1 00:00:00,000 --> 00:00:01,520 Okay. Okay. 2 00:00:03,640 --> 00:00:05,200 Next person in the flat shirt. 3 00:00:07,950 --> 00:00:16,870 I think I'm, there we go. My name is Jesse Lizon. I'm with Hub International. Okay. And lower person, gentlemen, with a nice beard. 4 00:00:20,750 --> 00:00:24,210 I'm Steve Hickman, the city council liaison. Okay. 5 00:00:26,490 --> 00:00:35,970 Welcome. And the last person we have on our Zoom call. Yeah, it gets probably me. I'm Glenn Gahan. I'm an actuary with Hub. 6 00:00:35,970 --> 00:00:38,650 of International Colleague of Justice. 7 00:00:39,150 --> 00:00:39,650 Very good. 8 00:00:40,210 --> 00:00:42,010 My name is Brawley O.S. Cabar, 9 00:00:42,210 --> 00:00:44,670 I'm the citizen member of the committee, 10 00:00:45,270 --> 00:00:48,010 and we have our employee liaison. 11 00:00:49,130 --> 00:00:51,170 Steve Stewart, I'm with the City of Newport. 12 00:00:52,330 --> 00:00:54,590 Also present, we have our finance manager, 13 00:00:55,430 --> 00:00:57,150 Steve Barrher, finance director. 14 00:00:57,790 --> 00:00:59,790 And then we have a person down here on the dius. 15 00:01:00,550 --> 00:01:03,550 Tiffany Collier, assistant finance director. 16 00:01:04,210 --> 00:01:07,030 Welcome, Tiffany, this is the first time I've had a chance to meet you. 17 00:01:07,570 --> 00:01:10,850 Okay, is that sufficient for a roll call? 18 00:01:11,730 --> 00:01:12,570 Yes, it is. 19 00:01:12,810 --> 00:01:14,370 We have our liaison with the city. 20 00:01:14,450 --> 00:01:18,430 We have two members here, and so the meeting is called order. 21 00:01:18,870 --> 00:01:26,450 First item on the agenda is approval of the minutes from July 24, 2025. 22 00:01:31,110 --> 00:01:34,250 Those were emailed out to us earlier last week. 23 00:01:34,250 --> 00:01:34,330 I think 24 00:01:36,540 --> 00:01:40,440 we would entertain a motion to approve the minutes, Stephen. 25 00:01:43,840 --> 00:01:46,060 I make a motion to approve their minutes as presented. 26 00:01:47,160 --> 00:01:48,360 Is there a second out there? 27 00:01:50,560 --> 00:01:51,660 I'm going to second it. 28 00:01:51,680 --> 00:01:54,760 I wasn't here, so I don't think I should really say yes, I approve them. 29 00:01:55,280 --> 00:01:58,820 I rely upon our staff and Steve here. 30 00:02:02,340 --> 00:02:04,940 I'll tell you what, hearing no objection to approval of the minutes. 31 00:02:04,940 --> 00:02:09,940 We're going to approve the minutes from July 24, 2025. 32 00:02:11,440 --> 00:02:21,880 Okay, the next item is the actual error or report from Hub International Great Plains and that's always interesting to hear that and see how we're doing. 33 00:02:22,540 --> 00:02:24,600 Do we have that representative on Zoom? 34 00:02:24,600 --> 00:02:31,100 So yeah, both of myself, Glenn Gayhand and Jesse Laison will co-present. 35 00:02:31,720 --> 00:02:38,800 And I'd like to just ask if you would like us to have share screen to pull up the report 36 00:02:40,200 --> 00:02:41,460 as we go through it. 37 00:02:42,980 --> 00:02:45,440 We have the written report. 38 00:02:46,400 --> 00:02:49,420 So there's no need to put it up on your screen. 39 00:02:49,420 --> 00:02:54,060 as you're walking through the report if you could identify the page that you're 40 00:02:54,060 --> 00:03:01,660 speaking of, then we can follow along. Absolutely. Okay, very good. Well, that's the 41 00:03:01,660 --> 00:03:08,920 turn to page one of the report, the financial highlights, and what we'll do is 42 00:03:08,920 --> 00:03:14,120 cover this and then selectively other pages as we walk through the report. 43 00:03:14,120 --> 00:03:23,920 Looking there, we present first the actual determined contribution, and then we additionally 44 00:03:23,920 --> 00:03:26,720 have what we call an alternative contribution. 45 00:03:26,900 --> 00:03:36,820 This little reminder or context of this determination, this has been in place this methodology since 46 00:03:36,820 --> 00:03:47,880 in 2013 where we are amortizing the unfunded liability over what was then a 13-year period 47 00:03:47,880 --> 00:03:52,260 starting in 2013 or an 18-year period as the alternative. 48 00:03:52,660 --> 00:03:58,420 So, in fact, 2023 is actually when we changed to this method, 2023, yeah. 49 00:03:59,640 --> 00:04:06,500 And the only difference in those contributions is that amortization period and you might 50 00:04:06,500 --> 00:04:14,300 we called prior to that, we were decreasing the amortization period of the unfunnered liability 51 00:04:14,300 --> 00:04:24,800 by one each year, and we were in essentially re-amortizing that amount. And as the period 52 00:04:24,800 --> 00:04:30,260 was decreasing, depending on the amount of the unfunnered liability, it could increase significantly. 53 00:04:30,260 --> 00:04:38,260 And so what we have changed in 2023 was what we call a layering method, so that, and we 54 00:04:38,260 --> 00:04:40,900 have this presented in report rule through which we'll get to. 55 00:04:41,940 --> 00:04:49,380 So it gives the outcome a little more stable, contribution amount, even though we do see 56 00:04:49,380 --> 00:04:50,560 an increase from 2024. 57 00:04:51,100 --> 00:04:56,800 And the reason for that was there was some, you know, relatively modest actually, but actual 58 00:04:56,800 --> 00:04:59,940 or your losses that are getting amortized. 59 00:05:01,460 --> 00:05:10,560 In the period that we amortize this loss, you know, as of July 1st, 2025, is 11 years under the 60 00:05:10,560 --> 00:05:20,800 actual determined contribution or 16 years on the alternative. So 349,000, the actual, actual 61 00:05:20,800 --> 00:05:27,280 determined contribution for the year in the alternative amount, you see, is 293,000. 62 00:05:27,280 --> 00:05:31,720 And we present an annual compensation amount 63 00:05:31,720 --> 00:05:38,460 in the contribution as a percentage of that as the number 64 00:05:38,460 --> 00:05:41,980 of active participants decreases the amount 65 00:05:41,980 --> 00:05:46,500 of that annual compensation also decreases. 66 00:05:47,380 --> 00:05:53,260 So it's not as meaningful, probably, of a figure 67 00:05:53,260 --> 00:05:55,920 that we see is 80% of the compensation. 68 00:05:58,660 --> 00:06:02,080 Important component of the valuation results is the, you know, 69 00:06:02,380 --> 00:06:03,600 investment return for the year. 70 00:06:04,440 --> 00:06:08,480 And under the market value of assets, we're now at, you know, 71 00:06:08,540 --> 00:06:16,020 $9,861,000, which experienced about a 9.5% return for the prior year. 72 00:06:16,400 --> 00:06:19,340 And the year before that was, you know, 10.9%. 73 00:06:19,340 --> 00:06:25,060 So it has had a couple, you know, relatively strong years of investment performance. 74 00:06:25,780 --> 00:06:32,100 The plan uses an actual value of assets to smooth out gains and losses, which is very common. 75 00:06:33,280 --> 00:06:35,700 The gains and losses are smooth over a five-year period. 76 00:06:36,460 --> 00:06:38,560 And so that takes out some of the highs and lows. 77 00:06:38,960 --> 00:06:43,620 And there have been some losses in some previous years. 78 00:06:43,620 --> 00:06:49,540 there was a negative 13% return four years ago. 79 00:06:49,940 --> 00:06:52,760 So that kind of gets smoothed in over future years. 80 00:06:53,840 --> 00:06:59,040 And for this most recent year, the actual value is 9,813. 81 00:06:59,360 --> 00:07:02,700 So just a little bit less than market value. 82 00:07:03,080 --> 00:07:06,060 The return on the actual rate was 6.1%. 83 00:07:06,060 --> 00:07:09,680 And since the market value is a little bit higher than the actual value, 84 00:07:09,680 --> 00:07:16,200 that indicates there's some gains that are not yet recognized in the actual value that 85 00:07:16,200 --> 00:07:18,220 will be recognized in future years. 86 00:07:20,060 --> 00:07:27,400 The actual reliability, that starts our main measure of the plan's liability is 12.1 million. 87 00:07:28,760 --> 00:07:38,560 And if you were to ask us, what would be the asset value to 100% fund the plan liability? 