[00:00:06]
STAFF AND BOARD READY FOR THE START THE MEETING.
ALL RIGHT. VERY GOOD. THANK YOU.
[Roll Call]
WILL THE RECORDING CLERK PLEASE TAKE THE ROLL? YES.TODAY'S MEETING IS HELD PURSUANT TO THE BROWN ACT.
WE ARE PROVIDING LIVE AUDIO AND VIDEO STREAMING.
MEMBERS OF THE PUBLIC WISHING TO MAKE A PUBLIC COMMENT CAN DO SO.
ONE LIVE IN PERSON OR VIA ZOOM.
TWO BY SUBMITTING AN EMAIL OR THREE LEAVING A VOICEMAIL.
THIS INFORMATION IS NOTED ON THE AGENDA.
IF THERE ARE NO QUESTIONS ABOUT THE MEETING PROCEDURES, WE WILL BEGIN.
THANK YOU. OUR NEXT ITEM IS APPROVAL OF THE MINUTES.
[Approval of Minutes]
DO I HAVE A MOTION FOR APPROVAL OF THE MINUTES? SO MOVED. OKAY, WE HAVE A MOTION.SECOND, SECOND. ALL IN FAVOR? AYE. ALL RIGHT.
THANK YOU. DO WE HAVE PUBLIC COMMENTS FOR ITEMS NOT ON THE AGENDA?
[Public Comments on Items Not on the Agenda]
LOOKS LIKE WE HAVE A HAND RAISED IN THE ON THE WEB.KELLY, CAN YOU HEAR ME? YOU ARE MUTED AT THIS POINT.
BECAUSE EVERYTHING HAS TO DO WITH FINANCE.
THE NATURE MAGAZINE OVERLOOKS THE IMPACT OF FINANCES AND THE IMPACT OF PARKING FEES ON VISITORS.
THEY TALK ABOUT ACCESSIBILITY WITHOUT TAKING ANY CONSIDERATION, ANY NOTE OF THE PARKING FEES THAT WENT FROM BEING FREE UP TO BEING $5. THAT WAS THE FREE PARKING WAS FENCED OFF IN LATE 2022, BASED ON THE AGGRESSIVE AND UNSUPPORTED ASSUMPTION THAT THE LEASE WAS THE FARMING LEASE WAS A SURE THING, AND FREE PARKING WAS GOING TO BE NEEDED FOR THE PRODUCE STAND.
BUT SINCE THE PLAN PRESENTED TO YOUR BOARD CALLED FOR ALAMEDA COUNTY AND DIG DEEP FARMS WITH A CONTRACT AND WITH A LEASE TO GROW EDIBLE CROPS BEGINNING A YEAR OR TWO AGO.
THEY DIDN'T GROW A SINGLE CARROT OR ONION OR POTATO OR CABBAGE OR EAR OF CORN.
AND THE OLD BARN COULD BE USED AS A PRODUCE STAND.
AND THAT THAT'S ACCORDING TO CHRIS BARTON.
OF COURSE, THEY GOT RID OF THAT FREE PARKING TWO YEARS, A YEAR OR TWO YEARS AGO OR A YEAR AGO BASED ON THE ASSUMPTION THAT THAT WAS GOING TO HAPPEN. NOW, IT'S NOT EVEN A SURE THING BECAUSE CHRIS SAYS BARTON MR. BARTON SAYS THAT'S IF THEY CHOOSE TO DO SO, THERE'S NO LONGER A PRODUCE STAND IN THE GUARANTEED.
NOW THERE'S 300 ACRES OF PARKLAND IN THIS ARTICLE SLATED TO OPEN IN SPRING OF 2024.
THE CONSTRUCTION THERE AS OF MID 22 WAS SCHEDULED TO OPEN IN SPRING OF 2023 AND AS OF AUGUST 16TH, 2023, SCHEDULED TO OPEN IN SEPTEMBER 2023.
WHICH WAS ABOUT A YEAR, YOU KNOW SIX MONTHS AGO.
IT'S NOW SCHEDULED. IT'S NOW FULLY A YEAR LATE.
IT'S TAKING EXACTLY TWICE AS LONG AS SCHEDULED.
SO WHEN YOU SPEND HAVE SCHEDULES AND YOU HAVE SPENDING YOU KNOW, THE TIMELINE FOR COMPLETION OF PROJECT COMPLETION IS OF CRITICAL IMPORTANCE, AND IT IS NOT BEING TRACKED.
YOU KNOW, YOU KNOW, YOU'RE SPENDING, BUT YOU DON'T KNOW YOUR TIMELINES FOR PROJECT COMPLETION.
AND IF YOU DO, THEY'VE BEEN INCREDIBLY AGGRESSIVE TWICE THE SPEED AND HALF THE HALF THE TIME.
AND THEY'VE BEEN ENTIRELY UNREALISTIC AT COYOTE HILLS.
[00:05:02]
THANK YOU. ANY OTHERS? NO. NO OTHERS.OKAY, SO WE MOVE ON TO OUR ACTION ITEMS.
[Action Items]
FOR NUMBER 4.A IS THE UPDATE.ON SELECTION OF THE FIRM TO PROVIDE ASSESSMENT, DISTRICT ENGINEERING AND COMMUNITY FACILITIES.
DISTRICT ADMINISTRATIVE SERVICES.
ALL RIGHT. GOOD MORNING EVERYONE.
I'M DEBORAH SPAULDING, ASSISTANT GENERAL MANAGER OF FINANCE AND MANAGEMENT SERVICES.
GIVE ME A SECOND WHILE I PULL UP THE SCREEN HERE.
DISTRICT ADMINISTRATIVE SERVICES.
I'M GOING TO START OUT BY GIVING YOU SOME BACKGROUND TALKING ABOUT WHAT DOES THE ASSESSMENT ENGINEER DO FOR THE PARK DISTRICT, BECAUSE IT'S KIND OF A FUNNY TITLE, AN ASSESSMENT ENGINEER.
SO THE PARK DISTRICT HAS A NUMBER OF SPECIAL REVENUES THAT COME IN FROM DIFFERENT ASSESSMENT DISTRICTS, LIGHTING AND LANDSCAPING ASSESSMENT DISTRICTS, OR LLDS, AS WE CALL THEM.
WE ALSO HAVE SIX ZONES OF BENEFITS OR ZOBS AND FOUR COMMUNITY FACILITIES, DISTRICTS OR CFDS.
ONLY SPECIAL BENEFITS ARE ACCESSIBLE.
AND AGENCIES SHALL SEPARATE THE GENERAL BENEFITS FROM THE SPECIAL BENEFITS CONFERRED ON A PARCEL.
SO OUR ENGINEER HELPS US TO DO THIS.
HELP US WITH THE REPORTING MAKING SURE THAT WE ARE CORRECTLY ASSESSING THESE PARCELS.
SO HERE'S A LIST OF ALL OF OUR ASSESSMENT DISTRICTS AND OUR ZONES OF BENEFITS.
SO YOU CAN SEE THERE'S QUITE A FEW OF THEM.
MOST RECENTLY WE'VE STARTED ADDING CFDS RATHER THAN ZONES OF BENEFITS.
AND ALL OF THESE, THE REVENUES ARE TRACKED IN SPECIAL REVENUE FUNDS, SO THAT WE'RE KEEPING TRACK OF THE MONEY COMING IN AND GOING OUT AND HOW IT'S BEING SPENT CAREFULLY AND SEPARATELY FROM OTHER FUNDS.
SO NOW INTO THE RFP PROCESS AND HOW IT WENT.
SO WE DISTRIBUTED OUR RFP DECEMBER 22ND.
WE RECEIVED THREE PROPOSALS ON JANUARY 11TH.
AND THEN WE CONDUCTED PANEL INTERVIEWS.
AND THEN I ALSO SAT ON THE PANEL.
AND FROM THAT PROCESS WE SELECTED NBS.
SOME OF YOU MAY BE FAMILIAR WITH THEM.
THEY HAVE BEEN THE PARK DISTRICT'S ASSESSMENT ENGINEERS SINCE 2011.
SO THEY'RE REALLY KNOWN AS BEING EXPERTS IN ASSESSMENT DISTRICTS AND IN CFD CREATION AS WELL.
SO VERY HELPFUL FOR US TO GO THROUGH THIS.
AND I'D BE HAPPY TO TAKE ANY QUESTIONS.
ANY QUESTIONS FROM THE COMMITTEE? IF THEY'RE.
WELL, LET ME JUST SAY THERE'S NO QUESTIONS BECAUSE YOU DESCRIBED IT ALL REALLY WELL IN THE REPORT.
I'M SORRY, I HAD SOME QUESTIONS.
OH, YOU HAVE A QUESTION? OKAY. YEAH.
GO AHEAD. IS THIS THE SAME FIRM THAT WE HAD WORKED WITH PREVIOUSLY, OR WILL THIS BE A NEW PARTNERSHIP? NBS IS THE FIRM WE'VE BEEN USING SINCE 2011.
SO EVERY FIVE YEARS, ROUGHLY, SOMETIMES WE'VE EXTENDED IT FOR AN ADDITIONAL TWO YEARS.
WE HAVE GONE OUT FOR AN RFP, GOTTEN PROPOSALS, AND WE'VE SELECTED NBS.
I THINK THIS IS THE THIRD OR FOURTH TIME.
THAT WE'VE ENDED UP WITH NBS, BUT YES.
SO THEY HAVE A LONG HISTORY WITH THE PARK DISTRICT.
AND THEN IN TERMS OF WHERE THE I GUESS THE PAYMENT TO WORK WITH THIS FIRM AND WHAT WE'RE APPROVING TODAY THAT WILL COME FROM THE.
PARCEL TAX AND ASSESSMENT DISTRICT FUNDS.
AND IS THAT DETERMINED BY THE AMOUNT IN EACH ONE OF THOSE DIFFERENT? YES, EXACTLY. YEAH.
SO THE LARGER THE DISTRICT, THE MORE WORK IT IS FOR NBS TO MANAGE IT.
[00:10:02]
SO YES.THANK YOU. ANY OTHER QUESTIONS OR.
I'D BE HAPPY TO MAKE THE MOTION.
GREAT. ALL RIGHT, LET ME RESUME SHARING HERE.
ARE YOU STAYING UP FOR THE NEXT ONE? TWO? YES. OKAY.
VERY GOOD. SO THE NEXT ITEM 4.B IS THE QUARTERLY REPORT AND MARKET REVIEW FOR DECEMBER 31ST, 2023 AND 2024 INVESTMENT POLICY APPROVAL.
SO THERE'S TWO, TWO SORT OF TWO ITEMS THERE.
TRYING TO GET TO THE RIGHT SIDE HERE.
ALL RIGHT, SO I'M GOING TO START OUT TALKING ABOUT OUR INVESTMENT POLICY AND WALK YOU THROUGH THE INVESTMENT POLICY. AND THEN I'M GOING TO TAKE THE QUARTERLY REPORT AND I'LL GIVE AN OVERVIEW OF THE QUARTERLY REPORT.
AND THEN WE HAVE JUSTIN RESUELLO, WHO'S HERE FROM PFM.
AND HE WILL GIVE YOU SOME EVEN MORE DETAILS ABOUT THE PARK DISTRICT'S INVESTED PORTFOLIO.
SO STARTING OUT WITH THE INVESTMENT POLICY.
AND LET'S SEE WHAT PAGE THIS IS IN YOUR PACKET.
SO WHAT IS THE INVESTMENT POLICY.
THERE ARE FIVE OBJECTIVES THAT WE HAVE LAID OUT IN OUR POLICY.
SO SAFETY, LIQUIDITY AND YIELD ARE OUR PRIMARY OBJECTIVES.
SO SAFETY ALWAYS HAS TO BE PRIMARY.
WE WANT TO MAKE SURE THAT WE AREN'T LOSING ANY OF OUR FUNDS THROUGH OUR INVESTMENTS.
LIQUIDITY MEANS THAT ALL OF OUR INVESTMENTS HAVE TO BE EASILY LIQUIDATED.
IN THE EVENT THAT WE NEED TO DRAW DOWN ON THOSE FUNDS.
AND THEN THE THIRD OF THOSE PRIMARY IS YIELD.
SO WE WOULD NEVER WANT TO PUT INVESTMENT EARNINGS AHEAD OF SAFETY.
AND THEN THE NEXT TWO SUSTAINABILITY AND PUBLIC TRUST ARE REALLY SPECIAL TO THE PARK DISTRICT.
SO YOU DO SEE SAFETY LIQUIDITY YIELD IN ALMOST EVERY INVESTMENT POLICY ACROSS THE STATE.
THIS YEAR, WE ACTUALLY HAVE MADE NO CHANGES TO LAST YEAR'S POLICY, ALTHOUGH WE'VE HAD SOME SUGGESTIONS THAT HAVE COME IN FROM THE BOARD MEMBER ABOUT LITTLE REFINEMENTS WE CAN MAKE. BUT THERE'S NOTHING IN THE PACKET THAT'S DIFFERENT FROM LAST YEAR.
SO WHAT ARE THE FINANCE COMMITTEE'S INVESTMENT DUTIES? SO THE TREASURER IS RESPONSIBLE FOR OVERSEEING THE PARK DISTRICT'S INVESTMENT POLICIES AND ITS PLURAL POLICIES.
THIS ONE THAT WE'RE LOOKING AT TODAY IS FOR THE PARK DISTRICT'S POOLED CASH INVESTMENTS.
EACH QUARTER, WELL, ANNUALLY THE PARK, THE FINANCE COMMITTEE REVIEWS THE INVESTMENT POLICY.
AND EACH QUARTER YOU RECEIVE QUARTERLY INVESTMENT REPORTS.
SO ALL PART OF MAINTAINING THAT INVESTMENT REVIEW THAT THE FINANCE COMMITTEE MUST DO.
AND YOU'LL RECEIVE QUARTERLY UPDATES ALSO FROM OUR INVESTMENT ADVISOR, PFM.
