Okay.

And I think now we take the log or take roll.

Member Bills.

Member Baker?

Here.

Member McCray.

Here.

Member Wainwright?

Here.

And Member Jablinski.

Present.

Wonderful.

We have a curl, a quorum, sir.

Great.

On to consent calendar.

Can I get a motion for the approval of the August 27, 2025 regular meeting minutes?

I have a recommendation.

Okay.

Second paragraph.

It says proposed on the hallway and put into a separate roadblock.

Change road file to a hash.

Perfect.

We'll need a motion to approve the amended minutes, please.

Or a motion to approve the amendment to the minutes.

I move to approve the amendment to the minutes.

Thank you.

Chair Wainwright?

Yes.

Vice Chair Baker.

Yes.

Ms.

McCrae?

Yes.

And uh did I call you Kelly?

I'm sorry.

I did.

You called me, yes.

Yes.

Who did I miss?

Jablonski.

Yes.

Thank you.

So the amendment has been approved.

Now let's go on to approve the actual minutes.

Okay.

Can we get a motion for approval of the minutes with the amended minutes?

I move to approve the minutes.

I second.

Member Baker?

Yes.

Member McRae?

Yes.

Member Wainwright?

Yes.

And Member Jablotsky.

Yes.

Great.

The minutes have the consent calendar has been approved.

Good.

On to discussion deliberation.

Number two is establishment of the 2026 board meeting schedule.

Clerk Davis.

Thank you, Chair Wainwright.

So the proposed schedule, the board is supposed to meet four times a year at minimum.

And I've gone ahead and taken the liberty of coordinating some dates.

And so I'd recommend February 18th, May 27th, August 26th, and November 18th.

And those are all on Wednesday afternoon or Wednesday evenings at 6 p.m.

And can I get a motion or discussion on this establishment of this schedule?

I move to approve the calendar.

I second.

Thank you.

Member Jablonski?

Yes.

Chair Wainwright?

Yes.

Chair Mc Ms.

McCray?

Yes.

And Vice Chair Baker?

Yes.

Great.

The meeting dates for next year have been approved.

Next piece is the annual report method to the governing body.

Clerk Davis, I believe it's the letter that we have.

Yes, thank you, Chair.

Um closed or provided in your meeting packet was a letter.

Um it's very similar to the format of last year's letter.

It outlines what took place during each of your meetings.

Um the assignment of the chair as well.

There was one error on the posted letter online.

Um just for the record, it said it's 2024 annual report, and I updated that this morning.

So the letter that you will actually present is the same letter, but it does have the correct year on it.

Do I hear discussion or can I get a motion to approve the annual report to the governing body?

I move to approve the annual report.

Second.

Yes.

Chair Wainwright?

Yes.

Vice Chair Baker?

Yes.

And Member McRae.

Yes.

Thank you.

The annual report to the governing body has been approved.

Great.

On to review and input on the permanent fund performance.

I believe it's Stephanie Yara with us.

Is that correct?

Hi, yes, Mr.

Chair.

I'm I'm Oh, yes, yes, I'm right here.

Um I first want to shout out to Carol Hodameo, who retired at the end of last month and thank her for all her service and um getting me on board uh with the position.

Um I wanted to before we let um Miss Woodring um go over the review of the performance of a portfolios.

I I wanted to inform the advisory board that um as of the end of September um we went ahead and uh combined both of our investment advisory contracts to uh government portfolio advisors, GPA Miss Woodring and her her group.

Um we got a little bit of savings uh on the annual um services that they're providing, and for me it was just easier to collapse those into one advisor so that I can only deal with them.

Um and so that change uh took effect in October, and that's why PFM is no longer with us today.

So thank you.

Thank you for that information.

Um then on to DM.

Good evening, Chair Wayne Wright and board members.

It's nice to see you.

Uh, my name is Deanne Woodring, and you guys have seen me on the on the regular um quarterly presentations, and now we will be working with you on the SIC and permanent fund program as well.

With me today, I have Frank McDonald who is also presented to you over a couple of sessions.

So I think this is going to be a really great way to combine your two reports and your oversight.

So I I put a lot of words in this presentation that you have just to kind of cover any questions that you may have on the process of um establishing you know our role as the consultant on the permanent fund.

I know there's some changes there on your board, so I thought this would be a good opportunity for us to just kind of level set and discuss any questions uh that there may be to uh address.

So in the scope of the uh procurement for the consulting role to the permanent fund, it involves just your it's your oversight to this board.