88 00:07:38,560 --> 00:07:43,060 this is the number we'd look at, and we're currently on a, you know, 89 00:07:43,420 --> 00:07:48,940 based on the market value, or 81% funded, and this 90 00:07:48,940 --> 00:07:56,920 funded percentage has been increasing over the years, and the 91 00:07:56,920 --> 00:08:03,800 contribution that we presented up top, you know, is in place that over time, 92 00:08:03,800 --> 00:08:05,940 You know, the actual determined contribution 93 00:08:05,940 --> 00:08:11,300 to the fund liability in the remaining period of 11 years, 94 00:08:11,760 --> 00:08:14,480 the forecast would be that the plan would be fully funded 95 00:08:15,760 --> 00:08:19,080 once we get fully advertised over that period. 96 00:08:21,820 --> 00:08:24,140 I'm just going to skip down to the annual normal cost 97 00:08:24,720 --> 00:08:27,440 just over $37,000 for this year. 98 00:08:28,020 --> 00:08:31,740 That represents the present value of benefits expected to be earned 99 00:08:31,740 --> 00:08:32,880 during the plan year. 100 00:08:32,880 --> 00:08:37,220 And this is always one of the components of the actual readily determined contributions 101 00:08:37,220 --> 00:08:42,800 so that we fund the benefits expected to be earned in a year, and then we also amortize 102 00:08:42,800 --> 00:08:43,840 the unfunded liability. 103 00:08:45,620 --> 00:08:51,680 And then we have the number of participants in the plan, the act is decreased by one from 104 00:08:51,680 --> 00:09:00,380 eight last year to seven, this 47 retirees we had had one new no deaths during the year, 105 00:09:00,380 --> 00:09:05,740 and then, you know, 12 remaining terminated vested participants. 106 00:09:06,320 --> 00:09:12,220 And those terminated vested participants, those are former employees who have terminated employment 107 00:09:12,220 --> 00:09:14,060 but have a deferred vested benefit. 108 00:09:14,260 --> 00:09:18,620 So they'll get a monthly benefit in the future. 109 00:09:23,200 --> 00:09:25,320 We'll turn to next page, too. 110 00:09:26,620 --> 00:09:32,480 And just mentioned the average age, the bottom half of the page, 111 00:09:32,480 --> 00:09:41,760 was 53 years this year, just a little bit less than the average was last year, and then 112 00:09:41,760 --> 00:09:53,820 the average salary for the participants was 108,778 this year versus 96,000 last year. 113 00:09:53,820 --> 00:09:59,940 So it increased about 13% on average, even though there was... 114 00:10:00,240 --> 00:10:11,960 You were a participant, so it's not the exact same participants were looking at last year and this year because we have one less that sometimes can skew that average. 115 00:10:14,580 --> 00:10:29,980 And on page three, we present the last two years of the actual return on contribution, which we had looked at in page one. And then we showed the amount actually of contributed during the plan years. So. 116 00:10:29,980 --> 00:10:38,860 So, looking at 2024, we had an actual retirement contribution of 308,058, and the amount that 117 00:10:38,860 --> 00:10:44,040 was contributed was 284,254. 118 00:10:45,180 --> 00:10:53,080 The prior year of 2023, you made 410,000, which actually exceeded the actual retirement 119 00:10:53,080 --> 00:10:54,600 contributions of that year. 120 00:10:59,620 --> 00:11:09,720 Page 5, we just comment on some of the valuation assumptions and methods and just commenting 121 00:11:09,720 --> 00:11:13,360 that there were no changes in the plan provisions for the year. 122 00:11:14,380 --> 00:11:18,660 And then the actual method, we really didn't have a change in it. 123 00:11:19,100 --> 00:11:24,980 The way it's already set up is that we have this closed amazation period which decreases 124 00:11:24,980 --> 00:11:35,220 by one each year. And that was, you know, applied for this year as well. And, as I said, that the 125 00:11:35,220 --> 00:11:40,260 new Ambrization-based established this year was amortized over a new 11-year period. 126 00:11:45,200 --> 00:11:46,180 Page six, 127 00:11:47,160 --> 00:11:55,640 this graphically shows historically the actual road-determined contribution. And you can see how it's, 128 00:11:55,640 --> 00:12:04,460 You know, fluctuated over the years, the method that's in place currently has been established since, you know, 2023. 129 00:12:07,880 --> 00:12:19,800 And it's, you know, and as I mentioned earlier, hopefully to stabilize that, that contribution amount, because only change in it from year to year is, is changes in the normal cost. 130 00:12:19,800 --> 00:12:26,500 And as participants, active participants continue to retire what a fewer 131 00:12:26,500 --> 00:12:31,420 active and that should result in a lower normal cost, but that's a fairly 132 00:12:31,420 --> 00:12:36,940 minor part of that contribution. The majority of it is amortizing the unfunded 133 00:12:36,940 --> 00:12:44,400 liability, but we only have a new amount for the new gain or loss during the year. 134 00:12:44,400 --> 00:12:51,140 so we can anticipate again that to be fairly stable going forward and the 135 00:12:51,140 --> 00:12:56,160 contribution as a percentage of compensation that's only for the act of 136 00:12:56,160 --> 00:13:03,620 participants' compensation in the plan and that's really you know well you have 137 00:13:03,620 --> 00:13:09,040 two things going on you know and you know especially since 2021 you can see on 138 00:13:09,040 --> 00:13:14,020 top, how that contribution amount is increased through that period. 139 00:13:15,360 --> 00:13:20,620 But also the number of active participants with compensation has decreased quite a bit. 140 00:13:21,480 --> 00:13:23,960 I went back and just pointed a reference. 141 00:13:24,640 --> 00:13:31,900 In the year 2020, the plan had 22 active participants in, you know, today it only has seven active. 142 00:13:31,900 --> 00:13:39,680 So, the amount of active, thereby the amount of compensation has decreased as that contribution 143 00:13:39,680 --> 00:13:42,680 has increased, especially since 2021. 144 00:13:44,060 --> 00:13:51,620 So, again, I don't know how meaningful of a percentage that is there on that page. 145 00:13:55,540 --> 00:13:59,640 Each seven on top shows the unsfunded crude liability. 146 00:13:59,640 --> 00:14:08,440 and this is the amount, the method is established to reduce it over the amazation period. 147 00:14:09,020 --> 00:14:10,080 We have learned years remaining. 148 00:14:11,760 --> 00:14:17,780 It was fairly constant over the last three years. 149 00:14:18,220 --> 00:14:23,660 We did have some losses established this year that increased the unfunded liability 150 00:14:23,660 --> 00:14:27,260 and we'll look at the gain loss page in a little bit. 151 00:14:28,240 --> 00:14:35,860 In the bottom of the page 7, we show the return on the actuarial value of assets compared 152 00:14:35,860 --> 00:14:44,460 to the actuarial assumed investor return, and the plan assumes a 6.75% return on plant 153 00:14:44,460 --> 00:14:52,220 assets, and this smooth or actuarial value of assets for the most years has been a little 154 00:14:52,220 --> 00:14:58,140 bit less than the 6.775. If we just take the straight average of that 12-year period, it's 155 00:14:58,140 --> 00:14:59,320 about 6.3% 156 00:15:00,000 --> 00:15:29,980 More recently, over the five years, average is about 5.6%. But as noted, the last two years, the market value had a return in excess of that 6.75%. So that's good. And when we talk about assumptions, we like to just bring up the investor return because that's what we say at the primary assumption that drives results. And you know, make sure that 157 00:15:29,980 --> 00:15:40,140 we have continued comfort on that assumption going forward and a lot of time that's driven 158 00:15:40,140 --> 00:15:47,500 by any changes and that might be driven by changes in investment policy or investment objectives 159 00:15:47,500 --> 00:15:54,940 and investment allocations and so we just want to be alerted if there are any changes in 160 00:15:54,940 --> 00:15:55,700 those areas. 161 00:15:55,700 --> 00:15:56,280 I'm 162 00:16:03,000 --> 00:16:04,860 going to jump a couple pages to page 9. 163 00:16:06,000 --> 00:16:09,620 Here we have the display of the development of the contributions. 