IT'S A LITTLE BIT MORE DETAIL ON THE ESG PIECE OF OUR POLICY.
SO IN 2020, WE ADDED THIS ENVIRONMENTAL, SOCIAL AND GOVERNANCE LAYER, WHICH IS ALSO CALLED ESG, WHICH IS IN ADDITION TO ALL OF OUR OTHER PRIMARY OBJECTIVES.
AND THE IDEA IS THAT IF WE'RE PAYING ATTENTION TO THIS, WE'RE PUTTING THIS NEW LENS ONTO OUR INVESTMENTS, THEN WE WANT THE COMPANIES THAT WE'RE INVESTING IN TO ALSO PAY ATTENTION TO THIS.
SO WHAT GETS MEASURED GETS MANAGED.
AND THOSE ARE TEND TO BE SAFER INVESTMENTS AS WELL.
[00:15:01]
SO THE INTENT IS GIVES US A BETTER INVESTMENT PORTFOLIO AND ALSO ENCOURAGES COMPANIES THAT WE'RE INVESTING IN TO MAKE CHANGES TO IMPROVE THEIR ESG SCORES.SO WE COULD TAKE AND WE CAN TAKE ACTION NOW, OR WE CAN HOLD IT TILL AFTER THE FULL INVESTMENT QUARTERLY REPORT. SO IT'S UP TO YOU GUYS IF YOU WANT TO TAKE DO QUESTIONS AND DO THE ACTION NOW.
OR YOU CAN HOLD EVERYTHING TILL THE END AND DO IT THEN.
WE CAN TAKE QUESTIONS NOW WHILE IT'S FRESH IN OUR MINDS, I GUESS.
ALL RIGHT. WE DO HAVE A QUESTION FROM ONE OF THE PUBLIC.
KELLY, YOU HAVE THREE MINUTES. YEAH.
AS WAS JUST MENTIONED, THIS IS A FAMOUS PHRASE FROM THE ONE OF THE GURUS OF STATISTICAL PROCESS CONTROL OR.
NO, ONE OF THE GURUS OF MANAGEMENT WAS IT WAS BRUCKNER, WHATEVER HIS NAME WAS WHAT GETS MEASURED, GETS MANAGED. VERY IMPORTANT PHRASE.
AND THE WAY THESE, THESE THINGS ARE BEING MEASURED VERY OFTEN THE, THE PENSION INVESTMENTS, THE INVESTMENT FUNDS THEY SHOW YOU WHAT THE, WHAT THE INVESTMENT RETURN HAS BEEN. THEY MAY EVEN SUBTRACT OFF THEIR FEES AND EXPENSES AND STUFF AND THEN SHOW YOU WHAT THE PERFORMANCE IS.
AND THAT'S A PRETTY THAT SOUNDS LIKE A PRETTY FAIR WAY TO DO IT.
HOWEVER IT TURNS OUT THERE'S ANOTHER LAYER BEFORE THE MONEY GETS TO YOUR PENSION RECIPIENTS AND YOUR EMPLOYEES AND AND THE FINAL, YOU KNOW, THE FINAL CONSUMER OR FINAL OWNER OF THAT MONEY.
AND THAT NEXT LAYER IS WHAT DO YOU PUT IN AS A INVESTMENT FUND KIND OF A MANAGEMENT STRUCTURE FOR, FOR WHEN THEY DON'T PUT THEIR MONEY IN THE FUNDS DIRECTLY, THEY KIND OF HAVE IT IN THEIR, IN THEIR OWN IRA OR WHATEVER IT IS.
RIGHT. AND FOR EXAMPLE, THERE MIGHT BE I'VE SEEN IN SOME COMPANIES OR IN SOME THEY'LL HAVE TARGET 2040 FUND FOR OR FOR OR FOR A CERTAIN AGE OF INDIVIDUAL AND THAT FUND IS BEING MANAGED BY SOME, SOME SERVICE PROVIDER TO GIVE WHATEVER A RETURNS AND RISK AND WHATEVER AND INVESTMENTS ARE A MIX OF INVESTMENTS TO, TO, TO, TO SATISFY THE NEEDS OF THE CONSUMER.
AND THAT ONE HAS ANOTHER LAYER OF EXPENSES.
SO WHAT YOU'RE SEEING HERE IS NOT WHAT YOUR PENSION RECIPIENTS ARE GETTING BECAUSE THEY'RE NOT THEY MAY BE GETTING THEY MAY BE HAVING SOMETHING ELSE SUBTRACTED RIGHT AT THE LAST MINUTE, DEPENDING ON HOW THEIR, THEIR FUNDS AND THEIR INVESTMENTS ARE STRUCTURED IN THEIR IRA OR IN THEIR PENSION ACCOUNT OR WHATEVER IT IS. THANK YOU.
ANY QUESTIONS FROM THE COMMITTEE? YES. GO AHEAD.
JUST ON THE JUST A QUICK QUESTION REGARDING MEASURE AA PROJECT FUNDS.
IS THERE A TIMELINE FOR WHEN WE NEED TO USE THOSE? BECAUSE IT'S.
RIGHT. SO THE REMAINING MEASURE AA BOND FUNDS WHEN THOSE BONDS WERE ISSUED, THEY WERE DONE AS TAXABLE WHICH IS TAXABLE BONDS WHICH IS DIFFERENT FROM OUR TYPICAL GENERAL OBLIGATION BOND ISSUANCE.
AND THE REASON THAT WAS DONE WAS BECAUSE WE RECOGNIZED IT WAS GOING TO BE DIFFICULT TO SPEND DOWN THOSE LAST POTS OF MONEY THAT SOME OF THE LIKE, ACQUISITIONS THAT WERE NEEDED, WERE GOING TO TAKE A LONGER TIME.
SO, THERE IS NO TIME RESTRICTION ON THE REMAINING AA FUNDS.
WE ARE DEFINITELY TRYING TO GET THROUGH THEM.
BUT THE OTHER THE OTHER QUESTION PART OF THAT IS; IS IT? ACQUISITION ONLY, OR CAN WE USE IT FOR CAPITAL PROJECTS? YEAH, THE MAJORITY OF THE REMAINING FUNDS THAT ARE UNAPPROPRIATED ARE IN ACQUISITION.
THERE'S A SMALL AMOUNT THAT'S IN DEVELOPMENT.
THANK YOU. AND THEN REGARDING THE PENSION FUND ARE WE STARTING TO DRAW DOWN ON THAT? YEAH. SO THE PENSION TRUST WE HAVE BEEN DRAWING DOWN, THIS IS THE THIRD YEAR WE'LL DRAW DOWN ON THE PENSION TRUST.
SO WE DREW DOWN IN 2022 $2 MILLION, 23, 2 MILLION.
AND THEN THIS YEAR ANOTHER 2 MILLION.
[00:20:09]
WE'RE TRYING TO GET THROUGH THE CLIFF.ALL RIGHT. ANY OTHER QUESTIONS? YES. OKAY.
SO THE INVESTMENT POLICY APPLIES TO THE FOUR.
THE FOUR FUNDS THAT YOU HAD MENTIONED DURING THE PRESENTATION.
OH, SORRY. I MUST NOT HAVE BEEN CLEAR.
SO THE SO WE ACTUALLY HAVE FOUR INVESTMENT POLICIES OKAY.
AND THEN IF WE EVER HAD ANY NEW FUNDS AND THEN WE HAVE OTHER POLICIES FOR OUR PENSION TRUSTS, FOR OUR DEFERRED COMPENSATION AND FOR OUR OLD RETIREMENT PLAN CALLED THE EBRPD RETIREMENT PLAN.
SO THEY'RE ALL SEPARATE INVESTMENT POLICIES.
OKAY. THIS IS THE ONLY ONE THAT YOU SEE ANNUALLY.
THIS IS THE ONLY ONE THAT NEEDS TO BE REVIEWED ANNUALLY.
IS THAT. YEAH, THIS ONE IS REQUIRED IN THE POLICY TO REVIEW IT ANNUALLY.
THE OTHER ONES, IT'S A BEST PRACTICE TO LOOK AT IT REGULARLY.
YOU JUST YOU JUST APPROVED LAST MONTH.
I THINK THE EBRPD INVESTMENT POLICY HAS PROBABLY BEEN ABOUT FIVE YEARS.
AND THEN MY NEXT QUESTION, SO I KNOW THAT THERE'S A LITTLE BIT OF A DIFFERENCE.
AND SO I'M SPECIFICALLY LOOKING AT.
SO 81 I THINK WHERE WE START TO LOOK AT THE DISTRIBUTION.
YOU KNOW, WE DON'T WANT IT TO EXCEED 30% OF OUR TOTAL PORTFOLIO.
AND THAT'S IN REGARD TO THESE THIS SPECIFIC INVESTMENT POLICY FOR THE POOLED CASH RESERVES.
OKAY. AND THEN DO WE HAVE LIKE A GENERAL PIE CHART TO SHOW THAT BREAKDOWN? AND I KNOW IT COULD VARY SO IT SHALL NOT EXCEED 30%.
BUT IS THAT I DON'T THINK THAT'S THE PIE CHART THAT WE HAD IN OUR PACKET.
IS IT I BELIEVE PFM THAT JUSTIN'S GOING TO GO THROUGH THAT.
LET ME LOOK AND MAKE SURE SOMETIMES THEY CHANGE THEIR CHARTS.
YES. SO THAT PIE CHART IS A DIFFERENT BREAKDOWN OF THE DIFFERENT IT'S CALLING OUT SOME OF THE DISTRICT FUNDS, BUT NOT ALL OF THEM.
BUT IT'S NOT GETTING INTO THE LEVEL OF DETAIL OF THIS MUCH IS TREASURIES.
THIS MUCH IS ASSET BACKED SECURITIES.
I SEE JUSTIN'S LOOKING AT HIS.
AND SO WE'RE GOING TO DO HIS PRESENTATION NEXT AFTER I DO MINE.
AND I BELIEVE HE HAS A PIE CHART THAT SHOWS THAT BREAKDOWN.
OKAY GREAT. AND THEN I GUESS MY NEXT QUESTION.
SO SORT OF THE SAME TOPIC THINKING ABOUT.
I GUESS MORE SPECIFICALLY TO MY QUESTION.
AND I KNOW THERE'S A NEWER TYPE OF BOND, A CLIMATE BOND THAT'S SUPPOSED TO BE LOOKING AT DIFFERENT RISKS AND MAYBE NOT EVEN JUST CLIMATE BOND, BUT RISK BONDS. SO IT CAN INCLUDE SOMETHING LIKE AN EARTHQUAKE.
AND IS THAT SOMETHING THAT WE'VE EXPLORED? AND IS THAT PART OF OUR INVESTMENT POLICY RIGHT NOW, OR IS IT TOO NEW AND MAYBE THIS MIGHT BE SOMETHING YOU CAN ANSWER? IS THAT SOMETHING TOO NEW FOR US TO THINK ABOUT THIS YEAR, BUT MAYBE SOMETHING FOR NEXT YEAR? BECAUSE I KNOW IT'S A LITTLE BIT OF A NEWER BOND ON THE MARKET.
YEAH, I'M GOING TO I'M GOING TO LET JUSTIN SPEAK TO THAT IN MORE DETAIL.
SO THAT I BELIEVE, FOR THE MOST PART, LIKE A CLIMATE BOND WOULD FALL INTO ONE OF THE EXISTING CATEGORIES THAT WE ALREADY HAVE HERE AS AN APPROVED TYPE OF BOND. BUT I'LL LET JUSTIN ADDRESS THAT.
YES. JUST TO FOLLOW UP ON DIRECTOR [INAUDIBLE] QUESTION SOME OF OUR, A LOT OF OUR INVESTMENTS ARE ALSO, AREN'T THEY GOVERNED BY STATUTE? BUT WHAT WE CAN AND CAN'T DO.
YEAH. SO STATE CODE AND IT'S CALLED OUT IN HERE WHAT EXACTLY SECTIONS OF THE STATE CODE IT IS.
IT'S NUMBER NINE AUTHORIZED AND SUITABLE INVESTMENT.
[00:25:03]
AND THEN IT LISTS A WHOLE LIST OF OTHER ONES.SO THAT'S THE STATE SAYING THIS IS WHAT YOU'RE LIMITED TO INVESTING IN.
AND THEN WE ON TOP OF THAT HAVE OUR INVESTMENT POLICY THAT GIVES EVEN MORE SPECIFIC GUIDANCE.
AND I DON'T HAVE ANY OTHER QUESTIONS.
I GUESS WE CAN CALL UP OUR NEXT SPEAKER THEN I GUESS.
ALL RIGHT. I HAVE JUST A FEW OVERVIEW SLIDES THAT I'LL DO BEFORE I TURN IT OVER TO JUSTIN.
SO. HANG ON WHILE I AGAIN REMEMBER HOW TO SHARE MY SCREEN.
ALL RIGHT. SO SO NOW WE'RE WALKING THROUGH THE FOURTH QUARTER INVESTMENT REPORT.
AND. I'M LOOKING AT ALL THE DISTRICTS INVESTED FUNDS.
SO THIS IS THE TABLE ON PAGE EIGHT AND I'M BREAKING IT DOWN INTO DIFFERENT CHUNKS.
SO FIRST LOOKING AT THE THE TOP PART OF THIS PAGE, THE LIQUIDITY PORTFOLIO.
SO THESE ARE THE FUNDS THAT ARE EITHER CASH OR EASILY CONVERTIBLE TO CASH.
AND SO JUST TALKING THROUGH A FEW OF THE HIGHLIGHTS OF WHAT YOU'RE SEEING HERE.
SO WE HAVE APPROXIMATELY $10.5 MILLION MORE IN OUR LIQUIDITY PORTFOLIO AS OF DECEMBER 31ST, 2023 THAN WE DID ON DECEMBER 31ST, 2022. AND THEN THE OTHER THING YOU'LL NOTICE IS THAT OUR.
