Good morning. We will call to order the August 8th, 2024 budget finance and taxation committee if we can do a roll call please. Gertis here. Montenegro here. Big Sanders. Yeah. Hannah Witts. Thank you. We have an agenda in front of us. I'll entertain a motion for approval. All in favor. All right. Any opposed? Motion carries. We have minutes from July 25th, 2024. I'll entertain a motion for approval. All in favor? Aye. Any opposed? Motion carries. Okay, right into new business for today. It's the annual review of the city's fiscal policies and proposed changes. We've got a couple of items today. Then we're going to go into budgetary analysis and the quarterly financials. But first we'll look at fiscal policy and proposed changes. We've got a couple of items today then we're going to go into budgetary analysis and the quarterly financials. But first we'll look at fiscal policy and proposed changes and we'll welcome Livs Mkoski budget and management director and Eric Langans, our chief financial officer. Welcome. Good morning. We'll pass it over to you. Okay, so we have six items that we're currently looking at recommending approval for fiscal policy changes for the current year. And we are planning if the committee approves to bring this back at the same time as the public budget first hearing, which is September 12th. Her City Council approval. The first one is part of that annual the multi-year plan that we have to increase the general fund target balance to the fund balance equivalent to two months or 16.7%, which is what is recommended by the government financials office association. We're currently at 12% and we're recommending to move to 16.67% for FY25 and that would get us a little closer to that 16.7 target. And if you look on page 6 of the fiscal policy's markup, you can see the change that corresponds to this change there. We're also looking at target balance changes for four other funds. The first one is a technology infrastructure fund, which is part of the general fund group of funds. And currently that fund does not have a specific fund balance target because it isn't that group of funds, but this is also where we collect departments Pay into the fund for future laptop and tablet replacement So we wanted to identify those funds that are coming in from the department as not be as the target fund balance to make sure They're not spent on anything else besides that purpose And that's also on page six of the fiscal policies. The next three are related to human resources funds. The first one is changing the health insurance fund. The current target balance is 25% of the budget plus the incurred but not reported claims. And we're recommending changing the target fund balance to just the 25% or three months of the current year appropriation. And this would match up with the GFOA, the General Government Finance Officers Association best practices amount. And this is located on pages seven and eight of the fiscal policies. And the next one is the General Liability Claims Fund, which is currently set by an annual, annually by an actuary study is what's in the fiscal policies. We wanted to make a little bit of a change to that, and also the same kind of with the next change, which is the Workers Compensation Fund, which currently says target is 75% of long-term liabilities. We wanted to change both to say that the target fund balance is set by the 75% confidence level of the annual actual where we study, taking into the consideration the annual appropriation amount of the fund. So those two would match and that's pretty much what we've been doing, but we wanted to make that language a little bit more clear in the fiscal policies. And those are both on page eight. And Eric, would you have anything to add to those? Especially the next one. The last two I think is really just clarifying technically where we're pulling these from. So we have that continuity of where are we getting the annually set by Actuarial Study or 75% of long-term liabilities. Those weren't very clear of where we were getting the numbers and we received those from the Actuarial Study at the 75% confidence level. So it's clarifying that language to practice at the city. And the last item is kind of a cleanup of existing language on page 15. The current language says that the payas you go improvements, that's in the payas you go improvement section states that the annual rate study for FY21 was a 40% cash and other resources and 60% bond funding ratio and it will be reviewed annually as part of the rate study to increase to the 50-50 target. Since we are at that 50-50 target, we wanted to remove that language, that reference to FY21 rate study, and replace it with language dating that the target has been met. Many members, any questions? Council Member Reynolds. Thank you. I just have one question on the fund balance reserve target. And for those that are watching, just historically, we're at 12% now, right? And obviously the GFOA recommendation is two months, which is 16.7%. First of all, I guess how long have we been at the 12% fund balance reserve target? Has the GFOA recommendation for two months been the same for a long time? And what has been going on while we're here? And just kind of explain that. So I think when we first created a target, we went to 5%, which was the amount of funding that we had available in the general fund at that time. Okay. And knowing that we've always wanted to start moving towards that target and as we got past the great recession and started coming into some better economic times, we came up with a plan to start trying to get us to there. So we started out at five. We went the first year we stepped up to 10 and then that was, I think, an FY 23. FY 24 we stepped up to 10 and then that was I think in FY 23, FY 24 we stepped up to 12 and now we're going to step up to 14.67. And so it could be a four or five year plan depending on how the economy is next year we could go to 15.67 and then go to 16 or we could jump straight to 16. It just kind of depends on how the economy is looking next year. And it's also one of the reasons why with the economic stability fund, how we've kind of kept that transfer at half a million instead of one million is because we're trying to meet this goal. So we're trying to do a little bit of bold at the same time. So it's one of the reasons we've kept that at the same level. And once we achieve this goal, we can look at increasing that amount as well. Okay, and when we were at 5% and you mentioned the Great Recession, what we at 5% for a long time is that where we had just kept it. And Tom, maybe. Yeah, I can shed a little more light on it. And it's a little bit of a long story because when we were in the midst of the great recession quite candidly, it was a challenge to keep the lights on and a lot of departments in our operations. So what we did is we constructed that general fund group of funds to ensure that we had enough in reserves to cover 20% of our operations. So we were exceeding in that aggregate, the General Fund Group of Funds, but we had an individual target of 5% on our pure operating fund. So, and then as Liz has discussed, we've started to ramp that up so that we have truly in our General Fund, our checking account, our checking account. Right, so but in the aggregate, we were still exceeding what GFOA recommended. And that's a little bit convoluted, but that's kind of the strategy that we worked up back as we were starting to recover from the great recession. Okay, I appreciate that. Thank you so much. Thank you, Chair. Council member Montenegro, thank you. I wanted to talk about the Can you just tell me a little bit more about the the language of the 75% confidence level of these annual actual or actual aerial studies Can you just yeah, hey Blaze can you can I walk me through? Sure, so what we do each year as we do, an actuarial study for our funds for workers' compensation and general liability. So the actuarial comes back with these parameters of where they feel you could be. And the confidence level at 75% basically means that there's, we will be able to pay out our claims at a rate that is acceptable within the 75% range. And that includes incurred but not recorded. So claims that might have occurred but we don't know about things that might have occurred but maybe take a swing elsewhere and as well as the operating budget. So there's different ranges. So you start out with 50 and then you'd go to 75 then you do 90. 