164 00:16:10,000 --> 00:16:15,380 The top is what we call, you know, the actual determine a recommended contribution has 165 00:16:15,380 --> 00:16:20,080 the remaining 11 years of amortization. 166 00:16:21,000 --> 00:16:26,060 And as I said earlier, the annual normal cost is the component of that contribution that 167 00:16:26,060 --> 00:16:31,680 represents the value of benefits expected to be earned during the year and that's $37,000. 168 00:16:31,680 --> 00:16:39,020 and then the amortization payment of the unfinal liability is $290,000 by far the largest component. 169 00:16:39,960 --> 00:16:46,380 And then we just give it interest to the end of the plane year to get to the $349,000 recommended 170 00:16:46,380 --> 00:16:55,620 contribution. Alternatively, if we amortize the unfinal liability over a five-year longer period, 171 00:16:55,620 --> 00:17:05,140 You see an item two, the amortization period decreases and that's the difference in the 172 00:17:05,140 --> 00:17:11,600 methods and we get $293,000 contribution, an alternative contribution calculation. 173 00:17:15,220 --> 00:17:23,920 Those amortization installments are detailed on the next page 10 and might just draw your 174 00:17:23,920 --> 00:17:32,700 attention to the second column original duration. This method was really started in 2023. 175 00:17:33,860 --> 00:17:42,970 At that time, it was amortized over a 13-year period and had an annual installment of $225,000. 176 00:17:43,950 --> 00:17:50,590 There's 11 years remaining on that and that $225,000 will be a constant amount for each of 177 00:17:50,590 --> 00:17:53,310 the remaining years until that's fully amortized. 178 00:17:53,750 --> 00:17:56,330 Likewise, the next layer in 2024 179 00:17:56,330 --> 00:17:58,710 was amortized over a original period of 12 years. 180 00:17:59,570 --> 00:18:03,890 And the most recent, an actual loss of $360,000 181 00:18:03,890 --> 00:18:06,650 has been amortized over 11 years. 182 00:18:07,450 --> 00:18:10,650 So those three components give us the amortization amount 183 00:18:10,650 --> 00:18:12,130 of $290,000. 184 00:18:12,530 --> 00:18:15,950 And that would be a constant amount that will continue 185 00:18:16,530 --> 00:18:19,070 this year and then following 10 years 186 00:18:19,070 --> 00:18:20,730 until those are fully amortized. 187 00:18:22,840 --> 00:18:25,040 Then we have the alternative contribution schedule 188 00:18:26,080 --> 00:18:29,020 with remaining periods of 16 years below that. 189 00:18:29,840 --> 00:18:32,200 And that's the difference in those two contributions. 190 00:18:33,060 --> 00:18:35,820 The amortization amount is about $52,000. 191 00:18:36,540 --> 00:18:38,940 And then we add interest to the end of the year 192 00:18:38,940 --> 00:18:41,760 and we can get a difference about $55,000 193 00:18:41,760 --> 00:18:42,560 of the contribution. 194 00:18:50,260 --> 00:18:51,420 We jump to page 12. 195 00:18:52,160 --> 00:18:54,960 Here we have this reconciliation on the market value of assets. 196 00:18:54,960 --> 00:19:01,950 that you can see the city's contribution of $284,000. 197 00:19:02,970 --> 00:19:04,970 Collectively, there were investment earnings 198 00:19:04,970 --> 00:19:07,050 about $884,000. 199 00:19:07,730 --> 00:19:12,470 And then the plan paid out in benefit payments of $967,000. 200 00:19:12,850 --> 00:19:16,070 So that's the cash flows resulting 201 00:19:16,070 --> 00:19:19,370 in a market value of $9,861. 202 00:19:20,930 --> 00:19:24,890 And the very next page develops the actual rural value 203 00:19:24,890 --> 00:19:32,590 where the method calculates a gain loss on the value of assets on an annual basis and those get 204 00:19:32,590 --> 00:19:45,410 smoothed in over a five-year period of time. And the smooth value is 9,813,000. So a little bit less than 205 00:19:45,410 --> 00:19:50,930 the market value. And as I mentioned earlier, that indicates there's some deferred gains because the 206 00:19:50,930 --> 00:19:58,190 market value has returned in excess of the 6.75% of the last few years, and those deferred 207 00:19:58,190 --> 00:19:59,950 gains will continue to come through the actual. 208 00:20:00,080 --> 00:20:02,240 roll of value in the future years. 209 00:20:10,460 --> 00:20:13,820 I was going to just jump to page 16 and look at the actual gain 210 00:20:13,820 --> 00:20:21,160 a lot and Jesse maybe ask if you want to provide some comments on that development. 211 00:20:21,880 --> 00:20:27,220 Excuse me. Some of us don't have page 16. Staff is helping out right now. 212 00:20:30,500 --> 00:20:30,780 Okay. 213 00:20:33,000 --> 00:20:34,200 My packet 214 00:20:34,200 --> 00:20:36,140 end at page 12. 215 00:20:37,520 --> 00:20:38,420 Oh, okay. 216 00:20:38,980 --> 00:20:39,180 Okay. 217 00:20:39,860 --> 00:20:45,340 I can bring that up if that would be. 218 00:20:45,980 --> 00:20:47,940 I think that would be helpful. 219 00:20:49,480 --> 00:20:49,740 Okay. 220 00:21:00,950 --> 00:21:02,850 Oh, so Sherry's not turned on. 221 00:21:03,030 --> 00:21:04,030 I can send a request. 222 00:21:07,200 --> 00:21:10,600 If you have an administrator of the Zoom meeting there, 223 00:21:10,620 --> 00:21:14,340 but it looks like I have to request the permission to share my screen. 224 00:21:51,120 --> 00:21:51,520 I'm 225 00:21:55,390 --> 00:22:02,570 sorry about that, but it's not allowing me to share my screen, you know, look, is the adjustment that we made to change that? 226 00:22:13,600 --> 00:22:17,040 Yeah, I think our IT person is working on that to get you to share. 227 00:22:17,240 --> 00:22:17,600 Okay. 228 00:22:27,940 --> 00:22:29,980 Okay, should be reshared now. 229 00:22:31,080 --> 00:22:31,320 Okay. 230 00:22:31,780 --> 00:22:31,840 Okay. 231 00:22:54,940 --> 00:22:55,540 Did that work? 232 00:22:56,320 --> 00:22:57,320 It did. 233 00:22:57,860 --> 00:23:03,340 On my end, the top of the page is currently cut off. 234 00:23:10,120 --> 00:23:14,920 So on this page, we just detail the actual container loss, 235 00:23:15,300 --> 00:23:20,460 which is the basis for those amortization installments 236 00:23:20,460 --> 00:23:22,160 that determine the contribution. 237 00:23:22,160 --> 00:23:28,800 And the way we do that is we look at what the unfunded accrued liability was last year, 238 00:23:29,300 --> 00:23:36,380 and if everything had progressed exactly as assumed, what would it be today? 239 00:23:36,860 --> 00:23:42,360 And then we compare the actual unfunded accrued liability today to that expected value, 240 00:23:42,580 --> 00:23:47,960 and that gives us the actual real gain or loss that we're then spreading over future installments. 241 00:23:48,520 --> 00:23:54,340 So, the first section just, and it develops that on the liability side, what we had expected 242 00:23:54,340 --> 00:23:58,880 the liabilities to be, and right underneath that, we do the same with the assets. 243 00:23:59,200 --> 00:24:03,380 We look at the, what the assets were and roll them forward a year. 244 00:24:04,280 --> 00:24:12,280 And then that gives us line three, which is the expected unfunded accrued liability of 1.956 245 00:24:12,280 --> 00:24:12,500 million. 246 00:24:12,500 --> 00:24:12,760 And 247 00:24:15,610 --> 00:24:21,050 then immediately below that we look at the actual unfunded liability on the measurement 248 00:24:21,050 --> 00:24:21,470 date. 249 00:24:22,170 --> 00:24:25,810 And that's that $2,316,000. 250 00:24:25,930 --> 00:24:34,670 And the difference between those of $367.01 is the actual oil loss that the plan. 251 00:24:38,220 --> 00:24:42,740 And so at least the loss comes from several different sources. 252 00:24:44,260 --> 00:24:53,040 The majority of it this year is the money purchase plan, which is the similar to the 253 00:24:53,040 --> 00:24:53,360 plan. 254 00:24:53,480 --> 00:24:58,780 It is actually part of the same trust, but people, when they retire, they can take their 255 00:24:58,780 --> 00:24:59,960 of Money, Purchase, Plan, Con- 256 00:25:04,600 --> 00:25:25,720 And we had just one participant do that this year, but those increased annuities as approximately $150,000 in value. And so because that wasn't accounted for in prior valuations, then that shows up here as a loss on the liability side. 257 00:25:28,870 --> 00:25:38,830 In addition, salaries increased more than expected or more than assumed, and so that increases 258 00:25:38,830 --> 00:25:46,210 not just future benefits, but also past benefits for the actives, although the actives are 259 00:25:46,210 --> 00:25:52,030 a small group that can sometimes have an outsized influence, and then no deaths. 