Okay.

I'm calling to order the committee seating on the first item.

Let's take let's I just want to make sure we're on the committee.

Yeah.

Let me make uh the way and are you?

I'm open to no, I'm not I'm glad you're here.

I was that looking for the oh it's a yes.

Um motion to approve the middle of September 19th.

Is there discussion?

All in favor of the motion, say aye.

Aye.

Motion's been adopted next is the 2026 internal audit.

Good morning.

Uh I respectfully request that um you approve the proposed audits for 2026 um within the scope of what I'm proposing is um our annual airfield maintenance audit, uh concessions pricing on it, which we've done before.

Um our contracts are street pricing plus 10% for it not to exceed that.

So we've done a pricing on it before um various retail and concession audits.

I work with that team to determine highest risk and what they uh desire for us to take a look at, as well as those that are just on the rotation monthly parking cashier audits, annual fixed asset audit, uh, per requirements of getting federal funding for that, part packets, and um concur expenses as we do every year.

Um we're also gonna take a look at the maintenance records process.

Um there's a process by which our uh maintenance is done, and uh we want to make sure to capture it.

And then the uh control assessment form would be that we do with four this requirements.

Keep in mind also that um the schedule is very fluid and flexible.

So if something comes up and it's determined to be a higher risk that we need to look at, then we can move adjust or alter um any audits.

Is there anything unusual this year?

No, we don't believe there.

Is there a motion to approve the 2026 plan?

Okay, no discussion on the motion.

All in favor say uh all right, motions adopted Robert Vertical Rates Securities and Derives policy.

Yeah, the next three items were policies that we didn't review at September meeting.

We said we needed a little more time.

So the first policy um is the variable rate securities and derivatives policy, and the first question maybe is well, why don't we just get rid of it?

We don't have the variable rate anymore, right?

That is not actually uh, I think wise one, because we look at short-term financing, normally those are uh variable rate.

So um, and that might be what uh I'll be bringing forward for discussing such up structure to do a draw facility for construction next year, and then do a hard public market issue in 27.

But we're still working through that with the bond bank.

So this policy's been looked at by multiple, so our uh municipal advisor, bond council, and then we went through it also looking at procedurally and dramatically and that type of thing.

There are four changes in the policy.

First one is uh related to advanced refundings, policy hadn't been updated since advanced refunding law changed, so that was updated to comply with the current law, but we're not getting rid of the whole concept of advanced fundings because you can still do one, do it taxable.

Now the policy reflects and is aligned with current law.

Um the next change is uh on the next page.

Um moving the thing forward here, it's got a little latency.

Um is this uh thought of a max rate?

Well, we do have some step-up rates in the direct placements with banks, so the section on the second page, section one short term, the variable rate securities, and to reflect what those agreements have.

If there is a default, there is a step up rate until that time of that default, and it doesn't necessarily by what was said there before.

So we've taken the uh correct step of having the policy aligned to the current uh situation in those agreements.

Um next item then is multiple pages ahead, and it is on page 12 of 65, but it is recognize, and I'm gonna try to move this forward to page 12 um while I talk.

It is that as we look at if we were to ever enter into any typo 12 agreement, um that there's rating agencies.

Uh a recognized rating agency, and so on here uh we wanted to add that if a counterparty has a rating by all that would be an appropriate one to that is practical.

Um then the last is on the next page that was something we couldn't believe existed in the policy.

We had the words bond bank instead of authority in a couple of places, but we don't control what the bond was, so we you know know that that's an incorrect uh uh it's an appropriate change.

So those are the four changes in this policy.

I do the basis of this policy.

Uh it is really good uh to have this level of documentation guidance policy.

Uh the world might change in the future.

And so instead of starting from square one, you know, I don't do not is our plot that there isn't going to be swaps and variable rate debt uh in a long-term position.

That is not why I'm advocating for this, but I do believe exchanges are appropriate, and this is a good guide into if it ever is brought up in the so Robert, why don't we ask the questions on the short term improvable rate?

And let's have one vote on all three policies.

All three okay.

Any questions though?

This particular policy.

I think your point is uh you may not use this policy reason for us just to laminate this as an option for it.

Yes, and then you that makes sense.

Good.

I think starting from zero, a lot harder than you know, already being 100 miles an hour until you just want to go to 105.

So that's what the intent of the next policy.

So the investment policy um is got really one major change, and it is just to reflect that uh when the policy was created, uh, the organization that is the state's pooled investment trust really in its infancy, and so we had a very low limit on in pooled investment trusts as a percentage of uh what we could invest in of the total portfolio.

Um, so we've and I'm gonna get to the page here.

It's this this page, which is in your document 21 of 65.

So if you change turn to 21, you'll see that uh and the two things we're changing are not dictated by state law, they were internal rigor or limitations that uh were established when this policy was created.

The first is state law allows us to put 100% of uh funds into money market mutual funds, doesn't limit it.

We get limited by ourselves to 50 percent.

Um the opportunities that exist, especially after we do an issue or we come through something like uh a COVID disruption, we got really liquid before we went into COVID, and then we had to, because of limitations on where we had to put money, we were making decisions that were made it more complicated.

Money market mutual funds that we put it they're they're underpinned by federal securities, so it is not a risk discussion.

This was a uh as far as what the underlying investment is.

It it what we had to do is we have to go and figure out different mutual funds to put dollars in and then put some down in a pool investment.

That's what we're trying to eliminate in the policy, provide a better ability to manage through uh a time of turbulence or something unexpected.

Um so that's the first one.

Money market, take it from 50% to 100.

And the second is to identify that Trust Indiana, they have uh a group of professional traders.

Um, there's over 4.3 billion dollars of state funds being invested today through Trust India.

Um they understand and they have the idea or the directive to protect principal and optimize yield.