90s on the top end. It's basically fully funding what you think. And we use a reserve. So what we do is we say when a claim comes in, let's say it's an auto accident. We say that claim might very well be $25,000. We put place that reserve on it. That information then that when we say the actuary study, they take into account essentially what we've reserved. And they also take into account how other people have factored in and how our history has factored in. So, if we under reserve stuff in our division, what would happen over time is then you would see them tack on like additional monies to the confidence level. So your confidence level, your range of dollars would grow because you're under funding or you're underestimating your reserves. So we try to get our reserves as close as possible. Sometimes we're over, sometimes we're under, sometimes we're right on. But essentially the 75% gives us the confidence based on our history to say that we will be able to pay all of our claims within a range. 50 is a little, we feel is a little light. 90 is just outside the bounce, which is to be too much to try to fund. And we know that we're not going to pay out that amount of those claims. And in Workers' Comp, it's the longevity of claims. So you have a different parameter there. The liability claims you're looking at a snapshot of three, five years or so, because they're going to ultimately pay out at some point. Workers comp could have an injury now and you could be paying on that for the life of the individual. So it's a much longer game in that realm. Okay. That's the help you answered. Yes. It does. Who does the studies? We have a company that we, so what we would want to do is hire somebody outside so it's an independent. We don't want to do that actual real study, obviously, just like an internal audit or something like that. We want to do an external, because we want another party to review it. It's a company called AMI Consultants. We've been working with them for years on both the liability and the workers' come. So they're very familiar with their history, and we give them data going back years and years. So I mean, we're talking back to the 90s they have on file for us. So they can see the pattern at which we pay out claims and the historical approach that we take. So we work with them closely to determine and we explain how we reserve things, home workers comp as well as liabilities. They have a firm handle on what we anticipate. So that's... Okay. And what's the variation, especially on the workman's comp? Does that go fluctuate up and down dramatically year to year? Actually, no. We've not gone with. We've had some really good history in the last few years. It does, as with anything else, medical bills are going to increase, and we could have potentially a backlink. But it doesn't. It's not off the charts range that goes up. I mean, we're talking a couple million dollar swim one way or another. Right now we are sitting very good for this year on our reserves. What we've reserved, we actually as of today we're down a little bit on the amount that we need to reserve so I'm hopeful that we will even improve or stay at the same amount. You would expect the workers' comp to just continue to go up based on claims because we still have claims coming in although we do a really good job city wide with safety, there's still going to be accidents. There's still going to be things that happen. But at the end of the day, we've seen it very much stabilize. We compared to our peers, we have a workers' compensation modification that's an experienced mod. So one is where you really want to get as close to. And in years past, we've been as high as like 1.5. That's a big swing. close to and in years past we've been as high as like 1.5. That's a big swing. This year, the last few years we are at 1.04 and then 1.12 which is a big swing down which means that we are trending in the right direction from our as compared to other self-insured entities. Okay, very good. Thank you for answering my questions. I do have, I want to visit the page 15 and the economic stability fund. This came up last week at the committee the whole meeting. I still, I think it was page 15. It might be wrong. AJ? That may be its eight. There it is. Thank you. So, I've talked about this before. I put in a new business item, BFNT, discussed it. In 2021, administration came to me, I was chair of BFNT and city council, wanted to do some loans out of the economic stability fund for affordable housing. We had a discussion of BFNT. We made a, had a resolution drawn up to allow loans out of the economic stability fund, capped at $5 million. And then earlier this year, it was January this year. We had a housing project that came to City Council was approved on a split vote that included an additional $6 million loan from the Economics Development Stability Fund. So we're currently at over $10 million, approaching $11 million loaned out of the economic stability fund. And I want to know, I made a recommendation to add a sentence on page 9 of paragraph 4. per graph for and just add the language the maximum amount of the intent of interfund loans will not exceed $5 million. What did administration have any any discussion about putting that sort of language in. So I recall that conversation council member and quite candidly, I think we missed that. We can have another discussion of that and bring that back for consideration at the next iteration. Our preference though would be not to provide some limitation on that simply because we like the flexibility of being able to utilize resources that are available to the city. a defined repayment plan and a way to return those resources. We feel comfortable if we're advancing a high priority that we will return those funds in a defined time period. And so having that flexibility is attractive from our perspective to continue to invest in priorities of our city and using the resources that we have. Like I said, as long as there is a defined repayment plan and it's a defined time period, we would prefer to continue to have that flexibility. point back to, you know, you mentioned when we designed the first kind of credit facility of $5 million to invest in affordable housing projects, you know, each time we advance to a developer, we have a plan of repayment over 10 years to make sure those resources are coming back. On the second one that we brought for the deuces, we have two different sources of repayment. One could be if there's a