260 00:25:52,030 --> 00:26:05,650 You know, each year we assume a certain percentage that everybody is going to die given based on their age and when that doesn't happen, there's just a small loss associated with each person. 261 00:26:09,060 --> 00:26:13,640 And so that is just the development of the actual real loss for there. 262 00:26:13,640 --> 00:26:22,010 And Jeff, I can advance the report if you want to hit any other pages. 263 00:26:23,190 --> 00:26:25,390 That was kind of the last one. 264 00:26:25,450 --> 00:26:27,170 We could look at the risk, I suppose, 265 00:26:33,030 --> 00:26:34,070 table here. 266 00:26:34,350 --> 00:26:41,440 It shows the retiree liability and the total plan liability. 267 00:26:42,200 --> 00:26:45,360 And you can see that it's a large part. 268 00:26:45,520 --> 00:26:48,440 It's 80% and it's increasing each year. 269 00:26:49,040 --> 00:26:50,840 And you know, that trend is going to continue. 270 00:26:51,600 --> 00:26:58,080 The plan is close to new entrants, only 7 active, like two-thirds of them currently are 271 00:26:58,080 --> 00:26:58,400 retired. 272 00:27:01,040 --> 00:27:09,300 And then cash flow, 284,000 going in, 967 coming out for the past year, and that also 273 00:27:09,300 --> 00:27:12,380 is going to be a continuing pattern. 274 00:27:14,100 --> 00:27:15,740 If the plan earns, you 275 00:27:18,200 --> 00:27:22,540 miss speaking, but not by much, but if the plan earns the assumed 276 00:27:22,540 --> 00:27:29,440 return on assets then I think it's going assets will be decreasing each year in general. That's 277 00:27:29,440 --> 00:27:36,180 just because the payments to retirees are growing each year and that's just kind of the nature 278 00:27:36,180 --> 00:27:38,020 of mature plans like this. 279 00:27:42,490 --> 00:27:46,250 It's not too exciting that's just a measurement of kind of how the 280 00:27:46,250 --> 00:27:49,590 liabilities respond to changes in interest rates. 281 00:27:59,950 --> 00:28:02,050 The liabilities respond to changes of interest rates. 282 00:28:02,050 --> 00:28:08,150 we have this other liability measure. It's called a load default risk obligation measure. 283 00:28:10,240 --> 00:28:11,520 What's done there is 284 00:28:14,140 --> 00:28:18,800 re-value the liabilities instead of using the assumed 6.75% rate. 285 00:28:19,400 --> 00:28:31,010 We're using a risk marker rate, I believe. Let me find that 4.74% is what was used here. 286 00:28:31,910 --> 00:28:41,030 And so if we use that lower interest rate, the liabilities increase to 14.5 million. 287 00:28:42,350 --> 00:28:42,630 I 288 00:28:45,670 --> 00:28:54,050 guess one way to think of this number is that it's based on the liabilities that are accrued as of today. 289 00:28:54,250 --> 00:28:59,090 It doesn't project any future earned benefits going forward. 290 00:29:00,390 --> 00:29:09,410 And a good way to think of this number is that if you wanted to put the funds in a safe 291 00:29:09,410 --> 00:29:14,870 account and just kind of ignore them, this is the amount that you would want to have in 292 00:29:14,870 --> 00:29:18,650 that account to cover liabilities earned as of today. 293 00:29:26,540 --> 00:29:29,060 I think all that I wanted to cover good 294 00:29:32,140 --> 00:29:34,460 times to hit any questions that may have come up. 295 00:29:34,460 --> 00:29:34,940 Any 296 00:29:45,940 --> 00:29:52,200 questions Jesse and I just wanted to point out a couple of things on the assumptions kind of looking ahead the next year in a way 297 00:29:53,040 --> 00:29:59,860 They're the society of actuaries just recently this year published a new public 298 00:30:00,000 --> 00:30:29,980 Pension plan, mortality, table, they updated it. It might kind of sound old, but it updated it from the 2010 to the 2016 table. And what they usually do is, when they name the table, they take a midpoint of the experience years in which they're analyzing to come up with a mortality table. And we've taken some preliminary looks at this table. And it doesn't seem to have a significant impact. 299 00:30:29,980 --> 00:30:36,720 impact on the plan liabilities, but we'll take a closer look at it for your plan in specifics 300 00:30:36,720 --> 00:30:42,900 next year and may likely recommend we update it just to keep on the current table. 301 00:30:44,040 --> 00:30:51,060 And then we did just want to ask the board, you know, if your thoughts on the salary increase 302 00:30:51,060 --> 00:30:57,880 assumption, which is 3% remains our best estimate going forward because we didn't know what 303 00:30:57,880 --> 00:31:01,300 that looked like there was higher pay increases 304 00:31:01,300 --> 00:31:03,800 than the 3% assume this past year. 305 00:31:04,540 --> 00:31:07,200 And we know we're always gonna get gains or losses 306 00:31:07,200 --> 00:31:09,560 from year to year on most of the assumptions. 307 00:31:10,180 --> 00:31:12,280 And we don't make a determination 308 00:31:12,280 --> 00:31:14,360 on a single year experience, 309 00:31:14,940 --> 00:31:17,780 but you know, get any feedback you have for us 310 00:31:17,780 --> 00:31:19,940 on the assumptions we would certainly take 311 00:31:19,940 --> 00:31:22,380 into consideration on those. 312 00:31:34,620 --> 00:31:36,740 I think as Jesse said, that takes us through 313 00:31:36,740 --> 00:31:44,780 the really the parts that we wanted to present to the board and again any questions or comments that 314 00:31:44,780 --> 00:31:51,440 we could address. We certainly welcome them. Now this is Bob Westerman. I do have a clarifying 315 00:31:51,440 --> 00:31:59,420 question. I thought I heard you say use the low market rate of 4.75. Is that should that be 6.75? 316 00:31:59,420 --> 00:32:01,860 Because that seems awful low for returns. 317 00:32:03,580 --> 00:32:07,860 Yeah, and that is just used for the one number. 318 00:32:09,820 --> 00:32:18,220 It's required disclosure under the actual practice. 319 00:32:19,140 --> 00:32:24,280 And so that number is being used for this 14.5 million result. 320 00:32:25,060 --> 00:32:27,340 And that's just really a comparison number. 321 00:32:27,340 --> 00:32:35,020 We, for the vast majority of results shown in this report, the 6.75 percent was used. 322 00:32:35,540 --> 00:32:39,740 The 4.74 is only used for the single point of comparison. 323 00:32:40,920 --> 00:32:46,300 Yes, so the contribution recommendations based on the 6.75 percent, as Jesse mentioned, 324 00:32:46,940 --> 00:32:54,280 this 4.74, just used because we need to satisfy actual standards of practice or present this number, 325 00:32:54,280 --> 00:32:59,280 which is just a disclosure item, not used for any of the recommendations. 326 00:33:03,260 --> 00:33:12,580 Just to help me understand a little better, what is the, in terms of the unfunded liability, 327 00:33:13,020 --> 00:33:19,880 are we in a better position today in October 2005 than we were in October of 2004? 328 00:33:23,850 --> 00:33:24,410 Your plans, 329 00:33:27,060 --> 00:33:31,040 based on the market value, was the same 81%. 330 00:33:33,020 --> 00:33:39,500 So on that basis, you know, it's just very similarly funded this year versus last year. 331 00:33:41,500 --> 00:33:47,220 It seemed to me at one point, I mean, historically, we were a little underfunded. 332 00:33:47,500 --> 00:33:50,880 Then there were a couple years when we were well funded. 333 00:33:51,300 --> 00:33:57,580 And then there was the drop in the market and we had to have a discussion among ourselves 334 00:33:57,580 --> 00:34:02,120 And the recommendation to a city council has to how much to fund. 335 00:34:02,300 --> 00:34:09,320 And I think this committee always was always recommending to the city council that we aggressively fund. 336 00:34:10,060 --> 00:34:17,800 And if I recall the city budget starts in July and they start putting their budget together in April. 