FUNDS ARE APPROXIMATELY 25 MILLION HIGHER THAN WHAT WE HAD AT SEPTEMBER 30TH.
AND THE REASON FOR THAT IS THAT WE ARE RECEIVING PROPERTY TAXES IN AT THE VERY END OF DECEMBER.
SO WE GET OUR PROPERTY TAXES IN TWO BIG CHUNKS AND THEN SOME SMALLER INCREMENTS THROUGH THE YEAR.
BUT SO AT THE END OF DECEMBER, YOU SEE OUR INVESTMENT, OUR POOLED CASH BALANCES ENLARGE QUITE A BIT.
THOSE ARE OUR BIG FUNDS COMING INTO THE PARK DISTRICT.
SO PFM MANAGES ALL THESE INVESTMENTS FOR US.
SO JUSTIN WILL GET INTO MORE DETAIL.
BUT SOME OF THE HIGHLIGHTS ARE TREASURIES INVESTMENTS DECREASED IN QUARTER FOUR AND INVESTMENTS IN FEDERAL AGENCIES AND ASSET BACKED SECURITIES INCREASED. AND THEN LASTLY, I'LL TOUCH ON THE FACT THAT SEVERAL YEARS AGO WE ESTABLISHED A LONGER INVESTMENT BENCHMARK 1 TO 5 YEARS PREVIOUSLY. WE ARE 1 TO 3 YEARS.
AND SO THAT ENABLES US TO INVEST A LITTLE BIT LONGER DURATION.
AND AS SHORT TERM RATES START TO DROP, WE ARE WE ARE SLOWLY MOVING OUR PORTFOLIO OUT TO BE A LITTLE BIT LONGER SO THAT WE CAN TAKE ADVANTAGE OF THOSE HIGHER YIELDS AND HOLD ON TO THEM EVEN WHEN SHORT TERM YIELDS DROP.
AND THEN LASTLY MOVING DOWN TO THE BOTTOM PART OF THIS PAGE.
THESE ARE ALL THE FUNDS THAT WE HOLD IN TRUST.
SO THEY'RE NOT PART OF OUR FUNDS THAT WE CAN USE FOR DAILY OPERATION.
THAT'S MEASURE AA OUR PROMISSORY NOTES AND MEASURE WW.
SO THOSE FUNDS ARE JUST FOR DOING OUR PROJECTS.
AND THEN DOWN AT THE BOTTOM WE HAVE OUR DEBT SERVICE FUNDS.
SO THOSE ARE THE TAXES THAT ARE BEING LEVIED TO PAY FOR THOSE BONDS.
WE ALSO ARE TAKING IN THAT LEVY.
AND SO WE NEED THOSE FUNDS IN ORDER TO MAKE OUR MARCH 1ST DEBT SERVICE PAYMENT.
SO I'LL TURN IT OVER TO JUSTIN NOW.
ALL RIGHT. NOT SURE IF IT IS ACTUALLY.
[00:30:45]
GOOD MORNING, EVERYONE. MY NAME IS JUSTIN ROSSELLO, AND I'M WITH PFM.I KNOW THAT MONIQUE SPIKE HAS HISTORICALLY BEEN HERE.
SHE'S MY MANAGER, AND UNFORTUNATELY, TODAY SHE COULDN'T MAKE IT BECAUSE SHE'S PREPARING A PRESENTATION FOR THE CMTA, CSMFO INVESTMENT TRAINING CONFERENCE IN LIVERMORE TODAY. SO I'M PLEASED TO STEP IN SELFISHLY.
AND I'VE TOLD DEB THIS NUMEROUS TIMES, I'M SUCH A BIG FAN OF EAST BAY PARKS.
MY PARTNER AND I, WE LOVE GOING TO REINHARDT.
THAT'S PROBABLY ONE OF OUR MOST FAVORITE SPOTS IN THE BAY AREA.
SO AFTER THE CSMFO CONFERENCE IN ALBANY, IN ANAHEIM, WE ENDED UP AT CHABOT.
BUT OTHERWISE, YOU KNOW, WE'RE I'M A BIG FAN.
I'M SO HAPPY TO BE WORKING WITH YOU ALL.
SO THANK YOU FOR YOUR TIME THIS MORNING.
THE FIRST THING I'LL TALK TO YOU HERE IS THE MARKET UPDATE.
SO I DON'T WANT TO READ THROUGH EVERYTHING ON THIS SLIDE.
THROUGH Q4 THROUGH THE END OF THE YEAR, WE SAW THE CONSUMER REALLY HOLD UP A LOT OF THE ECONOMY.
THEY'RE JUST SPENDING LIKE GANGBUSTERS, AND THAT'S REALLY WHAT'S DRIVING GDP GROWTH.
THE CONSUMER IS ALSO BENEFITING FROM REALLY REMARKABLE EMPLOYMENT AND LABOR MARKETS, AND REALLY STRONG SALARIES THAT ARE NOW EXCEEDING THE RATE OF INFLATION.
SO IN SUMMARY, THE ECONOMY REMAINS RESILIENT.
THE FED IS WORKING TOWARD WHAT THEY CALL A 2% TARGET.
I KNOW THERE ARE SOME QUESTIONS ABOUT WHAT'S THE DIFFERENCE BETWEEN PCE AND PCI.
AND I'LL DIG INTO THAT IN A BIT.
BUT EITHER WAY THE FED IS GETTING THERE AND THEY'RE BEGINNING TO TELEGRAPH.
AND THEY HAVE TELEGRAPHED TO THE MARKETS THAT THEY EXPECT INTEREST RATES TO BEGIN FALLING.
AND THAT'S WHAT DEB SPOKE TO YOU A MOMENT AGO WITH PARKING MONIES A LITTLE FURTHER OUT ON THE YIELD CURVE, SO THAT THE DISTRICT CAN BENEFIT FROM LOCKING IN HIGHER COUPONS AS RATES BEGIN TO FALL. THIS NEXT SLIDE HERE.
THIS IS SHOWING FEDERAL RESERVE PROJECTING A SOFT LANDING.
THE DATA HERE ARE FROM THE FED'S SUMMARY OF ECONOMIC PROJECTIONS.
THEY RELEASE THESE EVERY FEW MONTHS, EVERY OTHER MEETING.
SO THE ECONOMY IS GROWING WITH REALLY NO SIGNS OF A RECESSION IN THE UPPER LEFT.
REAL GDP GREW 4.9% IN THE THIRD QUARTER AND 3.3% IN THE FOURTH QUARTER.
THIS MORNING WE ACTUALLY HAD THE FULL YEAR GDP RELEASE.
SO THE CHART IS SHOWING EXPECTED PROJECTION OF 2.6 FOR THE YEAR.
SO COMPARED TO 2022 WE WERE AT 1.9%.
LABOR MARKETS, AS I MENTIONED IN EARLIER, ARE VERY STRONG.
AND YOU'LL SEE IN THE UPPER RIGHT THE LIGHT BLUE BARS SHOWING ON THE UNEMPLOYMENT RATE.
CURRENTLY, THERE ARE ABOUT 1.4 JOBS AVAILABLE FOR EACH PERSON SEEKING UNEMPLOYMENT.
SO THE LABOR MARKET IS STILL REALLY DOING QUITE WELL.
UNEMPLOYMENT CONTINUES TO BE AT HISTORIC LOWS.
MOST RECENTLY, THE JANUARY NUMBERS WERE SHOWING 3.7% UNEMPLOYMENT, WITH 353,000 NEW JOBS ADDED.
FOR PERSPECTIVE, WE HIT 3.4%, AND THE LAST TIME WE WERE AT THAT RANGE WAS IN 1969.
SO, THE LABOR MARKETS ARE INCREDIBLY STRONG.
SO CPI THAT'S THE NUMBER THAT YOU PROBABLY HEAR IN THE NEWS.
AND THAT NUMBER WAS 3.4% IN DECEMBER.
AND THAT FELL ACTUALLY TO 3.1% IN JANUARY.
AND WE'LL EXPECT TO SEE FEBRUARY NUMBERS IN MID-MARCH.
[00:35:01]
WITH RESPECT TO WHY WE'RE LOOKING AT PCE COMPARED TO PCI, THAT'S BECAUSE PCE IS ACTUALLY THE FED'S PREFERRED MEASURE.SO WHEN THE FED WHEN JAY POWELL IS ON 60 MINUTES AND HE'S TALKING ABOUT WE WANT TO GET TO 2%.
THAT'S SPECIFICALLY REFERRING TO PCE.
AND THE MAIN DIFFERENCES ARE THAT WHILE THEY MOVE IN TANDEM PRETTY MUCH WITH EACH OTHER.
PC ACTUALLY USES ACTUALLY HAS SOME SMALLER SEASONAL ADJUSTMENTS AND SOME SMALL PRICE DIFFERENCES.
THE SPECIFIC THINGS I'VE WRITTEN DOWN HERE, I'M JUST READING FROM MY NOTES.
PC USES, FOR EXAMPLE, PASSENGER REVENUES FOR MILES TRAVELED, WHEREAS PC I MIGHT USE WHAT IS THE AIRFARE? MORE PRECISELY, PC IS USING SOME OTHER MEASURES THAT WE'RE MORE INTERESTED AS WELL, WHICH IS HEALTH CARE COSTS.
SO PCI WILL CAPTURE CONSUMER SPENDING, FOR EXAMPLE, AT WALGREENS WHEN YOU BUY MEDICINE AND HEALTH CARE AND WELL CARE ITEMS, WHEREAS PC IS ALSO CAPTURING THOSE ITEMS ACTUALLY SPENT BY THE HOSPITAL AND INSURANCE COMPANIES.
AND ADDITIONALLY, PCE IS ACTUALLY COVERING HOW DO YOU CALL IT MORE, MORE BROAD POPULATIONS.
SO PCI REALLY COVERS ONLY URBAN AREA POPULATIONS, WHEREAS PCE COVERS MUCH LARGER SWATHS OF THE POPULATION, CAPTURING MORE OF THE INFLATION DATA THAT THE FED IS MOST INTERESTED IN. SO HERE WE'RE SHOWING PCE INFLATION.
AGAIN. THIS IS THE FED'S TARGET IS 2%.
THEY'RE GETTING TO NEARLY 2% BY 2026.
AT LEAST THAT'S WHAT THEIR PROJECTIONS ARE SHOWING.
TOMORROW IS THE NEXT RELEASE FOR PCE.
THE MARKET'S REALLY KIND OF ON EDGE WAITING TO SEE WHERE INFLATION IS HEADED.
I THINK THE EXPECTATION IS THAT THE FED WILL BE GETTING CLOSER TO THAT 2% LEVEL.
AND LASTLY IN THE LOWER RIGHT THE FED FUNDS RATE.
THESE ARE EXPECTATIONS FOR WHERE THE FED IS FORECASTING OVERNIGHT RATES.
AND WE REALLY ONLY GOT TO ABOUT FIVE AND FIVE AND A THIRD REALLY AT THE END OF THE YEAR.
SO HERE ON THE NEXT SLIDE WE'RE SHOWING THE TWO YEAR TREASURY YIELD CURVE.
THE MAIN REASON WE FOCUS ON THIS CHART IS BECAUSE THE DISTRICT IS IN THAT 1 TO 5 YEAR BENCHMARK.
AND WE THINK THIS IS A NICE PROXY FOR WHERE THE DISTRICT'S RATES LIE OR RETURNS LIE.
SO YOU'LL SEE OVER THE QUARTER RATES FELL PRECIPITOUSLY.
SO IN THE BEGINNING OF NOVEMBER, THEY SLOWED THE RATE OF DEBT ISSUANCE IN MID NOVEMBER.
CPI DATA CAME OUT IN THE END, AT THE END OF NOVEMBER, THERE WAS SOME FED SPEAK.
AND THEN FINALLY IN MID-DECEMBER, THERE WAS THE DOT PLOT.
AND ALL OF THESE CONTRIBUTED TO REALLY DRAMATIC DECLINES IN TREASURY YIELDS.
YOU'LL SEE AT THE AT THE END OF THE CHART, THEIR RATES BEGIN TO CREEP BACK UP.
AS OF TODAY, I BELIEVE IT'S AT ABOUT THE TWO YEARS AT ABOUT 466.
SO, YOU KNOW, WITH POSITIVE UNEMPLOYMENT, WITH CONTINUED ELEVATED INFLATION, THOSE NUMBERS MAY DELAY THE FED'S ACTION, BUT THEY DO COMMUNICATE AND TELEGRAPH THAT THEY DO PLAN TO THAT THAT RATES WILL DECLINE.
SO HERE YOU'RE SEEING THE TREASURY YIELD CURVE.
SO THIS IS THE PAST 15 YEARS IN THE BRIGHT SHADE ACROSS THE WHOLE CHART.
THE SEPTEMBER DATA FOR YIELDS WERE THE DASHED LIGHT BLUE LINE AT THE TOP.
AND THEN THE DECEMBER YIELD CURVE IS THE DARKER SOLID BLUE LINE.
AND YOU'LL SEE THE PRECIPITOUS DECLINE IN IN YIELDS ACROSS THE MATURITY SPECTRUM.
THIS IS WHAT'S REALLY DRIVING GAINS IN THE PORTFOLIO.
AS RATES FALL, BOND PRICES RISE.
AND YOU KNOW, WHILE WE'D LOVE TO TAKE CREDIT FOR ALL THE GAINS IN THE PORTFOLIO, WE JUST CAN'T.
AND YOU'LL SEE, I THINK THE BIG 40,000 FOOT VIEW FOR THIS CHART FOR THESE TWO CHARTS IS THAT MOST OF THE FOURTH QUARTER DECLINES WERE REAL, OR MOST OF THE YEAR RETURNS WERE MADE UP ALL IN THE FOURTH QUARTER.
SO YOU'LL SEE US TREASURIES YIELDED, YOU KNOW, OR WE'RE GENERATING 310 FOR THE FULL YEAR.
