. Page 1 of 4 EXHIBIT A CITY OF SEBASTIAN POLICE OFFICERS' PENSION PLAN CALENDAR OF ACTIVITIES AND SCOPE OF SERVICES Updated September 2018 JANUARY: 1. As -needed activities. FEBRUARY: 1. As -needed activities. MARCH: 1. As -needed activities. 2. Complete Annual State Report: a, Gather information on current members. b. Secure required forms from the Division of Retirement website. c. Complete forms and obtain Chairperson and Secretary signatures. 3. 1" Quarter Board Meeting: a. Compile agenda and back-up materials. i. Minutes from prior meeting, ii. Approval of Payments. lii. Approval of Calendar of Activities. iv. Investment and Performance Review. v. Request for Update of Summary Plan Description (every two years) vi. Report on completion of Annual State Report. b. Coordinate attendance dates: I. With Recording Secretary. ii. With other parties. c. Send agenda and back-up to Board Members or make arrangements for pick-up. d. Follow-up to document minutes and take action on Board directives. APRIL: 1. As -needed activities. MAY: 1. As -needed activities. JUNE: 1. As -needed activities. 2. Request update of Summary Plan Description (every two years). 3. 2N" Quarter Board Meeting: a. Compile agenda and back-up materials. I. Minutes from prior meeting. ii. Approval of Payments, iii. Approval of Calendar of Activities. iv. investment and Performance Review. v. Select Board Chairperson and Secretary (every two years) vi. Approve the Summary Plan Description (if needed). b. Coordinate attendance dates: L With Recording Secretary. ii. With other parties, c. Send agenda and back-up to Board Members or make arrangements for pick-up. d. Follow-up to document minutes and take action on Board directives. i. Distribute the Summary Plan Description to Members (if needed). Page 2 of 4 EXHIBIT A CITY OF SEBASTIAN POLICE OFFICERS' PENSION PLAN CALENDAR OF ACTIVITIES AND SCOPE OF SERVICES Updated September 2018 JULY: 1. As -needed activities. 2. Board Members should file Financial Disclosure forms by July 1". AUGUST: 1. As -needed activities. 2. Handle receipt of State premium tax monies: a. Record receipt to City. b. Have Mayor acknowledge receipt to the State. c. Wire monies to Trust Fund. SEPTEMBER: 1. As -needed activities. 2. File for administrative hearing, if State premium tax monies are not received. 3. Request Rate of Return Comparisons from Actuary. 4. Update Calendar of Activities (if needed). S. Develop report on actual expenses and establish a budget for the next year. 6. 3rd Quarter Board Meeting: a. Compile agenda and back-up materials: i. Minutes from prior meeting. ii. Approval of Payments. iii. Agree on Quarterly Meeting dates for following year. iv. Approval of Calendar of Activities. v. Investment and Performance Review. vi. Report on receipt of State premium tax monies. vii. Year-to-date expenses and budget for the next year. viii. Information on Election Process for Police Officer Board Members (if needed). b. Coordinate attendance dates: i. With Recording Secretary. ii. With other parties. c. Send agenda and back-up to Board Members or make arrangements for pick-up. d. Follow-up to document minutes and take action on Board directives. i. Request City Council confirmation of Board appointed Member (if needed). ii. Request City Council action on City Council appointed Members (if needed). iii. Advertise and conduct election of Police Officer Members (if needed). Provide Actuary a report of annual wages/deductions of active/terminated members. OCTOBER: 1. As -needed activities. 2. File report on actual expenses and budget for the next year: a. With the City as Plan Sponsor. b. With the State Department of Management Services. c. With Chairperson to make available to Plan Members. 3. File report on investments to the City Council. 4. Update City website: a. Rate of Return Comparisons from Actuary. b. Actual expenses for fiscal year and budget for following year. Page 3 of 4 EXHIBIT A CITY OF SEBASTIAN POLICE OFFICERS' PENSION PLAN CALENDAR OF ACTIVITIES AND SCOPE OF SERVICES Updated September 2018 NOVEMBER: 1. As -needed activities. 2. Review Operating Rules and develop any recommended changes. 3. Renew Police Pension Board liability insurance policy. 4. Confirm schedule for receiving the Actuarial Report. S. Request Updates of: a. Expected Rate of Return. b. GASB 67/68 Report. c. Report on Return and Asset Allocation. DECEMBER: 1. As -needed activities. 2. Receive Actuarial Report: a. Distribute to Board Members. b. Provide Copy to City Auditors. 3. 4tn Quarter Board Meeting: a. Compile agenda and back-up materials: I. Minutes from prior meeting. ii. Invoices to be paid. iii. Approval of Calendar of Activities. iv. Consider Updates to Operating Rules. v. Report on Actual Operating Expense for the year. vi. Investment and Performance Review. vll. Consider Recommended Updates to Investment Policy and Allocation Strategy. viii. Accept the Actuarial Report. ix. Approve Expected Rate of Return. x. Confirm renewal of Liability Insurance Policy. b. Coordinate attendance dates: i. With Recording Secretary. ii. With other parties. c. Send agenda and back-up to Board Members or make arrangements for pick-up. d. Follow-up to document minutes and take action on Board directives. i. Update City Website and give required notices of Changes to Investment Allocation Strategy and Investment Policy. 1. To the City Council. 2. To the Actuary and Other Consultants. 3. To the State. ii. Update City Website for Actuarial Report. iii. Update City Website and give required notices of Expected Rate of Return: 1. To the City Council. 2. To the Actuary and Other Consultants 3. To the State. 4. Post Actuary's GASB 67/68 Report to the City Website. S. Post Report on Return and Asset Allocation to City Website. Page 4 of 4 Annual Onemtfng Fxbgnses Investment Managers: Highland Capital Boston Pamers Fiera Capital (APEX) Renaissance Center Coast (Brookfield) Intercontinental Performance Manager - Graystone Salem Tout Company AOR Agent Fee - Foreign Dividends Sub -total investment Expense Actuarial - Foster S Foster State Report Preparation - Foster $ Foster Legal Services Administrative Fee to City Insurance Miscellaneous: Minutes Reparation Codification ol'Approved Ordinance(s) Functional Capacity Assessments Travel Contingency Sub -total Administrative Expense Total Operating Upera:es CITY OF SEBASTIAN, FLORIDA POLICE PENSION FUND - 2028/2019 BUDGET/ACTUAL Update as of December 4, 2018 Approved Amended Total Previous Year's Annual Total 2018/2019 2018/2019 2018/2019 To Date 2018/2019 2017/2018 2016/2017 2025/2016 2014/2015 2013/2014 Budget Budget 10/1-12131 1/2-3/32 4/1-6/3 7/1-9/30 Actual Actual Attual Actual Actual Actual $ 52,000 $ 52,000 $ - $ - $ - $ $ - $ 67,754.39 $ 60,479.85 $ 42,352.99 $ 64,402.32 $ 58,710.23 7,000 7,000 1,858.40 - - 1,BSBAO 7,168.66 5,400 5,400 1,572.12 - - 1,57212 5,93256 7,ODO 7,000 1,876.41 - - 1,876.41 6,938.39 3,ODO 3,000 817.12 - - 817.12 3,066.53 13,500 13,500 3,375,00 - - 3,375.00 13,500.00 13,SDD.00 13,500.00 26,875.00 15,000.00 29.ODO 29,000 51015.00 - - 5,015.00 27,715.00 7,245.00 6,26500 6,61500 51295.00 2,300 2,300 - - - - 193.08 581.24 451.80 241.44 196.69 $ 119,200 $ 119,200 $ 14,514.05 $ - $ - $ - $ 1014.05 $ 132,269.61 $ $2,806.09 $ 62,569.79 $ 88,033.76 S 79,191.92 18,000 18,000 - - 13,331.00 14,765.00 21,39800 15,544.00 3,000 3,000 26,ODO 26.000 9,234.92 8,234.92 7,767.42 29,011.01 18,294.60 17,289.16 7,623.64 24,OOD 24,000 6,000.00 6,00D.00 6,000.00 2,600 2,600 2,585.00 2,585.00 2,585.00 3,021.05 3,121.05 3,12105 3,000.00 1,100 1,100 256.00 256.00 256.00 600 600 - - 1,222.07 1,646.76 1,350 1,350 - - - 695.50 101.90 - 15,000 15,000 $ 91,650 $ 76,6SO $ 17,075.92 $ - S - $ - $ 17,075.92 $ 16,60SA2 45,363.06 $ 36,876.15 $ 43,032.18 S 27,814.40 $ 210,850 $ 195,850 $ 31,589.97 $ - $ - $ - 11 31,589.97 $ 143,877.03 127,169.15 $ 99,445.94 $ 131,065.94 $ 107,006.32 OPERATING RULES AND PROCEDURES For The CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM Approved by the Board on: 00119050.WPD;1 CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM OPERATING RULES AND PROCEDURES TABLE OF CONTENTS SECTION PAGE NUMBER Rule 1 - Board of Trustees 1.1 Definition of Functions 1 1.2 Definition of Fiduciary 1 1.3 Summary 1 1.4 Establishment of Offices 1 1.5 Conflicts of Interest and Gifts 2 1.6 Per Diem and Reimbursement 2 1.7 Election Procedures 2 1.8 Succession of Persons to Vacant Positions 3 1.9 Education Requirements 4 1.10 Disclosure of Financial Interests 4 Rule 2 - Meetings 2.1 Attendance at Board Meetings 4 2.2 Agendas and Other Meeting Materials 5 2.3 Rules of Order 5 2.4 Appearance Before the Board 6 2.5 Public Records 6 2.6 Government in the Sunshine 6 2.7 Committee Meetings 7 2.8 Workshops 7 2.9 Minutes 7 Rule 3 - Rules of Procedure 3.1 Legal Effect 7 3.2 Adoption Procedures 8 Rule 4 - Plan Administrative Assistant/Office Personnel 4.1 Board Employees/Independent Contractors 4.2 Selection Standards 4.3 Evaluation and Compensation 4.4 Decision Making Authority Rule 5 - Internal Procedures and Controls 5.1 Mail 9 5.2 Expense Payments from the Fund 9 5.3 Processing of Payments for Early or Normal Retirement and Return of Contributions 10 5.4 Review of Custodial Statements 11 5.5 Rollovers to and from the Fund 12 00119050.WPD;1 Table of Contents Page 2 Rule 6 - Insurance 6.1 Fiduciary Insurance 12 6.2 Travel Coverage 12 Rule 7 - Relations With The City 7.1 Authority of the Board 12 7.2 Contractual Services 12 7.3 Use of the City Finance Department 13 7.4 Use of Independent Custodians 13 7.5 Administrative Services 13 Rule 8 - Ordinance Changes 8.1 Form of Ordinance 13 8.2 Collective Bargaining 13 8.3 Appearance at City Council Meetings 14 8.4 Actuarial Impact Studies 14 Rule 9 - Judicial Proceedings 9.1 Process 9.2 Dissolution of Marriage Rule 10 - Investments 10.1 Hiring Investment Managers 10.2 Hiring Performance Monitors 10.3 Performance Goals and Objectives 10.4 Investment Standards 10.5 Decision Making Authority 10.6 Written Contracts 10.7 Reporting 10.8 Presentations by Prospective Consultants and Professionals 10.9 Divestiture 10.10 Proxy Voting 10.11 Declaration of Expected Annual Rate of Return 10.12 Investment Reports to the City Rule 11 - Actuarial Services 11.1 Selection 11.2 Conflicts of Interest 11.3 Reporting 11.4 Setting Contribution Rates 14 14 14 15 15 16 16 16 17 17 18 18 19 19 19 19 19 20 00119050.WPD;1 Table of Contents Page 3 11.5 Credited Service 20 11.6 Actuarial Studies for Individual Plan Members 20 Rule 12 - Accounting Services/Administrative Budget 12.1 Audits 20 12.2 Conflicts of Interest 21 12.3 Review of Internal Controls 21 12.4 Detailed Accounting Report 21 12.5 Administrative Budget 21 Rule 13 - Legal Services 13.1 Selection 22 13.2 Conflicts of Interest 22 13.3 City of Sebastian City Attorney 22 13.4 Privileged Communications 22 13.5 Authority to Direct 22 13.6 Contracts 23 Rule 14 - Claims Procedures 14.1 Claims of Affected Persons 23 14.2 Initial Hearing 24 14.3 Full Hearing 24 14.4 Conduct of the Full Hearing 27 14.5 Disability Claims - Additional Procedures 28 Rule 15 - Confidentiality 15.1 Extent of Confidentiality Permitted 28 15.2 Requirement for Maintenance of Confidentiality 29 15.3 Confidentiality of Medical Records 29 Rule 16 - Interest Calculations 16.1 Interest Calculations 29 Rule 17 - Disability Review Procedure 17.1 Procedure 30 Rule 18 - Surveillance 18.1 Surveillance 31 Rule 19 - Insurance Premium Deductions 19.1 Insurance Premium Deduction Authorization 31 19.2 Tax -Free Payment of Insurance Premiums 32 00119050.WPD;1 Table of Contents Page 4 19.3 Retirees Who are Eligible for the Tax -Free Payment of Qualified Insurance Premiums 33 00119050.WPD;1 RULE 1 BOARD OF TRUSTEES 1.1 DEFINITION OF FUNCTIONS The Board of Trustees shall act as the named fiduciary of the Fund as defined by Florida law. The Board shall have the exclusive authority to operate, maintain and interpret the provisions of the state laws and local ordinances establishing and executing the investment policy of the Fund. The Trustees shall be solely responsible for the selection and retention of professional advisors to the Fund including but not limited to investment managers, performance monitors, plan administrators, attorneys, accountants, actuaries, and clerical staff. 1.2 DEFINITION OF FIDUCIARY A fiduciary shall be defined as a person responsible for the discharge of his duties with respect to the Pension Plan solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying the reasonable expenses of administering the Plan. 1.3 SUMMARY Trustees shall be responsible for the investment and reinvestment of the assets of the Fund; for determining all claims for retirement benefits; for exercising the sole and exclusive adminis- tration of and the proper operation of the Plan; to perform such actuarial and accounting functions as are required by law; to prepare and distribute a Summary Plan Description as provided in § 112.66, Florida Statutes, to the Members of the Fund upon employment and every other year thereafter; and to fulfill all other such duties as may be required by law. 1.4 ESTABLISHMENT OF OFFICES The Board of Trustees shall elect a Chairman and Secretary every two years. The officers shall be Trustees of the Board. The Chairman shall be responsible for the conduct of all meetings of the Board and shall have voting rights the same as any other Trustee of the Board. The Chairman shall perform such other duties as the Trustees may assign. The Secretary shall be responsible for 00119050.WPD;1 -1- the keeping of minutes of the transactions of the Board. The Secretary, together with the Chairman, shall execute all official contracts of the Board. 1.5 CONFLICTS OF INTEREST AND GIFTS A. Conflicts of interest in voting shall be governed by the provisions of Section 112.3143, Florida Statutes, the Code of Ethics for Public Officials. Notwithstanding any other provision of law, no Trustee shall vote or participate in a determination of any matter in which that Trustee shall receive a special private gain except in the case of employee Trustees voting on benefits applicable to all Members of the Plan. B. No Trustee (or his or her spouse or minor child) shall, at any time, solicit or accept any gift (including but not limited to, food, beverages and transportation), loan, reward, promise of future employment, favor, service, compensation, payment, or thing of value when the Trustee understands, knows or should have known that it was given to influence a vote or other action in which the Trustee was expected to participate in his official capacity. Gifts provided directly or indirectly by a state, regional or national organization which promotes the exchange of ideas between, or the professional development of, members of that organization or staff of a governmental agency that is a member of that organization, are permitted. 1.6 PER DIEM AND REIMBURSEMENT All Trustees shall be entitled to receive a per diem allowance and reimbursement for reasonable expenses incurred in conducting the business of the Fund. The Board shall establish reasonable reimbursement rates in accordance with policies of the City of Sebastian, a copy of which is attached. 1.7 ELECTION PROCEDURES The Board of Trustees shall consist of five persons, two of whom shall be Police Officers, two of whom shall be legal residents of the City appointed by the City Council and the fifth Trustee shall be a person selected by the other four Trustees and appointed as a ministerial act by the City Council . 