337 00:34:18,300 --> 00:34:22,860 So if I recall last year, we made a recommendation in January or February. 338 00:34:22,860 --> 00:34:24,580 Is it appropriate to do that now? 339 00:34:25,400 --> 00:34:33,620 I would say this would be a good point to do a recommendation because we will be starting the budget probably late November, early December. 340 00:34:34,000 --> 00:34:37,160 It just seems to me we have this data in front of us. 341 00:34:37,280 --> 00:34:46,660 We have the experts to ask any questions and if I'm understanding it correctly, you've got two recommended plans. 342 00:34:46,660 --> 00:34:55,000 One, to retire the liability in 11 years, and the other one was to retire the liability over 18 years. 343 00:34:55,540 --> 00:34:57,480 Is that an accurate assessment on my part? 344 00:35:00,000 --> 00:35:29,080 It is, except the remaining period, the 13 is down to 11, as you said, because this was established in 2003, in the 18-year period is now down to 16. But, you know, we do present the higher amount, this 349,000, as our act, what we call the actual determined contribution or our recommended contribution. You know, you sound like my credit card statement. If you make the minimum payment, 345 00:35:29,080 --> 00:35:32,760 It'll take you 25 years to pay it off and make a larger payment. 346 00:35:32,800 --> 00:35:34,340 You can pay it off in three years. 347 00:35:35,780 --> 00:35:39,060 You know, we have a representative from the City Council here with us. 348 00:35:40,940 --> 00:35:42,180 Did he log off? 349 00:35:43,360 --> 00:35:44,020 I'm here. 350 00:35:44,600 --> 00:35:44,840 Okay. 351 00:35:45,360 --> 00:35:49,360 What do you think the sense of the city council would be? 352 00:35:49,540 --> 00:35:55,840 My own personal recommendation would be to follow the recommended contribution 353 00:35:55,840 --> 00:35:59,000 and as set forth in the hub report here. 354 00:36:00,540 --> 00:36:01,580 The rich would pay for it. 355 00:36:01,580 --> 00:36:07,920 Yeah, I mean, it's reasonable to ask, you know, now would be the time, as Steve said. 356 00:36:08,680 --> 00:36:11,920 I don't know, you know, what things are going to be looking like. 357 00:36:12,140 --> 00:36:21,940 They don't seem to be too positive just now in terms of our funds, but it seems reasonable 358 00:36:21,940 --> 00:36:25,840 to at least put it out there and make the request. 359 00:36:28,040 --> 00:36:31,440 Very good. Steve, do you have any comment? 360 00:36:37,700 --> 00:36:38,320 Excuse me. 361 00:36:38,600 --> 00:36:41,160 I've got three steves. 362 00:36:44,480 --> 00:36:49,900 No. I mean, if we're looking at 4349 versus 293, 363 00:36:51,840 --> 00:36:57,540 I guess it kind of dictates on what budget funding is 364 00:36:57,540 --> 00:37:02,160 as to which one would be more easily attained. 365 00:37:02,160 --> 00:37:03,040 Mr. 366 00:37:05,430 --> 00:37:06,510 Westman and 367 00:37:18,290 --> 00:37:20,390 that would be our recommendation to the City Council. 368 00:37:23,880 --> 00:37:25,300 Yeah, but he else want to make. 369 00:37:25,800 --> 00:37:31,080 Yeah, I'd recommend the 3.49 5.20 for the next budget year, that'd be by a recommendation. 370 00:37:32,840 --> 00:37:35,120 All right, so we're building a consensus. 371 00:37:35,960 --> 00:37:38,380 We have our finance manager over here. 372 00:37:38,780 --> 00:37:41,680 Do you like, do you have an opinion or assessment to share? 373 00:37:41,740 --> 00:37:47,200 I'll try to keep it funded with the recommendation because the way things move up and down, you 374 00:37:47,200 --> 00:37:51,320 We don't want to get hit one year with a lot more money than we want to budget. 375 00:37:51,800 --> 00:37:56,080 So I vote for the recommendation at $3.49, $5.20. 376 00:37:58,440 --> 00:38:02,680 Chair would entertain a motion to make a recommendation to the City Council for 377 00:38:02,680 --> 00:38:07,760 the contribution to the defined benefit plan. 378 00:38:12,030 --> 00:38:17,150 So I think the motion is to recommend to the City Council that the recommended 379 00:38:17,150 --> 00:38:27,130 to contribution amount as set forth in the hub report of $349,520 be sent to the City Council. 380 00:38:27,990 --> 00:38:29,370 And do I have a second? 381 00:38:29,490 --> 00:38:30,230 I have a second. 382 00:38:30,750 --> 00:38:32,570 Is there any further discussion? 383 00:38:35,870 --> 00:38:37,050 All in favor, please say aye. 384 00:38:37,890 --> 00:38:38,050 Aye. 385 00:38:39,150 --> 00:38:40,110 Is anyone opposed? 386 00:38:41,210 --> 00:38:44,990 So if our minutes could reflect that we're making a recommendation to the City Council, 387 00:38:44,990 --> 00:38:50,610 You know, finance folks, you know our recommendation, pay off the liability. 388 00:38:50,950 --> 00:38:56,430 We've made what I feel is a sacred commitment to the employees, and we need to fulfill that commitment. 389 00:38:58,710 --> 00:39:05,810 Okay, Hub, thank you folks for participating and sharing your expertise with us. 390 00:39:07,270 --> 00:39:13,950 Unless you have something further, you can stay or you can leave whatever your preference is. 391 00:39:13,950 --> 00:39:17,110 and we can move on to Andrew. 392 00:39:21,640 --> 00:39:23,420 All right, but I appreciate, we just, 393 00:39:23,540 --> 00:39:25,480 I would both appreciate every time and attention 394 00:39:25,480 --> 00:39:28,620 and just look forward to any further discussion 395 00:39:28,620 --> 00:39:31,060 and never hesitate to reach out to us 396 00:39:31,060 --> 00:39:32,220 with questions that they come up. 397 00:39:32,460 --> 00:39:33,460 Thank you very much. 398 00:39:33,800 --> 00:39:36,780 It's always, you know, annually you come in 399 00:39:36,780 --> 00:39:40,240 and when you first start your conversation, 400 00:39:40,440 --> 00:39:42,740 my head starts spinning numbers in new terms. 401 00:39:42,740 --> 00:39:52,060 Yeah. Thank you very much. Thank you. Okay. Andrew, do you want to talk about your quarterly 402 00:39:52,060 --> 00:39:56,360 investment review? Sure. Let me try and share the screen here. 403 00:40:01,330 --> 00:40:10,330 And, yeah, it's funny you mentioned that, Rolio, there's something that challenges my economic 404 00:40:10,330 --> 00:40:16,330 page about putting people to sleep and actually all people might do that. But those guys 405 00:40:16,330 --> 00:40:23,210 are good and that's great information. And I think it's a good service for the city 406 00:40:23,210 --> 00:40:27,390 and the retirement plan. Can you see my screen here, the economic overview? 407 00:40:30,110 --> 00:40:30,770 So I'll run through 408 00:40:30,770 --> 00:40:36,510 this, like in quarters past, I highlight some numbers here. I've voted some economic growth, 409 00:40:36,770 --> 00:40:42,930 which is GDP. Long-term average for the US is 2%, and we've been above that the last 410 00:40:42,930 --> 00:40:48,130 several years, but economists are expecting that to slow down. You can see here, for the 411 00:40:48,130 --> 00:40:53,310 end of this year and next year, it's just right below 2%, and then 20-27 potentially getting 412 00:40:53,310 --> 00:40:59,630 back up to that long-term 2% average. So, long story short, expectations are that we may 413 00:40:59,630 --> 00:41:05,610 A.C. is somewhat of a slowdown in the economy, and I think we are certain to see some of that in some of the pockets across the country. 414 00:41:06,990 --> 00:41:14,350 Inflation is a key figure, certainly for investors and consumers and the Federal Reserve. 415 00:41:18,120 --> 00:41:21,660 E.E. is the main figure they look at, personal consumption expenditures. 416 00:41:22,780 --> 00:41:30,300 Another target is 2%, but most of the comments believe we're probably not going to get down to 2% anytime soon. 417 00:41:30,300 --> 00:41:35,340 But if it gets to a level that's closer to between two and a quarter and two and a half, 418 00:41:35,640 --> 00:41:41,260 that's kind of a healthy or interest inflation rate where we're at, it would lead the Fed 419 00:41:41,260 --> 00:41:43,460 to lower interest rates. 