AND THEN IT GOES ON AS YOU GO DOWN THE SORT OF SECTOR SPECTRUM AND FROM AGENCIES DOWN TO CORPORATES.
[00:40:02]
SO AT THIS POINT, MAYBE I SHOULD PAUSE BEFORE I JUMP INTO THE PORTFOLIO ITSELF.I HOPE THIS OVERVIEW WAS HELPFUL.
ALL RIGHT. ANY QUESTIONS? OKAY. GO AHEAD. GO AHEAD.
THIS IS KIND OF HYPOTHETICAL, BUT WHAT EFFECT DOES THE THREAT OF SHUTDOWNS HAVE ON THE MARKET? SO DIRECTOR ROSARIO, I REALLY APPRECIATE THAT QUESTION.
I STARTED MY CAREER AT MOODY'S AS A RATING AGENCY ANALYST.
RIGHT. WITH ALL OF THE SORTS OF NOISE, SHALL WE CALL IT NOW IN CONGRESS NOW WITH RESPECT TO THE SHUTDOWN, I THINK HISTORICALLY WHAT WE'VE SEEN IS MARKETS HAVE REALLY JUST NOT RESPONDED.
WE'RE ALL GOING TO HAVE MUCH LARGER ISSUES THAN, THAN WHAT, WHAT WE'RE FACING AT THIS POINT.
BUT AS WE'VE SEEN AS CONGRESS HAS, YOU KNOW, HAD THESE SORTS OF LEVELS OF YOU KNOW STRIFE OR INACTION, HOWEVER YOU WANT TO CHARACTERIZE IT, THE MARKETS HAVE REALLY KIND OF JUST BEEN MUTED, KEEP CALM, CARRY ON SORT OF ATTITUDE.
WHAT ARE THEY LOOKING AT? I MEAN, I'M I MEAN, I'M LOOKING AT THE YIELD CURVE.
AND IN THE PAST, WHEN THE YIELD CURVE REVERSES INVERSES LIKE IT IS NOW, IT USUALLY PORTENDS.
BUT THE YIELD CURVE HAS BEEN SO STEADY AND I DON'T.
IF YOU CAN ILLUMINATE ME THAT'D BE GREAT.
I, YOU KNOW, I CERTAINLY AGREE WITH YOU.
THE INVERTED YIELD CURVE HAS PORTENDED TYPICALLY A RECESSION.
BUT BASED ON THE DATA THAT WE'RE SEEING AND THOSE FED PROJECTIONS AND OR SUMMARY OF ECONOMIC PROJECTIONS THAT I POINTED TO EARLIER BASED ON THEIR GDP FORECASTS, BASED ON WHAT WE'RE SEEING WITH RESPECT TO INFLATION AND EMPLOYMENT AND GDP GROWTH, IT REALLY DOESN'T SEEM LIKE WE'RE GOING TO HIT ANY SORT OF RECESSION OR NEGATIVE GROWTH.
WE'RE NOT GOING TO HIT THE LEVELS THAT JAPAN OR EUROPE HAVE HIT.
YOU KNOW, IF ANYTHING, THE FED IS PROJECTING MAYBE 1.4 1.5% GDP GROWTH OUT TO 2026 AND NO NEGATIVE GROWTH AT THIS POINT. I THINK WE'LL HAVE TO SEE WHAT INFLATION LOOKS LIKE TOMORROW AND IN THE COMING MONTHS AND HOW HOW MUCH THE FED CAN REALLY STICK THAT SOFT LANDING.
BUT AT THE SAME TIME THEY'RE FACING THE ELECTION.
THEY DON'T WANT TO SHOW ANY SORT OF INDICATION OF BIAS, YOU KNOW.
BUT AT THIS POINT THE DATA JUST AREN'T REALLY POINTING TO EVEN THOUGH THE YIELD CURVE DOES REMAIN INVERTED, THAT THE DATA AREN'T POINTING TO A RECESSION. THANK YOU.
THIS IS ALWAYS HELPFUL TO HAVE YOU KNOW, THIS TYPE OF MARKET UPDATE AND MARKET REVIEW.
I REALLY APPRECIATE HAVING YOU HERE WITH US TOO, AND BEING ABLE TO MEET YOU.
I DON'T THINK I'VE MET YOU BEFORE, SO THANK YOU FOR BEING HERE.
I'VE ALWAYS BEEN A SOFT LANDING PERSON, SO IT'S INTERESTING TO SEE IT PLAY OUT.
AND YOU KNOW, I WONDER IF THAT'S SOMETHING TO CONSIDER, INCLUDING IN HERE, WHERE SOME OF THOSE GLOBAL RISKS COULD COME FROM, OR JUST EVEN HAVING A NOTE THAT WHILE THE US ECONOMY LOOKS TO BE PERFORMING STRONG AND, YOU KNOW, THE FORECAST LOOKS STRONG, YOU KNOW, WE DO LIVE IN A GLOBAL ECONOMY.
AND SOMETIMES, YOU KNOW, THE RISK COULD COME FROM OUTSIDE THE US.
AND THEN ON THAT NOTE, YOU KNOW, I ALSO THINK ABOUT OUR LOCAL ECONOMY HERE IN THE BAY AREA.
I THINK THAT IN TERMS OF OUR INVESTMENTS, SINCE THIS IS LOOKING AT, YOU KNOW, OUR INVESTMENT PERFORMANCE, IT TENDS TO TRACK MORE CLOSELY WITH WHAT'S HAPPENING ACROSS THE US. BUT I GUESS WHAT'S HELPFUL FOR US HERE AT THE PARK DISTRICT IS TO ALSO THINK ABOUT THE LOCAL BAY AREA ECONOMY.
AND I THINK THAT WE IN GENERAL, ARE VERY SIMILAR TO THE CALIFORNIA BOOM AND BUST TYPE OF CYCLE.
[00:45:06]
AND YOU KNOW, I ALWAYS THINK ABOUT, LIKE, YOU KNOW, HOW THAT CAN AFFECT US, YOU KNOW, LOCALLY AT THE PARK DISTRICT.BUT IN TERMS OF OUR INVESTMENTS, I DON'T THINK THAT THAT'S ALWAYS QUITE THE IMPACT IN TERMS OF THE INVESTMENT PORTFOLIO, BUT SOMETHING FOR US TO THINK ABOUT HERE AT THE PARK DISTRICT. I LIKED ONE OF YOUR COMMENTS ON THE SLIDE.
THE SOFTER INFLATION AND FED PIVOT.
SLIDE THREE. YOU SAID SOMETHING.
IT'S A GOOD PROXY FOR THE DISTRICT'S RETURNS.
YEP, YEP. I THINK THAT'S HELPFUL.
YEAH. AND I THINK THE LAST THING I'D SAY GO GOING BACK TO GLOBAL RISK.
IT'S NOT JUST GEOPOLITICAL RISKS BUT ALSO AND I THINK THIS IS MY EARLIER QUESTION WITH SOME OF THE BONDS WITH THE CATASTROPHE BONDS OR DISASTER BONDS OR DIFFERENT CLIMATE BONDS, ESPECIALLY BECAUSE I KNOW WE FACE THIS AS A PARK DISTRICT OURSELVES.
SO THAT'S ONE POINT I WOULD THINK OF IN REGARD TO GLOBAL RISKS.
AND SO THAT'S SOMETHING ELSE THAT I THINK.
YOU KNOW, SHOULD BE AT LEAST ON OUR RADAR SCREEN.
AND THEN, YOU KNOW, MY FINAL POINT, AND I THINK THAT WAS A REALLY GOOD QUESTION, ACTUALLY DIRECTOR ROSARIO ABOUT, YOU KNOW, WHAT ARE THE RISKS OF GOVERNMENT SHUTDOWN? BECAUSE I ALWAYS THINK ABOUT, YOU KNOW, LAST YEAR I WAS ON OUR LEGISLATIVE COMMITTEE, AND, YOU KNOW, WE TALK ABOUT, YOU KNOW, SOME OF THESE DIFFERENT ECONOMIC THEMES IN A DIFFERENT WAY. SO I'M NOT SURE IF SOME OF THESE SLIDES GET SHARED ACROSS THE PARK DISTRICT, BUT I THINK IT COULD BE HELPFUL TO START TO AGGREGATE SOME OF THESE, BECAUSE I KNOW WE KIND OF HAD SIMILAR SLIDES AT THE LAST FINANCE COMMITTEE MEETING WHEN WE WERE LOOKING AT THE EMPLOYEE RETIREMENT ACCOUNTS.
SO BEING ABLE TO AGGREGATE THE DIFFERENT, YOU KNOW, MARKET SLIDES AND ALSO BE ABLE TO SHARE THAT BECAUSE I THINK THAT COULD BE HELPFUL, YOU KNOW, IN TERMS OF WORK THAT WE'RE DOING IN OTHER PLACES WITHIN THE PARK DISTRICT.
ALL RIGHT. ARE THERE ANY ANYTHING FROM THE PUBLIC ON THIS? NO. PUBLIC QUESTION. OKAY, SO I GUESS IF THERE'S NO OTHER QUESTIONS.
OH, YEAH. THERE'S A BIT MORE, AND I'LL TRY TO GET THROUGH THIS MORE QUICKLY, I APOLOGIZE.
KEEP GOING. YEAH. NO, THANK YOU SO MUCH.
SO THIS IS NOW THE PORTFOLIO REVIEW.
WE PROVIDE A CERTIFICATE OF COMPLIANCE SO THAT YOU ALL KNOW.
WE MANAGE THIS VERY CAREFULLY.
COULD YOU MAYBE GET CLOSER TO THE MIC? BECAUSE I'M HAVING A HARD TIME.
I DON'T WANT TO MISS ANY OF YOUR WISE ADVICE HERE.
SO WITH RESPECT TO THE PORTFOLIO ITSELF, IT NOW STANDS AT 1.49 OR $149 MILLION.
THIS IS UP FROM 140 4.8 AT THE END OF LAST QUARTER, AND ONE 42.4 MILLION AT THE END OF LAST YEAR.
THE DURATION WAS 2.46 VERSUS THE 1 TO 5 YEAR BENCHMARK OF 2.53.
THE PORTFOLIO IS DIVERSE TO THE EXTENT PRACTICABLE, PRACTICABLE AS YOU'LL SEE HERE ON THE SECTOR ALLOCATION PIE CHART IN THE UPPER RIGHT, YOU'LL THAT COST. THIS IS ESSENTIALLY YOUR EARNINGS RATE LOOKING FORWARD.
AND THAT CAN BE KIND OF USED AS A BUDGET PROXY NUMBER THAT WAS 3.67.
THE CREDIT QUALITY OF THE PORTFOLIO IS REMARKABLY HIGH.
IT'S 64% ALL AA RATED AND HIGHER.
SO THIS IS A VERY HIGH QUALITY PORTFOLIO.
THE NEXT SLIDE, WE'RE SHOWING PORTFOLIO ACTIVITY.
SALES AND MATURITIES ARE IN GRAY WHEREAS NEW PURCHASES ARE IN THE DARK BLUE BARS.
I'LL POINT OUT A FEW OF THE NEW PURCHASES FOR THE PORTFOLIO.
IN TOTAL IT WAS 10.7 MILLION PURCHASED.
[00:50:05]
THIS IS THE PORTFOLIO PERFORMANCE SLIDE.RETURNS WERE 3.10 OUTPERFORMING BENCHMARK BY 30 BASIS POINTS.
INTEREST WAS EARNED OF OVER 1.2 MILLION FOR THE DISTRICT, WITH A CHANGE IN MARKET VALUE OF THE INVESTMENTS OF 3.7 MILLION AND A TOTAL DOLLAR RETURN OF 4.9 MILLION, AND THAT EQUATES TO THE 3.40 RETURN OVER THE PAST TEN YEARS.
YOU'LL SEE WE OUTPERFORM BENCHMARK FOR THE DISTRICT BY 29 BASIS POINTS.
THIS IS THE ACCRUAL BASIS EARNINGS.
THIS IS EARNINGS WITHOUT MARKET VALUE CHANGES.
AND THIS IS SHOWING A $978,000 GAIN FOR THE QUARTER AND 16.3 MILLION EARNED OVER THE PAST TEN YEARS.
SO THE TARGET IS TO BE MINDFUL OF THE ESG FACTORS.
WHEN WE'RE INVESTING THE CORPUS.
THE CRITERIA IN 2020 WERE LESS THAN 30 RISK RATING FOR THE CERTAIN AREAS THAT ARE INVESTED OR THAT THAT CAN BE REVIEWED IN THE ESG POLICY. AS OF TODAY, 69 OUT OF 75 OF THE ISSUERS ARE RATED BY OUR PORTFOLIO, BY OUR ESG PARTNER SUSTAINALYTICS, AND THAT REPRESENTS $94.2 MILLION OF THE PORTFOLIO.
I LOOKED BACK ON THE 2020 REPORT WHEN THE ENDEAVOR WAS FIRST STARTED, AND AT THAT POINT, ONLY 55 OF THE 62 ISSUERS WERE RATED, REPRESENTING ABOUT 62.5% OF THE PORTFOLIO.
AND AT THAT POINT THE RATING WAS 25, WHEREAS TODAY THE RATING IS 21.3.
SO OVER THE PAST FOUR, THREE PLUS YEARS, THE DISTRICT HAS DONE A GREAT JOB OF MEETING ITS ESG GOALS.
WITH RESPECT TO INDUSTRY DIVERSIFICATION.
YOU'LL SEE THE DIAMOND REPRESENTS THE LARGEST PORTFOLIO WEIGHTING IN IN YOUR HOLDINGS BY NO SURPRISE.
FRANKLY, BANKS KIND OF DOMINATE THIS JUST BECAUSE THEY'RE VERY FREQUENT ISSUERS IN THE MARKET.
SO WE'RE ABLE TO MOVE IN AND OUT OF THOSE ASSETS NICELY.