So um I wouldn't go into any other, we are in no other uh pooled investment trust, but maintain the 25% if that ever came up if there was some opportunity or a desire to be different governmental pooled investment trust, but to move the the amount up to 75%.

Um and I think we've bumped up against the 25 before.

We were gonna just set it at 50, and then well, our internal discussion was why would we go to 50 if we had problems?

And what's really uh attractive about Trust Indiana is uh one they're uh technological uh safety issues, yeah.

Well, the say the safety, right?

That we are always worried about when move money, they have good technology, they um have dual authentication and moving funds, and so I feel good about that end, but then they also are 100% liquid.

So we could move over 50 million dollars and take it back the next day.

Or the committee explain new house operates you the two page of the general, yeah.

So um next page um it is uh an entity that's set up by uh the state of Indiana, so that it is then um as uh executive director.

I know they have traders, um, and it was established under the screen there, IC513911.

So and it was created by the Indiana General Assembly.

So I don't believe it, I believe it is just a state agency is how that would be identified.

Your point is you would like is an option that they do like correct now in all transparency.

Why you don't have 5% another percent?

Um we just went up even 25.

I said we were thinking of 50, we had bumped up against 50 on uh money market before, and ultimately if the yield is the best in Trust Indiana, that's why we said we're taking money markets to 100, let's take Trust Indiana to 75%.

Um I'll just let you know also the banking association of Indiana has been very active.

They've seen Trust Indiana move from you know just another option to uh the there's a committee that's been formed to evaluate how Trust Indiana invests the money that they've seen them become more of a competitor than an ally.

But um we uh met with a local bank this last week, and the banker that we met with was uh on that committee now and is really pushing to have more of those trust Indiana dollars, 4.3 billion, it's quite a bit.

And they have in their policies 50% both local.

Um, and they list the banks that they invest in and that type of thing.

So that's being worked through, but um, it is the highest yield usually when we look at where we put it.

So if I have awesome security of principle at highest yield and the most liquid, those three are a trifecta that uh we will go towards, and it helps us really deliver on our capital program.

Um we can't take bond proceeds that that that does trustee money, can't go there, but our PFC, CFC, ASF, CIS have that ability to uh take advantage of that safety ethic field.

Anything else you want to say about changes?

Nope.

Other questions from the committee um changes to the investment concerns question last one's really easy got two reasons we're making changes.

One state board of accounts revise the requirement.

This policy is a direct uh figure, and it was mandated by state board of accounts to have uh these nine uh items be adopted in a resolution, and they added one.

And the last one was uh, and I think it's because changes in lawsuits with uh the credit card companies.

This last one, that if a vendor charges a convenient these parts that you may be paid to enter.

So with that change, we need to reflect that.

And then they changed maize to um throughout the policy in the must now says should that is directly the change SBOMH first, so that's pretty easy.

So that's pretty easy.

The second is we're identified and working together uh with procurement.

So the policy is actually one page.

The way we have tried to have flexibility is to have like a living guidelines document and the guidelines document.

Um we would look at to say if we have to change something to make operational efficiency happen, then we view that.

But in the in the actual policy, um are we uh page page here prior to it.

Oh, yes, there it is.

So um the uh policy on the page one identified specific responsibilities of the procurement department.

Well, as we've looked at the opportunity for curement to support the business, more out uh agility and to do the work of procurement.

Procurement currently has been the technical manager and the functional manager of the PCART program, and the efficiency will come by providing a P card to the procurement department.

So now that maybe is a little control risk.

So what we have agreed and that we're proposing is that procurement not be the technical manager already finance is the administrator of all of our bank accounts be maintained and is reviewed by Forbis.

Glad you're here, Rick.

You can shake your head.

Yes, they they review our our creation of the internal control environment and the segregation of duties.

So we're we have this documented in any change.

We've plot that, and we see if we violate a segregation of duties uh construct, and so we will take on the administration of the PCAR program.

Procurement will take on the functional.

So that will be all the training, all the interaction with people dealing with uh you know teaching people procedures and doing all that.

So it will maintain strong controls and make higher B.

So that is will the policy is changing uh to identify that uh procurement's role is just the functional part, and then from the guidelines standpoint, we went through and identified uh and really the appendix is there.

I just want to be clear.

So you see how we're managing, but uh when I look at this, the appendix guidelines document that I feel we have the ability to change, it keeps and supports the policy.

So I don't know if there's any other questions related to the policies while we're bringing them forward or the substance of those changes.

Any other questions?

Or any questions comments uh ask for motion to approve all three policy policy policy changes.

Uh maybe in the motions or second second item.

Cool.

Yeah, discussion on the motion.

All in favor say aye.

Aye.

Motion's done.

Now move to forward vision.

Thank you so much.

Thanks for having us here today.

Uh our goal today is to communicate just our standard and required communications related to the planning and risk assessment phase of the audit.

Uh, we're on page 39, I believe, with your packet.

Uh, certainly want to thank you for having us here today.

During the audit, it's important that we have an open line of communication.

Obviously, our day-to-day communication is primarily through the staff with just Robert and Elias.

Anything rise to the level that needs the attention of the fact, it'd obviously go to Toby.

If you have any questions about the process or as we work through it, you're welcome to contact me.

My contact information is listed there.

Um, happy to talk through that.

The bottom of that first page talks about responsibilities and and our engagement is to audit the financial statements as well as the compliance with the federal grant requirements or the authority.

That is done as you look at the top of the next page through the application of various professional standards.

We audit in accordance with our professional standards, which are generally accepted auditing standards.

In addition, we review uh the financial statements in accordance with government auditing standards.

Government auditing standards are a little bit broader, but still focused on the financial statements.

If there are any compliance uh matters, uh fraud waste of use, other compliance matters with government auditing standards or any internal control matters related to the financial statements, they would be reported in accordance with those standards.

In addition, I mentioned the federal grant compliance audit.

That audit is conducted in accordance with uniform guidance as prescribed by the OMB.