land sale, we would certainly first look, you know, if we liquidate land that we own, we would first make it a priority to return those resources to the economic stability fund. If that doesn't happen between now and when we construct those town homes, we have a payment plan for those town homes that they would, as we sell those units, we would return resources to the economic stability fund. So, you know, not to be redundant, but, you know, to be able to have the flexibility to use resources that the city has and not have to seek outside financing, it just provides us some additional flexibility that we can use for purposes of advancing priority initiatives. So let me just respond to what you said because it kind of flies in the face of the logic of what we got written in our fiscal policies. Because it clearly states that the economic stability fund will be used in the event of damage to city property, law, city assets, due to disasters of hurricane, tornado, wind flood, terrorism, public health emergency, other catastrophic events when such event results in the declaration of the state of emergency, other funds of the city, such as the economic replacement fund, self insurance fund, and technology infrastructure fund, will be used first as appropriate to the circumstances before relying on the economic stability fund. And then, like I said before, in 2021, the city council passed a resolution, capping it at $5 million. So to me, $5 million was what City Council approved in 2021. I think it's absolutely appropriate that that language gets in there. And I understand what you're saying. I mean, we all want affordable housing, but we have to be fiscal stewards first. And this is the piggy bank that's not supposed to be broken, just in case things really go south. And so I hear what you're saying, but it runs counter to the rest of the fiscal policies. So I'm going to go ahead and make a motion to approve what the fiscal policies that have been proposed by administration, with the addition of the language to this part of the fiscal policies that the sentence be added the maximum amount of Interfund loans will not exceed $5 million. Okay, just quickly, this was an MBI from you I think a few months ago. I think it was my recommendation to keep it on the referral list, but you wanted to vote on it and we voted and it failed. And so you're trying to add it back here today. Okay. Any questions, Council Chair, Fick Sanders? Thank you. I just wanted to interject since I was here for both the voting for the resolution and that and I remember the conversation in regards to the five million dollar maximum. And it's not that it was in opposition to housing. It was using the funds expeditiously before we knew it, it would be gone if there was not a limit that was said and that was the discussion Which is how we got to the five million dollars? I will support the five million dollar limit with The exception of because it actually when you read what we're going to utilize it for and Council actually has to approve it whether it's five million six million whatever the the request is it still has to approve it, whether it's 5,000, 6,000,000, whatever the request is, it still has to go to Council for approving it. I do hear what Council member Montenegro is saying, going all the way back to the original conversation that he wanted to put more over checks and balances on this particular fund in regards to what we're making the request from and why and end the things that we take the money from this particular fund. So as and I hear committee chair vice chair Gertis as to a motion being made today, I don't I wouldn't support that that particular sentence because I still want to give the flexibility, but I also still want to maintain a dollar limit that's in writing per policy. Because if it's not written, it really doesn't happen. But I do remember as having that conversation, I do remember it's inclusion in the very rich, which is why we did the resolution. So it's like we keep going in circles, but I agree with Council Member McNair on that. We did do a resolution. I remember having the conversation. I don't know how we're going to move forward with it, but if it makes more sense, because I hear you to administrative gain, you wanted to leave that flexibility, but we have the flexibility. Even if you put the five million in there, if it's more than that, Council still has to vote on it. Do we not? Well, I guess we could have it in our policies and Council could vote to, you know, not comply with our fiscal policy, but it seems kind of a little bit counterintuitive to have that in the policy and then... Okay, so how often have we come with anything large in that? I'm trying to remember how we came to the $5 million threshold. Yeah. How do you care where we're at? Well, that was. Real quickly. Hold on just one second. Go ahead, Liz. I was just going to say that if we did add that, there's two things. If we did add that 5 million, we'd be out of compliance today. And we actually, in my opinion, we're not at the 5 million for the credit facility. We're actually at like a 4.0 something million the credit facility was specific to loans that we were making to outside developers the deuces rising was alone we were making to ourselves so that's where we had the distinction that we were not exceeding that five million number with that but though that was how we we thought those two were two different topics thank you okay council chair of the standards I just wanted to make sure you were finished I'm so so I am finished but thank you for for that explanation, because I couldn't remember how we landed on that $5 million threshold for that. So again, I want to ensure Councilmember Monteney that I hear him, because we've had this conversation several times, and it's still hadn't progressed anywhere in accordance to the resolution that has a council that we voted on. And if I'm not mistaken, was that not a unanimous vote? It was a unanimous vote. So I don't want to overlook the process. We actually did follow the process, rather. I agree on the dollar amount or not. We did have a process that council did vote on. So I'm going to leave that there. But I do support councilmember Martin Nierry's Question as to why we were able to Support a resolution and we still haven't seen a change for that. So I'll leave it there and entertain my other colleagues Conversation Councilmember Herald. Thank you chair and Liz first of all, thank you for bringing that up again because it's First of all, I've been preparing for lots of things that we are covering today. I didn't think about that, so I needed some refreshing because there are other things on my mind and I needed refreshing as to what our conversations were on this topic. So I remember the whole out of compliance, now conversation, and it was regarding a loan make, you know, being made to ourselves. Here's the thing, I mean, when I read this policy, there are different sections to this policy, right? And they all can apply. I mean, there's also the section that economic stability may be used for short term loans when you're less, or long term term loans exceeding one year and length to other funds of the city for short falls due to economic impact or for other purposes. So they could I think what was done was done within the policy right as it's written right now. So I understand there could have been a resolution by a City Council that I was not on on 2021. There are lots a resolution