HERE YOU CAN SEE THE SECTOR ANALYSIS AND THE RATINGS HERE WITH THE RANGES.
AND THEN LAST OR AND ON THIS SLIDE WE HAVE THE S&P RATING DISTRIBUTION.
YOU'LL SEE FEDERAL AGENCIES DOMINATE THE CREDIT RISK RATINGS.
SO AAA AND AA REALLY KIND OF HELP THAT OUT.
AND THERE ISN'T MUCH ELSE I WOULD SHARE ON THIS PAGE.
LASTLY, THIS IS MAYBE WHERE WE WANT TO DIG IN JUST A LITTLE BIT.
THESE ARE THE ACTUAL INDIVIDUAL NAMES HELD WITHIN THE PORTFOLIO.
SO THE LOWER THE NUMBER FOR THE ESG RISK RATING, THE BETTER.
THE HIGHER THE NUMBER, THE MORE WE GROW A LITTLE BIT CONCERNED.
YOU'LL SEE. NOW AT THE TOP WE HAVE JP MORGAN CHASE AND GINNIE MAE AND JP MORGAN CHASE IS REALLY RATED HIGH JUST BECAUSE OF ITS SORT OF, YOU KNOW, FINANCIAL, ENVIRONMENTAL CONCERNS SURROUNDING POTENTIAL BRIBERY, POTENTIAL ISSUES WITH ENVIRONMENTAL SORT OF THREATS THAT THEY'RE MAKING AS THEY MANAGE A MULTINATIONAL, GLOBAL COMPANY.
GINNIE MAE IS ALSO LISTED HIGH HERE, BUT THAT.
BUT THAT'S NOT THAT'S A GOVERNMENT RELATED SECURITY.
SO WE DON'T WE DON'T EXPLICITLY REMOVE THIS FROM THE PORTFOLIO BECAUSE OF ITS ESG RATING.
WITH THAT SAID, THAT WRAPS UP MY REMARKS FOR THE ESG PORTFOLIO AND THE PORTFOLIO IN TOTAL.
I'LL INVITE QUESTIONS OR DEB, TO COME BACK UP.
OKAY. ANY QUESTIONS OVER THIS PORTION? OKAY. SURE.
GOLDMAN SACHS AND CITIBANK, THEY'RE ALL NOW TRIPLE B'S.
IS THAT BECAUSE THEY HAVE BIGGER EXPOSURE OR ARE THEY NOT PERFORMING? YEAH. NO, I APPRECIATE THAT QUESTION HERE.
AND I JUST I'M PULLING UP THE, THE CUSIP SLIDE.
[00:55:01]
SO WITH RESPECT TO GOLDMAN AND CITI AND I THINK A FEW OF THE OTHER FINANCIAL INSTITUTIONS, S&P REVISED ITS RATING CATEGORIES.AND FOR SOME REASON, THEY RATE THOSE ISSUERS MUCH LOWER THAN THEIR COUNTERPARTS, FITCH AND MOODY'S, WHO I BELIEVE MAINTAIN SINGLE-A RATINGS ON THESE BANKS. I DON'T KNOW SPECIFICALLY WHY S&P WENT THAT ROUTE, BUT IT CERTAINLY HAD A NEGATIVE IMPACT ON THE RATINGS. BUT WITH RESPECT TO THE INVESTMENT POLICY THESE CAN STILL BE HELD BECAUSE MOODY'S AND FITCH CONTINUE TO MAINTAIN HIGHER QUALITY RATINGS.
SO WE MAINTAIN INDEPENDENTLY AS WELL THAT THAT THEY'RE STILL VERY HIGH QUALITY.
OKAY. AND THEN MY LAST QUESTION IS REGARDING I SAW WE HAVE A LITTLE BIT OF WALMART AND DID DID THEIR ESG IMPROVED TO THE POINT WHERE WE WERE HAVEN'T DROPPED THEM OUT OR.
YEAH, I WAS JUST GOING TO SAY.
SO LOOKING AT HERE AT THE WALMART ESG SCORE AT THE END OF THE YEAR, IT WAS 25.3, WHICH PUTS THEM IN THAT LOW RATING CATEGORY OR RIGHT IN THE MIDDLE OF THE LOW RATING CATEGORY. SO, YOU KNOW, THEY THEY FIT WITHIN THE POLICY.
OKAY. OH, AND I GUESS ONE OTHER THING DEB REMINDED ME TO ADDRESS FOR DIRECTOR SAN JUAN, WERE THE CLIMATE ISSUES THAT THAT YOU WERE TALKING TO? SO THERE'S BEEN A LOT OF PUSH FOR ESG TYPE ISSUES WITH RESPECT TO WHAT THE MARKET TYPICALLY CALLS GREEN BONDS AT THIS POINT.
THIS HAS BEEN AN OPEN COMMENT, I WANT TO SAY, SINCE 2018, AND THE ANTICIPATION WAS THAT THE SEC WOULD PROVIDE DIRECTION FOR THE INVESTOR COMMUNITY IN 2022, AND WE JUST STILL HAVEN'T GOTTEN ANYTHING.
FOR THE PORTFOLIO AS THEY BECOME AVAILABLE IN THE MARKET.
YEAH, I LOOK FORWARD TO SEEING THAT.
ABSOLUTELY. DEE, DID YOU HAVE OTHER QUESTIONS? I HAVE A QUESTION.
SO THESE ARE THE BOTTOM 25 ISSUES.
AND THE PREVIOUS SLIDE WAS THE TOP 25 ISSUERS.
SO YOU BASICALLY TOOK ALL OF OUR HOLDINGS AND JUST WANT TO SHOW US THE TOP 20.
AND THIS MIGHT BE SOMEWHAT REPETITIVE, BUT I WANT TO MAKE SURE I UNDERSTAND WHAT I'M LOOKING AT.
SO THE TOP 25 BY THEIR ESG RISK RATING.
AND THEN THE NEXT ONE IS THE BOTTOM 25.
BUT THEN THERE'S A WHOLE BUNCH IN THE MIDDLE.
AND THAT'S WHAT'S ALL IN THE NEXT SET OF SLIDES.
YOU KNOW, STARTING ON SLIDE 31.
YEAH, I THINK THAT MOST OF THE PORTFOLIO WAS COVERED HERE ON THESE TWO SLIDES.
I'M HAPPY TO GET THAT INFORMATION.
YEAH. THAT'S GOOD. AND THEN I GUESS THIS GOES BACK TO THE INVESTMENT POLICY.
ONE OF THE OTHER QUESTIONS I'VE ALWAYS HAD IS I DON'T THINK WE REALLY HAVE IN OUR INVESTMENT POLICY, THIS IDEA OF COMPANIES THAT ARE HEADQUARTERED IN THE SAN FRANCISCO BAY AREA OR SPECIFICALLY WITHIN, YOU KNOW, OUR EAST BAY REGIONAL PARK DISTRICT.
AND I DON'T KNOW IF THAT'S SOMETHING THAT WE WOULD WANT TO CONSIDER IN THE FUTURE, BECAUSE WE DO HAVE, YOU KNOW, SOME COMPANIES HERE IN THE BAY AREA THAT I THINK MAY HAVE YOU KNOW, A DECENT ESG SCORE AND ALSO DECENT PERFORMANCE.
SO IT'S A WAY OF ALSO, YOU KNOW, SUPPORTING THOSE COMPANIES THAT ARE HERE.
SO THAT MIGHT BE SOMETHING TO CONSIDER.
I DO SEE A FEW ON THIS LIST, BUT THEN THERE'S A FEW THAT I DON'T SEE ON THIS LIST THAT, YOU KNOW, MAYBE THAT'S A WAY THAT WE, YOU KNOW, HELP STRENGTHEN OUR LOCAL ECONOMY. GREAT.
THANK YOU. I'LL TURN IT NOW OVER TO UNLESS THERE ARE ANY OTHER QUESTIONS.
OKAY, I'LL TURN IT OVER TO DEB.
OH, WE HAVE A PUBLIC COMMENT. ALL RIGHT, LET'S HEAR.
KELLY, YOU HAVE THREE MINUTES.
[01:00:11]
A LOT OF TIMES HAS A WAY OF GOING THROUGH FADS AND FASHIONS, AND SOMETIMES THERE'S A BACKLASH AGAINST WHATEVER THE CORPORATE FAD WAS, YOU KNOW, THE PARADIGM SHIFTS OF WHATEVER OF CORPORATE FICKLE FASHIONS AND WALL STREET JOURNAL, JANUARY 9TH, 2024.THE VOICE OF CORPORATE AMERICA, THEY HAVE THIS STORY, AND I'LL QUOTE FROM THE STORY.
MANY COMPANIES NO LONGER USE THESE THREE LETTERS.
ESG FOLLOWING YEARS OF SIMMERING INVESTOR BACKLASH, POLITICAL PRESSURE, AND LEGAL THREATS OVER ENVIRONMENTAL, SOCIAL AND GOVERNANCE EFFORTS, A NUMBER OF BUSINESS LEADERS ARE NOW MAKING A CONSCIOUS EFFORT TO AVOID THE ONCE WIDELY USED ACRONYM FOR SUCH INITIATIVES ON EARNINGS CALLS.
MANY CHIEF EXECUTIVES NOW EMPLOY NEW APPROACHES.
MEANWHILE SOME FIRMS ARE CLOSING ONCE POPULAR ESG FUNDS AS INTEREST FADES.
SO YEAH, THERE'S SOMETHING TO FOR YOU GUYS TO READ.
THANK YOU FOR YOUR TIME. ALL RIGHT.
I JUST WANTED TO POINT OUT A FEW THINGS THAT WERE NOTED IN THE INVESTMENT POLICY WHEN THE BOARD WAS DOING THEIR REVIEW THAT WE ARE GOING TO AMEND. I GUESS I'LL SAY WHEN WE BRING THIS TO THE FULL BOARD.
SO ONE ON PAGE 78 THERE FOR SOME REASON.
SO NUMBER 5.4, THERE'S SOMETHING STRANGE HAPPENED WITH THE ADOBE DOCUMENT.
AND THAT WORD THAT'S ALL GARBLED SHOULD BE THE WORD SUSTAINABILITY.
AND THEN I BELIEVE THE FINAL CHANGES ON NUMBER 9.10, WHICH IS PAGE 82.
THERE'S AN ADDITIONAL IT SAYS 500 WITH THE DOLLAR SIGN AND THEN IT SAYS DOLLARS AFTER THAT.
SO JUST CLEANING UP THAT DUPLICATION.
SO WE'LL MAKE THOSE CHANGES FOR THE VERSION THAT WE BRING TO THE FULL BOARD.
OKAY. THANK YOU. ANY QUESTIONS ON THAT PARTICULAR DOCUMENT FOR EITHER.
GOOD. THANK YOU. SO YEAH, IT'S TIME.
AND THAT'S FOR, FOR THE ENTIRETY OF ITEM 4.B BOTH PORTIONS OF IT.
SO THE MOTIONS TO APPROVE THE INVESTMENT POLICY AS WELL AS IS IT JUST TO RECEIVE THE MARKET REPORT? YEAH. OKAY.
THE FOURTH QUARTER INVESTMENT REPORT DOES GO TO THE FULL BOARD.
SO WE NEED A RECOMMENDATION TO BRING THAT FOURTH QUARTER REPORT TO THE BOARD AS WELL.
SO FOR BOTH OF THEM. SO THEN THE MOTION IS TO RECOMMEND THAT BOTH THE INVESTMENT POLICY AS WELL AS THE FOURTH QUARTER MARKET REPORT GO TO THE FULL BOARD. CORRECT. I'M HAPPY TO MAKE THAT MOTION.
AYE. OPPOSED? PASSES UNANIMOUSLY.
THANK YOU. GREAT. THANK YOU TO BOTH OF YOU.
[Informational Items]
AND NOW WE MOVE ON TO NUMBER FIVE.WHICH IS ABOUT THE JOB ORDER CONTRACT CONTRACTING PROGRAM.
OKAY. GOOD AFTERNOON, FINANCE COMMITTEE MEMBERS.
I'M PULLING UP MY PRESENTATION NOW, SO PLEASE BEAR WITH ME FOR A SEC.
HERE WE GO. THIS IS A QUARTERLY REPORT.
IT'S PART OF OUR JOB ORDER CONTRACTING PROGRAM.
WHAT I'M GOING TO PROVIDE TODAY IS AN UPDATE ON OUR CURRENT CONTRACTS.
[01:05:01]
THIS IS PER OUR JOB ORDER CONTRACTING POLICY THAT THE BOARD ADOPTED.IT'S PROVIDED THAT WE PROVIDE TO THE FINANCE COMMITTEE THE COSTS OF JOB ORDERS THAT HAVE BEEN INITIATED AND COMPLETE AND OR COMPLETED, AND THE AMOUNT OF ADMINISTRATIVE FEES FOR OUR CONSULTANTS THAT ARE PART OF THOSE PROJECTS.
SO I WAS JUST AT THE BOARD ON THE 20TH OF THIS MONTH TO ASK AUTHORIZATION FOR TWO NEW CONTRACTS.
SO I'M TALKING ABOUT THESE ONE, 2345, SIX, SEVEN, EIGHT CONTRACTS THAT ARE IN FRONT OF YOU.
AND AGAIN, THESE CONTRACTS ARE A ONE YEAR PERIOD WITH AN NTP ISSUED AT THE OR OUR COMMENCEMENT OF THAT TERM WITH THE ISSUANCE OF OUR FIRST NTP. AND THE MINIMUM CONTRACT VALUE IS THAT WE NEED TO OFFER TO THESE CONTRACTORS $50,000 OF WORK.
IT'S NOT REQUIRED THAT WE ENTER INTO AN AGREEMENT IF WE CAN'T, BUT WE ARE.
AND THE MAXIMUM CONTRACT VALUE IS $2 MILLION.