And so uh GPA is very familiar with the SIC.

We have several clients there in New Mexico that utilize the investment opportunities that are presented there.

So you're in good hands with us, Los Alamos County, City of Albuquerque, uh, Middle Rio Conservatory District are the other three that we ongoingly monitor their positions there.

We will also be doing an ongoing allocation review of the structure of the opportunities there at the different funds.

So I'm gonna dive into those funds a little bit with you today, and then we are ongoing looking at uh tactical asset allocations within those choices.

So our we did reduce the cost.

I think you're paying PFM 50,000.

We're at 35,000, and uh we're excited to be working with you uh on this portfolio as well.

Uh just a little background again for those of you who have not met uh GPA.

We are we manage a total of 30 billion in assets for uh local governments throughout the country.

Uh New Mexico is our third largest state, and we're really proud to be working in New Mexico.

Um I've been personally working down there for over 30 years.

Uh work with the state treasurer's office, NMFA, uh, several cities and counties.

So uh we're there every quarter.

Uh I meet with Stephanie on an ongoing basis uh to discuss uh anything that's going on there at the city.

So the actions that we're looking at today, I had to kind of take a deep dive, and I'm going back and actually rebuilding uh the portfolio back to 2023.

That's when you started uh investing in the permanent fund, January 2023.

So I wanted to have a good record of the uh portfolio structure and any changes that PFM did within those, and there were a couple changes here in the last year that they made to some asset allocation choices.

So I'm hoping once I can get all the the updated reports in there that I'll be able to come back to you with additional kind of insight.

So you uh you all are aware of the um what's happened historically uh to the investments in there and what's happening uh the plan going forward on strategy, and then your policy.

And then your policy, I believe there was some discussion on the policy last meeting, but it was adopted for the permanent fund in October of 24.

So we will slate and have uh this prepared and uh ready to review if that timeline works for your August 2026 meeting.

We did identify that there's a couple things that we want to look at, particularly related to the asset allocation parameters that are within that.

Um, but everything otherwise looks looks fine.

We're operating we can operate totally in the way it is, and we'll just do a little fine-tuning uh within the policy, and it's by statute that you update it every two years.

So the current structure and how the SIC funds are being utilized.

You have a 60% allocation to equities and a 40% allocation to income.

This is really a standard growth model uh for long-term permanent funds and and appropriate.

Uh the top part is the ranges that are within the policy, and that's how that's stated.

Just recently in May of 2025, uh, PFM did introduce two other asset products.

One is a real estate fund and the other is a real asset growth fund, and they tuck that within the equity.

So we are going to report on that in that same manner until we uh come back and look at the policy, and we'll probably carve that out as a uh additional asset class for you.

But um, as far as the ranges and the targets, uh everything is pretty tight, and we'll continue to maintain that 6040 split.

And what that means is when when the stock market really rallies strongly and we start getting a higher balance, we will go in and rebalance the portfolio to that 6040 target, or if the stock market sold off dramatically, and it's maybe the stock market that will that will throw the equity positions that will throw it, we will adjust uh the portfolio as needed to keep you aligned to that 6040 allocation.

And then just talking a little bit about uh the equity markets.

So the SAC does provide a very comprehensive report from their consulting group, RV Coons.

Um, and so we are going to continue to provide you kind of an elevated summary of their data reports and then our own economic, our own commentary regarding the equity market.

I think that'll just make it really consistent for the board to have the information directly from RV Coons and what they're reporting on.

And you basically within the equity sector, we have the equity uh US equity and then the international sector.

So within your 60% of equity allocation, both of those um asset groups are being utilized.

So they have very comprehensive reports and benchmarks on the markets in those two subgroups.

The large cap are our corporations that are over 10 billion in asset size, the small cap are anywhere from 250 million to 2 million as an alternative, and then the um international equities, which they have the SIC has had some restructuring in those are uh across the the global uh markets.

So we've had uh strong markets in the equities.

We have some volatility that's occurring right now due to the AI uh bubble.

Um I think we had some recovery today from uh what some trade-offs from that in the market, but this is a long-term growth portfolio, and so having that balance and that diversification in the asset uh groups across both uh US and international, I think is a good balanced portfolio overall.

And then you have a section in the bond market that you have a longer term.

So we're managing your operating short-term bond market bond money, and I'll I'll address that in a moment.

But within the SIC funds, you're uh managing that to the aggregate, which means it basically picks up every single type of bond within the quality that you're allowed to do between one day and 30 years.