420 00:41:43,960 --> 00:41:46,180 You can see it's hovering right at 2.9 right now. 421 00:41:48,310 --> 00:41:49,070 You know, most of 422 00:41:51,340 --> 00:41:57,180 it to be, for this year and next year kind of seems 423 00:42:08,060 --> 00:42:09,700 to be holding steady. 424 00:42:09,880 --> 00:42:10,860 They've increased significantly. 425 00:42:10,860 --> 00:42:12,600 You can see over the last several years, 426 00:42:18,550 --> 00:42:20,670 consumers spending and industrial production to 427 00:42:20,670 --> 00:42:25,450 main parts of the economy. Consumer spending has been fairly resilient. We've been saying this 428 00:42:25,450 --> 00:42:31,250 for the last couple of years. Economists have been expecting consumers spending to slow down, 429 00:42:31,830 --> 00:42:36,550 and you can see here there's an expectation that we should be slowing down over the next couple 430 00:42:36,550 --> 00:42:39,690 years. We're seeing some underlying consumer 431 00:42:42,310 --> 00:42:46,050 spending habits, people substituting name brand products 432 00:42:46,050 --> 00:42:51,050 for a store brand, generic products, and things like that. You're seeing default rates, 433 00:42:53,920 --> 00:42:54,360 credit cards 434 00:42:56,790 --> 00:43:00,870 These are early warning signs saying that the consumers are starting to feel pressure. 435 00:43:02,250 --> 00:43:06,010 But they're not at levels that we would be concerned at a recessionary level. 436 00:43:06,950 --> 00:43:14,450 Certainly, the default rate on credit cards is not at levels that we've seen in previous times of concern. 437 00:43:14,990 --> 00:43:15,090 So, 438 00:43:17,360 --> 00:43:25,800 all that said, we are seeing some consumer spending slow down, but not to a point where we'd be throwing up red flags and concerned about a recession. 439 00:43:27,620 --> 00:43:33,700 Unemployment, the headlight numbers look better than the unemployment data underneath actually 440 00:43:33,700 --> 00:43:41,400 is. So from a historical standpoint, unemployment at 4 percent, 4.2, 4.3, 4.5 even is historically 441 00:43:41,400 --> 00:43:49,100 very, very low unemployment. But we have been seeing layoff announcements. We've been seeing 442 00:43:49,680 --> 00:43:53,780 lower than expected job data come through. 443 00:43:54,480 --> 00:43:57,600 Unfortunately, the federal government is in a shutdown right now 444 00:43:57,600 --> 00:43:59,340 and we don't have the latest jobs number. 445 00:43:59,960 --> 00:44:02,140 But there's some other jobs numbers out there that indicate 446 00:44:02,140 --> 00:44:03,780 that it is slowing down. 447 00:44:04,120 --> 00:44:07,940 So that's one of the main reasons why the federal reserve is getting more concerned 448 00:44:07,940 --> 00:44:10,100 and why they've recently cut interest rates. 449 00:44:10,480 --> 00:44:12,960 They're likely going to cut interest rates here this month 450 00:44:12,960 --> 00:44:15,160 and likely in December. 451 00:44:15,160 --> 00:44:22,640 But that's the rate's prediction markets are saying it's about a 50% chance that we have 452 00:44:22,640 --> 00:44:28,140 another rate cut in December, but for now, expectations are we have another quarter 453 00:44:28,140 --> 00:44:32,100 percent rate cut here at this month at the next Fed meeting. 454 00:44:34,440 --> 00:44:40,680 Concerns, I mentioned slowing, slowing economy, jobs numbers were lower than expected. 455 00:44:42,020 --> 00:44:47,700 manufacturing is still hovering kind of below that expansionary mark in this institute. 456 00:44:48,020 --> 00:44:54,620 For supply management figure, services has been more resilient, but it's just hovering 457 00:44:54,620 --> 00:44:58,140 right at that kind of expansion versus contraction. 458 00:44:58,140 --> 00:44:59,560 and a break point. 459 00:45:00,000 --> 00:45:07,200 Main concerns for investors right now, as I mentioned, flowing economy, questions around the unemployment 460 00:45:07,200 --> 00:45:12,900 jobs market, interest rates are still higher than we've been used to for the last couple decades. 461 00:45:13,960 --> 00:45:20,160 And there's a potential for re-emerging inflation. I don't think consumers have really seen 462 00:45:20,980 --> 00:45:28,460 the impact of these tariff policies. And a lot of businesses are, I think, eating up some of the 463 00:45:28,460 --> 00:45:32,640 impact from that as well. So there may be some more 464 00:45:34,750 --> 00:45:37,310 surrounding that moving forward. 465 00:45:37,970 --> 00:45:44,230 But for now, long story short, slow in economy, not in a recession, not likely approaching 466 00:45:44,230 --> 00:45:50,210 a recession. We're cautious to see optimistic as investors at this point, you know, markets have 467 00:45:50,210 --> 00:45:56,150 done very well this year, even in the face of all these uncertainties. And earnings reports 468 00:45:56,150 --> 00:45:59,090 the last couple of weeks actually have been the 469 00:46:03,860 --> 00:46:05,080 consumers resilient, 470 00:46:07,420 --> 00:46:08,240 my investment. 471 00:46:10,820 --> 00:46:14,260 The American consumer is more resilient than many people will think. 472 00:46:15,080 --> 00:46:17,960 And it's really been a key driver for the economy in the last several years. 473 00:46:21,420 --> 00:46:22,500 How's there to see if there's any questions? 474 00:46:27,020 --> 00:46:31,610 If not, on page three has the summary of the accounts. 475 00:46:31,750 --> 00:46:34,950 As you recall, there's two different main portfolios that we manage. 476 00:46:35,270 --> 00:46:41,550 One is the defined benefit, which is essentially a pensioned 477 00:46:43,600 --> 00:46:44,300 contribution. 478 00:46:44,300 --> 00:46:50,280 retirement plan. So the fine benefit wound which we heard from the actuarials is this one here. 479 00:46:50,840 --> 00:46:56,080 There's a growth portfolio which holds the bulk of the assets and is invested. And then we have 480 00:46:56,080 --> 00:47:03,920 a cash liquidity account that has funds set aside in anticipation of distributions. And so the 481 00:47:03,920 --> 00:47:09,920 combination of those two at the end of the quarter just above $1.2 million that's a fine contribution 482 00:47:11,160 --> 00:47:16,240 Portfolio right around 4.75 million at the end of the quarter. 483 00:47:19,430 --> 00:47:24,150 So I've got a couple pages here with some analytics regarding the Portfolio and they're all 484 00:47:24,150 --> 00:47:24,570 combined. 485 00:47:25,330 --> 00:47:28,270 Both the Portfolios are managed in a balanced fashion. 486 00:47:28,490 --> 00:47:31,070 We call it acid allocation, which is balanced. 487 00:47:32,410 --> 00:47:33,490 And so in 488 00:47:35,700 --> 00:47:43,040 this type of acid allocation, about 59% inequities or stocks, 37.5% in fixed income 489 00:47:43,040 --> 00:47:46,400 similar bonds, and then the remainder in cash. 490 00:47:48,000 --> 00:47:51,320 And so looking for the quarter, you can see here, 491 00:47:51,660 --> 00:47:54,480 and I'll go here to date, might give you a better picture 492 00:47:54,480 --> 00:47:56,540 of where we started at at the beginning of the year, 493 00:47:56,980 --> 00:47:58,960 just above 13.6 million. 494 00:47:59,680 --> 00:48:01,720 There's been some contributions, 495 00:48:02,200 --> 00:48:03,840 there's been withdrawals and distributions 496 00:48:03,840 --> 00:48:07,860 through retirees, fees, and then what's been the gain 497 00:48:07,860 --> 00:48:10,600 in the portfolio for the year, about 1.6 million. 498 00:48:10,600 --> 00:48:12,660 So at the end of the quarter, right about 499 00:48:15,350 --> 00:48:16,290 15 million. 500 00:48:17,170 --> 00:48:21,710 As chart below, I find this interesting because I find it a visual 501 00:48:22,670 --> 00:48:25,360 kind of as gone. 502 00:48:26,120 --> 00:48:29,960 We've started managing portfolio way back, you know, right in the 503 00:48:29,960 --> 00:48:32,340 the throes of the great financial crisis. 504 00:48:33,000 --> 00:48:35,780 And you can see here that portfolio really shrunk. 505 00:48:35,780 --> 00:48:37,340 This is back in 0708. 