AND AS A REMINDER, I GUESS JUST TO BACK UP, WE DO HAVE OF THESE EIGHT CONTRACTS, WE HAVE THREE THAT ARE GENERAL A LICENSES, WHICH IS UTILITY AND GENERAL ENGINEERING, THREE B LICENSES, WHICH ARE BUILDING ENGINEERS, AND THESE ARE LICENSES THAT ARE ISSUED BY THE STATE IN TERMS OF CONTRACTOR'S LICENSE.
AND THEN THE LAST TWO ARE CONTRACTORS, WHICH AGAIN ARE GENERAL ENGINEERING.
BUT THOSE TWO WE PROVIDE ARE JUST FOR BASICALLY PAVING.
AND THAT THAT THOSE CONTRACTORS NEED TO SELF PERFORM THAT WORK AT A RATE OF 65%.
SO SOME OF OUR JOB ORDER CONTRACTING IS JUST AS A POINT OF REFERENCE.
AND SO THEY'LL SUBCONTRACT THAT OUT.
THAT SAID, WE DON'T WANT OUR GRADING OR OUR PAVING ENGINE CONTRACTORS TO DO THAT.
SO WE'VE PROVIDED A PROVISION THAT THEY DO 65% OF THEIR WORK SELF PERFORMING.
SO JUST AGAIN, AS A POINT OF REFERENCE, WE HAVE THREE A'S AND THREE B'S.
SO THESE ARE PROJECTS THAT HAVE BEEN COMPLETED.
AGAIN, IT'S THE, THESE GRAPHS SHOW THE PARK THE PROJECT NAME WHICH OSTENSIBLY SHOWS YOU WHAT WE'VE KIND OF DONE, THE APPROVED PROJECT COST IN THIS COLUMN, WHICH SHOWS WHAT WE PAID FOR THAT WORK.
AND THEN THE GORDIAN GROUP COST IS A 5% OF THIS.
AND SO THAT IS THE FEES THAT THEY GET AS, AS OUR CONSULTANTS.
AND THOSE ARE THE FEES THEY GET IN SUM TOTAL.
SO THEN THEY INVOICE US FOR THAT 5% OF THAT.
THOSE FEES ARE INCORPORATED INTO THIS COST.
SO WE'VE ACCEPTED THESE THIS NEXT SLIDE THAT I'M FORWARDING TO OUR PROJECTS THAT HAVE BEEN EITHER WE'VE AGREED TO A PRICE AND ISSUED NTP, WHICH IS A NOTICE TO PROCEED AND OR ARE IN CONSTRUCTION.
SO HERE'S THE LIST OF THOSE PROJECTS.
AND THEN LASTLY, BECAUSE WE DO WE ARE ABOUT MIDWAY THROUGH SOME OF THESE CONTRACTS, WE STILL HAVE PROJECTS THAT WE ARE PRICING, AND THESE ARE THE PROJECTS THAT WE ARE CURRENTLY PRICING. I WILL AMEND THAT ITEM NUMBER SIX ON THIS LIST.
IF YOU REMEMBER, WE HAD AN ACTION AT THE LAST BOARD MEETING THAT COMBINED THIS WORK.
SO THAT NUMBER SIX IS ACTUALLY GOING TO COME OFF THE LIST, BECAUSE WE'RE GOING TO INCORPORATE EVERYTHING THAT WE SAW OR RECEIVED FROM THE DEPARTMENTS OF STATE, SAFETY OF THE DAM, SAFETY OF DEPARTMENT OF THE STATE TO FIX LAKE ANZA DAM.
SO THAT WILL BE REMOVED AS A JOB ORDER CONTRACTING PROJECT.
AND WE'RE GOING TO DO FULL PLANS, AND WE'LL PUT THAT ONE OUT TO BID BECAUSE THE SCOPE HAS INCREASED.
SO BUT THESE ARE OTHER ONES WE ARE CURRENTLY WORKING ON.
THIS SHOWS AGAIN THE BENEFIT OF A JOB ORDER CONTRACTING IN TERMS OF REPAIR AND RENOVATION WORK IS THAT IT PROVIDES US COSTS FOR DURING NORMAL HOURS AND OFF HOURS.
AND SO IT ALLOWS US TO GET PRICES FOR WHEN WE HAVE TO DO WORK AT NIGHT BECAUSE OF TIDES.
IT REALLY IS A GREAT WAY FOR US TO CONTRACT THAT.
AND THEN LASTLY, I HAVE AN IMAGE OF THE BURRELL AT THE BURRELL PROPERTY.
WE REMOVED A STORAGE TANK, AND THIS JUST SHOWS SOME OF THAT.
[01:10:06]
SO THAT'S DONE. CLEANED UP.THESE ARE JUST SOME REPRESENTATIVE PROJECTS.
THAT CONCLUDES MY PRESENTATION.
I DON'T HAVE IMAGES OF ALL THE PROJECTS AND I DON'T KNOW MUCH ABOUT THEM.
I'M HAPPY TO ANSWER QUESTIONS AS I AS I'M ABLE.
IF THERE ARE THINGS I CAN ANSWER, I WILL FIND OUT FROM THE PROJECT MANAGERS AND RELATE TO THAT.
THAT CONCLUDES MY PRESENTATION AND I'M HAPPY TO FIELD QUESTIONS CURRENTLY.
ALL RIGHT. AS LONG AS YOU SHOW US A FEW PICTURES, WE'LL LET YOU GO.
YEAH. AND I REALIZED THAT THIS IS A NEW FINANCE COMMITTEE.
SO I'M HAPPY TO ANSWER ANY QUESTIONS ABOUT THE QUARTERLY REPORT OR JOB ORDER CONTRACTING AT THAT.
JUST AS A REFRESHER AND DULY NOTED, WE'LL GET MORE PHOTOS ON THE NEXT QUARTERLY REPORT.
I HEARD YOU THAT WE HAVE A COUPLE, BUT I WILL STRIVE TO HAVE A FEW.
THAT'S FINE. IT'S YOU KNOW, A LITTLE A LITTLE SOMETHING TO TANGIBLE.
YOU KNOW, WE JUST GOT DONE WITH A LOT OF ABSTRACT STUFF, YOU KNOW? AND SO INDEED, THIS IS A NICE RELIEF.
I PREFER CONSTRUCTION PHOTOS TO GRAPHS AND CHARTS AS WELL.
ANYWAY SO ANY QUESTIONS? OH. OKAY.
I LIKE HEARING THESE QUESTIONS.
OKAY. THE LAFAYETTE MORAGA PROJECT THAT 222,000.
IS THAT JUST FOR THE TEMPORARY OR IS THAT INCORPORATE THE PERMANENT FIX AS WELL? THAT IS PERMANENT.
I'M NOT SURE. ARE YOU REFERRING TO THAT ONE AS THE PENAL SHORES OR.
THAT'S LAFAYETTE-MORAGA TRAIL.
I THINK IT WAS NUMBER SIX ON YOUR SLIDE.
SO WE'RE IN CONSTRUCTION. THAT'S A PERMANENT REPAIR FOR THAT ONE.
GREAT. LOOKING FORWARD TO THAT.
YES. OH, THAT. SORRY I'M GETTING CONFUSED WITH THE POINT THEY HAD.
THAT ONE IS THE ONE WITH THE EAST ON THE EAST BAY MUD PROPERTY.
YEAH. WE. YEAH THAT'S THAT ONE.
SO, THAT'S THE ONE TO GET THE TRAIL OPEN AGAIN ALL THE WAY AT THE END.
ALL RIGHT. THERE'S MORE TO GO.
YEAH. ALL RIGHT. ANY QUESTIONS HERE.
YEAH. SO REAL QUICK SO THIS IS THE REVIEW FROM THE JANUARY 17TH, 2023 AWARD.
AND WAS THAT A TWO YEAR JOB ORDER CONTRACTING OR IS THAT A NO.
IT'S SO IT'S THEY'RE ALL ANNUAL.
THEY'RE ALL ONE YEAR TERMS. AND SO WHEN THE BOARD APPROVED IN JANUARY, IT TAKES US SOME TIME TO EXECUTE THOSE AGREEMENTS.
AND THEN IT TAKES TIME TO SET UP AND THEN GET JOB ORDERS INITIATED.
SO IN PRACTICE THEY'RE CALLED ANNUAL TERMS. BUT YOU CAN THINK OF THAT IT USUALLY TAKES 18 MONTHS TO TWO YEARS FOR US TO CYCLE THROUGH A FULL ONE YEAR TERM OF JOB ORDER CONTRACTING CONTRACTS. AND IT JUST BECAUSE JUST FOR CLARITY, IS THAT SO WE ENTERED IN OR THE BOARD APPROVED ON JANUARY 7TH, I THINK IT TOOK US 2 TO 3 MONTHS TO FULLY EXECUTE ALL OF THOSE. AND THEN WE GO INTO PRICING.
BUT ONCE WE THEN ISSUE THE PNP, THAT'S WHEN THE, THE, THE ANNUAL TERM STARTS.
SO WE'RE COMING UP ON SOME OF OUR TERMING OUT IN APRIL AND MAY OF THIS YEAR.
SO THAT'S HOW THAT WORKS IN TERMS OF.
THAT IF THAT ANSWERS YOUR QUESTION.
YEAH. AND, YOU KNOW, I'M TRYING TO KEEP THIS ORGANIZED IN MY BRAIN HERE.
SO THESE ARE THE ONES THAT WERE APPROVED FROM THAT INITIAL JANUARY 2023 DOC.
AND THEN WE JUST HAD ANOTHER ONE A FEW WEEKS AGO AT THE BOARD OF DIRECTORS.
SO I GUESS WE COULD SAY JANUARY 2024, FEBRUARY 2024.
BUT IF I RECALL CORRECTLY, THAT WAS FOR TWO OF THE GENERAL ENGINEERING CONTRACTORS, CORRECT? AND I THINK BOTH OF THEM HAD BEEN ALSO PART OF THIS 2023 CYCLE.
IS THAT CORRECT? THAT'S CORRECT.
WE'VE DONE THEM IN GROUPS SO THAT WE HAVE THREE A, THREE B'S AND TWO PAVING.
THE REASON THAT WE WENT WE CAME EARLIER THIS MONTH TO AWARD TWO A CONTRACTS IS BECAUSE SOME OF THE A'S THAT WE CURRENTLY HAVE ARE CLOSE TO THEIR $2 MILLION CAPACITY FOR THE CONTRACT, AND THAT'S BECAUSE OF ALL THE WORK THAT WE'VE DONE.
AND SO IN TERMS OF HAVING OVERLAP, IT WAS SUGGESTED, AND WE ACCOMMODATED THAT TO GO OUT TO BID FOR TWO MORE IN CASE THERE WAS MORE STORM CLEANUP OR ANYTHING THAT NEEDS TO HAPPEN SO THAT WE WOULD HAVE SOME OVERLAP, BECAUSE AS IT IS NOW, THE TWO MOST OF OUR A'S WILL TERM OUT IN ABOUT MAY OF THIS YEAR.
[01:15:05]
PAVING. YEAH, AND I KNOW TWO OF US ACTUALLY ARE ALSO ON THE OPERATIONS COMMITTEE.AND WE RECEIVED A REPORT FROM OUR [INAUDIBLE] TEAM.
HERE ON WAS THIS NUMBER 96 IN OUR PACKET.
I DON'T KNOW WHAT SLIDE NUMBER IT WAS WHEN IT WAS PRESENTED.
AND THEN I GUESS. YEAH, I THINK YOU EXPLAINED IT VERY WELL JUST NOW.
SO I UNDERSTAND WHAT YOU SAID, BUT I DON'T KNOW IF THERE'S A WAY TO VISUALIZE THAT, HOW WE'RE GETTING CLOSE WITH SOME OF THE YOU KNOW, GENERAL ENGINEERING CONTRACTORS ON THAT 2 MILLION. THAT'S WHY WE EXTENDED IT AT THE PREVIOUS BOARD MEETING.
BUT JUST TO TRY TO KEEP TRACK OF THE YOU KNOW, CONTRACTORS ARE WORKING WITH, BECAUSE RIGHT NOW THE UPDATES MORE BASED ON, YOU KNOW, OUR PARK AND OUR PROJECTS. BUT I ALSO THINK THERE'S ANOTHER DIMENSION TO THIS, WHICH IS THE CONTRACTOR THEMSELVES.
AND THEN THAT A, B AND C DESIGNATION.
SO I THINK WE COULD LOOK AT THAT, BUT I'LL NEED TO I HEAR YOU, I'LL LOOK INTO THAT AS TO WHAT ALL WE NEED TO REPORT TO YOU AS A REQUEST AND KIND OF WHAT WE FITS INTO OUR POLICY.
OKAY. COOL. THANKS. NO PROBLEM.
YES, WE HAVE A PUBLIC COMMENT FOR YOU.
WELL, LET'S BRING IT ON BETTER.
MY NAME IS MEADOW DARCY, AND I AM THE CHIEF STEWARD OF ACME LOCAL 2428.
I KNOW SOME OF YOU ARE NEWER TO THE FINANCE COMMITTEE THIS YEAR.
I KNOW DEE'S BEEN ON HERE FOR A WHILE.
BUT I WANTED TO ASK THE STATUS OF THE PAVING REPORT THAT WE'VE BEEN ASKING FOR SEVERAL YEARS.
EACH TIME I COME, IT'S ALMOST DONE.
SO JUST WONDERING IF THERE'S AN UPDATE ON THE PAVING REPORT.
THANK YOU. WE'LL CHECK IT OUT.
OTHER POST-EMPLOYMENT BENEFITS TRUST FUND UPDATES AND FUNDED STATUS THROUGH DECEMBER 31ST, 2023.
ALL RIGHT. GOOD MORNING AGAIN, DEB SPALDING.
ASSISTANT GENERAL MANAGER OF FINANCE AND MANAGEMENT SERVICES.
I'M GOING TO GIVE A FEW BRIEF SLIDES HERE.