00119050.WPD;1 -2- A. Police Officer Trustees. The Police Officer Trustees shall be elected from among the Members of the Fund in the Police Department. Elections shall be by a majority vote. If no candidate receives a majority vote, a run-off election between the two top vote recipients shall be held at the earliest practical date. Elections shall be within sixty calendar days of a vacancy. Trustees shall take office immediately after election results are certified by the Board. In the event of a vacancy, elections shall be within sixty days of the vacancy. Employees shall be permitted to nominate themselves for office and elections maybe conducted by mail -in ballot. The election shall otherwise be conducted by placement of a ballot box in the Police Department Headquarters for a period of 72 hours beginning on a date to be selected by the Board. Ballots shall be counted by the Board and the winners certified by the Board. B. Resident Trustees. The two resident Trustees shall be legal residents of the City and shall be appointed for four year terms, by the City Council at the earliest practical date after a vacancy occurs. C. Fifth Trustee. The fifth Trustee of the Board shall be chosen for a four year term by a majority vote of the other Trustees at the earliest practical date after a vacancy occurs. The fifth Trustee may or may not be a legal resident of Sebastian and may or may not be an employee of the City. The name of the person selected by a majority of the other Trustees shall be certified to the City Council which shall, in accordance with state law, ratify the appointment of that person as a ministerial act. 1.8 SUCCESSION OF PERSONS TO VACANT POSITIONS Vacancies on the Board of Trustees of employee members shall be filled by special election to be conducted in the same manner as any other election. Vacancies among the resident Trustees shall be filled by the City Council . The person selected to fill a vacancy shall fulfill only the remaining term of the vacant office. In the event of a vacancy in the fifth Trustee of the Board, the Board shall appoint a successor in the same manner as the initial selection. 00119050.WPD;1 -3- 1.9 EDUCATION REQUIREMENTS Each Trustee is required to attend a seminar or conference regarding Trustee duties and responsibilities and matters relating to the investment program of the Plan at least once each term. Trustees are encouraged to attend seminars or conferences more frequently in order to remain informed regarding pension issues. New Trustees are encouraged to attend within the first six months of their term. Trustees shall be permitted to attend conferences or schools within the State of Florida to satisfy the above minimum requirements without prior Board approval. 1.10 DISCLOSURE OF FINANCIAL INTERESTS Trustees must file a statement of financial interests (Form 1) with the supervisor of elections of the county in which they permanently reside within 30 days from the date of appointment and no later than July 1 of each year thereafter. Trustees must file a final statement (Form 1F) within 60 days after leaving their office as Trustee. The final statement shall cover the period between January 1 of the year in which the Trustee leaves office and the last day of office. If a Trustee has not filed by July 1, the supervisor of elections is required to notify such Trustee of a grace period to file by September 1. If a statement is not filed by September 1, a fine of $25.00 per day will be imposed up to a maximum of $1500.00. Fines cannot be paid from the pension plan. The Trustee may also be subject to additional penalties provided for in § 112.317, Florida Statutes. RULE 2 MEETINGS 2.1 ATTENDANCE AT BOARD MEETINGS The Board shall set its own schedule of meetings. Special meetings may be called by the Chairman or by a majority of Trustees. The Board shall meet at least once each quarter. In recognition of the importance of the work of the Board, regular attendance at Board meetings is expected of all Trustees. Physical attendance of a quorum is required at meetings in order for the Board to conduct business. Once the physical presence of a quorum is established, 00119050.WPD;1 -4- Trustees not physically present may participate telephonically if so noted on the meeting agenda. Trustees shall only be permitted to attend meetings of the Board by teleconferencing or telephone if extraordinary circumstances exist for the Trustee's absence, as determined by the Board, and only if a quorum (3) of the Trustees is physically present at the meeting. Trustees who are permitted to remotely attend meetings shall be permitted to participate and vote at such meetings. Any Trustee who fails to attend two consecutive meetings of the Board without an excuse acceptable to the other Trustees shall be deemed to have resigned from the Board. Employee Members of the Fund who are called into the active service of the City at the time of a Board meeting shall automatically be deemed excused. 2.2 AGENDAS AND OTHER MEETING MATERIALS A published Notice of Meeting and Agenda shall be prepared for each regular and special meeting of the Board. The Notice of Meeting and Agenda shall set forth those items upon which the Board anticipates taking action or discussing. Each agenda item shall have attached to it backup material necessary for discussion or action by the Board. Each Notice of Meeting and Agenda shall inform members of the public that should they wish to appeal any decision made by the Board that they will need a record of the proceedings and that they may need to ensure a verbatim record is taken, which includes testimony and evidence upon which the appeal is based. In addition, the Notice of Meeting and Agenda shall also include a notice to members of the public offering to provide assistance to those who are disabled, should they need assistance in order to attend the meeting. A copy of the Notice of Meeting and Agenda shall be posted in a location in the Sebastian City Hall and the Police Department where notices of public meetings are customarily posted. The Board must provide and post reasonable notice of all meetings. All agendas and meeting materials are public records as defined in Chapter 119, Florida Statutes. 2.3 RULES OF ORDER In recognition of the importance of accomplishing the objectives of the Board in a most orderly fashion, the Board may establish rules of order for the conduct of its meetings. The Board 00119050.WPD;1 -5- shall not, however, be bound by strict observance of the rules of parliamentary procedure unless the Board deems it in its best interest to do so. Three affirmative votes are required to carry action. 2.4 APPEARANCE BEFORE THE BOARD As a public body, the Board has a responsibility to accommodate members of the public and Members of the Fund who wish to appear before the Board. All appearances before the Board shall be scheduled through the Plan Administrative Assistant and time limits for presentations may be established by the Board. Appearances before the Board may be in person or through a repre- sentative. All communications with the Board shall either be in writing or by personal appearance at a Board meeting. 2.5 PUBLIC RECORDS A. The records of the Fund are public records as set forth in Chapter 119, Florida Statutes, except for medical records of the Fund. The Board shall maintain the confidentiality of medical records as required by law. All medical records of Members of the Fund shall be maintained separately from other records of the Board so as to ensure security of the privileged information to which the Board is privy. B. The Board shall appoint a Records Management Liaison Officer (RMLO) in accordance with Section 257.35, Florida Statutes. The RMLO shall be the official custodian of the records of the Board. The Board shall adopt the Florida General Records Schedule GS1-SL, as amended from time to time, and shall maintain an active and continuing program for the economical and efficient management of Board records. 2.6 GOVERNMENT IN THE SUNSHINE All meetings of the Board shall be conducted in accordance with the provisions of Section 286.011, Florida Statutes, the Government in the Sunshine Act. No Trustee shall engage in communications with another Trustee outside of a public meeting on any matter which shall ultimately be the subject of a Board action. All meetings of Trustees at which official business of the Board shall be discussed shall be publicly noticed and open to the public in accordance with the 00119050.WPD;1 -6- law. All meetings of the Board shall be held in a location where public access is reasonably available. Regular meetings of the Board shall be held in Indian River County, Florida. 2.7 COMMITTEE MEETINGS The Board, in the conduct of its business, may choose to establish committees consisting of a lesser number of Trustees. Committees shall be appointed by the Chairman. Committees consisting of two or more Trustees shall be conducted in accordance with the Government in the Sunshine Law. Committees consisting of one Trustee shall maintain records in accordance with the Public Records Act but need not conduct its business pursuant to a publicly noticed meeting. All reports of committees shall be reduced to writing and made a part of the official records of the Board. 2.8 WORKSHOPS The Board may from time to time wish to conduct workshop meetings for the purposes of developing policies or procedures of the Board or for the review of investment data of the Board. Workshops shall be conducted in a public forum the same as any other meeting and shall have a published agenda in advance of the workshop. 2.9 MINUTES Complete minutes of all meetings of the Board or a Committee shall be promptly prepared following the meeting and all minutes shall be submitted to the Board for approval following their preparation. All minutes shall be open for public inspection. RULE 3 RULES OF PROCEDURE 3.1 LEGAL EFFECT The Board of Trustees is authorized by law to establish rules of procedure for the operation of the Fund. No rule or regulation of the Fund may conflict with any lawful ordinance, charter provision or state law. 00119050.WPD;1 -7- 3.2 ADOPTION PROCEDURES All rules to be adopted by the Fund shall be in writing and shall be adopted by a majority vote of the Board. The Board shall review its rules and regulations on a periodic basis but not less than once a year. The rules and regulations of the Fund shall be made available to any member of the Fund requesting a copy from the Plan Administrator. RULE 4 PLAN ADMINISTRATIVE ASSISTANT/OFFICE PERSONNEL 4.1 BOARD EMPLOYEES/INDEPENDENT CONTRACTORS The Board shall establish specific j ob descriptions for each classification of service provided to the Board. New employees and independent contractors of the Board shall not, by virtue of their employment by the Board, be employees of the City of Sebastian and shall serve at the pleasure of the Board. 4.2 SELECTION STANDARDS The Board shall establish for each classification of service, standards of education, experience and skills necessary for the execution of the duties of the position. The Board may delegate the initial screening process for applicants to a committee of the Board. The final decision for the employment of any person as an employee or independent contractors shall be determined by the Board of Trustees acting as a whole. 4.3 EVALUATION AND COMPENSATION All employees and independent contractor of the Board shall be evaluated periodically. Compensation shall be established by the Board of Trustees. 4.4 DECISION MAKING AUTHORITY No employee or independent contractor of the Board shall have the authority to bind the Board of Trustees in any contract or endeavor without the express authority of the Board. 00119050.WPD;1 -8- RULE 5 INTERNAL PROCEDURES AND CONTROLS 5.1 MAIL The Administrative Assistant of the Board shall be responsible for opening, dating and transmitting mail. All mail received by the Board shall be dated, stamped and reviewed for any time limitations or response dates. The mail shall be placed in folders bearing the names of the recipient of the mail. Mail addressed to the Board in general and to no specific person shall be directed to all Trustees. All official decisions of the Board shall be sent by mail. A "reading file" of all correspondence coming into and emanating from the Board shall be maintained on a monthly basis together with copies in any specific files as may be established. In all respects, the provisions of Chapter 119, Florida Statutes, the Public Records Act, shall be observed. 5.2 EXPENSE PAYMENTS FROM THE FUND A. Payments to professionals performing services previously authorized by the Board or for other expenses authorized by the Board shall routinely be made prior to Board approval as follows: (1) Statements received for services or expenses which are not pursuant to a written agreement shall be paid, but only if such statements do not exceed $250.00. (2) Statements received for services or expenses which are rendered pursuant to a written agreement shall be paid if deemed to be in accordance with the agreement. All payments made pursuant to paragraphs (1) and (2) above shall be considered by the Board at the first meeting following such payment and approved and ratified, if appropriate. B. Any other payments from the Fund not described in subsection A. above shall be approved by the Board prior to such payment. C. Authorization for payments from the Fund shall be in writing and signed by at least two trustees of the Board, or by the Administrative Assistant. 00119050.WPD;1 -9- 5.3 PROCESSING OF PAYMENTS FOR EARLY OR NORMAL RETIREMENT AND RETURN OF CONTRIBUTIONS A. Upon receipt of an application for early or normal retirement, the Board's Administrative Assistant or other Board designee shall process the application as follows: (1) The application shall be reviewed for accuracy and completeness and for eligibility for benefits. (2) A copy of the application and any necessary records from the City shall be forwarded to the actuary for calculation of the benefit amounts payable for the normal form and all optional forms of benefits. (3) Upon receipt of the actuary's calculations, the calculations shall be presented to the Retiree and the Retiree shall make his election. (4) The application shall be approved by any Administrative Assistant and shall then be provided to the Custodian along with any necessary supporting documents in order to begin payments. (5) Copies of the Retiree's election form and the actuary's calculations shall be provided to the Board of Trustees or Administrative Assistant prior to the commencement of payments or at the next meeting immediately following the commencement of payments, and the Board shall review and approve the retirement benefits. B. Upon the termination of employment of a Member prior to his early or normal retirement date, the Board's Administrative Assistant or other Board designee shall: (1) Determine whether the Member is vested or not vested and determine the amount of the Member's contributions. (2) Inform the Member of his right to leave his contributions in the plan or withdraw his contributions. If the Member desires to withdraw his contributions, provide the Member with the necessary forms, including the appropriate Return of Contributions form, the Special Tax Notice Regarding 00119050.WPD;1 -10- Plan Payments and the Certification of Receipt of the Special Tax Notice and the Lump Sum Distribution Election Form; (3) Recommend that the Member study and complete the appropriate forms and seek tax and/or legal advice regarding his choice. (4) Direct the Member to return the completed forms to the Administrative Assistant or Board designee; (5) Upon receipt of the properly completed forms, prepare and submit a payment request signed by the Administrative Assistant and copies of any necessary documents to the Custodian to authorize the requested payment or rollover; (6) Provide copies of all documents to the Board of Trustees prior to payment or at the next meeting immediately following the payment, for the Board to approve the payment. C. Pension payments should only be made as provided above. 