Uh there's a compliance supplement supplement that's issued each year that guides our audit approach.

Uh the ultimate goal of the audit is to provide reasonable rather than absolute assurance about the financial statements and about compliance.

So, in essence, there are three auditors' reports, and they're all directed toward reasonable assurance rather than salute assurance.

We don't audit every single transaction, we don't audit every single compliance requirement necessarily or every single grant transaction.

We use scopes and sampling techniques to get reasonable assurance.

That said, all of those professionals say that reasonable assurance is a relatively high level of assurance.

So I want you to think about and understand that while we don't audit every single transaction, we do provide relatively high level of assurance.

And I'll go one step further even when we look at the financial statements.

Obviously, airports have very capital-intensive operations.

Um if we were to base our scopes and our materiality levels on the balance sheet, they'd be very, very high.

You have a two billion dollar balance sheet, our scopes will be very, very high.

So instead, knowing the nature of airports and Indianapolis Airport in particular, we base our scopes based on the income statement side, the operating revenues is the driver.

Because ultimately, as we look at it, the biggest risk is bond compliance.

We have a debt covenant that requires compliance.

Obviously, you have a rate model that's set to support compliance with that, but our scopes are probably lower than what some other firms may use because we don't use a balance sheet approach.

We use an income statement approach because we believe that's where the risk is for an airport such as the authority.

Uh our responsibilities are obviously to do the audit.

It's management's responsibility is to ensure there are controls in place and that the financial statements are free of material misstatements.

So, in essence, the financial statements are the responsibility of the authority.

We can't take that responsibility because we would be in uh impairing our independent.

Essentially, we'd be auditing our own work.

That's not an independent audit.

And so the the authority does maintain the responsibility for compliance and the preparation of the financial statements.

Uh there is also at the bottom of that second page a reference to the annual comprehensive financial report.

If you have looked at the annual comprehensive financial report or ACPR in the past, you will see that it has uh two additional sections included.

There's an introductory section and there's a statistical section.

Uh we do not apply on those two sections.

The middle section is the financial statement section, and that's the section that we apply on it.

So the bottom part of that second page is just simply to inform you that we do not issue an opinion or anticipate issuing an opinion on the introductory and statistical sections of the ACFR.

The ACPR is issued after the financial statements, generally in June.

We do review it to make sure there's any uh if there were any inconsistencies with the financial statements or our opinion, we would notify the authority of the fact, obviously, but we have not encountered that in the past, so they do a good job preparing that.

Uh, we will be doing our interim and risk assessment procedures in second week of December.

Um, our final field work will be done in February, all in anticipation.

It references here the April 2026 FAC meeting.

I understand that date is actually May 1st, so that's the meeting that we'll be presenting the results of the audit uh as we do that.

Planned audit scope in the middle of that page.

Um, we've talked a little bit about the extent of testing, use of scopes and sampling techniques.

Um, we obviously also make sure that we understand how the internal control environment, both over compliance and the financial statements, um, is designed to prevent material misstatements or material non-compliance, the significant portion of it.

If there are any significant deficiencies or material weaknesses, we will communicate those in writing.

We're actually required to in those professional standards.

Uh, and and again, we don't anticipate anything, but at the same point in time, we don't know what we don't know, and that's why we do an audit.

But one thing I will add about the compliance audit this year is we anticipate auditing an additional major program.

So if you've been a member of a FAC in the past and listened to our presentations in the spring, we always talk about the airport improvement program as our major federal program.

And historically, that's not necessarily been the only program, but it's been significantly the dominant program as far as expenditure goes.

This year we will have an additional major federal program where we anticipate it, um, and that's the EDA grant, the economic development assistance grant.

Uh that likely will exceed the threshold for requiring an audit.

Uh so we'll do that as a separate major program as well as auditing airport approvement program.

So the way uniform guidance is written, we have to obtain certain level of coverage of the expenditures of the authority.

So if the authority spends 30 million dollars, we would have to achieve either a 40% or 20% coverage of that, those dollars by program.

Historically, AIP has always provided that coverage because we've never had another program that exceeded the $750,000 threshold.

So in short, we will be auditing two major programs, anticipating auditing two major programs based on our discussions earlier this week.

What that means is that you're gonna have essentially two compliance reports combined into one.

We will issue a compliance report on ADA and a compliance report on AIP this year.

It's I only highlight that because it is unusual for the authority to have a second major program.

We haven't had that in a number of years.

I actually can't recall the second major program.

So the EDA grant is the grant that's funding the bridge, connecting uh the perimeter road to plain field air tech parkway.

I'm sure you're very familiar.

The top of the next page is just our our risk areas, our anticipated risk areas.

The first two items I would mention management override of controls and revenue recognition, those are risks in every single audit.

So those are not necessarily specific to the authority.

And the way we look at that or evaluate that is we test journal entries and the general ledger detail to make sure we understand are there any unusual journal entries?

We obviously obtain an understanding of internal controls.

Um we review estimates for management bias and so forth.

Revenue recognition, again, it's a prescriptive major risk for every single audit.

And there's a rebuttable presumption that it will be a significant risk area.

We do some standard procedures on revenue areas.

Last year we we took a pretty deep dive into parking revenues candidly.

Uh, and that is again a prescriptive risk.

The other area that's listed is capital assets.

Obviously, as you look at the statement and deposition of the balance sheet, capital assets is by far the largest asset category.

Um so if there was going to be a material misstatement, the likelihood is it's gonna be in that area.

So we test useful lives depreciation, we test acquisition costs and so forth, and vouch supporting documentation.

Uh significant unusual transactions kind of in the middle of that page.

Obviously, the hotel construction is a new transaction.

Uh, we've already started discussing that agreement.

While the construction is not necessarily it falls under the capital asset risks and so forth, the accounting treatment we want to make sure we get right is is it just a management agreement or is it some other type of agreement as prescribed by government uh uh accounting standards?