AND THEN I'M GOING TO TURN IT OVER TO OUR EXPERTS HERE FROM VIA ACTUARIAL.
AND THEY HAVE A MORE DETAILED PRESENTATION.
SO JUST VERY QUICKLY WHAT IS OUR OPEB TRUST.
SO BACK IN 22,007 WE SET UP OUR TRUST.
AND THIS IS SETTING ASIDE MONEY TO PAY FOR FUTURE RETIREE MEDICAL COSTS.
SO PRIOR TO THIS, WE WERE LIKE PAY AS YOU GO.
JUST WE DID NOT HAVE A FUND SET UP AND IT'S WORKING, AS YOU CAN SEE, BY THE THIRD BULLET.
SO THIS YEAR WE PUT IN 2.4 MILLION AND CONTRIBUTIONS AND 3.2 MILLION IN BENEFITS WERE PAID OUT.
AND YET OUR FUNDED STATUS IS OVER 100.
AND RIGHT NOW WE'RE AT 111% FUNDED STATUS, BUT TO THE POINT OF EXPECTED RISK WE HAD WE WERE AT A NEGATIVE NOT NEGATIVE, BUT WE HAD SOME INVESTMENT LOSSES IN 2022.
AND THEN IN 2021, WE WERE ACTUALLY AGAIN ABOVE THE 100% FUNDED STATUS.
SO IT'S REALLY IT'S GONE UP AND DOWN OVER THE LAST FEW YEARS.
AND THEN I'M GOING TO TURN IT OVER TO MARK AND EMILY FROM VIA TO DO THEIR PRESENTATION.
[01:20:50]
GOOD AFTERNOON. MARK SCHULTE FROM THE ACTUARIAL SOLUTIONS WITH ME IS MY COLLEAGUE EMILY ERICKSON.AS DEB MENTIONED, OPEB IS KIND OF A CATCH ALL TERM FOR RETIREE HEALTH CARE.
AND I'M JUST GOING TO GIVE A LITTLE BIT OF BACKGROUND ON WHAT OPEB IS, SOME OF THE CONCEPTUAL ITEMS, SINCE IT IS A VERY COMPLEX TOPIC, WHAT'S GOING ON BEHIND THE SCENES? AND JUST TO REFRESH PEOPLE'S MEMORY EMILY, YOU'LL TALK ABOUT SOME OF THE FINANCE UPDATES AND THEN WE'LL TALK A LITTLE BIT MORE ABOUT FUNDING, BUT WE'LL TRY TO KEEP IT AS BRIEF BUT AS INFORMATIVE AS POSSIBLE.
AS MENTIONED, THESE ARE PROMISES THAT HAVE BEEN MADE TO RETIREES AND ACTIVE EMPLOYEES AS THEY'RE WORKING THAT WHEN THEY RETIRE, THEY'RE GOING TO RECEIVE SOME FORM OF SUBSIDIZED HEALTH CARE BENEFITS, WHETHER THEY PARTICIPATE ON THE DISTRICT'S GROUP HEALTH PLANS OR ANOTHER HEALTH PLANS.
THERE'S A LOT OF DIFFERENT STRUCTURE TO HOW YOUR RETIREE HEALTH PLAN IS ORGANIZED, VARYING BY WHEN FOLKS WERE EMPLOYED, WHAT BARGAINING GROUP THEY'RE IN, WHETHER THEY'RE UNDER OR OVER AGE 65.
AND GENERALLY, THE FUNDING STRUCTURE FOR OPEB IS A LITTLE BIT DIFFERENT THAN, SAY, FOR A PENSION PLAN, WHERE A CONTRIBUTION AMOUNT IS CALCULATED, THAT MONEY GOES INTO A TRUST, AND THEN THE TRUST THEN PAYS THE RETIREES THEIR MONTHLY BENEFITS FOR LIFE.
AND SO REALLY ALL THAT HAPPENS THERE IS THE DISTRICT OR WHATEVER AGENCY IS SPONSORING A PENSION PLAN WHERE THEY'RE JUST RESPONSIBLE FOR FUNDING THE TRUST, AND THEY TAKE CARE OF THE BENEFITS. IT'S A LITTLE MORE COMPLICATED WITH OPEB IN THAT YOU ARE I WON'T USE THE TERM SELF-ADMINISTERING, BUT YOU'RE REALLY SUPPLYING THOSE SUBSIDIES DIRECTLY TO THE RETIREES IN A HEALTH CARE SETTING.
AND SO ON THE SIDE, YOU HAVE THIS TRUST FUND THAT YOU'RE ALSO FUNDING.
AND WHAT WE OFTEN SEE FROM AGENCIES IS NOT DOING THE REIMBURSEMENT PART.
SO THEY'RE PAYING BENEFITS TO RETIREES.
THEY'RE ALSO PUTTING MONEY IN THE TRUST FUND, WHICH ARE BOTH PRETTY SUBSTANTIAL EXPENDITURES.
AND THAT WE CALL IT HYPER FUNDING.
AND THAT'S REALLY WHAT HAPPENED AT THE DISTRICT FOR A WHILE, IS THAT YOU HAD THIS POT OF MONEY GROWING, AND IT REALLY HELPED CONTRIBUTE TO THE GROWTH OF THE OPEB TRUST FUND AND WHERE YOU'RE AT NOW, WHICH IS A LITTLE BIT MORE BALANCED APPROACH, WHERE THESE REIMBURSEMENTS ARE NOW COMING IN AND OFFSETTING THE PAYMENTS YOU'RE MAKING TO RETIREES.
BUT IN THE END, WHAT YOU WANT TO DO IS PUT MONEY ASIDE.
SO AS ACTUARIES, WHAT WE DO IS WE BUILD THESE MODELS BASED ON ALL THE CENSUS DATA.
AND WE USE OUR MODELS TO PROJECT OUT.
WHAT ARE YOUR OUT-OF-POCKET COSTS FOR RETIREE HEALTH CARE BENEFITS GOING TO BE IN THE FUTURE? AND THEY GENERALLY FOLLOW A CURVE, AS SHOWN IN THIS CHART.
AND AS DEB MENTIONED, IT'S ABOUT 3.5 MILLION OR SO IN EXPENDITURES THIS PAST YEAR.
AS YOU CAN SEE, THOSE ARE EXPECTED TO RAMP UP OVER THE NEXT COUPLE DECADES.
AND THIS IS JUST BASED ON THE POPULATION NOW.
BUT TO SEE HOW THERE'S THIS GROWTH IN PAYMENTS AND OFTENTIMES WHAT WE FIND WITH AGENCIES IS THAT ESPECIALLY EARLY IN THE STAGES OF AN OPEB PLAN, THE PAY AS YOU GO, AS DEB MENTIONED, PAYING OUT OF POCKET.
[01:25:02]
OPEB JUST TO HELP MANAGE THOSE THOSE COSTS.ANY QUESTIONS SO FAR ON SOME OF THE TECHNICAL STUFF? OH, THIS IS GREAT. OKAY A LITTLE BIT MORE BACKGROUND INFORMATION ON YOUR PLAN.
AND YOU'LL SEE THAT THE LIABILITY AMOUNT IS CALCULATED IS ABOUT $70 MILLION OR SO.
AND APPROXIMATELY TWO THIRDS OF THAT IS FOR RETIREES.
AND THIS ONE'S A LOT HARDER TO PIN DOWN.
IT'S ESSENTIALLY THE ADDITIONAL COST TO THE HEALTH PLAN BY ALLOWING RETIREES TO REMAIN ON THE PLAN, MIXED IN WITH YOUR ACTIVE MEMBERS, BECAUSE THE RETIREES GENERALLY HAVE A HIGHER COST LEVEL, WHICH DRIVES UP THE OVERALL PREMIUM COST.
SO I ALWAYS LIKE TO THINK ABOUT IT WHEN I ASKED BY A FINANCE FOLKS, WELL, HOW DO WE ACTUALLY SEE THIS COST? I SAY, WELL, WHAT IF YOU TOOK ALL THE RETIREES OUT OF YOUR PLAN? WHAT WOULD HAPPEN TO THE HEALTH PREMIUMS? GENERALLY, THEY WOULD GO DOWN, SO YOUR COST FOR YOUR ACTIVE EMPLOYEES WOULD GO DOWN AS WELL.
SO IT'S KIND OF THIS HIDDEN SUBSIDY THAT'S IN THERE.
IT'S REALLY HARD TO FOLLOW THE DOLLARS, BUT IT MUST BE MEASURED FOR FINANCIAL REPORTING PURPOSES.
FORTUNATELY FOR THE DISTRICT, IT'S RELATIVELY SMALL PIECE OF IT.
AND SOMETIMES THAT DOES NOT HAPPEN.
WITH THAT, I'M GOING TO TURN IT OVER TO MY COLLEAGUE EMILY TO TALK ABOUT THE FINANCE UPDATES.
SO THIS CHART MIGHT LOOK A LITTLE FAMILIAR.
AND YOU KNOW, HE MENTIONED THAT IT CAN BE A LITTLE HARD TO MEASURE THE LIABILITY FOR OPEB, BECAUSE HEALTH CARE COSTS TEND TO BE A LITTLE BIT UNPREDICTABLE AND VOLATILE.
SO, HAVE THE FUN JOB OF BEING ABLE TO PROJECT THOSE COSTS.
BUT THERE IS A COUPLE OF THINGS THAT ARE UNIQUE TO THE DISTRICT THAT DOES HELP WITH THE PROJECTIONS.
AND ONE IS THAT THEY HAVE THEIR HEALTH PLANS THROUGH CALPERS MEDICAL.
AND CALPERS HAS MADE A LOT OF CHANGES TO TRY TO HELP STABILIZE PREMIUMS GOING FORWARD.
AND SO THAT IS HELPING TO STABILIZE THE OPEB LIABILITIES.
AND ALSO THE PLAN IS CLOSED TO BACK IN 20 2012.
WHILE EMPLOYEES ARE ABLE TO STAY ON THE PLAN, THEY'RE NOT PROMISED AS LARGE OF A BENEFIT AS FOLKS WHO WERE EMPLOYED PRIOR TO 20 2012, SO THAT IS HELPING TO BE ABLE TO PROJECT THOSE COSTS IN THE FUTURE.
AND HERE WE ARE MOVING ON TO THE INVESTMENT RETURNS FOR THE OPEB TRUST.
AND SO OUR LIABILITIES ASSUME AN ANNUAL 6.25% INVESTMENT RETURN.
AND YOU'LL NOTICE IN THIS CHART THAT THERE'S A HORIZONTAL LINE RUNNING THROUGH IT.
AND THAT'S WHERE IT SHOWS THE, YOU KNOW, EXPECTED RETURN THAT DOTTED LINE.
AND THEN YOU CAN SEE THE GREEN BARS ARE THE RETURNS THAT ARE IN RELATION TO THE EXPECTED RETURN.
THERE HAS BEEN A LOT OF MARKET.
THERE WAS A LOT OF MARKET VOLATILITY IN 2021 AND 2022.
BUT YOU CAN SEE THAT ON A SMOOTHED BASIS OVER FIVE YEARS, IT HAS BEEN PRETTY CLOSE TO EXPECTED AND SHOULD BE NOTED THAT FOR FUNDING PURPOSES, WE USE A SMOOTHED VALUE OVER A FIVE YEAR BASIS.
[01:30:04]
ANNUALLY SO THAT WE'RE NOT OVERREACTING TO CHANGES IN THE MARKET IN YOUR CONTRIBUTION RATES.AND HERE YOU CAN SEE A PICTURE THAT SHOWS THE PROGRESSION OF THE DISTRICT'S FUNDED STATUS, GOING BACK TO ABOUT TEN YEARS AGO IN 2013, YOU CAN SEE THAT THE DISTRICT WAS AROUND 50% FUNDED.
AND AS DEB MENTIONED, YOU KNOW, THEY'RE NOW IN A SURPLUS SITUATION.
AND THE THERE IS A FEW THINGS THAT HAVE ATTRIBUTED TO THAT.
AND THEN ALSO THE CONTINUED FUNDING THAT THE DISTRICT HAS DONE.
YOU'VE MADE A REALLY GOOD JOB OF CONTINUING THOSE CONTRIBUTIONS ANNUALLY.
AND THAT, COUPLED WITH SOME GOOD INVESTMENT RETURNS, HAS REALLY HELPED GROW THE FUNDED STATUS.
YEAH. I'M NOT FAMILIAR WITH WHEN WE WHEN THE PARK DISTRICT CHANGED TO CALPERS, WHAT DID WE HAVE WHEN DID WAS THAT CHANGED AND WHEN DID WHAT WOULD WHEN WAS THAT CHANGED TO CALPERS AND WHAT DID WE HAVE BEFORE? I'M GOING TO HAVE TO GET SOME SPECIFICS FOR YOU, BUT I BELIEVE IT HAPPENED IN 2012.
IT WAS PART OF THE NEGOTIATIONS THAT WERE GOING ON AT THAT TIME.
THAT'S OKAY. BUT THAT CHANGE DOES MAKE A DIFFERENCE.
SO AS IT'S STARTING TO SMOOTH OUT, YOU KNOW, IF WE.
SO WITH THIS CHART COMPARED TO THE OTHER ONE WHERE YOU SHOWED 2044 WHERE WE'RE GOING TO KIND OF BE AT THAT PEAK PERIOD, BUT THEN EVENTUALLY IT'S GOING TO COME DOWN.
SO WHILE THAT'S PRETTY FAR INTO THE FUTURE DO WE THINK THEN WITH THIS TRUST, IT MAY NOT BE THE TYPE OF SITUATION WHERE WE'RE GOING TO HAVE TO BE CONTRIBUTING.
I THINK I SEE 2023 WE CONTRIBUTED.
THE PARK DISTRICT CONTRIBUTED 2.4 MILLION.
