1-16-14 Ltr to Dallas Police & Fire Pension System (1)

8/13/2019 1-16-14 Ltr to Dallas Police & Fire Pension System (1)

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City of DallasJanuary 16,2014

VIA U.S. FIRST CLASS and CMRRRand via EMAIL TO JOSH MOND, ESQ.([email protected])Board of Directors, Combined PlanDallas Police & Fire Pension Systemc/o Josh Mond, General Counsel, Dallas Police & Fire Pension System4100 Hany Hines Boulevard, Ste. 100Dallas, Texas 75219Board of Directors, Supplemental PlanDallas Police & Fire Pension Systemc/o Josh Mond, General Counsel, Dallas Police & Fire Pension System4100 Harry Hines Boulevard, Ste. 100Dallas, Texas 75219In their respective below-listed official capacities on the Boards of the Dallas Police & FirePension System:

George Tomasovic, Board ChairmanDan Wojcik, Vice ChairmanRick Salinas, Deputy Vice ChairmanTennell Atkins, TrusteeGerald Jerry Brown, TrusteeSamuel L. Friar, TrusteeScott Griggs, TrusteeKen Haben, TrusteePhilip T. Kingston, Trusteelre Kleinman, TrusteeJoe Schutz, Trustee

Each c/o Josh Mond, General Counsel, Dallas Police & Fire Pension System4100 Harry Hines Boulevard, Ste. 1.00, Dallas, Texas 75219Re: Independent Actuarial Audit of City of Dallas PensionsGentlemen:The City of Dallas (the City ) respectfully demands that on or before 5:15 PM Dallastime on the tenth business day following the date of this letter, the Dallas Police & Fire PensionSystem Combined Plan and the Dallas Police & Fire Pension System Supplemental Plan

OFFICEOFTHECITYATTORIIEY CITYHATL OALLAS.TEXASTs2Ol PHONE214{7G35I9 FA)(2144704A22


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Board of Directors, Combined planBoard of Directors, Supplemental planDallas Police & Fire Pension SystemJanuary 16,2014Page2(together PFPS ) provide to independent actuary Jason L. Franken, of the independent actuarialfirm Foster & Foster, who has been retained by the City for the purpose of performing the auditof actuarial valuations, studies, and reports required by Tex. Gov't bode gSO-Z.tOtZ1c;,documents containing the information described on exhibit A to this letter to enabli said actuaryto perform his audit. The City has elected to have its independent actuary perform a fuitreplication actuarial audit. The information listed on Exhibit A is what the iaid independentactuary advises the City that he requires to perform the said engagement, and to identifyappropriate assumptions for the audit. The independent actuary will endeavor to meet with theMr. Richard Tettamant as manager of PFPS, and whatever additional managers the boards maydesignate to discuss the full range of actuarial assumptions used by the plairs' actuary and anyissues that may support the independent actuary's detlrmination of the aipropriate asiumptionsto use in conducting the audit. But because the initial document - production is merelypreparatory to conducting the actuarial audit, if there is a delay in that meeting respectingactuarial assumptions, the document production should not also be delayed.

_ PFPS is a public retirement system within the meaning of Tex. Gov't Code $802.001(3).The City is the unit of government that is the employer of the active members of pfpS. fne iiiyhas engaged independent actuaries Jason Franken anO amy Strickland through the actuarial firmof Foster & Foster for the purpose of conducting the actuaiial audit by the Ciiy; and Mr. Frankenand Ms. Strickland each has the credentials required for an actuary under Tex. Gov't Code$802.101(d).If any of this information is not in PFPS'possession and is in the possession of anotherentity, the City respectfully demands that PFPS immediately (a) specify such information in

writing to the City and (b) direct the custodians of such informltion to provide it to theindependent actuary in accordance with this letter. We have already provided you with a copy ofthe City's contract with Foster & Foster. The City will also cooperate fully with this uuait,promptly providing to the actuary whatever information that the actuary may request.As the City has discussed with the PFPS Administrator and pFpS' attorney the City isrequired by Texas Government Code $802.1012(c) to perform an actuarial audit of it. p.nrion,every five years. Government Code $802.1012(c) mandates that this actuariat audit includes anaudit of the subject-matters of all reports filed by PFPS during the previous five years pursuant torequirements including any requirements under Government Code chapter 802. Since Tex.Gov't Code $802.103(a) requires PFPS to file annual financial reports, and such reports bydefinition cover both assets and liabilities, the independent aciuarial audit will includeexamination of PFPS assets as well as its liabilities and other categories of information asindicated on Exhibit A. It is the City's overarching duty and right to Iearn about all aspects ofthe Police Fire Pension finances on both the asset una ti.Uitity sides of the ledger as the sponsorof the plans administered by the board, the employer of system members, and the issuer ofmunicipal securities the ratings of which could potentially be prejudiced by unknown risks toPFPS about which the City is obligated to leain and that the U.S. Securities and ExchangeCommission would assert that the City would be obligated to disclose if they exist under Section


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Board of Directors, Combined planBoard of Directors, Supplemental planDallas Police & Fire Pension SystemJanuary 76,2014Page 3

10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. The City has additionalobligations under federal and state law that further necessitate and warrant th; full replicationactuarial audit in the City's judgment.

Therefore, to meet our obligations under section 802.1012 and other relevant obligationsof the City, the City has engaged Foster & Foster to perform and in-depth actuarial audit of bothof the City's pension systems for the most recent five-year period. The audit performed byFoster & Foster will include all of the valuations, studiei, und reports prepared by the pensionsystems since the last audit in 2008. The Foster & Foster actuarial audit will inquire into pensionsystem assets and liabilities. We need and appreciate your assistance in getting this projectmoving.You should contact Mr. Franken (Foster & Foster, One Oakbrook Terrace, Suite 720Oakbrook Terace, IL 60181, (630) 620-020A, Fax (239) 481-0634,[email protected]), orCity of Dallas Controller Edward Scott ((214) 670-3856, [email protected]) toresolve any questions about scope or format of the documents to be provided. Please use emailor fax for your communications to avoid delay.Mr. Franken or Mr. Scott can also arrange for an FTP site into which you can copyvoluminous data to avoid the volume limitations of email.During the audit, the actuary may contact PFPS for additional information orclarifications to avoid any misunderstandings or incorrect results. We appreciate your assistancein this project.As shown by the copy of the agreement that we provided to PFpS, the City has enteredinto a written agreement with Foster & Foster to maintain the confidentiality of any nonpublicinformation provided by PFPS as required by section 802.t0L2(d). If you prlfq not to diiclosespecific information directly to Foster & Foster, we will be glad to arrange io, you to transmit itdirectly to the City and the City will accept responsibility for tttr dutu and the related legalobligations. The City has the same obligations- as PFPS to protect non-public informationobtained from PFPS in connection with this actuarial audit, and ihe ,u-, po*rrs to protect thatinformation from further disclosure. No additional confidentiality provision is necessary orappropriate given the protections that state law recognizes as confidential that is accorded in bothsection 8O2..lOl2 and the Public Information Act.

Sincerely,

V&/4,,1^tmnWD[nne Chipperfieldcc: Warren Ernst Chief Financial Officer


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1-16-14 Ltr to Dallas Police & Fire Pension System (1)

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