Is it a service concession air agreement?

The most common service concession air agreements you probably are aware of is the toll road.

In essence, the toll road, third party comes in, pays a big sum of money to the state, the state turns over essentially control of the toll road.

The toll road operators then pay directly by third party fees.

The hotel is not that type of agreement because the hotel operator is paid by the authority under the management agreement.

So we don't believe it's in a service concession air agreement, but we'll continue to review those.

The good thing is that we don't have to have a final determination until it's placed in service, but I think we actually have our determination at this point.

But it is unusual just because it's obviously a new asset, new type of management agreement, and it is significant.

So please ask about that on the hotel.

Does so that's included in the audit?

Yeah, right.

Absolutely.

So my question is a project like that, is that an additional level of scrutiny?

Tell us about the level of scrutiny that you apply a project.

So we look at it in two different ways.

We look at it in a broad transactions nature and say, do we have the accounting broadly applied appropriately?

Is it a management agreement?

Is it some other type of agreement?

And then we look at the details of the construction in progress and say, let's vouch the activity to make sure that the activity is appropriately recorded, make sure that it is shouldn't be obviously placed in service at this point in time.

That's another question that we've discussed is what is the place at service date for that asset?

Not a 2025 question, but is it when they do their soft opening?

Is it when they do actually officially open to the full public and so forth?

Uh so it's it's it's a broad transaction level as well as the granular details of the costs that are being charged that project to make sure that they're a appropriate, that they exist, and that they should be capitalized rather than expensed.

Thank you.

When the hotel does open, we've already defined with the operator bank accounts that will exist, abilities for reconciliation access, those types of things.

That was actually part of and underpin the last the bond issue.

So that uh the the flow of funds.

Uh we're gonna yes, we'll take you through that when we did the supplemental last year or April, I think it was.

We actually amended our bond ordinance because hotel requirements for a new feature, we have to deal with them differently.

And so we are there was we're gonna combine and make it so we have one document instead of an original of that.

underpin the last the bond issue so that uh the the flow of funds uh we're gonna this we'll take you through that when we did the supplemental last year or April I think it was we actually amended our bond ordinance because hotel requirements were a new feature have to deal with them differently and so we are there was we're gonna combine and make it so we have one document that of original that but um that was all done already but when we get there that will be a new component to the audit because there will be the operator will be paying bills all funds will go into an account all revenues so it'll be uh expanded yeah if you if you if you think about what we discussed a few minutes ago as far as revenue recognition being a significant risk area our focus on operating revenues in particular because of the risks of a of an airport such as the authority this is going to add an entirely new revenue line item to operations that we'll have to consider as we do risk assessment.

Yeah hotels sometimes have prepayments and well never never accounted for a hotel before it read the book but um I know what we need to do I just haven't seen the years move yet yeah thank you so the last item is just our consideration of errors and fraud and and the very last page talks about just some some procedures that we knew are as um our consideration of errors and fraud and I don't know it's very similar to what we discussed in the past.

So after we do our planning and risk assessment our team comes together and has a brainstorming session so we'll sit in a room and really say okay we've accumulated all this data and all this information for planning or risk assessment what does that all mean and and ultimately the question is what can go wrong.

What can go wrong and on it that's the ultimate question that we're trying to answer as we design our audit procedures to make sure that we address the what could go wrong in the various areas that are identified.

We also obviously have discussions with various members of management as well as Toby we review accounting estimates most significant accounting estimates for the authority um are the the precipital lives so if you have an assets place and service are you putting in a third of your life a 50 year life a 10 year life and is it appropriate and there's some industry um comparatives that we can look at there's not necessarily prescriptive industry guidance uh but obviously your history and other airports that we work with we can look to um significant unusual transactions we've discussed and then incorporating an element of unpredictability this is a a somewhat unique piece of the audit practice um it's not necessarily based on risk or materiality but to make sure that the audit doesn't become stale we incorporate an element of unpredictability that is looking at a different transaction class just for transaction cycle looking at something differently to make sure that we're really really trying to design an audit that is different and unique each year.

We'll have a much more detailed presentation with audit including the results of the audit as well matters and so forth that'll be at the May first meeting.

Any questions for Rick.

So we don't require a vote on this plan correct right any other questions.

Let's move on to internal audit thank you Ray the fact charter uh requires that we have a discussion about emerging risks and how we're mitigating them and the risks that we deem to be of highest importance so I will be going through current trends and the IAA's response to those risks trends.

The first one I want to talk about is the elevated risk of cyber attacks and terrorism threats um as you all know and our HRC has approved we uh hired a director of cybersecurity who's really gotten in is and is really on the top end of any of those threats and attacks um that we could be um uh possibly uh a victim of uh there's an implementation of staff training we all get um training uh little videos they run from a minute to three minutes that we all are required to go through to just help us understand um what potential threats or attacks that we could have so we're required to go through those um al stoball and the public safety team they do training and simulations on a regular basis we have security software to mitigate the impact and of course we have routine conversations with the Department of Homeland Security for anything that we might need to be aware of or prepare for another um set of risks that we have identified is TSA or FAA regulation changes and um again we're in constant communication with those agencies to make sure that we're and we proactively prepare and put strategies in place in the event that those things do happen and if we need to make any changes for that.

So there are things that we look at as far as our do we need to implement new routes.

Is there a route that might be changing?

I know Maggie and Marcia's team, they look at that.

We also are building a new hotel on property, as you're very well aware of, because we understand that that's something that our passengers need, and that will be a benefit to them as well as us.

So that goes along with passenger travel trends.

We're very well aware of tariff impacts and supply chain potential supply chain disruptions.

So what we do to mitigate that is building redundancies on our goods and services, and then we also procure local goods and services and things like that.

So it gives us an edge over anything that might happen.

We're not bringing in people from out of state, we're not buying things from out of state as much as possible.