1099-R reporting forms to Retirees must contain the proper information and codes to ensure that Retirees report the proper amounts on their personal income tax returns. In -line -of duty disability benefits shall be reported as "taxability undetermined" on 1099-R forms. 5.4 REVIEW OF CUSTODIAL STATEMENTS A. Custodial reports should be monitored by the Board or its designee for disclosure of all asset inflows such as City and Member contributions, state excise tax payments, if applicable, miscellaneous citizen donations, and investment income. All errors, including those involving the misclassifications of Plan revenues, e.g., recording Member contributions as City contributions, must be corrected. B. Custodial reports should also be monitored for all asset outflows. Asset outflows must be properly approved and verified on audit. Expenses shall be approved as provided in Rule 5.2 and Retirements and Returns of Contributions in accordance with Rule 5.3. Letters of authorization for the expenditure of funds must be issued by the Administrative Assistant and copies must be maintained in orderly files. 00119050.WPD;1 -11- 5.5 ROLLOVERS TO AND FROM THE FUND The Fund will accept and transfer eligible cash rollover distributions to and from the Fund as permitted by local, State and Federal law. The Board may adopt appropriate forms to facilitate such rollovers. RULE 6 INSURANCE 6.1 FIDUCIARY INSURANCE The Trustees are authorized by law to purchase fiduciary insurance to insure members of the Board for breaches of fiduciary duty at the expense of the Fund, but the Fund shall not pay to waive recourse against Trustees. A rider waiving recourse may be purchased and paid for by the City or by a Trustee. 6.2 TRAVEL COVERAGE The fund may purchase, at its expense, life and accidental death and dismemberment insurance for each Trustee who shall travel outside of Indian River County for the purpose of Board related business. RULE 7 RELATIONS WITH THE CITY 7.1 AUTHORITY OF THE BOARD The Board of Trustees is an independent entity established by state law, city charter and local ordinance. The Board of Trustees shall not be considered a component part of nor subordinate to the City of Sebastian government. The Board shall have exclusive control of the operation of the Fund; however, no change to the retirement ordinance may be made except by action of the State Legislature or the City Council . 7.2 CONTRACTUAL SERVICES In the selection of contractual services, the Board shall pay particular attention to the existence of conflicts of interest when contractors are to be employed by the Board for services similar to services which the contractor also provides to the City of Sebastian. 00119050.WPD;1 -12- 7.3 USE OF THE CITY AS CUSTODIAN The Board shall be authorized to utilize the services of the City for the performance of banking functions of the Board. The City shall have no discretionary authority with regard to the utilization or direction of funds of the Board. The precise duties of the City shall be reduced to writing, the same as any other contract for services entered into by the Board. 7.4 USE OF INDEPENDENT CUSTODIANS The Board shall be authorized to use the services of any duly qualified custodian in lieu of the City for the performance of banking functions of the Board. The custodian shall be duly licensed, insured and bonded and shall meet all of the depository requirements of Chapter 280, Florida Statutes. 7.5 ADMINISTRATIVE SERVICES The Board shall be authorized to utilize the City for the performance of administrative services. The precise duties shall be reduced to writing, the same as any other contract for services entered into by the Trustees. RULE 8 ORDINANCE CHANGES 8.1 FORM OF ORDINANCE No ordinance change affecting the Pension Fund shall be presented for a vote to the City Council unless first reviewed and approved by a majority of the Trustees in accordance with the existing law governing the Fund. All proposed ordinances shall be reviewed by the General Counsel to the Fund who shall pass on the form and correctness of the ordinance. All proposed ordinance changes carrying an economic impact shall be reviewed by the actuary to determine the cost as required by law. 8.2 COLLECTIVE BARGAINING The Board of Trustees acknowledges that it is neither an employee organization nor an employer as defined by Chapter 447, Part H, Florida Statutes. Therefore, the Board shall not engage in collective bargaining on behalf of the City of Sebastian or on behalf of any employee organization. 00119050.WPD;1 -13- The Board shall make itself available as a resource to labor organizations and the City for all matters relating to pension and retirement, if any. 8.3 APPEARANCE AT CITY COUNCIL MEETINGS The Board of Trustees shall, through one of its members, its designee or its General Counsel, be present at all City Council meetings where a discussion of matters of interest to the Board shall occur. The Board shall, prior to said meeting, designate an official spokesperson on behalf of the Fund. 8.4 ACTUARIAL IMPACT STUDIES No benefit change shall occur without an actuarial impact study as required by state law. Actuarial impact studies initiated by the Board of Trustees shall be at the expense of the Fund. Actuarial studies requested by the City or the Union, if any, previously authorized by the Board shall be paid for by the City or Union, respectively. RULE 9 JUDICIAL PROCEEDINGS 9.1 PROCESS All process issued by federal or state courts to the City of Sebastian concerning the Pension Fund or to the City of Sebastian Police Officers' Retirement System shall immediately upon receipt, be forwarded to the General Counsel for the Fund who shall respond thereto. 9.2 DISSOLUTION OF MARRIAGE Upon entering into a Dissolution of Marriage, a Plan Member shall notify the Administrative Assistant of the Member's attorney's name, address and telephone number. The Administrative Assistant shall then promptly provide that information to the General Counsel to the Fund. RULE 10 INVESTMENTS 10.1 HIRING INVESTMENT MANAGERS In recognition of the importance of professional guidance in the investment of the assets of the Fund, all investments shall be performed by qualified, professional investment managers. The 00119050.WPD;1 -14- investment managers shall be selected at a regular or special meeting of the Board of Trustees by a majority vote of the Board. The Board may delegate the initial screening of investment managers to a committee of the Board but no final decision shall be made except at a meeting of the Board. All proposals for investment manager services shall be presented in writing to the Board and shall be made a part of the records of the Board. 10.2 HIRING PERFORMANCE MONITORS The Board shall engage at all times, at least one performance monitor who shall be responsible for reviewing the performance of the various investment managers of the Fund. The performance monitor shall report to the Board on such time schedules as the Board shall establish but not less than annually. The performance monitor shall advise the Board as to the relative performance of each investment manager as compared to the various stock, bond and cash indices as are generally accepted in the investment market place as reflective of satisfactory investment performance. The performance monitor shall recommend in writing to the Board the retention or discharge of investment managers and the reasons supporting its recommendation. At the request of the Board, the performance monitor may perform evaluation and searches for investment managers and such other services as the Board shall request be performed. 10.3 PERFORMANCE GOALS AND OBJECTIVES The Board shall establish performance goals and objectives for each investment manager in each class of investment and shall establish expected rates of return. The investment policy shall comply with the minimum requirements set forth in Section 112.661, Florida Statutes. The perform- ance goals and objectives shall be reduced to writing in an Investment Policy Statement and shall be referred to in the contract between the Board and the manager. The performance goals and objectives shall be reviewed on not less than an annual basis and shall be compared to the actual performance of an investment manager to determine compliance with the goals and objectives set by the Board. All Investment Policy Statements and amendments thereto shall immediately be provided to the City, the Department of Management Services and to the Board's actuary. 00119050.WPD;1 -15- 10.4 INVESTMENT STANDARDS The Board shall establish written investment standards in the Investment Policy Statement. The standards shall set forth the distribution of the Fund between equities, fixed income, cash and cash equivalents and other forms of lawful investment. The standards shall set forth the relative percentages of the Fund to be distributed to each investment vehicle and shall establish permissible risk factors. Each investment manager shall subscribe to the Investment Policy Statement setting forth the written investment standards and performance goals and objectives of the Fund and the Investment Policy Statement shall be incorporated into each investment manager contract by reference. 10.5 DECISION MAKING AUTHORITY The Board of Trustees shall determine the retention or discharge of any investment manager or performance monitor. The Board shall also establish the amount of funds to be entrusted to any investment manager and shall determine when funds shall be withdrawn and investments terminated. The Trustees shall not, however, participate in the selection of individual stocks, bonds or cash funds as that shall be the responsibility of the investment manager within the context of the performance goals and objectives and investment standards established by the Board. 10.6 WRITTEN CONTRACTS Each investment manager shall enter into a written contract with the Board. Each contract shall include an acknowledgment by the investment manager that it is familiar with the ordinances of the City of Sebastian and the provisions of Chapters 112 and 185, Florida Statutes. The contracts shall also provide that the investment manager shall make no purchases which are prohibited by law and in the event such purchase is made, shall make the Fund whole for any loss incurred in the divestiture of said investment. Each contract shall set forth with specificity the fees charged by the investment manager to the Fund. All investment manager contracts shall further set forth that the investment manager is registered as an investment advisor and is otherwise qualified by law to engage in the management of the assets which are the subject of the contract. 00119050.WPD;1 -16- 10.7 REPORTING All investment managers and performance monitors of the Fund shall report on not less than an annual basis. The investment managers and monitors may, however, be directed by the Trustees to report on a more frequent basis. All such reports shall be in writing and shall be presented in person by a representative of the investment manager or performance monitor who has authority to make discretionary decisions with regard to the Trust's account and to settle claims and disputes arising from the contract. All such investment managers and performance monitors shall make these presentations in person at a regular meeting of the Board and shall bear their own costs and expenses in traveling to Board meetings. The performance monitors shall attend at least an annual meeting of the Board and shall report, in writing, the progress of each investment manager. The performance monitor shall also make written recommendations regarding retention of investment managers and changes in investment policy. 10.8 PRESENTATIONS BY PROSPECTIVE CONSULTANTS AND PROFESSIONALS In recognition of the limited time resources of the Board, presentations of prospective investment managers, performance monitors, custodians or other prospective professional advisors shall only be by written invitation of the Board. The Board shall maintain records of such prospective managers, monitors, custodians and other professionals to be reviewed by the Board in the event the Board wishes to consider adding or making a change in its current manager, monitor, custodian or other professional. In the event the Board elects to consider retaining a new manager, monitor, custodian or other professional, prospective applicants, including those applicants who had previously provided information to the Board, may be contacted and provided with a Request for Proposal. The Board or a committee appointed by the Board may conduct the initial screening of applicants by reviewing the proposals received in response to the Requests for Proposals. The Board may then schedule personal presentations by a "short-list" of qualified applicants. The Board may also decide to retain managers, monitors, custodians and other professionals by utilizing any other method which the Board deems to be prudent under the circumstances. 00119050.WPD;1 -17- 10.9 DIVESTITURE No divestiture of any asset of the Fund shall be made for any reason other than fulfillment of the fiduciary obligations of the Fund, or compliance with State Law. 10.10 PROXY VOTING The Trustees shall be responsible for exercising all proxies on equities held by the Fund. The Trustees shall comply on a voluntary basis with the standards of the Employee Retirement Income Security Act of 1974 in the voting of proxies. The Board shall, by contract or other written agree- ment, give all investment managers proxy voting responsibility and the Trustees shall monitor the voting of the managers. The Trustees (along with the United States Department of Labor) do not consider the following practices by investment management firms with proxy voting responsibility to be consist- ent with their fiduciary responsibility: A. Declining to vote proxies; B. Voting proxies exclusively for management without analysis of the underlying issues; C. Permitting negligent or inaccurate record -keeping regarding proxy voting; D. Accepting directions from other parties; E. Permitting the absence of policies or procedures to assure the proper exercise of this fiduciary responsibility. Any significant proxy items and the vote by an investment manager shall be reported in writing to the Trustees. Records of all proxy votes shall be maintained and made available to the Trustees or any agents acting in their behalf. All such records shall be maintained in accordance with the Florida Public Records Act. It shall be the primary responsibility of investment managers acting on behalf of the Board to vote all proxies to enhance the value of the Fund assets. All tender offers shall be treated in the same manner with regard to record -keeping and asset enhancement. 