WILL THAT START TO POTENTIALLY LOWER? YOU KNOW, AS WE MOVE FORWARD IN TIME BECAUSE OF SOME OF THE CHANGES THAT WE'VE MADE MORE RECENTLY WITH THE MOVE TO CALPERS, FOR EXAMPLE.
THAT'S THE PRESENT VALUE OF ALL THOSE FUTURE BENEFITS.
AND SO IT WILL DECREASE OVER TIME.
AND HE ALSO MENTIONED THAT IT'S, YOU KNOW A CLOSED GROUP THAT CHART.
AND SO AS THE PLAN KEEPS HAVING FUTURE ACTIVE EMPLOYEES, THERE WILL STILL BE SOME FUTURE LIABILITIES THAT WILL BE ADDED THAT THAT CHART THAT SHOWS THE DROP IS FOR THE CLOSED PLAN RIGHT NOW.
AND THEN TO TOUCH ON YOUR QUESTION ABOUT THE FUNDING, WHICH WE'RE GOING TO DISCUSS NEXT.
YES, THE DISTRICT'S CONTRIBUTIONS ARE DECREASING BECAUSE OF THE SURPLUS STATUS.
THE DISTRICT UPDATES THEIR FUNDING EVERY TWO YEARS.
AND SO WE'LL SEE THAT ON THE NEXT COUPLE SLIDES OKAY.
EXCELLENT. THANK YOU. SO THIS CHART KIND OF ANSWERS YOUR QUESTION A LITTLE BIT.
SO YOU CAN SEE THAT THE DIRECT RELATION RELATED TO HOW THE FUNDED STATUS HAS BEEN INCREASING.
AND YOU CAN SEE THAT THE CONTRIBUTIONS HAVE SUBSTANTIALLY DECREASED AS WELL.
[01:35:01]
AND YOU CAN SEE THERE WAS A HUGE DROP IN 2023 BASED ON THE SURPLUS STATUS THAT THE DISTRICT IS NOW IN.AND WE HAVEN'T RELEASED THE FUNDING REPORT FOR THE NEXT COUPLE OF YEARS.
BUT WE'VE DONE SOME PRELIMINARY ANALYSIS, AND WE'RE EXPECTING ANOTHER DROP IN 2025 AND 2026.
SOMEWHERE AROUND THE 700 TO $800,000 RANGE ON A PERCENT OF PAYROLL.
AND THEN IF THERE'S NO OTHER QUESTIONS ON THIS, I'M GOING TO TURN IT BACK OVER TO MARK.
I'M JUST GOING TO ADD ONE OTHER COMMENT ON THIS CHART THAT, YOU KNOW, REALLY COMMEND THE DISTRICT AND ALSO ON THE CHART, A COUPLE SLIDES BACK WITH THE CHANGE IN FUNDED STATUS TO REALLY SEE THAT THAT CLOSURE OF THE GAP FROM GOING FOR UNDER 50%, FUNDED NOW TEN YEARS AGO, TO BE IN A SURPLUS POSITION THAT THAT REALLY, YOU KNOW, SHOWS THE DEDICATION AND THE CONSISTENCY WHEN WE TALK WITH PUBLIC AGENCIES ABOUT THE KEY TO FUNDING PENSION AND OPEB, IT'S ALL ABOUT CONSISTENCY.
YOU HAVE TO PUT IN THOSE ACTUARIAL CONTRIBUTIONS.
AND NOW IT'S MANIFESTED IN LOWER CONTRIBUTION RATES.
YOU KNOW, I REALIZE IT CAN BE DIFFICULT TO PUT A MILLIONS OF DOLLARS INTO THESE PLANS, BUT REALLY, THE SOONER YOU GET IT IN, THE MORE YOU CAN HARNESS THE INVESTMENT RETURN SO THAT LONG TERM YOUR CONTRIBUTION RATES CAN BE LOWER.
I MEAN, THAT'S THE WHOLE GOAL OF PENSION AND OPEB FUNDING IS TO FULLY FUND THAT OLD LIABILITY.
SO YOU'RE JUST FUNDING THE NEW STUFF AS IT GROWS, WHICH IS GENERALLY THE MUCH LOWER LEVEL.
SO THE LAST SLIDE REALLY IS JUST ON THE FUNDING SIDE.
I THINK ONE IMPROVEMENT WE'VE TALKED WITH FINANCE STAFF ABOUT IS ADOPTING A FORMAL OPEB POLICY.
YOU KNOW, WE DO THESE REPORTS EVERY COUPLE OF YEARS AND THEY'RE BASED ON I WOULD CALL THEM INFORMAL POLICIES OVER THE YEARS OF HOW ARE WE GOING TO AMORTIZE OR PAY DOWN UNFUNDED LIABILITIES, THINGS LIKE THAT.
BUT IT IS A BEST PRACTICE TO HAVE A FUNDING POLICY DOCUMENT.
SO WE'VE HAD SOME DISCUSSIONS ABOUT STARTING THAT PROCESS.
IT'S FAIRLY STRAIGHTFORWARD JUST TO DRAFT A DOCUMENT THAT THEN WOULD ENCAPSULATE ALL THESE ITEMS, YOU KNOW, WHAT ARE WHAT ARE OUR OBJECTIVES FULLY FUNDED THE LIABILITIES AS THEY ACCRUE. THINGS LIKE THAT.
IDENTIFYING IF THERE EVER IS AN UNFUNDED LIABILITY, HOW LONG ARE WE GOING TO TARGET FOR PAYING DOWN THOSE COSTS? IS IT GOING TO BE TEN YEARS, 20 YEARS, WHATEVER IT MIGHT BE, IF THERE'S A SURPLUS POSITION, HOW DOES THAT AFFECT OUR CONTRIBUTIONS? IF WE GET TO A CERTAIN POINT IN TIME, IT MIGHT BE CERTAINLY REASONABLE.
IF YOU'RE 125% FUNDED TO SAY WE'RE GOING TO TURN OFF CONTRIBUTIONS FOR A WHILE, BUT THEN IF IT EVER DROPS BELOW A CERTAIN THRESHOLD, WE WANT TO MAKE SURE WE AT LEAST KEEP PUTTING A NOMINAL AMOUNT INTO THE TRUST AND THEN DOCUMENTING THE REIMBURSEMENT POLICY SO THAT THERE'S A CLEAR STRUCTURE FOR STAFF TO FOLLOW IN THE FUTURE.
WITH THAT. THAT'S THE END OF OUR PRESENTATION AND PREPARED REMARKS.
BUT GLAD TO ANSWER ANY OTHER QUESTIONS ABOUT THE OPEB.
JUST ONE. BUT IT DOESN'T HAVE TO DO WITH THE.
INVESTMENT. BUT I JUST HAD A QUESTION ABOUT PINA.
DO WE HAVE A PROCESS WHERE WE REVIEW HOW THEY'RE DOING? ARE WE TRACKING COMPLAINTS VERSUS RESOLUTIONS? SO, IS THERE? DO WE HAVE ANY KIND OF REVIEW OF THEM, OR DO WE WAIT TILL THEY TILL THE END OF THEIR CONTRACT.
YEAH. SO, PNA GROUP IS THE FIRM THAT WE'RE CONTRACTING WITH TO MANAGE THE PAYMENTS TO.
THE RETIREES THAT ARE RELATED TO THAT ARE FOR OPEB.
THAT CONTRACT IS MANAGED BY HR.
BUT I CAN CHECK INTO IT AND FIND OUT FOR YOU.
BUT THIS IS MY COMMENT IS JUST THANK YOU VERY MUCH.
YOU'RE TAKING VERY GOOD CARE OF THE FUNDS THAT WE'RE, THAT WE'RE ALLOTTING.
SO THANK YOU AGAIN TO THE DISTRICT FOR, FOR REALLY BEING DEDICATED ABOUT FUNDING THESE BENEFITS.
YEAH, I THINK THE TERM FISCAL DISCIPLINE COMES TO MIND HERE WHEN WE GET A REPORT LIKE THIS.
[01:40:03]
YEAH, ONE QUESTION, BUT JUST A COMMENT.I THINK THIS REPORT WAS GREAT.
SO THANK YOU SO MUCH FOR JOINING US TODAY AND SHARING THIS.
I THINK IT WAS REALLY WELL ORGANIZED.
I GUESS MY QUESTION IS THE LAST SLIDE HERE ABOUT CONSIDERING THE ADOPTION.
SO THIS WOULD BE A FUTURE AGENDA ITEM.
IT SOUNDS LIKE BECAUSE TODAY THIS WAS JUST AN INFORMATIONAL PRESENTATION.
SO ARE YOU LOOKING FOR SOME DIRECTION IF THIS IS SOMETHING THAT WE'RE INTERESTED IN PURSUING? BECAUSE I WOULD SAY, YEAH, I THINK THIS WOULD BE SOMETHING GOOD TO BRING FORWARD IN AT A FUTURE MEETING AND JUST STAY LATE AND WE'LL DO IT RIGHT NOW.
WE HAVE BEEN TALKING ABOUT DOING AN OPEB FUNDING POLICY.
AND IF YOU WANT TO GIVE US THAT FORMAL DIRECTION, THAT WOULD BE.
THAT WOULD BE GREAT. VERY HELPFUL.
YOU HAVE THREE MINUTES. OPEB FUNDING PERCENTAGE WHERE THE PEOPLE JUST PUT OUT A NUMBER AND SAY, OH, WE NEED TO BE AT WHATEVER NUMBER, 100% WHATEVER TO MEET OUR, TO MEET STANDARDS.
AS YOU KIND OF HEARD FROM THE CONSULTANTS, THE, THE PARK DISTRICT HAS VASTLY EXCEEDED THE TYPICAL INDUSTRY STANDARD AMONG GOVERNMENT AGENCIES FOR OPEB FUNDING PERCENTAGE.
SO LET ME GIVE YOU A LITTLE HINT.
IF YOU DID INDUSTRY SURVEYS AND REPORTS.
IF YOU LOOKED AT LIKE THE NATIONAL CONFERENCE ON PUBLIC EMPLOYEE RETIREMENT SYSTEMS AND CPAS AND THE GOVERNMENT FINANCE OFFICERS ASSOCIATION GFOA TO LOOK AT OTHER AGENCIES, OPEB PRACTICES, PRACTICES YOU MIGHT FIND AVERAGES OR MEDIANS FOR FUNDING PERCENTAGES FOR, YOU KNOW, VARIOUS TYPES OF AGENCIES AND REGIONS.
THAT YOU'D BE ABLE TO USE NOW.
I'LL JUST THROW OUT A NUMBER HERE.
I'VE HEARD A NUMBER OF AROUND AMONG HUNDREDS OF GOVERNMENT AGENCIES OF AROUND 75%.
SO, THEY'RE FUNDING, LIKE, 75%.
YOU KNOW, OF THE LEVEL THAT THEY SHOULD THAT THEY'RE SUPPOSED TO BE FUNDING.
AND THAT'S A TYPICAL UNDERPERFORMANCE AMONG YOUR GOVERNMENT AGENCIES.
SO TO BE AT 111% OR AT 100% IS REALLY TREMENDOUSLY OUTSTRIPPING THE INDUSTRY STANDARDS OR GOVERNMENT AGENCY STANDARD FOR GOVERNMENT AGENCIES.
AND, YOU KNOW, THIS IS YOU KNOW, THE THIS IS EXTRAORDINARY PERFORMANCE.
THIS THIS AGENCY IS REALLY EXEMPLARY IN THE OPEB BUSINESS.
SO I THINK THAT'S THAT CONCLUDES THAT ITEM OR.
SO. SO YEAH, THOSE WERE, THOSE WERE FIVE A AND B WERE BOTH INFORMATIONAL.
[Announcements]
DO WE HAVE ANY ANNOUNCEMENTS? NO. YES.I DID WANT TO MAKE AN ANNOUNCEMENT.
OKAY, OKAY. WE HAVE A NEW STAFF PERSON HERE TODAY.
KATIE DIGNAN. SHE'S STANDING UP IN THE BACK.
FOR THOSE OF YOU WHO ARE HERE IN PERSON.
SHE'S OUR NEW ASSISTANT FINANCE OFFICER.
KATIE'S BEEN JUMPING RIGHT IN.
WE'RE VERY EXCITED TO HAVE HER.
IF YOU WANT TO SAY A FEW WORDS OF INTRODUCTION, THAT'D BE AWESOME.
YEAH. HI. GOOD AFTERNOON, DIRECTORS.
AND PICKING UP AS QUICKLY AS I CAN.
LIKE IN DEB'S FIRST DAY WAS ALSO ON MONDAY IN HER NEW ROLE.
SO FIGURING EVERYTHING OUT AS WE GO ALONG.
BUT LOOK FORWARD TO WORKING WITH YOU ALL.
WHERE DO YOU COME FROM? SO GOVERNMENT EXPERIENCE THE CITY OF OAKLAND? I WAS THE ASSISTANT DIRECTOR FOR PLANNING AND BUILDING, AND THEN I SPENT SEVEN AND A HALF YEARS IN NEW ORLEANS HELPING WITH THE HURRICANE KATRINA RECOVERY AND RESILIENCE PROGRAM.
AND YOU CAN'T HAVE TOO MUCH FEMA HELP.
YEAH. THANK YOU, THANK YOU, THANK YOU.
NICE TO MEET YOU. NICE TO MEET YOU AS WELL.
ANYTHING ELSE? ALL RIGHT. SO, OUR LAST AGENDA ITEM IS ADJOURNMENT.
[01:45:02]
OKAY. I WAS GOING TO ASK IF WE COULD ADJOURN IN HONOR OF IN MEMORY OF BEVERLY LANE'S SON.YEAH. OKAY. WELL, THEN WE SHALL ADJOURN THIS MEETING IN MEMORY OF MEMBER EMERITA BEVERLEY LANE'S SON, DOUGLAS. THANK YOU.
MEETING IS ADJOURNED.
* This transcript was compiled from uncorrected Closed Captioning.