We try to do that in state and in the city.

Climate changes and aging infrastructure is also something that we are aware of and keep in mind.

And so we have a sustainable master plan, and we perform routine maintenance on equipment, runways, things like that, replacements.

We keep in mind what the audit risk is as far as what they say the useful life is, but we also keep track of how it's being utilized and if there's additional wear and tear, if there's something that we need to replace or repair more quickly than what the standards mandate.

And then the last one is talent shortages.

As you all know, we have an apprentice program, we have a robust internship program.

So we in this particular industry we're finding that it's hard to replace certain positions, but we are ahead of that trend by networking with colleges and high schools.

We go out to job fairs, not necessarily to get additional employees, but just to make the community aware of what it is that we're doing and the jobs that we have out here.

We're a city within a city, and our community really is understanding that.

So they're looking more toward the airport as an opportunity, whereas traditionally that wasn't something that maybe our high schools, our colleges would have thought of.

Every year we perform an inventory maintenance uh audit, and this year as it always is, um it turned out to be really great audit.

Um there are over 3200 individual inventory items that we have over at the building tube, and then a few items that are stored here, and we had a very successful audit.

Um there was an overall net adjustment of 1,100 that needed to be done.

But I wanted to just give you a couple of ideas of when we have discrepancies, um, what does that really mean?

So there were three.

I pulled the three top items that we had that we had a surplus of.

So we had a plumbing valve that we noticed that was in inventory, and it showed that there were zero.

That one valve was uh over $900.

So how does that happen?

It could happen that somebody could pull that, write a ticket on it, it comes out of inventory, and then discover well, maybe we don't need it, or maybe our maintenance department was able to do the fix without replacing the item, and we do our inventory at a very specific time.

We do it October 1st.

There are audit reasons why we do that at the very same time every year.

It could have been that that item was not replaced back, it was over in a different department.

It's not hard for uh an inventory count to be off.

We do cycle counts.

Um another thing, there were bolts.

So there were 24 bolts that were in inventory that it showed that they weren't supposed to be.

Um, and so that totals $796.

So just to show you how even though it shows that you know it might be six thousand dollars one way and five thousand another, our our maintenance staff does an amazing job.

Um, that's also attributed to the fact that we have a lot of longevity in our organization, and our maintenance group has a great training program, whereas when new folks come in, um we uh have the ability to train because of having that institutional knowledge.

Um, also there's been movement in the uh building two maintenance area where um a longtime employee retired.

Well, the one that actually um through going through the process of interviewing the one that got promoted into that position, he had been under the one that retired for a while.

We have movement where um there was someone that was over at building two that actually uh got another job within the organization.

So we have redundancies in that, so it makes it very easy when the folks stay around or when they've been around for a long time to train and really understand.

Um so they have some great controls and procedures in place, and um we just recommended that the adjustment for the inventory be.

Anything else?

Um one more thing.

Um we have you all know a um Camacho Janitorial Service is a uh contractor that supplements our cleaning, and we did an audit of the assets that they utilize.

We purchased the assets, the authority owes the assets, but allows Camacho to utilize those assets.

So we did an inventory of that to ensure that those assets were actually being utilized and in place and located here.

And um at the conclusion of the audit, the um everything ended up uh coming out great.

Uh we thought that there were some assets that were missing, they really weren't missing, they had actually been transferred back for our internal staff to be used.

So um Camacho no longer had possession of those, and there was an item that uh wasn't in working order, but they were waiting to go hard at the conclusion of the audit, they got that, and it was actually in working order, and then the rest uh were completed with no issues.

Right.

I have to say that I'm always phone crossed because I I think that's reports our window and how strong our matching $700 adjustments, macho missing vacuum, and that's most organizations the size don't have those kinds of results, and you're right now.

I mean, I'm sure they fear you they don't care to be united to a one-dollar.

I I absolutely echo that uh because we have controls and procedures in place, and um it's easy to work with the staff, and even when we come and show up, everyone is well aware that you know it's it's for the good of the organization.

And if there's something that we find that needs to be improved upon, um, it happens.

So it's it's easy to do what I do in this organization.

Questions or comments or what determines when you audit a significant vendor and a Camacho audited every single year, or they just happen to get your love and care this year.

It got on love and care this year.

And it's much like what Rick said, it was something that we had never done before and took a look at it.

And sometimes you need to touch and feel those areas that you've never looked at because occasionally you will find something.

And although everything ended up being fine at the end of the audit at the conclusion, um, it's always good to look at things that maybe you've never looked at before.

Maria's team is incredibly vital.

Kind of guarantees the board guarantees all of us that the broken window theory doesn't occur.

Kind of get fixed every level.

And with us being internal, we can act and react quickly.

Versus if you had to go out and procure a contractor and then go through the scope of work and all of that bidding, um, because um, as you heard me say with uh the requested audits uh that we want to do at 26, we have the ability to be ample enough to adjust.

And there have been times when there's been a request internally or uh perhaps uh something that the board wanted looked at, and we can absolutely back quickly.

Oh I'll ask our external auditor.

Our observation about these positive results.

Yes, absolutely.

And and what I would tell you is you know, obviously, sitting on the outside about here every day.

The thing that I especially appreciate for you highlighting is enterprise risk management, and each department having their own risk matrix and assessing risk and then using those risks that are identified to inform internal audit, not just about command to them, maybe as a risk because it's never been touched before, but other areas that have opportunities for risk.

Uh, I think enterprise risk management is critical to inform internal audit, and the fact that that's a highlight and it's done well, I think is just fantastic.

I hadn't venture plan for that purpose consent, something to address enterprise risk management really isn't.

Our focus is really financial statement risk.

Not so much of risk as much as whether or not the analysis.

Yeah, we absolutely we do, we read all the internal audit reports in part of our audit process to help us uh obtain further information about the entity, what has been looked at.