00119050.WPD;1 -18- 10.11 DECLARATION OF EXPECTED ANNUAL RATE OF RETURN For each actuarial valuation, the Board shall seek the advice of its investment professionals and the actuary and then the Board shall determine the total expected annual rate of investment return for the current year, for each of the next several years and for the long term thereafter. This determination must be filed promptly with the Department of Management Services, with the City and with the Board's actuary, as well as posted to the City website. 10.12 INVESTMENT REPORTS TO THE CITY The Board shall prepare annual fiscal year end reports for submission to the City, City Council, which shall include the investments in the portfolio by class or type, book value, income earned and market value as of the end of the fiscal year. RULE 11 ACTUARIAL SERVICES 11.1 SELECTION The Board of Trustees shall retain at all times the services of an enrolled actuary. An enrolled actuary shall mean an actuary who is enrolled under Subtitle C of Title III of the Employment Retirement Income Security Act of 1974 and who is a member of the Society of Actuaries or the American Academy of Actuaries. Competitive bidding shall not be required in the selection of actuaries. 11.2 CONFLICTS OF INTEREST In order to avoid conflicts of interest in the delivery of actuarial services, the Board shall not retain actuaries who are employed by the City of Sebastian, unless the Board is determined to be the client by a separate engagement letter or contract. 11.3 REPORTING The actuary shall report to the Board on not less than an annual basis so that the Board may establish the adequacy of employer and employee contribution rates. Valuations shall be done at least every three years and posted to the City website. No proposed change in retirement benefits 00119050.WPD;1 -19- shall be made without an actuarial determination of the cost impact of the change. All actuarial reports shall be in accordance with the provisions of Section 112.63, Florida Statutes. 11.4 SETTING CONTRIBUTION RATES Pursuant to the ordinances of the City of Sebastian, the Board is solely responsible for establishing the contribution rates of the City. The City contribution rate shall be established following an analysis of the adequacy of employee contributions, contributions from the State of Florida Insurance Rebate Program and investment earnings of the Fund. 11.5 CREDITED SERVICE For purposes of actuarial calculations involving credited service, fractional parts of years shall be defined as completed months. 11.6 ACTUARIAL STUDIES FOR INDIVIDUAL PLAN MEMBERS Each vested Plan Member shall be entitled, at the Fund's expense, to receive two actuarial studies to estimate his or her retirement benefits. Any additional studies shall be provided only at the Member's expense. Benefit calculations for terminated vested persons shall be performed by the actuary immediately upon termination. RULE 12 ACCOUNTING SERVICES/ADMINISTRATIVE BUDGET 12.1 AUDITS The Fund shall cause to be made not less than on an annual basis an audit of the assets and liabilities of the Fund. Financial reporting should be made in accordance with generally accepted accounting standards. A. All postings from the custodial statements to the Plan's working trial balance should be in accordance with the Board's general and/or specific authorizations. B. All transactions recorded in the custodial statements should be analyzed, summarized and accurately posted to the correct trial balance accounts in the correct time period. C. All adjustments, deductions or write-offs of account balances should be calculated, summarized and recorded in the correct period. 00119050.WPD;1 -20- D. All postings to the working trial balance should be supported by and reference to adequate, authorized documentation. 12.2 CONFLICTS OF INTEREST In order to avoid conflicts of interest, the Board shall not retain auditors who are employed by the City of Sebastian unless the Board shall be determined to be the client by separate engagement letter or contract. 12.3 REVIEW OF INTERNAL CONTROLS The policies and procedures provided for in these Operating Rules and Procedures shall be reviewed by the independent certified public accountant as part of the financial audit to determine the effectiveness of such controls to prevent losses of funds which might arise from fraud, error, misrepresentation by third parties, or imprudent actions by the Board or employees of the City. 12.4 DETAILED ACCOUNTING REPORT The Administrative Assistant shall provide a detailed accounting report of its expenses for each fiscal year to the City and the Department of Management Services and make the report available to each member of the plan, and post the report on the Board's website, if the Board has a website. The report must include all administrative expenses that, for purposes of this subsection, are expenses relating to any legal counsel, actuary, plan administrator, and all other consultants, and all travel and other expenses paid to or on behalf of the members of the Board of Trustees, or anyone else on behalf of the plan. 12.5 ADMINISTRATIVE BUDGET The Board of Trustees shall adopt and operate under an administrative expense budget for each fiscal year. The Administrative Assistant shall provide a copy of the approved budget to the City, and make available a copy of the budget to plan members before the beginning the fiscal year. If the Board of Trustees amends the administrative expense budget, the Administrative Assistant must provide a copy of the amended budget to the City and make available a copy of the amended budget to plan members. 00119050.WPD;1 -21- RULE 13 LEGAL SERVICES 13.1 SELECTION The Board shall select and appoint a General Counsel who shall be licensed to practice law in the State of Florida. The General Counsel shall have demonstrated competence in the area of public employee retirement systems in the State of Florida and shall have been practicing law for not less than ten years. Competitive bidding is not required in the selection of legal services. 13.2 CONFLICTS OF INTEREST In recognition of the requirement that attorneys be independent in their judgment as set forth in the Code of Professional Responsibility, no attorney may serve as General Counsel who is also performing legal services on the part of the City of Sebastian or who otherwise engages in any legal services which the Board deems to be in conflict with its interests. 13.3 CITY OF SEBASTIAN CITY ATTORNEY In recognition of the responsibilities of the City Attorney to the City of Sebastian and the potential for representing competing interests, the office of the City Attorney may not serve in any legal capacity on the part of the Trust. 13.4 PRIVILEGED COMMUNICATIONS In all dealings between its General Counsel and the Board, the Board shall be deemed the client rather than any individual Trustee of the Board. All communications between the Board and its General Counsel shall be privileged communications except where otherwise governed by the Government in the Sunshine Law. 13.5 AUTHORITY TO DIRECT The General Counsel shall take direction from the Board of Trustees as may be given at the various meetings of the Board. In between meetings of the Board, direction to the General Counsel shall be given by the Chairman or other person directed by the Board. All files of the General Counsel to the Fund shall be open for inspection by any Trustee. 00119050.WPD;1 -22- 13.6 CONTRACTS If possible, all contracts shall provide that the laws of Florida shall govern and that venue for any legal action shall be in Indian River County, Florida. In no event shall any contract be terminable by the service provider with less than 45 days' written notice, unless otherwise agreed to by the Board. All written contracts shall be reviewed by the General Counsel to the Fund who shall approve the form and correctness of each such contract. All written contracts shall be executed by the Chairman and Secretary of the Board. RULE 14 CLAIMS PROCEDURES 14.1 CLAIMS OF AFFECTED PERSONS A. The Board of Trustees shall grant an initial hearing upon receipt of a written request ("Claim"), on matters which affect the substantial rights of any person ("Claimant"), including Members, Retirees, Beneficiaries, or any person affected by a decision of the Board of Trustees. B. The Board shall review the Claim at an initial hearing and enter an order within ninety (90) days a reasonable time from the date of receipt of the Claim. In determining a reasonable time period for setting the initial hearing, the actions reauired for the collection of records and in the case of a disability claim, receipt by the Board of a written medical release authorization in a form approved by the General Counsel, a completed set of interrogatories prepared by the General Counsel and provided to the Claimant, and the E!atheriniz of medical records necessary to process the claim shall be considered. Thy Dowd i.�ay CSC tl�� %J1 aC rinrt�al l��a�1116 ro, at, addltiv..al days if-ii dc[c fj,;,:LG, sich til-IC, I, HU"—S-my Mull d1m ovu. adcqualc icvicw. aci..c al C-,uu.scl ai.d the Claimant iy.ay stipulate-to-f-utlllci Vf time. C. It shall be the function of the General Counsel, throughout the claims procedure, to assist the Board in the discovery and presentation of evidence in order to assure that the Board receives all relevant information prior to the Board's decision. D. The Claimant shall have the right to be represented by counsel at any or all times throughout the claims procedure. 00119050.WPD;1 -23- 14.2 INITIAL HEARING A. At the initial hearing, the only evidence to be considered by the Board shall be documentary evidence contained in the pension file, including but not limited to, correspondence, medical records and reports of treating physicians and/or examining physicians and information I vidc,acc received pursuant to paragraph B. B. Other than questions from the Trustees, there will be no taking of additional evidence at the initial hearing, except that the Claimant will be afforded 15 minutes to make a presentation, which shall be limited to comments and/or arguments as to the evidence or information already contained in the pension file, including the report of the examining physician. C. Upon completion of the review of the Claim at the initial hearing, the Board shall enter an order setting forth its findings and conclusions on the Claim. The written order shall be provided to the Claimant. The order shall include: (1) The specific findings and conclusions of the Board, including specific references to pertinent provisions of the Plan on which such conclusions are based; (2) A description of any additional material or information that the Board may deem necessary for the Claimant to perfect his Claim, together with the reasons why such material or information is necessary; and (3) An explanation of the right to a full hearing on the Claim and the time limit in which a full hearing must be requested in writing. D. The decision of the Board at the initial hearing shall not be final until after the time has expired to request a full hearing or, if a full hearing is requested, until the Board makes a decision at the conclusion of the full hearing. 14.3 FULL HEARING A. Any Claimant may request a full hearing on the issues presented to the Board at an initial hearing and upon which the Board has entered an order as provided in subsection 2.C. above. 00119050.WPD;1 -24- B. A full hearing must be requested by the Claimant within ninety f" thirty (30) days of the receipt of the Board's order. The order will be deemed received three (3) days following the date it is mailed to Claimant at the address provided to the Board by Claimant. C. Upon receipt of the request for a full hearing and considering the amount of discovery which might be conducted, the Board shall establish a date for the full hearing and cause notice to be given to the Claimant. Mull h�ariilg shall be Bela within iiiiietll�, 1" ,gA-of the rcKu�,st from the Claill7laiA—. The full hearing maybe postponed, if necessary and with the consent of the Claimant, to permit full discovery of the facts. D. Copies of all documents to be offered into evidence at the full hearing, including depositions, and a complete witness list with names and addresses of witnesses expected to be called, shall be furnished to the Board and the General Counsel by the Claimant at least 20 days prior to the full hearing. Documents not furnished to the Board within the prescribed time limit maybe excluded from evidence at the full hearing if a reasonable explanation is not provided for the delay in providing the documents. E. A Claimant or the General Counsel may obtain discovery by deposition and/or interrogatories prior to the full hearing. Written notice of any depositions and/or interrogatories shall be given to the General Counsel and the Claimant. F. The costs of any discovery, except discovery requested by the Board or the General Counsel, the appearance of witnesses at the hearing, and the making of a verbatim record of the proceedings shall be the responsibility of the Claimant. G. The Claimant shall be responsible for the appearance of any witnesses which he the Claimant wishes to have testify at the hearing. The Board shall, however, have the power to subpoena and require the attendance of witnesses and the production of documents for discovery prior to and at the proceedings provided for herein. The Claimant may request in writing the issuance of subpoenas by the Board. A reasonable fee may be charged for the issuance of any subpoenas not to exceed the fees set forth in Florida Statutes. 00119050.WPD;1 -25- H. Testimony at the full hearing may be submitted in the form of a deposition. Depositions timely submitted will be part of the record before the Board at the full hearing and will not be read in totality at the full hearing; provided however, that this does not preclude the Claimant or the General Counsel from reading parts of depositions in an opening or closing statement. L Irrelevant and unduly repetitious evidence shall be excluded. J. Any person who knowingly gives false testimony is guilty of a misdemeanor of the first degree, punishable as provided in Section 775.082 or 775.083, Florida Statutes. K. The file maintained by the Board, including but not limited to various medical reports therein, is part of the record before the Board at the full hearing L. All proceedings of the Board shall be conducted in public. M. In cases concerning an application for pension benefits, including applications for disability retirement benefits, the burden of proof, except as otherwise provided by law, shall be on the Claimant seeking to show entitlement to such benefits. N. In cases concerning termination of pension benefits, including re-examination of Retirees receiving disability retirement benefits, the burden of proof shall be on the Board. O. Except as to those records which are exempted from the provisions of Chapter 119, Florida Statutes, Florida's Public Record Law, records maintained by the Board are open for inspection and/or copying during normal business hours at a reasonable cost for the copying. P. Should a Claimant requesting an initial or full hearing decide to appeal any decision made by the Board, with respect to any matter considered at such hearing, the Claimant requesting an initial or full hearing will need a record of the proceedings and may need to assure that a verbatim record of the proceeding is made. The Claimant requesting an initial or full hearing will be responsible for obtaining a court reporter or otherwise making a record of the proceedings before the Board. Q. The decisions of the Board after the requested full hearing shall be final and binding. R. After making a decision at the full hearing, the Board shall enter a 00119050.WPD;1 -26- final order setting forth its findings and conclusions and a copy of the order shall be provided to the Claimant. S. Judicial review of decisions of the Board shall be sought by the filing of a timely petition for writ of certiorari with the Clerk of the Circuit Court, in the appropriate county. 