506 00:48:37,640 --> 00:48:41,800 If you remember those times, which were atrocious for investors. 507 00:48:41,800 --> 00:48:48,020 And then over time you can see staying invested, staying diligent and disciplined with your 508 00:48:48,020 --> 00:48:48,400 plan. 509 00:48:48,760 --> 00:48:54,600 Even throughout numerous different crises, portfolios can grow over the long run. 510 00:48:54,820 --> 00:48:58,080 You can see here, you know, great financial crisis. 511 00:48:58,680 --> 00:49:00,280 We have some tips in 2016. 512 00:49:00,980 --> 00:49:04,640 The pandemic-driven recession you can see here. 513 00:49:05,220 --> 00:49:06,620 Can you see my cursor, by the way? 514 00:49:07,480 --> 00:49:08,100 Yeah. 515 00:49:08,780 --> 00:49:09,400 Okay. 516 00:49:09,540 --> 00:49:09,640 Cool. 517 00:49:09,640 --> 00:49:17,240 So, right here was a big drop-off in the markets during the pandemic, subsequent rally afterwards. 518 00:49:18,220 --> 00:49:21,600 2022, if you recall, was an atrocious year for investors. 519 00:49:22,060 --> 00:49:27,580 The worst bond market ever in the last 90-plus years. 520 00:49:29,020 --> 00:49:31,960 But staying in best and staying disciplined, you can see portfolio growth. 521 00:49:32,420 --> 00:49:36,940 Even here, early in the first quarter of this year, there was a big death after announcements for tariffs. 522 00:49:36,940 --> 00:49:41,740 but markets have recovered and they're close to all time highs. 523 00:49:43,760 --> 00:49:46,960 Same discipline, same invested, don't panic, don't hide your cash. 524 00:49:49,540 --> 00:49:50,760 It's kind of the story there. 525 00:49:54,120 --> 00:49:54,880 I'm going to page five. 526 00:49:55,660 --> 00:49:57,220 Page five kind of drills down. 527 00:49:57,960 --> 00:49:59,960 And this gives you a closer look at what it is. 528 00:50:00,000 --> 00:50:29,560 Exactly. The portfolio is done this year. So you can see the first quarter was kind of up and then flat. As I mentioned, we had that kind of tariff announcement and care in the market. But the market's been all intensive purposes. It's been on a tariff ever since then. We've had some clarity around some tariffs, earnings have been OK, consumer has been OK, inflation hasn't spiked like people feared. So things have gone well in the markets. And you can see here, I'll go down to the account summary. You can see each of the portfolios here. 529 00:50:29,560 --> 00:50:35,720 but overall for the quarter, a great quarter, you know, up almost 5.6% in the portfolios, 530 00:50:36,060 --> 00:50:42,580 year-to-date returns, up over 12% for the year, through the end of September. 531 00:50:43,380 --> 00:50:47,400 So it's been kind of a gangbusters year for investors, I would say. 532 00:50:47,880 --> 00:50:52,980 And you can see up here, just highlight some of the top 10 holdings that have done really 533 00:50:52,980 --> 00:50:55,060 well what 534 00:50:58,100 --> 00:51:04,160 we call our core large cap US strategy where we manage about 50 to 60 individual 535 00:51:04,920 --> 00:51:09,720 stocks and we use that as a core position in many of our client portfolios and that's 536 00:51:09,720 --> 00:51:10,160 what we've got. 537 00:51:10,660 --> 00:51:15,840 These portfolios in some of the names that we've got in there have done well so things that 538 00:51:15,840 --> 00:51:24,960 are related to technology you think semiconductors AI, L3 Harris has exposure to defense spending 539 00:51:24,960 --> 00:51:26,220 as well as technology. 540 00:51:28,560 --> 00:51:31,240 You know, a lot of these names have some tech exposure. 541 00:51:32,660 --> 00:51:34,620 Obviously, you've probably heard of NVIDIA. 542 00:51:35,500 --> 00:51:37,540 NVIDIA hasn't been the top performer. 543 00:51:37,700 --> 00:51:40,220 We've had some other positions that have done very well. 544 00:51:40,660 --> 00:51:42,900 Crowdstrike's an interesting name that we own. 545 00:51:43,680 --> 00:51:44,720 They're involved in cybersecurity. 546 00:51:45,740 --> 00:51:47,080 Really well-willed company. 547 00:51:47,680 --> 00:51:50,900 Position to take advantage of that thematic over coming years. 548 00:51:51,240 --> 00:51:53,100 So just give you a highlight there. 549 00:51:54,480 --> 00:51:59,060 And on the last page of page 6, this gave you a drill down, so what we call asset allocation, 550 00:51:59,380 --> 00:52:01,600 different asset classes, how to classify things. 551 00:52:02,340 --> 00:52:07,080 So as I mentioned, you're balanced portfolio, think of it as like a 60-40 mix. 552 00:52:07,840 --> 00:52:11,260 You can drill it down into US exposure versus international. 553 00:52:12,320 --> 00:52:17,480 And you can go even further, you can say okay, we have large cap companies, which are larger 554 00:52:17,480 --> 00:52:19,220 companies, made in small companies. 555 00:52:19,220 --> 00:52:25,940 We have developed exposure, we have emerging market exposure, and then within fixed income 556 00:52:25,940 --> 00:52:30,840 you have other exposures as well, like high yield, corporate bonds versus government bonds. 557 00:52:32,220 --> 00:52:38,020 And then the sector exposure just shows you, okay, within stocks what kind of sector of the economy are we invested in. 558 00:52:38,460 --> 00:52:42,980 And we keep this fairly close to the S&P 500. 559 00:52:43,500 --> 00:52:48,740 So, you know, technology has become a very big part of the economy, and so no surprise 560 00:52:48,740 --> 00:52:49,100 there. 561 00:52:49,360 --> 00:52:54,080 It's one of the largest physicians that we have in the strategy. 562 00:52:55,220 --> 00:53:00,000 But overall, very well diversified, that's our strategy, that's what we do for our clients. 563 00:53:00,580 --> 00:53:06,780 Make sure we're diversified within equities, within fixed income, not taking too much risk 564 00:53:06,780 --> 00:53:11,900 but trying to get market-like returns or better with lower risk over the long run. 565 00:53:15,360 --> 00:53:25,420 questions. I think I thought your strategy was to build a portfolio that would withstand 566 00:53:25,420 --> 00:53:33,080 a lot of the volatility and it wouldn't require a lot of trading. In light of your comments 567 00:53:33,080 --> 00:53:42,100 at the bottom of page two, do you see any need to make adjustments in the portfolio for 568 00:53:42,100 --> 00:53:43,680 the city's retirement funds. 569 00:53:46,420 --> 00:53:48,260 Don't see a lot of need to change. 570 00:53:48,520 --> 00:53:52,900 We do, from time to time, change asset allocation sub 571 00:53:55,010 --> 00:53:55,630 asset 572 00:53:55,630 --> 00:53:56,230 classes. 573 00:53:57,690 --> 00:54:01,330 The cash and the portfolio, there's some set aside. 574 00:54:01,710 --> 00:54:04,670 But our team's been talking about if there is excess cash, 575 00:54:04,990 --> 00:54:08,310 we would recommend putting it in fixed-income or bonds 576 00:54:09,130 --> 00:54:12,210 as opposed to putting it back in the equities. 577 00:54:12,690 --> 00:54:17,700 Your portfolio is pretty right in line with the $60,40 578 00:54:17,700 --> 00:54:24,640 balance. So at this point, there's not a lot of excess cash sitting out there. But like 579 00:54:24,640 --> 00:54:30,180 I said, we're cautious, the optimistic, not making a lot of changes at this point, but 580 00:54:30,180 --> 00:54:36,100 for clients who do have excess cash, we're recommending some bond exposure for that instead. 581 00:54:36,640 --> 00:54:40,500 Because we expect short-term cash rates to come down the Fed, like I mentioned the Fed, 582 00:54:40,840 --> 00:54:46,960 likely going to cut interest rates. So short-term interest rates will be coming down. That 583 00:54:46,960 --> 00:54:48,040 that does benefit college. 584 00:54:52,910 --> 00:54:56,390 There are questions of Andrew, either from city staff, 585 00:54:57,070 --> 00:54:58,370 members of the committee. 586 00:54:58,850 --> 00:54:59,590 No further questions. 587 00:55:02,320 --> 00:55:07,820 How about from our, our liaison with the council? Do you have questions of the, from our advisor? 588 00:55:10,600 --> 00:55:19,180 No questions for me. Seems, um, fairly solid and clear. Thank you. I don't think we have a lot of questions when there's a 12% return. 