We really rely heavily on the maintenance inventory that's conducted by internal audit on an annual basis uh to reduce our procedures in that area.

And so, and the fact that you've consistently performed that maintenance audit and it's consistently had good results.

I mean, obviously, the the individual that ran that department for years and years is retired, but see that transition go successfully, I think all speaks very highly to the quality of the process.

Okay.

Any other questions or comments?

Alias.

The next green pages, we believe that they're gonna be a little bit five.

The second item definitely, which is a disparate item, we'll spend some minutes a few minutes up to the master or it's even though we're already Robert the mention some of that.

This is our liquidity feature.

And and we include our liquidity on our business report, which is our website every month.

We show our funds or liquidity by funds, it has not changed to our year.

What you see here is very similar to the what you saw in September.

But we are seeing here 401 days of operating on a base of cash for operations and debt.

And then if you add uh fund reserved for capital, it's an extra 151 days, which will be about 552 days, or about a year and a half, and then you have the dollar amounts on the layout.

Are there any questions about liquidity?

The next item is a discussion item.

And we'll go through the agenda so you can see it.

Which is is something that we don't do often.

Last time that we view up observation, it was in 2004 when from that 2004 marked the order then then whatever changes through or those years to play than what they were consolidated in 2004.

Now we're we're gonna be doing something similar right now in 2025, where anything from the master or dance from forward, now we're consolidating now with including some of the changes that have been done from the debt transaction, which Robert mentioned earlier.

And you will be seeing these at the board meeting, you will be seeing that the evidence being introduced, and then also we will be something to evolve.

Are there any questions for these discussions or designer that will be into this?

Any questions?

But then the next items, which is a lot of pages for it for an investment performance, and this if you have your back, it starts in page 46.

I will highlight a few things.

Of course, the important things here that you will always see is those green green uh boxes that we're in compliance.

You saw how Robert was talking about the flexibility with the of the variable, the variable rate policy.

You could see how here we were getting very close to the 50% here for money market.

And then in power in power periods, because we trust Indian is not new for us, we have been using it.

We were very close to that in that investment pool, that 25%.

We're very we're getting close, and we're trying to manage it, we're spending our time to not be not bridge those levels.

And we don't believe that that's that we should not be spending our time on that, where we have a lot of other things to do.

If there's no reason for us to restrict ourselves to use something like Trust Indiana, or if right now, because of the debt transactions, the reason that transactions it is proper to have those funds in money markets, we don't need to have that 50% restriction.

Sorry that I stood at the stood up, but I'm I'm a teacher.

But so those green markets you could see in the rate that the compliance from the top, you can see that 19.5 million.

It's still a really good year.

2025, it's a lot of money.

There's a good amount of interest earnings, 19.5 million, and you can see does a great job highlighting where it's coming from.

You can see the variance, how out of those we're expecting 6.9 million, the variance for the year versus budget.

We think about 5.7 million, it is really from these debt transactions, and about 1.2 million, it is because of those higher balance.

Any questions about this report?

We will go also to page 56, which has also the other page that you want to look at that we're in for clients when we're looking at our depository accounts, making sure that the banks were putting out our trust on our money.

You can see an index there that we that is done compliance uh with the entities with basically Morgan Chase and Fifth Third Bank, which is uh much greater than that six percent.

Any questions about investment?

Okay, the next page almost look like a copy of what you saw in September.

It's it has not changed much, even though we mentioned to you we came here in April that hey, there's there's there's a lot of there's uncertainty right now if that the report that we're showing you right now, year to date of September results, it has not changed much.

It is still you can see the passenger 2.4% greater than budget, very pretty much flat versus last year, which was a record year, which is great, and targo is still being lower.

You can see that that variance of cargo, so we we know that.

And when you were approving the rates this morning, you still saw that landing fee a little bit higher than normal because you have those low cargo numbers.

At some point at Target TV activity is gonna come up.

And those you will see that in the financials when we switch the next pages, and then the revenue is very similar to what you saw with results through July.

We were 2.1 million favorable in revenue, but still 2.1 million favorable in revenue right now, year to date.

And then for our expenses, we're 4.5 million better or lower expenses in uh through September, and it's very similar.

We're 4.1 million to July in regards to expenses.

Uh the total amount year to date, we're 6.6 million, and the lower section is a summary, and we include this in this page in our business report that is put in the website every month, and it's a summary that shows to everybody what the action, what are we planning to do with those 6.6 million?

There are some one-time investments, some projects that the TM here continues looking into trying to deliver those.

There are some items where their discussions when we're going with with with when people come to us and say, Hey, and we do a project.

One of the percentages we're looking at is that we see where you are here today versus your budget.

And if they have capacity to absorb that project within their budget, we say, well, no, put it put it right now towards that.

Let's not include more one-time items.

Just use that that favorability that right have right now you have over your budget for this project, which is it makes sense, it's a good project, but that's why you have not seen a lot of change down there, is because there has been a lot of work internally.

Make sure that we are we are we are using the funds that are ready within the budget.

And you can see that in line, we're looking up maybe around 3.3 million their performance right now that so far, if the year will have ended to September, that would that 3.3 million will be an outperformance that could be used for a reduction of fusion rate.

And let's go to the next page.

You will see it, you will see these same numbers, but now with a lot of digits.

But here you will see.

I don't know, Matt, are you able to have that to hide this little box?

But anyway, you can see here this 1.4 million of landing fees of cargo.

So that is that is the the reduction we knew when we the year started, we already adjusted our next year budget.

So we will we will even reduce or or or or or or risk towards cargo, and then you see now a strength in the next areas where you're gonna see retail, retail, and also parking.

You can see where the where the favorability is coming because of the higher pass.

What else is different this year all the way to the bottom?

You will see IMC the 1.3 million.

That was an it's part of volume, but it's also of the management that that that agreement that Marsha and Eric negotiated, and we every month that's a new process now.