by a City Council that I was not on on 2021 There are lots of resolutions by many City Councils that I've not been on that doesn't mean and correct me if I'm If I'm wrong legal am I completely bound by a resolution or can I make we can make other decisions? That other council members, you know decided to put in a resolution form 10 years ago. A resolution is in binding. Anytime you could pass a resolution that is the opposite of what the law is. That's exactly right. So I mean, I appreciate that there was a council that had opinions back in 2021, about 5 million. But that to me, and it's been brought up another, another, look, it was brought up in the historic gas plant. I understand that, but I also look at the current council as it is. And there are people on our council, including me and others that were not there. Look, that vote went the way it did, and I know that, you know, it didn't go the way you wanted to vote to go and I understand it and it was a hard vote for many but I think these issues were discussed at that vote by the majority of city council. So we actually have I think a kind opinion on this fiscal policy and we're rehashing to revisit something that frankly was already considered by the majority of city council. So I don't think I appreciate the fight in terms of bringing up that language, but I think it's already been discussed. And I'm fine with it. Now I have no problem discussing it in the future. I know that the loan obviously is supposed to be repaid. If there are any issues with that and we need to revisit, obviously the loan repayment issues, then maybe we need to revisit that. But I'm fine with it. So that's my take on that chair. Thank you. Thank you. Council Member Montenegro, Thank you. Thank you. So We did I did put a new business item in we did discuss it discuss it here VFNT We took a vote at BFNT. Yeah, it did go up Then vote didn't pass. I think she's talking about the deuces live not the I just want to make sure yeah, okay. Yeah, okay. Yeah, all right. Yeah, I just wanted to make sure we're clean. Yeah, I was. Okay. Yeah, I just wanted to. Yeah, sorry. So, um, and I totally understand where you're going with on resolutions that prior council members have last and my rationale for bringing this item for at a previous BFNT meeting was to quantify it and put it into our fiscal policies. So we don't go continue down this road and continue taking loans out of the economic stability fund. I'll leave it there. Okay. Thank you. Liz, thank you. Liz, thank you for bringing out that if that motion were to pass, we'd be in violation today. I certainly have a concern about that. I want to bring up a couple of things. And I apologize. I didn't bring my budget book down, which is not normal for me on these back-to-back days. I get a little whacked out. So currently we're at 12%. That's the target. What do we actually sit at from a percentage point in general fund balance? I don't know of the top. I mean, can you ballpark it? What are we anticipated to be at at the end of the year from a percentage standpoint? So for I have the dollar amount I'd have to calculate. Sixty-not it's like sixty something million. We are looking to be at sixty eight million at the end of FY 24 based on the third quarter estimates. Okay and so based on third quarter estimates, if we were to use that number, what percentage of target fund balance would we actually be at? Sorry, I'm making you do the math. Sorry, and it's gonna be estimate because there's some stuff that I'm trying to figure out. Yeah, absolutely. I get that it's not exact. 18, right? So a couple of points above where the actual target for or whether it's 25 or 26 is, right? If we're about 25 million over the 12 percent target and 30.8 million over the 25 percent target. Okay. So I just want to make a quick point. I obviously have support of the economic stability fund from the very beginning. I support that. I have always looked at the economic stability fund from the very beginning. I support that. I have always looked at the economic stability fund as an in-between to the general target balance fund because I believe that the general target balance fund is the true backup savings account to the city. That's the economic stability fund is in there to go and use, which is why we try not to go to general fund balance because that's the backup. That's the backstop for better. And we are above where we're going to, we could frankly move this target today to 16.7 and we would be in compliance. And so I struggle with putting more constraints on the economic stability fund because we are being conservative on target balance fund above and beyond what GF-A-O-A is asking us to do. And I am here for at least another four and a half more years. I have no intention of messing with that number. And so that's where I struggle with the economic stability fund because I want us to be able to do some of these projects that need help because of interest rates rising or whatever inflationary pressures to be able to get these things done. I can appreciate the deuces project being a little bit of a wild card because of everything that's happened over the history of that project. And it was a relatively big number but I struggle putting more constraints on the economic stability fund even though I very much support continue if I've supported going from 500 to a million right behind you in the last three years I've been here. So I just I just wanted to make that clear because we're really we're it's it's like we're doubling down. And I do think there should be some flexibility inside of economic stability fund to be able to do those projects that we've talked about. Okay, question. The motion as is, if it were to fail, does that mean all of the other changes fail? No. We could come back and vote. We'll back with a motion to just do what has been presented. Okay. I just wanted to discount double check real quickly to make sure we weren't shooting ourselves in the foot. Council Member Monter, did you have, I thought I saw your hand. Um. I saw your hand. It does bother me that we brought this up. I've been talking about this for a while in that administration didn't even consider me. I want to amend what I said because I think I was thinking of what I should say and what I, the second part of my response is really what we talked about was the fact that the limiting of our flexibility with respect to the overall resources that the city has. Now, so that's, I think I got started off on the wrong foot, so I apologize for that. But as we had the conversation, I started to remember the discussions that we did have. And so my apologies, and I just wanted to clear, that's at the record straight. All right, I just wanted to thank you for that. And I support, of course, I'm gonna support the motion that I put forward. I support the other judge, I'm going to support the motion that I put forward. I support the other. Okay. We have a motion on the floor. Any other questions or comments? Can you please repeat the motion? To add to paragraph four of the economic stability fund paragraph on page nine. One sentence, the maximum amount of interfund loans will not exceed $5 million. Okay, thank you, sir. Before we vote, I'll just say that Council member Montenegro, I would certainly be willing to look at this item again. If we were in compliance, if we were to vote positively, if I were to vote positively for this, if we were in compliance the day it happened. And so