MINUTES OF THE

FIRE FIGHTERS’ RELIEF AND RETIREMENT FUND BOARD OF TRUSTEES

AUSTIN, TEXAS

The regular meeting convened at the pension office at 4101 Parkstone Heights Drive, Suite 270, Austin, Texas, on May 10, 2016 at 8:30 a.m., with the following present:

Mayor Steve Adler Chair Cliff Alexander Donald G. Lowe

Keith Johnson Vice-Chair Becky Brooks Richard Meyers

Art Alfaro Secretary/Treasurer Delbert Cain Bob Nicks

Jeremy Burke Trustee Chuck Campbell Mike Sullivan

Dimitri Nichols Trustee Mike Duffee Jan Wesson

Bill Stefka Administrator Christine Jones

Linda Adney Adm. Asst.

Minutes of the regular meeting April 21, 2016 were reviewed by the Board. Jeremy Burke recommended some revisions to the April minutes and after further review by the Board, Jeremy made a motion to approve the minutes of the regular meeting held April 21, 2016 as amended. With a second from Dimitri Nichols, the Board unanimously approved.

Agenda item 2 was approval of retirement benefits for David R. Bullock, Dennis L. Farris, Robert H. Kimmons, William J. Miller, David A. Neighbor and Troy L. Wenzel. After review of the benefit information, a motion was made by Jeremy Burke to approve benefits as stated on the benefit calculation form. With a second from Dimitri Nichols, the Board unanimously approved.

The next item to be discussed was a review of the Investment Committee Meeting held Monday, May 9, 2016 with the Fund’s investment consultant, Meketa. Keith Johnson summarized that meeting noting that the 1Q16 marked the worst start in many years for equity markets. The Fund produced a net return of 0.6% which trailed both benchmarks. Asset coordination update, asset allocation, amended operating procedures and private equity fund of fund’s due diligence phase were all reviewed at the meeting. Jeremy Burke made a motion to approve the revised Operating Procedures with a couple of updates to Appendix A: Style Benchmarks to include the Smid Cap Core, Smid Cap Value and Smid Cap Value Russell 2500 indexes which measures segments of U.S. equity, and a naming change on the bank loan index:from Credit Suisse Leveraged Loan Index to CSFB Leveraged Loan Index. With a second from Dimitri Nichols, the Board unanimously approved. From recommendation by the Fund’s consultant, a motion was made by Jeremy Burke to withdraw $10 million from the Intech Enhanced Plus and move to the S&P500 fund for capital calls as needed. With a second from Dimitri Nichols, the Board unanimously approved. Also upon recommendation by Meketa, Art Alfaro made a motion for a full redemption of the Weatherlow Fund Hedge Fund with Evanston Capital Management (approximately $38 million) to be allocated 1/3 TIPS, 1/3 Barc Agg, and 1/3 SP500 with final allocation to be made when cash comes back approximately in September 2016 based on what is most underweight at that time. With a second from Jeremy Burke, the Board unanimously approved.

The Board next discussed agenda item number 5 which was possible modifications of the ethics policy including items relating to Texas Local Government Code 176. Chuck Campbell, the Fund’s legal counsel noted Jeremy Burke’s recommendation of including staff in the ethics policy was a good one and he would investigate further on all areas that are applicable to staff and present a revised policy at a later meeting.

In the meantime, a motion was made by Dimitri Nichols to adopt the modified ethics policy as presented at today’s meeting. With a second from Jeremy Burke, the Board unanimously approved.

Agenda item number 6 was an update from Figer & Company, the Fund’s current auditor. Mike Figer noted that their firm has made a decision to no longer do public fund audits. Mike also discussed a delinquency in their peer review process which was now back on track. He was aware our Fund had hired the Montemayor, Britton & Bender CPA firm and would be assisting them during the transition. No motion was necessary.

Public commentary was taken next. Under this public commentary timeslot there is an opportunity for input directly from the membership about their concerns. Vice Chair Keith Johnson wanted to thank everyone for coming to share their ideas and opinions with the Board. Becky Brooks, Jan Wesson, Richard Meyers, Clifford Alexander, Christine Jones, Mike Sullivan, Bob Nicks and Mike Duffee, each gave their comments and input regarding the beneficiary designation policy. Mr. Johnson noted that the Board was working on several retirement options that would include new beneficiary options and hoped the membership would be patient in the meantime while all of the information is being compiled to present to the membership. The pension board thanked everyone again for their attendance at today’s meeting.

May 10, 2016

Page 2

The next item to be discussed with the review and possible modification of rules related to beneficiary designations per Section 7.09 including educational materials and possible survey. Keith Johnson asked Bill Stefka to update everyone on the recent communication to the membership regarding the distribution of the provisional beneficiary designation form. Mr. Stefka noted that after input from the membership it was decided to distribute the provisional designation beneficiary form whereby single firefighters have the opportunity to name anyone as their beneficiary between May 1, 2016 and June 1, 2016 until the Board completes the review process of the beneficiary designation policy that was adopted October, 2015. The form was posted on the afrs.org website, retired members received notification by USPS mail and via e-mail from the ARFFA Association. Active members received notification by postings to the AFD Intranet. The pension Board then went into executive session at 9:50 a.m. as authorized by Section 551.071 of the Texas Local Government Code. At 10:20 a.m. the Board concluded their session and resumed the regular meeting. A motion was made by Jeremy Burke to have legal counsel amend designation policy based on certain principles. An amendment to the motion was presented by Mayor Steve Adler to instead adopt the following principles with respect to the beneficiary designation policy: 1)Removes all requirements as to who can be named as a beneficiary, including removing the existing IRS dependent requirement; 2) Provides that new beneficiary designations or changes to existing beneficiary designations following retirement require a reduction to the member’s benefit so that the selection of the new beneficiary is actuarially neutral to the Fund; 3) Allows all retirees a window for a one-time change of beneficiary designations without any reduction to their benefit 4) Incorporates updated actuarial tables for reducing survivor benefits for beneficiaries who are more than 10 years younger than a member; 5) Allows for actuarially equivalent optional forms of benefits to member, including a single life annuity and request the fund administrator, legal counsel and actuary to present proposals based on such principles. The friendly amendment was accepted by Jeremy Burke and with a second from Art Alfaro, the Board unanimously approved, with Keith Johnson noting some reservation. The working timeline for review of beneficiary rule was updated and will continually be reviewed at future meetings as progress is made.

April financial statements and the fund expense report were not available because of the early meeting date this month and will be reviewed at the June meeting. No action was necessary.

Under old business, new business, future agenda items are the amended beneficiary designation policy, review proposals from the Fund’s actuary and legal counsel and possibly meeting with the Fund’s newly hired auditor.

A motion was made by Jeremy Burke to adjourn. With a second from Art Alfaro, the Board unanimously approved.

BOARD MEMBERS

Steve Adler, Chair

Keith Johnson, Vice-Chair

Art Alfaro, Secretary-Treasurer

Jeremy Burke, Trustee

Dimitri Nichols, Trustee

4101 Parkstone Heights Drive, Suite 270 454-9567/FAX 453-7194

E-mail: afdpension@ austin.rr.com

Website: WWW.AFRS.ORG

May 2016

Minutes