We we make sure we're doing a true up uh a through based on the requirements based on the new agreement, but we're also accruing every month for that through up, and we're thinking of this that right now here today we're 1.3 million favorable with IMC revenue.

So these are some of the items that are helping us to absorb that that reduction in cargo, and it still makes that 2.1 million favorability.

Any questions about revenue?

I've got a question.

Sure.

Um I think I heard you say that the 3.3 million dollars of outperformance on the prior page, uh, that if the year ended now might be reduced rates.

Under what circumstances would it not reduce rates?

So if we were able to do an operating project this year, right?

This is so that you're not the year ended.

So then years ended, that the only opportunity is when we reforecast next year.

Okay, that's what we're doing.

And that that's I understand.

And once rates are set for 27, because when we set the rates, we'll look and say, what is the outperformance that will move forward in the rate model as an offset?

But if we then take and put new expenses, the net is zero.

So that's and at least your point was since the the year really is not ending right now, that there might be other one-time projects between now and the end of the future.

So which it might reduce the 3.3 million.

It is possible.

It is then your comments about X year's rates.

Legitimate.

But we have this discussion at least every month, if not more.

I talk to the senior team and say, what opportunities exist that will help us meet our missions, use cost in the future, provide more efficiency, and we don't have any more.

I don't believe I I've only gotten a couple in the last months.

So we're also almost to the end of the year.

You just take so long here, do things and to spend any kind of quantity of money.

So you could imagine that 3.3 staying.

It's gonna be 3.3, it's gonna be between 2.9 and 4.

Okay.

Right.

Somewhere in there increase based on the perfect the perfect scenario is zero, obviously.

But you can never get what it's zero at the bottom line, and that way we reinvested everything in projects, not in not in programs, because that's an ongoing thing.

But wherever we're able to reinvest all this money, the problem comes in in the mechanics of doing it, because we're never 100% sure that we're not gonna hit a budget expenditure, or we're not gonna overperform on revenue.

Well, so for instance, when Alias said the part of the analysis on time projects is it already in your budget?

I mean, yeah, your budget.

The reason you do that, I'm guessing, and tell me if I'm wrong, is that if indeed they have room in the butt in their budget, that number just goes up anyway.

It's it doesn't seem exactly because then they've overperformed in that regulatory area, and that number goes up.

So this is this is a way to keep track of that, right?

Absolutely to know the unknown for us.

All right.

This is a challenge in year because when we see all this under spending versus budget, we're still some of those items.

We're still seeing they could still uh be very still able to budget items if they're still able to do those projects and finish them within the year as well.

But I would think maybe part of the uncertainty at the beginning of the year towards like uh whenever like pay a reduction of expenses and things like that, it's possible that maybe towards some managers, it may have made them a slow down in the normal normal way that they behave.

Could be could be, but but also it could be all as well that just even though that they are trying to deliver their budget.

When I look at the when we're put together the budget, people are signing off for really great initiatives that they need to deliver, and they are working very hard to do that.

But sometimes it's like they're not able to deliver all of those initiatives that are in their budget, and normally, and at the end of the year, we do have a lot of the lows of all projects that normally hit the quarter four that they already in our budget or quarter four, that's why it makes it to see already signed off to deliver those quarter four projects.

So that's that's what makes hard this year.

But just as you see, even when the year ends, if we identified some projects that could be 2025 projects, we'll pair them into next year the same way that do you see that 2024 row down there?

The same way that we did for 2024, but we still have an opportunity to do that.

The interesting part of the comp about the conversation is that this exceptional team has done all of this.

They're not talking about deficits.

We're talking about trying to invest the outperformance that the organization is actually yielding, which is it's a great conversation.

So did that play into the rates and changes that we Jonathan talking about early on the board meeting, or that's two totally separate that it's connected, it's connected, but it will be a relation to 27th rate.

We're setting the rates now.

We've already we had our meetings with the airlines, you know, the budgets were set back in July.

We were at July, August and City, City Council.

So the beauty of the one feature of our agreement is that we don't do a hard true up at the end of the year, make those rates forward, and then there's can be discussion with the airlines, even on that part, and it also gives us that discussion to say, hey, we've got a project that we've started that didn't get finished, finishes the next year, and that expected uh funding source is the funding for that.

So we are trying to do exactly what Mario said, and I'll look to my peers here to say is this a I mean I'm asking you guys constantly.

So what else can we do?

And can we get it done this year?

What are the top two examples?

So many.

Any sort of maintenance opportunity that we invest in any sort of the problem is right now we don't think it's a decade ago we had a lot of deferred maintenance.

Now we don't.

So the opportunity, the the the it's not a it's not a target rich environment.

We've actually started with deferred maintenance.

Yeah.

Well, and we have we don't have any.

We don't have deferred maintenance.

We are back, we are past the deferred maintenance.

Exactly.

So let's do this.

We'll have something that's the plans you have.

Uh no, this might be the only one that I've talked to that's deferred maintenance, so I don't have any.

That because of this agreement that we have that we have flexibility between a hundred thousand dollars and two hundred and fifty thousand dollars, what projects can we move out of that other part profit budget into this budget?

That is the first the first thing.

So most of those, most of those projects you already saw them in practical reviews, they are there in the budget.

We're just trying to see and what can we finish, what can we do?

And we we don't have right now in our mind which are not big ones, but normally it will fall in under that those discussions.

So I have a good one though, that at the end of the day there was an evaluation of all of our substations they came in and did infrared or some type of uh evaluation of our whole electrical system inside this building.

So instead of having that be next year, that was one of the items Keith came and said, Hey, we're gonna do that, and then addressing what came out of that.

Those were determined as one-time expenditures.

I mean, it's instead of saying no, let's wait till we get that budget is good example.

Yeah, no.

And I I also want to so we're talking about all the pressure to get it done.

It is there is scrutiny.