14.4 CONDUCT OF THE FULL HEARING A. The Chairman shall preside over the hearing and shall rule on all evidentiary, procedural, and other legal questions that arise during the hearing. The Chairman's rulings shall stand unless overruled by a majority of the Trustees present. The Chairman shall open the full hearing by explaining the procedures to be followed. B. The Claimant shall have the right to be represented by counsel or be self -represented. The General Counsel shall advise the Board. C. The Claimant shall be allowed to make an opening statement not to exceed ten minutes. D. Testimony of witnesses shall be under oath or affirmation. Depositions and affidavits shall be admissible. E. The Chairman, any Trustee, the General Counsel, the Claimant or the Claimant's counsel, upon recognition by the Chairman, may direct questions to any witness during the proceedings. F. Either the Claimant or the General Counsel shall have the right to present evidence relevant to the issues, to cross-examine witnesses, to impeach witnesses and to respond to the evidence presented. G. The Claimant shall be permitted a closing argument not to exceed 15 minutes. H. The Board shall deliberate and make a decision following closing argument and thereafter enter an order as provided herein. 00119050.WPD;1 -27- 14.5 DISABILITY CLAIMS - ADDITIONAL PROCEDURES A. All applications for disability pensions shall be in writing. Forms for such applications may be provided by the Board. B. Upon receipt of the application for disability, the General Counsel will provide the Claimant with a set of interrogatories or questions to be answered under oath and a medical release authorization. Both documents will be completed by the Claimant and returned to the General Counsel. C. Upon receipt of the properly completed interrogatories and medical release authorization, the General Counsel will request medical records from all relevant treating physicians; personnel records from the employer, copies of relevant workers' compensation records, and copies of other records deemed to be relevant to the Claim. The Board shall pay, from the Fund, the cost of any medical examinations required by the Board and for copies of medical records. D. The General Counsel will, if authorized by the Board, upon receipt of the medical records from the treating physicians, schedule an independent medical examination (IME) or examinations with an appropriate independent examining physician or physicians who will be asked to render an opinion about Claimant's physical condition as it relates to the claimed disability. E. Upon receipt of the WE report or reports from the examining physician or physicians, the General Counsel will provide all records of treating physicians, relevant workers' compensation claims records, the independent medical evaluation, and all other relevant documents to the Board for inclusion in the pension file and the Board shall then schedule the initial hearing. RULE 15 CONFIDENTIALITY 15.1 EXTENT OF CONFIDENTIALITY PERMITTED § § 119.071(4)(d)2.a. (1) and (II), Florida Statutes, provides that the home addresses, telephone numbers, social security numbers, photographs and dates of birth of active or former sworn law enforcement personnel and; the names, home addresses, telephone numbers, social security numbers, photographs, dates of birth and places of employment of the spouses and children of such personnel; 00119050 . WPD; 1 -28- and the names and locations of schools and day care facilities attended by the children of such personnel are exempt from the public records provisions of Section 119.07(1), Florida Statutes. 15.2 REQUIREMENT FOR MAINTENANCE OF CONFIDENTIALITY The Board will maintain the information specified in 15.1 as confidential, if it receives from a Member or the City of Sebastian a written request to maintain confidentiality. 15.3 CONFIDENTIALITY OF MEDICAL RECORDS A. § 112.08(7), Florida Statutes is an exemption of medical records and medical claims records from the public records requirements of § 119.07(1), Florida Statutes and such records are thus confidential. B. This exemption provides that the Board shall not furnish such records to any person except the employee or his legal representative without written authorization from the employee or, unless otherwise prohibited by law, it receives a subpoena issued in a civil or criminal action from a court of competent jurisdiction where the party seeking the records gave proper notice to the employee or his legal representative. C. Since, under Government in the Sunshine, trustees can only discuss issues involving medical records of an employee in a public meeting, such an authorization should be signed by an employee prior to discussion by the Board. Upon consideration of the medical records at a public Board meeting, such records then become subject to disclosure in the same manner as any other public record. RULE 16 INTEREST CALCULATIONS 16.1 INTEREST CALCULATION To the extent permitted by law, the interest calculation for the purchase of Credited Service, if not otherwise provided for in the ordinance, shall be the greater of the actual interest earned on plan investments or the actuarially assumed rate of investment return. 00119050.WPD;1 -29- RULE 17 DISABILITY REVIEW PROCEDURE 17.1 PROCEDURE The Board shall periodically review the status of disability Retirees who may be eligible to return to employment with the City of Sebastian as a Police Officer in accordance with the following: A. A disability affidavit on a form adopted by the Board shall be filed with the Board at least once each year. Failure to file the affidavit shall result in a suspension of disability benefits. B. Upon receipt of the affidavit, the Board shall determine whether the disability Retiree continues to be entitled to receive disability benefits pursuant to the terms of the pension plan. C. If the Board determines that the disability Retiree is still disabled, then disability benefits shall continue to be paid. D. If, after review of the affidavit, the Board is unable to determine whether the disability Retiree continues to be disabled, the Board shall make further inquiry as necessary. E. Such inquiry may include j ob availability and medical ability to perform duty. If the Board determines that a Police Officer position appropriate for assignment may be available, and the disability Retiree may be able to perform duty in such position, an independent medical examination or examinations shall be performed at the Board's expense by a physician or physicians selected by the Board. A job description and physical or psychological requirements necessary to perform the position shall be provided to the independent medical examiner(s). F. After receipt of the report or reports of the independent medical examiner(s), other medical evidence and determination of job availability, the Board shall determine whether disability benefits shall continue. 00119050 . WPD; l -30- RULE 18 SURVEILLANCE 18.1 SURVEILLANCE Any Trustee who has reason to believe that a disability Retiree may be recovered from his disability and again able to perform useful and efficient service as a Police Officer and who further reasonably believes that surveillance of the Retiree, including the production of video tapes of the Retiree, will help to establish the fact of the recovery, may authorize the Board's General Counsel to arrange for such surveillance. Surveillance of disability applicants may also be authorized by any Trustee who reasonably believes that such surveillance will assist the Board in determining an applicant's ability to perform useful and efficient service as a Police Officer. The cost of any surveillance authorized by any Trustee shall not exceed $10,000.00. RULE 19 INSURANCE PREMIUM DEDUCTIONS 19.1 INSURANCE PREMIUM DEDUCTION AUTHORIZATION A. As permitted by Florida Statute 185.05(6), upon the retiree's written request, the Board of Trustees hereby authorizes the Custodian or Board designee to withhold from a retiree's monthly retirement payment those funds that are necessary to pay premiums for certain insurance policies. B. Any retiree requesting such deduction under this policy may be required, as a pre- requisite, to be receiving the payment of his monthly retirement benefits via direct deposit. C. In order to participate in premium payments under this policy, the retiree shall be required to complete and submit all such forms as may be required to effectuate this benefit by the administrative assistant, plan custodian, and insurance carriers. D. Requests to begin such deductions shall be effective as soon as reasonably possible. Once elected, benefits deductions shall continue until such time as the retiree deceases or submits a termination request form to the administrative assistant or Board designee. Request for termination 00119050.WPD;1 -31- of deductions under this policy must be on a form obtained from the Administrative Assistant or Board designee and shall be effective as soon as reasonably possible. E. A retiree requesting a deduction under this policy shall be required to have such deduction be made in an amount to cover the total premium for all eligible insurance benefits. Partial premium payments may not be made through the use of pension funds and individual premiums may not be paid by separate means. F. Any insurance premiums paid in accordance with this policy shall be paid on a regularly recurring schedule. G. Premium payments made under this policy may only be made in equal monthly installments for each benefit year or the remainder of any benefit year as the case may be. 19.2 TAX-FREE PAYMENT OF INSURANCE PREMIUMS While participating in premium deductions under this policy, retired police officers, as defined in Rule 19.3 below, may designate that a portion of their premiums for eligible health insurance or other qualified health insurance premiums as specified by the Pension Protection Act of 2006 (PPA) be paid on a tax free basis up to $3,000.00 annually (or the then current IRS allowable limits). A. The pension plan custodian must make the premium payment payable directly to the provider of the qualified health insurance. B. Retirees cannot receive any such tax free amounts as reimbursements. C. This eligibility does not extend to joint annuitants, survivor annuitants, or beneficiaries. D. Tax free payments may not be made on a lump sum basis but rather must be paid in level monthly installments during the benefit year or remainder thereof. E. All qualified insurance premiums will accumulate as they are paid during the taxable year until the maximum tax free benefit is achieved. After that, monthly group insurance benefit premiums will continue to be deducted on an after tax basis. 00119050 . WPD; l -32- F. Participants shall be required to sign an agreement and certify that they are eligible retired police officers and that they are not having tax free deductions for qualified health insurance premiums taken from any other retirement benefit plan. G. Once a retiree requests to participate in the tax free provisions of this policy, such election shall remain in effect continuously until revoked in writing and in compliance with all requirements of this policy. H. A retiree may only use the tax free provisions of this policy to defray the actual costs of purchasing qualified insurance products. Tax free pension annuity deductions for qualified health insurance premiums may not be made in excess of the actual monthly insurance premiums due. 19.3 RETIREES WHO ARE ELIGIBLE FOR THE TAX-FREE PAYMENT OF QUALIFIED INSURANCE PREMIUMS In order to be eligible for coverage under the pre-tax policy, the retiree must be a retired "public safety officer" as defined by 42U.S.C. 3796b(9)(A) and must meet all of the following conditions: A. Must have been a police officer at the time of separation from employment. B. Must have retired from City service as a Normal Retirement or Disability Retirement. Persons receiving terminated vested benefits are not eligible. C. Must be receiving a monthly retirement benefit from the Pension Fund. 00119050.WPD;1 -33- City of Sebastian Police Officers' Retirement System Statement of Investment Policy Goals and Guidelines Adopted December 13, 2016 Introduction The City of Sebastian Police Officers' Retirement System is a defined benefit plan established by Ordinance of the City of Sebastian to provide retirement benefits for its employees. The City of Sebastian is the "plan sponsor". The Plan is administered by the Police Pension Fund Board of Trustees. The Plan is a pension plan maintained to provide retirement, disability, termination and death benefits to participants in accordance with the express provisions of the Plan. The Plan and the benefits provided thereunder are funded by contributions by the City of Sebastian, tax rebates from the State of Florida pursuant to Chapter 185, Employees' contributions, interest income and other income in accordance with the underlying Plan documents. The Board of Trustees of the City of Sebastian Police Officers' Retirement System has established this Statement of Investment Policy. The trustees are named fiduciaries. The investment of the assets of our retirement plan must be consistent with the written investment policy adopted by the board of trustees. The policies are structured to maximize the financial return to the retirement plan consistent with the risks incumbent in each investment and are structured to establish and maintain an appropriate diversification of the retirement system or plan's assets. To assist the Board in this function, they are authorized to engage the services of investment and actuarial consultants to provide expert assistance. The Board determined this Policy after evaluating the implications of increased investment return versus the increased volatility of return for a number of asset allocation strategies with varying commitments to stocks and bonds. In the view of its consultants and the Board, the investment program defined in this Statement will produce a result over the long term consistent with the Plan's primary objective of preserving and enhancing the purchasing power of assets. Purpose This Policy is intended to complement the investment guidelines provided in all applicable State Statutes and local ordinances. The purpose of this Policy is to define the City of Sebastian Police Officers' Retirement System investment objectives to develop a strategy to help meet investment goals. This statement is meant to clarify risk factors to establish guidelines consistent with the investment profile of the City of Sebastian Police Officers' Retirement System. Through open communication among the Fund, Investment Consultant and Investment Managers, continuity of investment direction can be more easily achieved. This Policy is meant to: 1. Provide the investment manager(s) a more accurate understanding of the Trustees' investment objectives and, 2. Indicate the criteria by which the investment manager's performance will be evaluated. In the implementation of the investment program, the Plan will employ investment managers who have demonstrated expertise with particular asset classes. Pursuant to the Prudent Investor Rule, the Plan's investment policy will utilize a variety of investment approaches. This diversification of managers and investment approach is intended to increase the risk adjusted return of the portfolio and contribute to a more consistent return. Nonetheless, the systemic risk inherent in the overall market can not be diversified away. Consequently, there will be periods of time when the fund may experience negative returns. Such periods are not inconsistent with achievement of the targeted longterm objective. General Obiectives The primary investment objective of the City of Sebastian Police Officers' Retirement System is the preservation of invested capital. The secondary objective is to achieve moderate long term real growth of the assets while minimizing the volatility of returns. To achieve these objectives, the Board seeks to create a conservative, well diversified and balanced portfolio of equity, fixed income, and money market securities. The Board has determined that one or more outside investment managers shall be retained to assure all investments are managed in a prudent and professional manner and in compliance with the stated investment guidelines. 