if we were to vote positively, if I were to vote positively for this, if we were in compliance the day it happened. And so if we sell a parcel and we pay back the dooses live and we are in compliance of that, I certainly would be open to that motion at that point. Just wanted to, I just wanted to put that on the record. All right, let's do a real call vote. Gertis, no. Montenegro? Yes. Fixanders? No. Hanowitz? No. Motion fails, one to three. OK, I'll entertain a motion to accept the changes as presented. Move approval. Let's do a- Let's do a- Let's do a- Let's do a real call vote. Curtis? Yes. Montenegro? Yes. Fixanders? Yes. Montenegro. Yes. Big Sanders. Yes. Hannah Witts. Yes. Motion passes unanimously. Thank you. Okay. Let's move on to our second item for today. Third quarter budgetary analysis and fund and fund balance reports and same team. Here we go. All right. Good morning again and as the chair just mentioned, we're here to go over the FY 24, third quarter budgetary performance report. I'm glad I didn't say FY 25. I think I'm here to say FY 25. So if you look at our first attachment, which is our stoplight report, the beginning fund balance of the general fund for FY 24 was 71.331 million. Of this amount, 1.763 million was the original BP settlement funds. There is a second report in the second attachment of this report, which is the BP status report, which provides additional details on the specific projects funded with BP resources. This report does not include the additional 1.64 million of BP funds received in December of 2021 as these funds have not been allocated yet. And so the revenue is included in the general fund beginning balance on the stop light report, but doesn't show on the expenditure estimate until the plan to spend the procedures approved. So when looking at this report, there's 41 operating funds citywide, which we report on, and of these 41 funds 37 are, or 90% are operating within an acceptable variance of plus or minus 2%. Revenue projections at three funds appears to be 5% or more below budget expectation. This is shown as red highlighted on the report. And an additional fund is showing as yellow, which is between two and 5%. On the expense projection side, there's nine funds that appear to be between 5% or more below and another five that are between two and 5%. As it relates to budget fund targets, there are four funds are projected to be 5% or more below target citywide. Looking specifically at the General Fund Revenue, the projection for the third quarter is 375.940 million, which is about 8.7 million over the amended budget. The General Fund Revenue Estimate is an improvement over our 24 amended budget amount and our second quarter, FY 24 revenue estimate, and we're looking at 8.724 above the amended budget amount. The updated revenue estimates that are showing increases over budget are utility taxes, interest earnings and investments, charges for services, sales taxes, and state revenue sharing, grandchise fees, property taxes, the community service tax, and business taxes. We do show grants as being under budget, but this is due to timing of receded these grant funds, and they'll be rolled over to next year for the ones that we did not receive in the current year. On our general fund expenditure amount, the projection for the third quarter is $385.1 million, which is about $1.858 million over budget. The overages mainly do in the salaries categories due to over time in our fire rescue storm-order pavement traffic operation departments and our engineering and cap and improvements department is over as well. If we look at both revenue expenditures together when we control for incumbrances, we're projecting that we will use 3.09 million of general fund balance and FY 24. This is an improvement over the amended budget which contemplates the use of 9.956 million in fund balance. We discussed this in our previous item. The City's physical policies establishes two fund balance targets that are applicable to the general fund or the general fund group of funds. The first target states that the unappropriated fund balance of the general fund will be 12% of the annual appropriation in the fund, excluding any transfers to the economic stability fund. This target was increased from 10% as part of our FY24 physical policy changes and part of a multi-year plan to bring the target balance to 16.7% or two month of appropriations. We're projected to be over the general fund 12% target balance by 25.063 million at the end of FY24 with an estimated ending fund balance of 68.2 for 1 million. Sorry, Liz, I could have just had to use this page. Yeah. Instead of pulling off the calculator. I was going to silo. That's my bad. I could have brought it up. I didn't. Just turn the page, Gertis. The second target applies to the general fund group of funds and it's to have an unappropriated fund balance in the group of funds that's equal to 20% of the collective appropriation in these funds. For FY 24, the 20% target equates to 72.305 million and based on our third quarter estimates, we project that will have an ending fund balance of 103.98 million which is above the target by 30.793 million. One of the other attachments in the report is the American Rescue Plan report. We have approximately received 45.414 million ARPA funds and all resources have been allocated to projects at this time. Of this amount, 44.164 million has been appropriated to projects as of the third quarter. The remaining 304,000 for the Healthy Food Action Plan Program was appropriated in July. So on the fourth quarter report, it'll show all the ARPA funds is appropriated. And finally, our final attachment is the Quarterly CIP Project Closeout Report. And during the third quarter, we close out a total of 13 CIP funds. Any questions? Committee members. Nothing on budgetary. I just have one question Liz. In your slide, on slide three the bottom bullpoint said, oh, fourth, I'm sorry. I think you said five, but it says four, because on the stoplight I counted four and I was like, wait a minute, there's one missing. Because the ones above are 5%, I think I just heard five over again. So I apologize for that now just rereading it. And then is Blaze still here? Or did he leave? Could we just quickly talk about the health insurance? I mean, that's a pretty big number in comparison on the stoplight. Can we just touch on that real quick compared to the other funds that are below? Some of the adjustment for the fiscal policy for that one because right now the fiscal policy is 25% plus IBNR, which in my opinion we were looking through it was doubling. Okay. Yeah, so we're putting it to the 25%. So when, after these fiscal policies are changed in 25, that'll be a significant difference compared to this. It'll be in line. But we'll still be below target. Yeah. We're still, just not nearly as bad. There's been, like we have a plan we're slowly getting there, but we also don't want to affect the city's budget for, because all the other funds pay into it. So we're kind of gradually increasing that amount to get to that target. And so, and just, and you may not have this answer and that's okay. Is this because of premium increases or is this because of claims experience? This IV&R is incurred but not reported, so that'll be claims. Okay. experience. This IV&R is incurred but not reported so that will be claims. But claims are in medical so it's different than the workers' company. Right. The liabilities are longer term. These are