So I don't know if anybody had my peers would say, Yeah, I've had one that didn't go forward.

That is part of the process.

Yes.

So I just want you guys to know.

It's pretty regular.

I I go through, and then I sit down with each of those with Mario and we'll talk.

And Mario has experiences that you know operationally, yeah, he'll have more depth in something, and he'll say that's great, or need to look at that one a little further.

That produces more conversation, more rigor, more justification, and sometimes it goes forward, not.

But um, Al's still in the room.

Al has some really great projects that he's brought forward as we look at tightening that safety and security, augmenting in those areas, being more efficient, and again, is everyone gone forward?

Okay, that's here.

Well, yeah, yeah, it's but uh I just want to give you confidence on both sides.

So it's not a free-for-all, right?

It's not a no, it is what makes the most sense.

What can we and I always think front page of the newspaper?

What will I proudly stand on the front page of the newspaper and say this was the appropriate thing for this organization to go forward with?

So, you know, that's one of my litmus tests.

And then how much is it?

And it's a local.

What makes also complex right now this year?

You guys remember the uncertainty.

What did we what was done for the 2026 2026 budget?

We did a budget, a flat budget.

It means we grew the people cost and we reduced 4.2 million dollars in expenses for next year.

But this is not a bad thing.

This is really not a bad position to be at for 2025 when we're looking to see how can we deal with 2026 the way that we prepare our budget.

So I know we we did mention if for some reason, like if we want to we're planning to go over in our budget, we'll bring bring forth action as well.

But then it is being having some fair ability for 25 would help as well from that perspective.

And I just want to say I don't can't remember a month.

So you heard Aaron.

This is the October results.

So these other things.

I have this plane passenger result compared to last year for October.

10.1%.

So Marsha, can you remember a 10.1% and just the normal pandemic?

I mean, the the seats that were in the market and the availability seats for people, it just provides the opportunity for people to travel.

So the airlines are seeing this market as strong and they're putting seats here, and that's what allowed that to happen.

Is the flow of economic uncertainty or the to make a catching of uh operational excellence?

I mean, like, wow.

So that's what's that's what's happening, but it's difficult when you're trying to plan ahead and then manage this because it does take time to have projects get done, that so we work collaboratively and uh try to be reactive to eating with all of this.

If you can move up with our expenses page, you can see here on the top, the people cost being one one for one million lower than budget, and then when pretty much what production services is the main variance when you're looking at that 3.6 million professional fees, when you're looking at next year's budget, that contractual services was an area that we reduced by 2.2 million budget to budget.

So right now we're talking about some flexibility that we're not expecting it's useful.

And then utilities, we are having $60,000 lower.

That was an area that we reduce in next year's budget, but basically when we're hearing from utility companies, that's that we're gonna need some extra money for next year.

So that will be a risk into next year.

So any any of the that we have that we could leave the worst, right?

Like we can we could prep see it, but we will we will so far that's the first area where we can see there could be some risk, maybe with with with electricity when we're looking into with the feedback that we're getting more recent from utility companies, but so far we're 760,000 better than budget, and then total we're is a 4.5 million that you saw in the power page.

And the next page that the next page is uh that's two main numbers to look at is investment income.

We are right now so far already at 14.6 million, so uh that's an area that we already highlighted in the investment report that we're planning to do.

And then you can just scroll down if you don't mind and the main number you look at here is the 1.73 if service coverage, which is that the certification that you're gonna sign Toby at the end of the meeting.

So we're still not what we presented uh in the prior meeting.

We're still expecting to end a year around that 1.73%.

Maybe you want to uh also point out what is the standard coverage that we're yeah, required is 1.25.

Any coincidence about the financial the next page is receivables is very similar to what you saw in the final report.

There was no plan to spend all the time here.

We were at the 168,000 last report 300,000 big report, which is uh uh it's a good good place where to be in receivables considering the the same.

And then the next page for receivables, it is year to date what writers have taken place, which is not is just a judgment over accrual.

Any questions about receivables?

And then this next page, this is just our uh track-in for checklist, which all those items in jail are the items that we're covering this meeting, and we will be able to feel all the all the actions from this committee for this year.

Oh and that policy, yeah.

Oh no, so we just hit those three policies um today.

Uh so the uh shape on the policies, yeah.

And then feature meetings.

So I know that Toby, you wanted some flexibility beyond the May, maybe, but uh, we definitely think of it scheduled though.

No, uh we should schedule these okay to help seven, and then um we can make adjustments or at least publish those.

Yeah, any questions about the report anything else.

Anything else for the sonata committee, Mario.

Um, and and uh Keith and I talk about this.

You know, we we work in a very very volatile environment, especially the aviation industry, and for the last maybe five to seven years.

This place has been boring, boring is very good in our in our industry.

It's been stable, it's been no deferred maintenance.

That's 551 days of pushing money back into investment back into the community.

Uh I think last year 91% of everything we spent that was over 200 million dollars we spent locally.

There really is an incredible thing uh to have this organization humming the weight is and it's all to this incredibly exceptional staff at each of them individually are exceptional, but as a team they're incredibly exceptional.

So from a financial standpoint, any impact cutback and flights that went in place a couple weeks ago, not right now at least.

We're gonna we're gonna see a little bit, but not not really operationally, but from a financial no no from all I'm looking at it from a financial side because what'll happen is all of those passengers eventually make it to where they are, and it's a very very small percentage of the overall amount of passengers.

So uh I'm not saying that the future is financially will be perfect, that's why we have 551 days of reserve because we're you know it's a volatile environment and I have infinite expansion and infinite conservative budget and going and we watch parking right now each week at one week where it was off 100 grand.

We have one week where it was off 100 grand.

And we got dashboards that tell us whether what we're what we're assuming will work will work or any anomalous behavior when it comes to our revenues.

That's so pretty shape.

Thank you.

Thank you.

Thank you.