2 Investment Obi ectives Investment Objectives are intended to provide quantifiable benchmarks to measure and evaluate portfolio return and risk. Asset allocation requires a full market cycle to allow a diversified portfolio of investment managers to demonstrate their abilities. As a result, performance results will be measured over a full market cycle. Performance over shorter time periods will be monitored as a means of identifying the trend of results. The specific investment objectives of the City of Sebastian Police Officers' Retirement System are as follows: Primary Objective: To earn a total rate of return over the long term (a full market cycle) which exceeds the return of a Target Index. The Target Index for the City of Sebastian Police Officers' Retirement System is defined as: 21.25% Russell 1000 Value, 21.25% Russell 1000 Growth, 5.00% Russell 2500 Value, 5.00% Russell 2500 Growth, 5% MSCI EAFE (Net), 7.50% MSCI ACWI ex US (Net), 25% Barclays Capital U.S. Aggregate, 5.00% Alerian MLP, 5.00% NCREIF indexes. In addition, it is expected the total rate of return earned by the Fund and the returns earned by the stock, bond, and cash portfolios will rank above average when compared to a representative universe of other similarly managed portfolios. Secondary Objectives: A further goal of the City of Sebastian Police Officers' Retirement System shall be to achieve an annual rate of return greater than 7.6% over the longer term. This absolute return objective will be evaluated in the context of the prevailing investment market conditions. In addition, the Fund should earn a return greater than inflation, as measured by the Consumer Price Index, by 3.0% per year. Volatility: The volatility of the Funds total returns is expected to be similar to the Target Index and will be evaluated accordingly. K Investment Stratet!v Guidelines Based on an analysis of Plan assets and expected returns and risks associated with various asset mix strategies, the Board of Trustees has established a target asset allocation for the entire City of Sebastian Police Officers' Retirement System to meet the long term investment goals of the Fund. Investment Policy Portfolio Allocation Asset Class Benchmark Min Target Max EQUITIES 40.00% 65.00% 70.00% Large Cap Equity Large Cap Value RUSSELL 1000 15.00% VALUE 21.25% 25.00% Large Cap Growth RUSSELL 1000 15.00% 21.25% 25.00% GROWTH SMid Cap Equity SMid Cap Value RUSSELL 2500 2.50% 5.00% 7.50% VALUE SMid Cap Growth RUSSELL 2500 2.50% 5.00% 7.50% GROWTH International (INT'L) I i Int'l Value MSCI EAFE 2.50% 5.00% 7.50% (Net) Int'1 Growth MSCI ACWI ex 5.00% 7.50% 10.00% US (Net) FIXED INCOME 20.00% j 25.00% 1 35.00% Core Fixed Income BARCLAY'S 20.00% 25.00% 30.00% CAPITAL U.S. AGGREGATE Cash Equivalents 3-MONTH BARCLAY'S T- BILLS Master Limited ALERIAN MLP 0.00% 5.00% 10.00% Private Real Estate NCREIF 0.00% 5.00% 10.00% Total Alternatives 0.00% 10.00% 20.00% The allocation to each asset class may vary from the target asset allocation depending upon market conditions. When necessary and/or available, cash may be deployed in a manner consistent with the strategic asset allocation limits set by this statement of investment policy. 11 Professional Monev Managers To implement this strategy, the Board has chosen to hire one or more professional investment managers. Within the guidelines and restrictions set forth within, it is the intention of the Board of Trustees to give each investment manager full investment discretion with respect to assets under its management. The investment managers shall discharge their responsibilities in the same manner as if the Fund were governed by the fiduciary responsibility provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Although the Fund Trustees acknowledge ERISA does not apply to a governmental fund, the trustees hereby imposes the fiduciary provisions of ERISA upon each investment manager whose performance shall conform to statutory provisions, rules, regulations, interpretations and case law of ERISA. Each investment manager shall acknowledge, in writing, that it is a named fiduciary of the Fund. The signed document shall be attached to this Investment Policy Statement. Each investment manager is expected to provide any reasonable information requested by the Board of Trustees. At a minimum, managers shall provide a quarterly report detailing their investment activity, the portfolios current value and any changes in investment philosophy or strategy. Each investment manager is expected to meet with the Board of Trustees or their designated representatives periodically to review investment performance and philosophy. Unless otherwise provided by the Funds' Custodian, each investment manager will monitor portfolio activity to minimize uninvested cash balances. Each investment manager shall be responsible only for those assets under their management. It will be the responsibility of each investment manager to review the monthly valuations provided by the Funds custodian and to note, in writing, any significant discrepancies from the valuations provided in their own reports. Caution must be used in selecting appropriate money managers to manage the Fund's assets. At a minimum, the money manager must meet the following criteria: 1. Be an investment management company, bank, insurance company, or Investment Consultant as defined by the Registered Investment Advisers Act of 1940. 2. Provide historical quarterly performance data calculated on a time weighted basis, based on a composite of all fully discretionary accounts of similar investment styles, and reported net and gross of fees. 3. Provide detailed information on the history of the firm, key personnel, fee schedules and support personnel. 4. Have no outstanding legal judgments or past judgments that may reflect negatively on the firm. E Securities Guidelines In accordance with the policies established by the Board of Trustees, the assets of the City of Sebastian Police Officers' Retirement System shall be invested in a diversified portfolio of fully negotiable equity, fixed income, and money market securities, provided they meet the following criteria: Equity Securities 1. Investments in all equity securities shall be limited to no more than 70% (at market) of the Fund's total portfolio value. 2. All equity investments shall be limited to fully and easily negotiable equity securities. 3. No more than 10% at market value of an investment manager's equity portfolio may be invested in the shares of a single corporate issuer. The equity position in any one company shall not exceed 5% of the total plan portfolio at market. 4. Allocation to any one economic sector should not be excessive and should be consistent relative to a broadly diversified equity market and to managers following similar style disciplines. 5. Investments in stocks of foreign companies shall be limited to 25% (at market value) of the total investment portfolio. The definition of a foreign stock for purposes of this policy is found in Florida Statues, Section 185.06(1)(b)4. The compliance and monitoring of this Section (Equity Securities) is the responsibility of the consultant and the trustees. The consultant's responsibility is to report any non-compliance to the trustees each quarter. a.) Large —Capitalization Value & Growth Stocks Large capitalization stocks are expected to have the greatest weighting in the Pension Fund. They are expected to provide more consistent returns over time than other equity styles. The objective is to maximize investment return over a market cycle by investing in large capitalization equities having the potential to generate investment returns exceeding a passively managed large stock index. Large -capitalization equity manager performance parameters include the following: • Performance within the top half of a Universe of Large Capitalization Value or Growth Managers. • Performance comparable to the Russell 1000 Value or Russell 1000 Growth Indexes. a Performance comparable to the S&P 500 Stock Index. • The risk associated with the manager's portfolio as measured by the variability of quarterly returns (standard deviation) should not exceed the comparison index without a corresponding increase in performance above the index. • Achieve the performance parameters within a time horizon of a minimum of a full market cycle. b.) Mid/Small Capitalization Stocks Mid/Small capitalization stocks are expected to improve total portfolio diversification and provide opportunities for higher incremental returns in the long run. The objective is to maximize investment return over a market cycle by investing in mid/small capitalization equities having the potential to generate investment returns exceeding a passively managed mid/small stock index. Mid/Small capitalization growth stock managers generally purchase companies with a market capitalization of greater than $500 million. Mid/Small capitalization equity manager performance parameters include the following: • Performance within the top half of a Universe of Mid/Small Capitalization Value or Growth Managers • Performance comparable to the appropriate Russell indexes. • The risk associated with the manager's portfolio as measured by the variability of quarterly returns (standard deviation) should not exceed the comparison index without a corresponding increase in performance above the index. • Achieve the performance parameters within a time horizon of a minimum of a full market cycle for the mid/small capitalization market. c.) Developed & Ememin2 Markets International Stocks International Stocks are expected to improve total portfolio diversification and provide opportunities for higher incremental returns in the long run. The objective is to maximize investment return over a market cycle by investing in international securities through American Depository Receipts (ADRs) as well as any foreign company that trades directly in a U.S. equity market. These equities should generate investment returns exceeding a passively managed international index. 7 Developed & Emerging Markets International equity manager performance parameters include the following: • Exceed MSCI EAFE — Net Dividend, MSCI All Country World ex USA, or MSCI Emerging Markets Indexes. • The risk associated with the manager's portfolio as measured by the variability of quarterly returns (standard deviation) should not exceed the comparison index without a corresponding increase in performance above the index. • Achieve the performance parameters within a time horizon of a minimum of a full market cycle of the international market. Fixed Income Securities 1. Investments in corporate fixed income securities shall be limited to: a) Those securities rated investment grade by a recognized rating agency. Fixed income securities downgraded below the minimum rating by both entities shall be sold at the earliest beneficial opportunity as determined by the manager. It is the manager's responsibility to notify the board in writing immediately after a security is downgraded below the policy guidelines. The written explanation should describe the manager's intentions regarding the disposition of the security being downgraded. b) Securities issued by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia. c) No more than 10% (at market) of the fixed income portfolio total value may be invested in the securities of any single corporate issuer. 2. Investments in Collateralized Mortgage Obligations shall be limited to 25% of the market value of the total fixed income portfolio and shall be restricted to those issues: a) Those issues backed by the full faith of the U.S. Government, an Agency thereof, or rated AAA by a major rating service. b) PAC (planned amortization class), NAC (non -accelerated securities) or VADM (very accurately defined maturity) securities. 3. There is no limit imposed on investments in fixed income securities issued directly by the United States Government or any agency or instrumentality thereof. Cash Equivalent Securities: 1. The Investment managers may invest only in the following short — term investment vehicles: a) The money market or STIF provided by the Fund's custodian. b) Direct Obligations of the United States Government with a maturity of one year or less. c) Commercial Paper issued by United States corporations with a maturity of one year or less. Master Limited Partnerships Master Limited Partnerships (MLPs) are utilized to provide additional income to the portfolio. They are expected to provide a higher level of income than fixed income securities in a low interest rate environment. MLP manager performance parameters include the following: • Exceed the Alerian MLP Index. • The risk associated with the manager's portfolio as measured by the variability of quarterly returns (standard deviation) must not exceed the appropriate index without a corresponding increase in performance above the index. • Achieve the performance parameters within a time horizon of a minimum of a full market cycle. Private Real Estate Private real estate investments are expected to improve total portfolio diversification and provide income and opportunities for higher incremental returns in the long-term. The objective is to maximize investment return over a market cycle by investment in real estate through private ownership. The investment managers are permitted to invest in private real estate. Private real estate will be purchased through an institutional vehicle. The institutional vehicle provides diversification of property type and geographical location and provides a competitive price structure. These private real estate investments should generate investment returns exceeding a passively managed private real estate index. Private real estate investment performance parameters include the following: • Exceed the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index or Open -End Diversified Core Index. 