short term. You're incurred but not reported. Generally are paid out in three or four months. So that 25% captures kind of the same amounts twice. Right. Okay. And not to put too fine a point on it but to E Eric's point, the IBM Rs really are captured in the annual expense. So if you look at like the 64.8 million expenses, that's going to capture a lot of those IBM Rs. So we're effectively in our target double counting because we're spending it, we're covering those IBM Rs. So we're now we, we're covering those IBNR. So we're now we're just going to take that out of calculation. Okay. Alright, that's helpful. Thank you. That's all I had. Just double check any other questions or comments. Alright, then we'll move on to third quarter financial and investment reports. And I think Erica will take it over from here. And the rest of the team. I have my team with us today, Tom Hoffman, and David Gadoo, controller, so giving them an opportunity to present some sections as well to the crew. Thank you. Welcome, welcome. Good morning. It's a pleasure. And if we're ready, we'll go ahead and start out with the quarterly investment report. And just a reminder, we report on face amount, which is the bond, it's the face amount book value. It's going to be plus or minus discount premium and then the market value and the market values for reporting here as of June 30, 2024. Looking at the city's two policies, with the general policy, the general managed by the city, book value of 1.185, market value 1.68, so we have a $16.2 million unrealized loss. The alternate policy, book value of 32.4 market value of 49.3. We have a market value gain there just under 17 million. So with the two policies combined together we have a 1.2 billion dollar book value, a $1.2 mark billion dollar market value. And we're at about six just under 700,000 plus there. So the two offset each other in our policies. Now we're going to get a little more granular as we look at the cities manage portfolio. We've got the five port policies. We get the five portfolios up on the screen, the short term, 154 million with a market and book, no, the interloss there. The long term, 775 million book, market value is 760, so we have a loss there, just about unrealized loss of 14 million, debt service service 30 million Drop break even bond proceeds 159 million again about break even the water cost stabilization fund 67 million point three market or book value 65 market values or 2.3 million dollar market value loss there. And then moving into the alternate investment policy, the four portfolios there, the Water Call Stabilization Fund, also known as the Index Funds Market Value of 30 million compared to the book value of 16. So we have almost a $14 million unrealized gained their parks preservation, 15.9 million in the book value, 18.8. In the market values who $3 million unrealized gain, copsack, $180, 181,000, book 176 market, slight loss there, and then Gene Stacey, seeing $185,000 in book value 101 in the market value so it gained there. So looking at the individual portfolios and those holdings. The next few slides, we get into the little more granular as we delve into the individual funds. This is also in the packet that you receive. So I'm not going to go through line by line here. And it's really not much different than we've seen in the prior quarters. If there is something that jumps out at you, please let me know. But it's just a more granular look at at what we've been seeing as we do all down on those. You can see where it's coming from on those pieces there. Now looking at what our activity was for the quarter. What we have up on the screen now is the purchases that we made into the portfolios. The individual instruments are up there showing the market value or the credit ratings. The annualized rate of return at the time of purchase. Looking at the lower We purchased 85.5 million. We had calls and this is a condition of the market where we see interest rates changing. So we've had a call. Tom, 58 million of purchases, not 85, right? Just double check. Okay. I just want to, yeah. 58. Yep. Thank you for that. The activity on the calls, 29 million in the calls, matured 54.6 million in maturities during the period. There's some activity within there. Now looking at the returns and what we have up on this screen now, we're showing by month. And these are our money markets, which would be the Florida Palm and the SBA Those rates have been holding for a while now Good rates to look at that 5.4 each month So for the quarter for the money markets 5.4 for so this is our short term overnight money Looking then at the city managed with the holdings and seeing that come in at 3.76 rate of return for the quarter and when we combine the two together the short term and the long term money markets here looking at the very bottom there in the 3.24 and then over the last 12 months 3.92 rates better than what we've seen over.24 and over the last 12 months, 3.92. And rates better than what we've seen over the past several years. Now moving into the area of compliance in the liquidity, we have a requirement of two months of operating, which is calculated to be the 145 million. We have comparison to that under the calculation, 562. So we're green there. We're good on compliance in the liquidity. In the diversification, this is looking at the compliance within all the different areas. I'm not going to go through. We can see them, but we're in compliance all the way through in this area. So on the diversification schedule. Credit, looking at our credits come together, categorize where the funds are at. And reporting, we only had one change, quarter over quarter. And that's up on the screen right now. We saw a rating of A go to A plus going in a favorable direction. On our index funds, we reporting up on the screen now, showing how we calculated it. We bringing in the 20 million and now showing what we need and it's the important piece that is on the yellow. And I'm just going to stop you just for a second showing we're going to see from the last quarter to this quarter that that threshold would have changed. We're at 33.3. When we ended March, we read a trigger point meaning that we were over the threshold that requires us then to sell off. We take half of the market value gain over the threshold. We liquidate that. We transfer that, which was about $1.6 million, that money then goes from this fund into the water operating fund to help mitigate the utility rate increases in there. And so we can see up on the screen each time that we've had, hit those thresholds and we're at the, so the index funds during the time that we've had them have done very well for the city for the water operating fund. Our new threshold is the 33.3. We'll be monitoring that and the optimistic that we'll reach that sometime in the future again. I'm looking at the individual different holdings that we have there and seeing the funds that come in, the dividends that have come in cumulative. So from inception till now, inception back in February of 2015, we've been addition to the market value increases. We've also had quarterly dividends come in at five and a half million dollars. That is the first section of the report that we have. Committee members, any questions? Council Chair for Assembly. I don't have a question. Just a correction. I don't know if you're going to use the slides for anything else, but just a typo on slide 23. OK. Thank you for that. Yeah, there were purchases. I