589 00:55:25,560 --> 00:55:39,020 I, as just checking, you know, my own personal account and I've got 8% but you're at 6040 and I'm a little bit more conservative because I'm old. Thank you, Andrew. Any more questions? 590 00:55:39,020 --> 00:55:42,480 for any more questions from Andrew. 591 00:55:44,040 --> 00:55:46,960 Andrew, the next meeting is not going to be until January 592 00:55:47,460 --> 00:55:50,700 and we look forward to seeing you either in person 593 00:55:50,700 --> 00:55:52,040 or via Zoom at that time. 594 00:55:53,320 --> 00:55:55,260 Okay, my pleasure. Thank you for your time. 595 00:55:55,900 --> 00:55:56,300 Thank you, sir. 596 00:55:58,140 --> 00:56:00,980 Okay, so we've had the report from Andrew. 597 00:56:02,000 --> 00:56:06,600 We're supposed to get an updated human resources report 598 00:56:06,600 --> 00:56:08,360 report on upcoming retirements. 599 00:56:17,880 --> 00:56:20,400 There isn't any HR updates. 600 00:56:25,600 --> 00:56:31,880 Shannon's not here, and she told me there wasn't going to be nobody's sitting about retiring. 601 00:56:32,320 --> 00:56:33,280 What is bailing yet? 602 00:56:33,480 --> 00:56:34,400 Nobody's bailing. 603 00:56:34,540 --> 00:56:35,700 All right, good, thank you. 604 00:56:36,860 --> 00:56:42,920 What happens is when a person retires, I usually get a phone call from somebody at the city 605 00:56:42,920 --> 00:56:47,760 manages office to sign off, and that's the only time I know if somebody's retiring. 606 00:56:47,760 --> 00:57:07,900 And I always kind of thumb through the paperwork to see if the person is taking a lump sum where if they're transferring it to another program and we always want people to, we can't make a recommendation to that, to that employee, but it's always wise to see somebody being prudent with their funds. 607 00:57:07,900 --> 00:57:14,700 Okay. I missed an agenda item. We have a vacancy. 608 00:57:17,710 --> 00:57:23,190 I went last meeting and I went up 609 00:57:23,190 --> 00:57:26,050 and I talked to one 610 00:57:28,450 --> 00:57:32,110 of the investment counselors with Edward Jones, the one up in the north end 611 00:57:32,110 --> 00:57:43,060 of town. And he has a new investment counselor there. I forget her name. And she didn't follow 612 00:57:43,060 --> 00:57:47,460 through on an expression of interest. I just thought it would be nice to have somebody 613 00:57:47,460 --> 00:57:55,020 with that type of a background. I think he just put the notice out there. We need 614 00:57:55,020 --> 00:58:00,660 a committee member, and there may not be a lot of interest. It might be incumbent upon 615 00:58:00,660 --> 00:58:09,080 our City Council members of our committee here to, if we see somebody who would invest the 616 00:58:09,080 --> 00:58:17,380 time and has a little bit of knowledge on financial issues, it might be wise for us to attempt 617 00:58:17,380 --> 00:58:18,560 to recruit that person. 618 00:58:19,300 --> 00:58:24,140 I was first recruited years ago by Mr. Baker, John Baker. 619 00:58:25,020 --> 00:58:28,640 And I took that opportunity as an opportunity for me to learn. 620 00:58:28,760 --> 00:58:32,460 I didn't feel that I could contribute a lot, but it was an opportunity to learn. 621 00:58:33,000 --> 00:58:36,000 And so keep your eyes and your ears open. 622 00:58:36,000 --> 00:58:43,940 And if we see somebody that all of us in this room feel that they could contribute to our work here, 623 00:58:44,320 --> 00:58:53,780 we might want to suggest to them that they get in touch with Stephanie or Steve under somebody here at City Hall to sign on and be a member. 624 00:58:54,220 --> 00:58:55,280 Yeah, probably, Ali. 625 00:58:55,820 --> 00:58:57,580 Probably, Ali should be recorded. 626 00:58:58,140 --> 00:59:01,100 Okay, that's the Down at the City Manager's office. 627 00:59:01,100 --> 00:59:03,960 this, Alex at the City of Managers office. 628 00:59:04,680 --> 00:59:05,040 Allie? 629 00:59:05,880 --> 00:59:06,460 Allie. 630 00:59:06,820 --> 00:59:09,100 Oh, wasn't she here just a few minutes ago with the glasses? 631 00:59:09,460 --> 00:59:09,640 Yeah. 632 00:59:09,860 --> 00:59:22,120 Okay, okay, following the conclusion of this meeting, we will have two meetings. 633 00:59:22,760 --> 00:59:26,020 There will be, and it's not required that anybody attend. 634 00:59:26,260 --> 00:59:28,800 I'll be there, our finance manager will be there. 635 00:59:28,800 --> 00:59:35,480 And we'll have a meeting with any employee who is in the Defined Benefit Program. 636 00:59:35,800 --> 00:59:40,740 And then after that, we'll have a meeting with anybody who's in the Defined Contribution Program. 637 00:59:41,100 --> 00:59:44,440 Those will be group meetings to answer general questions. 638 00:59:44,860 --> 00:59:58,460 After lunch at one o'clock, there's already an agenda of some, one, two, three, seven employees will have personal consultations with city staff. 639 00:59:58,460 --> 00:59:59,940 Um, it's- 640 01:00:00,000 --> 01:00:05,700 So that's what will be happening with us later on today. Again, it's not mandatory that anybody appear. 641 01:00:06,580 --> 01:00:12,160 Traditionally, I appear, I sit there like a bump on the log and help folks. 642 01:00:12,660 --> 01:00:23,020 Anyway, looking at our agenda moving on through, it looks as though our next regularly scheduled meeting would be January 22 at 10 o'clock. 643 01:00:23,020 --> 01:00:29,680 We met today at 9.30 because of the employee meetings and that required us to start just a little early 644 01:00:29,680 --> 01:00:37,100 We're going to go back to a 10 o'clock meeting schedule in January and again if you have ideas or 645 01:00:37,100 --> 01:00:41,800 Suggestions that we should discuss let's definitely know she can put them on the agenda 646 01:00:41,800 --> 01:00:46,420 It would be helpful if we could redouble our efforts to trying to find 647 01:00:48,760 --> 01:00:51,480 Another person to be on the committee so we're at full strength 648 01:00:51,480 --> 01:00:57,800 Any comments from the City Council today that you'd like to share with us? 649 01:01:01,620 --> 01:01:06,980 Just very briefly, back to the idea of an additional member of the committee. 650 01:01:07,160 --> 01:01:22,760 I think with the new website launching soon and some other things that I think are happening in terms of making volunteer opportunities more public, we could be optimistic that we could more likely capture somebody. 651 01:01:22,760 --> 01:01:30,780 So, there are things in the work, works regarding volunteer opportunities in general that I think might serve us well. 652 01:01:31,100 --> 01:01:32,260 That's all I have to report. 653 01:01:32,940 --> 01:01:40,860 I have a question. Do you have software that allows for you to be kind of a, it's like a portrait mode. 654 01:01:41,300 --> 01:01:48,740 You're bright and shiny and sharp, and then your background is blurred so that your image bounces out. 655 01:01:49,000 --> 01:01:51,000 It's a great software that you've got there. 656 01:01:52,140 --> 01:01:56,960 Oh, yeah, it's just part of zoom. I'm on the road. I'm sitting at the at the base of Mount 657 01:01:56,960 --> 01:02:05,280 Shasta at the moment in my in my camper van. Oh, that sounds like a Willie Nelson song on the 658 01:02:05,280 --> 01:02:12,440 end. I just can't wait to ask about that. Anything else for the good of the order for anybody here? 659 01:02:12,860 --> 01:02:15,500 Did we do the public comment yet? Oh, 660 01:02:23,890 --> 01:02:26,130 all right. See you in January. 661 01:02:31,440 --> 01:02:35,860 We're going to adjourn this meeting right now unless there's anything else that people would like to speak with. 662 01:02:36,260 --> 01:02:39,720 And again, welcome, Stephanie, and keep us informed. 663 01:02:40,320 --> 01:02:45,920 And we are fortunate to have a really good city staff here. 664 01:02:46,900 --> 01:02:47,560 Thank you. 665 01:02:48,320 --> 01:02:48,980 Thank you. 666 01:02:49,400 --> 01:02:50,000 Thank you. 667 01:02:50,480 --> 01:02:57,460 You know, we said there wasn't a lot of defaulting, but I kept reading that it was default on less than prime car loans.