0 • The risk associated with the manager's portfolio as measured by the variability of quarterly returns (standard deviation) must not exceed the comparison index without a corresponding increase in performance above the index. • Achieve the above objectives within a time horizon of a minimum of a full real estate market cycle. Mutual Funds/Commingled Funds: The Board of Trustees recognizes and accepts commingled and mutual fund investments will be dictated by the investment policies and guidelines of those funds and no additional constraints may be imposed upon them. The decision to invest assets of the City of Sebastian Police Officers' Retirement System in any commingled or mutual fund will only be made by the Trustees after a thorough review of the policies and/or prospectuses of those funds and after it has been determined those policies are appropriate and consistent with the investment philosophy of the City of Sebastian Police Officers' Retirement System. Sudan/Iran Divestiture In accordance with the Protecting Florida's Investment Act (Fla. Stat. 215.473), the Board is prohibited from directiv investing in any company identified each quarter by the State Board of Administration on its website as a scrutinized company. The Board shall review its investments each quarter to determine whether it is required to sell, redeem, divest, or withdraw any publicly traded security of a company identified by the SBA as a scrutinized company. Section 112.661 Florida Statutes The Board of Trustees has adopted the following additional provisions to comply with Section 112.661, Florida Statutes: 1. SCOPE: The investment policy applies to those funds under control of the Board. 2. INVESTMENT OBJECTIVES: The investment policy describes the investment objectives of the Board. 3. PERFORMANCE MEASUREMENT: The investment policy specifies performance measures as are appropriate for the nature and size of the assets within the Board's custody. 4. INVESTMENT AND FIDUCIARY STANDARDS: In performing its investment duties, the Board and its investment managers shall comply with the fiduciary standards set forth in ERISA (Employee Retirement Income Security Act). 10 5. AUTHORIZED INVESTMENTS: The Board of Trustees recognizes those assets listed in its attached Statement of Investment Policy. Investments not listed are prohibited. 6. MATURITY AND LIQUIDITY REQUIREMENTS: The investment portfolio shall be structured in such a manner to provide sufficient liquidity to pay obligations as they come due. To the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash -flow requirements. 7. PORTFOLIO COMPOSITION: The investment policy establishes guidelines for investments and limits on security issues, issuers and maturities. These guidelines are commensurate with the nature and size of the funds within the custody of the Board. 8. RISK AND DIVERSIFICATION: The Board of Trustees has developed a diversified investment program to control the risk of loss resulting from over concentration in a specific maturity, issuer, instrument, dealer or bank through which financial instruments are bought and sold. 9. EXPECTED ANNUAL RATE OF RETURN: With consideration to rates of return from different asset classes, the Board of Trustees has crafted its investment program to deliver an expected rate of return similar to the actuarial assumed rate. The Board shall determine for each actuarial valuation, the total expected annual rate of return for the current year, for each of the next several years and for the long term thereafter. The total expected annual rate of return is anticipated to be similar to the actuarial assumed rate of return. This determination is filed with the Department of Management Services and with the plan sponsor and consulting actuary. 10. THIRD -PARTY CUSTODIAL AGREEMENTS: All assets shall be held by a third party custodian selected by the Board. Securities transactions between a broker -dealer and the custodian involving purchase or sale of securities by transfer of money or securities are to be made on a "delivery vs. payment" basis to ensure the custodian will have the security or money in hand at conclusion of the transaction. 11. MASTER REPURCHASE AGREEMENT: Repurchase Agreements are prohibited investments. 12. BID REQUIREMENT: To the extent possible, the intention of the Board of Trustees is to determine the approximate maturity date based on cash -flow needs and market conditions, analyze and select one or more optimal types of investment and competitively bid the security in question when feasible and 11 appropriate. Except as otherwise required by law, the most economically advantageous bid is selected. 13.INTERNAL CONTROLS: The Board recognizes the internal controls and operational procedures outlined in the Board's operation rules and procedures, in the plan document, and in the custodial agreement. These controls are reviewed by the Board's independent certified public accountant as part of the financial audit periodically required. The internal controls are designed to prevent losses of funds, which might arise from fraud, error and misrepresentation, by third parties or imprudent actions by the Board or employees of the plan sponsor. 14. CONTINUING EDUCATION: The Board of Trustees relies on its consultants and professionals to provide continuing education on pension and investment issues. The Board of Trustees recognizes state and regional conferences as a source of continuing education. The Trustees are encouraged to attend conferences, schools, and other functions periodically to fulfill this requirement. 15. REPORTING: The Custodian's valuation report is filed annually with the plan sponsor. This report is available to the public. 16. FILING OF INVESTMENT POLICY: The investment policy is promptly filed with the Department of Management Services, plan sponsor and consulting actuary. The effective date of the investment policy and any amendment thereto shall be the 31 st calendar day following the filing date with the plan sponsor. 17. VALUATION OF ILLIQUID INVESTMENTS: The Board defines an illiquid investment as one for which a generally recognized market is not available or for which there is no consistent or generally accepted pricing mechanism. Should an investment become illiquid or in the event the fund acquires an illiquid investment, the Board shall develop the methodology for valuation as set forth in the criteria in Section 215.47(6), Florida Statutes (the SBA/FRS methodology for valuation). 12 ASSIGNMENT OF RESPONSIBILITIES Responsibility Table Fiduciary Written Written Strategic Asset Allocation Level Investment Investment Allocation Within Policy Strategy Among Asset Asset Class(s) Class(s) Manager Security Performance Search & Selection Measurement Selection Trustees 1 1 1 4 1 4 4 Investment 2 2 2 2 2 4 3 Consultant Investment 4 4 2 2 4 1 3 Manager(s) Custodian 4 4 4 4 4 4 4 Delegation of Responsibility: 1)Approves 2) Recommends 3) Monitors 4) Informed INVESTMENT POLICY REVIEW The intention of the Board of Trustees is to review this Statement of Investment Policy and its addenda periodically and to amend it to reflect any changes in philosophy or objectives. However, if at any time the Investment managers believe the specific objectives defined herein cannot be met or these guidelines unnecessarily constrict performance, the Trustees shall be so notified in writing. ACCEPTANCE AND AUTHORIZATION This statement of investment policy is adopted December 13, 2016 by the Board of Trustees of the City of Sebastian Police Officers' Retirement System whose signatures appear below. Chairman, Board of Trustees City of Sebastian Police Officers' Retirement System 13 Investment Manager's Acknowledgment I, the undersigned, acknowledge I have received the policy statement for the City of Sebastian Police Officers' Retirement System, dated . I affirm I have read and understand said Policy Statement, and do hereby agree to abide to the guidelines expressed in the Policy Statement. Name of Firm Signed Date 14 Exhibit 3: Sebastian Police Officers' Retirement System Investment Policy Change Log Date Section Description of Change 15 A Self -Assessment for the Trustees of the City of Sebastian Police Officers' Retirement System • Are investments managed in accordance with applicable by-laws, trust documents, and written investment policy statements? • Are the roles and responsibilities of all involved parties defined, documented and acknowledged? • Are service agreements and contracts in writing? Are they written with provisions that conflict with fiduciary standards of care? • Has an investment time horizon been identified? • Has a risk level been identified? • Has an expected, modeled return to meet investment objectives been identified? • Are selected asset classes consistent with identified risk, return and time horizon? • Are selected asset classes consistent with implementation and monitoring constraints? • Is there an Investment Policy Statement (IPS), which contains the detail to define, implement, and manage a specific investment strategy? • Is the investment strategy implemented in compliance with the required level of prudence? • Does the IPS define appropriately structured, socially responsible investment strategies (where applicable)? • Are Investment vehicles appropriate for the portfolio, size? • Is a due diligence process followed in selecting service providers, including the custodian? • Are there periodic reports comparing investment performance against an appropriate index, peer group, and IPS objectives? • Are periodic reviews made of qualitative and/or organizational changes of investment decision -makers? • Are control policies in place to periodically review policies for best execution, "soft dollar", and proxy voting? • Are fees for investment management consistent with agreements and all applicable laws? • Are "finder's fees" or other forms of compensation that may have been paid for asset placement, appropriately applied, utilized and documented? Is there a process to periodically review the Organization's effectiveness in meeting its fiduciary responsibilities? 16 CITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM SPECIAL TAX NOTICE YOUR ROLLOVER OPTIONS You are receiving this notice because all or a portion of a payment you are receiving from the City of Sebastian Police Officers' Retirement System (the "Plan") is eligible to be rolled over to an IRA or an employer plan. This notice is intended to help you decide whether to do such a rollover. This notice describes the rollover rules that apply to payments from the Plan that are not from a designated Roth account (a type of account with special tax rules in some employer plans). If you also receive a payment from a designated Roth account in the Plan, you will be provided a different notice for that payment, and the Plan administrator or the payor will tell you the amount that is being paid from each account. Rules that apply to most payments from a Plan are described in the "General Information About Rollovers" section. Special rules that only apply in certain circumstances are described in the "Special Rules and Options" section. GENERAL INFORMATION ABOUT ROLLOVERS How can a rollover affect my taxes? You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59'/2 and do not do a rollover, you will also have to pay a 10% additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you will not have to pay tax until you receive payments later and the 10% additional income tax will not apply if those payments are made after you are age 59'/2 (or if an exception applies). Where may I roll over the payment? You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer plan (a tax -qualified plan, section 403(b) plan, or governmental section 457(b) plan) that will accept the rollover. The rules of the IRA or 00119409.WPD; l Page 1 of 10 employer plan that holds the rollover will determine your investment options, fees, and rights to payment from the IRA or employer plan (for example, no spousal consent rules apply to IRAs and IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan. How do I do a rollover? There are two ways to do a rollover. You can do either a direct rollover or a 60-day rollover. If you do a direct rollover, the Plan will make the payment directly to your IRA or an employer plan. You should contact the IRA sponsor or the administrator of the employer plan for information on how to do a direct rollover. If you do not do a direct rollover, you may still do a rollover by making a deposit into an IRA or eligible employer plan that will accept it. You will have 60 days after you receive the payment to make the deposit. If you do not do a direct rollover, the Plan is required to withhold 20% of the payment for federal income taxes (up to the amount of cash and property received other than employer stock). This means that, in order to roll over the entire payment in a 60-day rollover, you must use other funds to make up for the 20% withheld. If you do not roll over the entire amount of the payment, the portion not rolled overwill be taxed and will be subject to the 10% additional income tax on early distributions if you are under age 59% (unless an exception applies). How much may I roll over? If you wish to do a rollover, you may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except: • Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary) • Required minimum distributions after age 70'/2 (or after death) • Hardship distributions • ESOP dividends • Corrective distributions of contributions that exceed tax law limitations • Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends) • Cost of life insurance paid by the Plan • Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution • Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will generally be adverse tax consequences if you roll over a distribution of S corporation stock to an IRA). 