didn't know if you wanted to correct that, moving forward. Since we use these slides over and over again, we don't want to replicate that in future quarters. So yes, we will go ahead and make that change. You see it? Slide 23, 1, 2, 3, 4. Rolls down. Got it. Got right. All right. All right. All right. All right. Keep rolling. The parks preservation fund, the Wiki Watchi looking. We're at and in the middle column there is what's happening. School year. So we've had investment earnings of $370,000. Gains losses just under $2 million. But what's important there is showing where we're at with our fun balances and what's available to us. And on the next slide here, we we see the second part of that report and taking it all the way down to the lower right? We see that we have available $3.8 million that's undesignated as of June 30, 2024. Just quickly, I think as all of us probably know, we have an item in front of us later this afternoon that allows us to keep capital and press and a press information fund rather than reinvest essentially that's due to the science center money That is no longer going to be appropriated and so that would be in addition to this 3.8 million. That's not inclusive of that Just thought I would throw that out there for everybody. I know we have a couple of weeky watchy items coming up. So the real number is somewhere in the 5.9, almost 6 million. Thank you. Any other questions on that? Thank you, Watchy. All right, let's keep rockin' a roll. Debt, all the fun stuff. David, what you're doing? The finance department. I'll go over it, Dad. In this slide, we have our general government outstanding debt by issue principal and interest. We have the solar panels issue, peer, peer approach, the JP Morgan 9 advolom Revenue Note, which have quite a few projects in it. Fortieth Avenue Bridge, Shore Acres Rec Center, Main Library, and James Town improvements. And also the pro sports trap that was refunded. We have the principal and interest outstanding. And the only change from this from quarter to was we had interest payments this past quarter of about $800,000, almost $800,000. That's what those numbers have come down. And the principal is the same. On the next slide, we have the same information, but we're roughly representative also by issue. Down the next slide we have similar information but by fiscal year of principle and interest outstanding. And you can see 2024 it's absolutely. Now we have our fiscal year 24 payments. And on the next slide we have where those funds are coming from to for the debt service. Penny for Penalas, General Fund Transfers, IRS subsidy for the solar panels, TIF transfers. And on the next slide, we have Water Fund Outstanding Prince Foreign Interest, Graphically Representative. You can see the two big columns on the left were from the band in quarter two that we issued. And that's going to affect water and storm water on the next slide. Here we have storm waters outstanding principal and interest by fiscal year. The first two are from the band. In the next few slides we have sanitation. It's on the next slide and there's no really changes in this one from the prior quarter. It's Prince 1 Interest Outstanding. Next slide is the Marina Funds. Prince 1 Interest Outstanding. Also, no changes in this one from quarter three. And the last slide is the Equipment Replacement Fund, where we roll at least, and there's also no changes in this graph from last quarter. Any questions on debt? Council Member Monterey. Just real quick with the action in the bond market on Monday. Any, are there any bonds that might be, we might be looking at a refunding? So we work with our fiscal fiduciary advisor on any refundings that might be advantageous to the city. We have some possible calls we are going to be doing on public utility. So we have 10-year calls on those. So we have 2014 that we are going to be refunding next year when we issue the new money for the band. So public utility, you'll see some activity in spring 2025 for some savings on that. But other pieces have not come up yet as a point to refund with the changes. Thank you. Yeah, we talked to to refund. Okay. With the changes. Okay. Thank you. Yeah, we talked to them all the time. Yeah, I bet. I bet. Okay, if there's nothing else, we'll move into pension. All right. So the pension quarterly report, for those listening, we have three separate pension plans that have their separate boards that invest and allocate to different types of investments between equities, alternatives, and fixed income. So each of our three pension boards will have different allocation types and strategies to meet their needs. The first slide is our employee's retirement system. That for the quarter-ending June 30th had $540 million market value. So we at that snapshot have a $41 million gain over cost. The next slide, we have the Fire Pension Plan. This at June 30 has a 322 million market value with a 76 million unrealized gain over cost. And police pension plan has 521 million in market value with a $69 million gain over cost. The next slide is I think a very interesting one to look at because this is a graph of the three plans and their investment class and their market values at 630. So you see how they all have different allocation plans to meet their long-term pension liability. So that's a very interesting piece to look at. Domestic stock continues to be a large percentage of each of their compliance and their portfolios and what they allocate to. But after that, they get into different types of investment strategies. Which you can see on the next page over time can change how our snapshot of percentage funded for actuarial accrued liability can end up compared to their total assets. So fire has a larger balance of fixed income and international, or fixed income international than other ones. So we've been trending over 100% actual accrued liability and we have still positive amounts in ERS and police with the current markets and their allocations at about 85% for each of those. Over time, if we see fluctuations in interest rates and how the stock market's doing, these are going to fluctuate as well. But generally, we've seen very positive percentage funded for all three of the plans. And I know from speaking and working through the administrative side of all the pension plans, they all have their own investment consultants that is monitoring changes in markets and strategy all the time and updating their allocation, looking at different investment managers, looking at the fees we're paying changing the market's strategy all the time and updating their allocation, looking at different investment managers, looking at the fees we're paying and doing their fiduciary responsibility to meet the needs of each of their three pension plans. Because they each three have their own mortality tables and specifics for their demographics within their pension plans. They definitely each are looking separately at what their needs are. So it's very interesting to see their allocation of assets and their plan for the long term for those. Any question on pensions? All right. First is actual. Liz did a wonderful job talking about our budget first actual. What I have included in the PowerPoint is a graph of sources of revenues. I like to look year over year at the actuals. And as you see, our property taxes are the largest percentage of revenues we receive by June 30th each year. And we have other large portions as well as tax, franchise taxes, public