00119409.WPD;i Page 2 of 10 The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover. If I don't do a rollover, will I have to pay the 10% additional income tax on early distributions? If you are under age 59'/2, you will have to pay the 10% additional income tax on early distributions for any payment from the Plan (including amounts withheld for income tax) that you do not roll over, unless one of the exceptions listed below applies. This tax is in addition to the regular income tax on the payment not rolled over. The 10% additional income tax does not apply to the following payments from the Plan: • Payments made after you separate from service if you will be at least age 55 in the year of the separation • Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the lives or joint life expectancy of you and your beneficiary) • Payments from a governmental defined benefit pension plan made after you separate from service if you are a public safety employee and you are at least age 50 in the year of the separation • Payments made due to disability • Payments after your death • Payments of ESOP dividends • Corrective distributions of contributions that exceed tax law limitations • Cost of life insurance paid by the Plan • Payments made directly to the government to satisfy a federal tax levy • Payments made under a qualified domestic relations order (QDRO) • Payments up to the amount of your deductible medical expenses • Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September 11, 2001 for more than 179 days • Payments of certain automatic enrollment contributions requested to be withdrawn within 90 days of the first contribution • Payments for certain distributions relating to certain federally declared disasters • Phased retirement payments made to federal employees. If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA? If you receive a payment from an IRA when you are under age 59'/2, you will have to pay the 10% additional income tax on early distributions from the IRA, unless an exception applies. In general, the exceptions to the 10% additional income tax for early distributions 00119409.WPD; 1 Page 3 of 10 from an IRA are the same as the exceptions listed above for early distributions from a plan. However, there are a few differences for payments from an IRA, including: • There is no exception for payments after separation from service that are made after age 55. • The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as part of a divorce or separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former spouse). • The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to whether you have had a separation from service. • There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a qualified first-time home purchase, and (3) payments for health insurance premiums after you have received unemployment compensation for 12 consecutive weeks (or would have been eligible to receive unemployment compensation but for self-employed status). Will I owe State income taxes? This notice does not describe any State or local income tax rules (including withholding rules). SPECIAL RULES AND OPTIONS If your payment includes after-tax contributions After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable portion of your after-tax contributions is included in the payment, so you cannot take a payment of only after-tax contributions. However, if you have pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether the after-tax contributions are included in a payment. In addition, special rules apply when you do a rollover, as described below. You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60-day rollover. You must keep track of the aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income for later payments from the IRAs). If you do a direct rollover of only a portion of the amount paid from the Plan and at the same time the rest is paid to you, the portion directly rolled over consists first of the amount that would be taxable if not rolled over. For example, assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions. In this case, if you directly roll over $10,000 to an IRA that is not a Roth IRA, 00119409.WPD; l Page 4 of 10 no amount is taxable because the $2,000 amount not directly rolled over is treated as being after-tax contributions. If you do a direct rollover of the entire amount paid from the plan to two or more destinations at the same time, you can choose which destination receives the after-tax contributions. If you do a 60-day rollover to an IRA of only a portion of a payment made to you, the after- tax contributions are treated as rolled over last. For example, assume you are receiving a distribution of $12,000, of which $2,000 is after-tax contributions, and no part of the distribution is directly rolled over. In this case, if you roll over $10,000 to an IRA that is not a Roth IRA in a 60-day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions. You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and only if the receiving plan separately accounts for after-tax contributions and is not a governmental section 457(b) plan). You can do a 60-day rollover to an employer plan of part of a payment that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over. If you miss the 60-day rollover deadline Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under certain extraordinary circumstances, such as when external events prevented you from completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS Publication 590-A, Individual Retirement Arrangements (IRAs). If your payment includes employer stock that you do not roll over If you do not do a rollover, you can apply a special rule to payments of employer stock (or other employer securities) that are either attributable to after-tax contributions or paid in a lump sum after separation from service (or after age 59'/2, disability, or the participant's death). Under the special rule, the net unrealized appreciation on the stock will not be taxed when distributed from the Plan and will be taxed at capital gain rates when you sell the stock. Net unrealized appreciation is generally the increase in the value of employer stock after it was acquired by the Plan. If you do a rollover for a payment that includes employer stock (for example, by selling the stock and rolling over the proceeds within 60 days of the payment), the special rule relating to the distributed employer stock will not apply to any subsequent payments from the IRA or employer plan. The Plan administrator can tell you the amount of any net unrealized appreciation. If you have an outstanding loan that is being offset 00119409.WPD;i Page 5 of 10 If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your employment ends. The loan offset amount is treated as a distribution to you at the time of the offset and will be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan. How long you have to complete the rollover depends on what kind of plan loan you have. If you have a qualified plan loan offset, you will have until your tax return date (including extensions) for the tax year during which the offset occurs to complete your rollover. A qualified plan loan offset occurs when a plan loan in good standing is offset because your employer plan terminates, or because you sever from employment. If your plan loan offset occurs for any other reason, then you have 60 days from the date the offset occurs to complete your rollover. If you were born on or before January 1, 1936 If you were born on or before January 1, 1936 and receive a lump sum distribution that you do not roll over, special rules for calculating the amount of the tax on the payment might apply to you. For more information, see IRS Publication 575, Pension and Annuity Income. If your payment is from a governmental section 457(b) plan If the Plan is a governmental section 457(b) plan, the same rules described elsewhere in this notice generally apply, allowing you to roll over the payment to an IRA or an employer plan that accepts rollovers. One difference is that, if you do not do a rollover, you will not have to pay the 10% additional income tax on early distributions from the Plan even if you are under age 59'/2 (unless the payment is from a separate account holding rollover contributions that were made to the Plan from a tax -qualified plan, a section 403(b) plan, or an IRA). However, if you do a rollover to an IRA or to an employer plan that is not a governmental section 457(b) plan, a later distribution made before age 59'/2 will be subject to the 10% additional income tax on early distributions (unless an exception applies). Other differences are that you cannot do a rollover if the payment is due to an "unforeseeable emergency" and the special rules under "If your payment includes employer stock that you do not roll over" and "If you were born on or before January 1, 1936" do not apply. If you are an eligible retired public safety officer and your pension payment is used to pay for health coverage or qualified long-term care insurance If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after normal retirement age, you can exclude from your taxable income plan payments paid directly as premiums to an accident or health plan (or a qualified long-term care insurance contract) that your employer maintains for you, your spouse, or your dependents, up to a maximum of $3,000 annually. For this purpose, a public safety officer is a law enforcement officer, firefighter, chaplain, or 00119409.WPD; l Page 6 of 10 member of a rescue squad or ambulance crew. If you roll over your payment to a Roth IRA If you roll over the payment from the Plan to a Roth IRA, a special rule applies under which the amount of the payment rolled over (reduced by any after-tax amounts) will be taxed. However, the 10% additional income tax on early distributions will not apply (unless you take the amount rolled over out of the Roth IRA within 5 years, counting from January 1 of the year of the rollover). If you roll over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions will not be taxed (including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after you are age 59'/2 (or after your death or disability, or as a qualified first-time homebuyer distribution of up to $10,000) and after you have had a Roth IRA for at least 5 years. In applying this 5-year rule, you count from January 1 of the year for which your first contribution was made to a Roth IRA. Payments from the Roth IRA that are not qualified distributions will be taxed to the extent of earnings after the rollover, including the 10% additional income tax on early distributions (unless an exception applies). You do not have to take required minimum distributions from a Roth IRA during your lifetime. For more information, see IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs), and IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). If you are not a plan participant Payments after death of the participant. If you receive a distribution after the participant's death that you do not roll over, the distribution will generally be taxed in the same manner described elsewhere in this notice. However, the 10% additional income tax on early distributions and the special rules for public safety officers do not apply, and the special rule described under the section "If you were born on or before January 1, 1936" applies only if the participant was born on or before January 1, 1936. If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a deceased participant, you have the same rollover options that the participant would have had, as described elsewhere in this notice. In addition, if you choose to do a rollover to an IRA, you may treat the IRA as your own or as an inherited IRA. An IRA you treat as your own is treated like any other IRA of yours, so that payments made to you before you are age 59'/2 will be subject to the 10% additional income tax on early distributions (unless an exception applies) and required minimum distributions from your IRA do not have to start until after you are age 70'/2. 00119409.WPD;i Page 7 of 10 If you treat the IRA as an inherited IRA, payments from the IRA will not be subject to the 10% additional income tax on early distributions. However, if the participant had started taking required minimum distributions, you will have to receive required minimum distributions from the inherited IRA. If the participant had not started taking required minimum distributions from the Plan, you will not have to start receiving required minimum distributions from the inherited IRA until the year the participant would have been age 70'/2. If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because of the participant's death and you are a designated beneficiary other than a surviving spouse, the only rollover option you have is to do a direct rollover to an inherited IRA. Payments from the inherited IRA will not be subject to the 10% additional income tax on early distributions. You will have to receive required minimum distributions from the inherited IRA. Payments under a qualified domestic relations order. If you are the spouse or former spouse of the participant who receives a payment from the Plan under a qualified domestic relations order (QDRO), you generally have the same options the participant would have (for example, you may roll over the payment to your own IRA or an eligible employer plan that will accept it). Payments under the QDRO will not be subject to the 10% additional income tax on early distributions. If you are a nonresident alien If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%, the Plan is generally required to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount of tax you owe (as may happen if you do a 60-day rollover), you may request an income tax refund by filing Form 1040NR and attaching your Form 1042-S. See Form W-813EN for claiming that you are entitled to a reduced rate of withholding under an income tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. Other special rules If a payment is one in a series of payments for less than 10 years, your choice whether to make a direct rollover will apply to all later payments in the series (unless you make a different choice for later payments). If your payments for the year are less than $200 (not including payments from a designated Roth account in the Plan), the Plan is not required to allow you to do a direct rollover and is not required to withhold for federal income taxes. However, you may do a 60-day rollover. Unless you elect otherwise, a mandatory cashout of more than $1,000 (not including 00119409.WPD; l Page 8 of 10 payments from a designated Roth account in the Plan) will be directly rolled over to an IRA chosen by the Plan administrator or the payor. A mandatory cashout is a payment from a plan to a participant made before age 62 (or normal retirement age, if later) and without consent, where the participant's benefit does not exceed $5,000 (not including any amounts held under the plan as a result of a prior rollover made to the plan). You may have special rollover rights if you recently served in the U.S. Armed Forces. For more information, see IRS Publication 3, Armed Forces' Tax Guide. FOR MORE INFORMATION You may wish to consult with the Plan administrator or payor, or a professional tax advisor, before taking a payment from the Plan. Also, you can find more detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs); IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs); and IRS Publication 571, Tax -Sheltered Annuity Plans (403(b) Plans). These publications are available from a local IRS office, on the web at www.irs.qov, or by calling 1-800-TAX-FORM. 00119409.WPD; l Page 9 of 10 I HAVE RECEIVED THE PRECEDING 9-PAGE SPECIAL TAX NOTICE: Date: Participant's Signature Print Clearly Participant's Name Note: Return ONLY this last page (numbered 10 of 10) to: City of Sebastian Police Officers' Retirement System C/O Ken Kilgore Plan Administrator 1225 Main Street Sebastian, FL 32958 Email: kkillgore(cbCityofSebastian.orq Telephone:(772) 388-8205 00119409.WPD; 1 Page 10 of 10