service taxes. The next slide is our sources of expenditure driven. So you'll see that our expenditures are much lower than our year-to-date revenues that's driven by early on in the calendar year and fiscal year, we received property taxes. But we're right on trend at about without encumbrances just expenditures at 70 percent expenditures year to date so I think we're pretty on track when you look at that percentage and as usual salaries and wages is the largest percentage of cost drivers and benefits at the city. The next two slides are the snapshot of the general fund. So if you would like to look at the trends here, that's where I see total revenues is the actuals are 314 million. So we're at 92% consumed against budget for the year, which is as expected as you look at taxes, is a heavy driver of our general fund that we've received almost 98% as of June 30th. And as Liz highlighted, certain groups are definitely over our budgeted amounts like earnings and our different specific taxes. I like looking at the expenditures in the general fund as well. This is without purchase order. So this is just expenditures and you see that we're tracking at the expenditures in the general fund as well. This is without purchase order. So this is just expenditures and you see that we're tracking at total expenditures 250 million year to date. And that is about 69% of our budget, which makes me feel like we're really good on track. You add in incumbrances obviously from Liz's report. The budget first actual for the general fund is still trending very healthy. And I'd also like to remind you we have OpenGov available on the city's website so we upload all of these financials in our OpenGov transparency sites so you can go in and click down into more detail to look at further trend analysis in free time. Any questions on budget versus actual? I do that. Thank you for the presentation. Real quickly, do you want to just give the committee an overview on the RFP that's about to go out and how that might. For investments, yes. Yeah, for investments and just what that entails and how that's going to help going forward. Absolutely. We're about to issue an RFP for the city investments to have an investment advisor. So we're looking for a hybrid advisor. Right now we have active management for the Wikihuachi Parks Preservation. We're looking to add on to that some additional advisory services. So annually we go out and have an investment advisor just look at our investment policy for the city. Van costs money and we don't have the same people perhaps every year do that. So I think it would be advantageous to have an investment advisor that is continuously the same person looking at that investment policy with us and suggesting updates and they would also be assisting us in some of the reporting and they'll have tools to help us do a little bit quicker reporting out of our systems. They can also assist in bids when we're looking at what purchases we need to make. They have more access to the markets. We don't have a Bloomberg or equivalent terminal to look at the markets, so we have to go out to our brokers and look for bids. And by the time we might be looking, this is the great one for us. It might not be available. So there's a lot of efficiencies we can get through using an investment advisor for some of those components. Not giving up the management of the cities, fixing portfolio, but just having some assistance there and continuity, they know our investments then, so they can, I think, advise us a little bit better on any investment policy changes we need to year-to-year. So it'd be great just to have that resource for our team and continuity year-to-year with a professional. Yeah. That looks at that every day. We look at a lot of things every day. We can't follow the market and we can't predict. We're in a very unstable prediction times, I guess, an investment. If I knew what was going on, I'd probably be working at Wall Street. So, and I don't, these people know what's going on a little bit better than us. I think it would just be a really good resource for the city long term to ensure we're preserving our cash investments, but also maximizing some growth within that preservation mindset. Yeah, thank you, Eric. I just wanted to give the committee an update. As we've gone through this in investment oversight, I'm just super excited for you guys to get this. I'm thankful to administration for supporting this initiative. And I think it's just gonna bring a totally different level of support, especially when we're talking about going a bit. And I mean, it happens so quickly to be able to go to an institution that has the buying capacity that we just don't have is gonna be such an advantage. You know, when you're looking at a $1.2 billion portfolio, you know, what we had had 58 million of purchases this past quarter, to be able to go to straight to bid and have that connection to an institution and that buying power, I just think this is the nerd in me. The that is so powerful and then to be able to have that backstop of information and somebody looking at kind of the big picture because you guys are in the weeds of it every single day and we're so appreciative of all the work. I'm very excited for this to get out and find a partner that can support you. That has frankly been some of the best news all year that this is almost going out. So I just wanted to get that update to everybody I thought that was really important. Any other questions from the committee? Council Member Monter, I just wanted to thank you off for everything you do. Like I said, at the committee, the whole meeting that we had on the budget, I know it's been a tough time for everybody in the city. A lot of extra work to do. I also, you brought up the investment oversight committee. That's a committee that does some very good work but doesn't get much credit. I don't know Chair if you've thought of doing something to recognize them for the work that they see. So it's funny you mentioned that because of this RFP we're in discussions on how that committee plays a role and Chances are the next quarterly that comes back. We're gonna have a representative from that committee rather than just me speaking on behalf of that committee And certainly we'll be able to share our thanks, but I appreciate that feedback But they're gonna play a big role in what that looks like from an advisory services and who is selected and It'll be exciting to have one of them representing that committee here and being able to speak to kind of the work that they're doing. I will tell you that the knowledge, history, perspective that that committee brings is wide and very important. We've got some really, really intelligent people on there. It's also morphed over the last year too, so we've gotten a little bit, not that it's good or bad, but we've gotten a little bit younger. We've got some new people willing to help the city and what the vision going forward looks like and so I very much appreciate that feedback and we'll and we'll maybe have the whole committee command and we can say a big thank you that same day. Yeah, yeah, thank you. Any other questions or comments from the committee? Well, thank you again for the presentation. Thank you for all the hard work. Excited to get you some support. There's nothing else for the go to the order. Will adjourn July, or excuse me, that is not July 25th. It is August 8th, BFNT meeting. Thank you, everybody. Thank you, Chair. Thank you.