And so that gets impacted with interest rates, and well, I love interest rates.

I don't like to talk about all the time, but we're having a big shift going on right now with the Fed funds rate, pulling interest rates down, so that when that occurs, the value of that portfolio uh goes up.

It is invested longer, so it is getting some impact from the inflation pricing in the market at the close today.

Uh, the 10-year closed around a 417, and the 30 year is quite high actually at 475.

So there's some steepening.

You'll hear this in the in the the press, and we're talking about normalization of the yield curve, and that's kind of what this picture is showing us over here on the top uh graphic, is that on 12 month forwards, so that means we can project out to what's going to happen to the market, it's expecting for the short-term rates to decline and the longer rates to stabilize to actually tick up a little bit.

It's expecting for the short-term rates to decline and the longer rates to stabilize to actually tick up a little bit.

So that's that's a normal, that's a normal curve.

That's where we should be.

That means our economy is growing, and and uh we should be there's a trade-off of risk and return that the longer you invest, the higher return you should demand.

So this normalization has been going on for about three years.

We've had a very high short uh short-term uh interest rate uh level, um, and that is coming down.

So uh we expect uh that change to occur, and that that is presenting value within the fixed income sector for you as well.

So the the one thing I did dive in a little bit on was to also this is out of the RV Coons report, and this is dated June 30th, but you'll see that you have certain active and passive investment portfolio selections within the SIC, and that always uh draws my eye to because you you always hear you know, can active managers really outperform the market?

So within this sheet, it's telling us who the managers are selected by SIC, and they do a very uh impactful review of any of the the strategies that they bring forward to local governments as well as the internal money of SIC.

Um so we're gonna see who the managers are, what their fees are, what type of portfolio and that benchmark is, and whether they're active or passive.

When they're passive, they're basically just matching everything that's within the index.

When they're active, they will deviate from that index structure and might uh have a heavier weighting towards financials or or different shifts.

And you can see that the fees are pretty substantial between those two.

So, and that's normal.

Uh, when you're passive, you're just basically turning over and matching that.

There's not a lot of strategic uh balance that goes into that.

Uh, but when you are active, you have more uh research, more inputs into that.

So the next question we would ask is are you getting returns that are benefiting uh the city with those passive, I mean, excuse me, those active managers.

So this is just a little background, and then the two new portfolios that you have just that just got added into the portfolios, the real estate and the real return down there on the bottom.

So real estate is just what it says, real estate, um, and the real return has an inflation component that's uh protective towards uh energy and infrastructure.

So those two security, those two asset classes were chosen to provide a diversifier for the portfolio in there, and that's the area that I want to dig in a little bit more for you going forward.

So a lot of numbers on this page, but this is telling us the returns of the different types of funds, both the active and the the passive funds, and so uh on the top section there are your US equities.

I look at these numbers and compare it to our bond market or the sector that we're working in, and I'm just amazed because they're so much higher, but they also have much more volatility.

So anytime we take on more volatility, we demand more returns.

Of course, the stock market and the and has been doing very, very well over the past 10 years, and you can see those results and those benefits.

So this fund you started with 10 million dollars that was invested, there's an additional 2,000 that came in at one point, and it's now worth over 15 million dollars in a very short period of time.

So the the power of growth in in these types of investments is is really phenomenal, um, and but is it needs to be closely tracked.

So we would see the reverse if we if we had a hit in the stock market, but overall uh is providing good value for this city and doing its job as a permanent fund investment for long-term growth.

And then we just did a high, this is a lot of numbers too.

So I just wanted to make sure that you saw it and we saw uh the details within the structure, but the the bottom section here is your one-year period.

So you can see that ending value on both of these slides at 15,500.

Uh, and again, this started at a 10 million dollar investment for the city, and um, and then it has the different returns for each quarter period.

So last quarter uh you earned 762 million 2,000.

That is uh price appreciation plus any income that's driven off of the funds, and then year to date since October 1 for the full year cycle, you're generating about a million five.

So uh we'll try we're gonna try to build out some nice consistent reports for you coming from all this data, but I we just wanted to get kind of a step back with you and with us to be able to get a good oversight level uh in looking at the portfolio.

So there's a lot of kind of the empty spaces of where are where trades were uh transacted.

Um so we had the uh a transfer of some securities out of these development active pools, those just shifted down to the non-US product in there, and that was driven from SIC's recommendation, and then you can see up there on the top where the real estate and real returns were added in they were added in May.

And then uh we will be providing an asset allocation.

So that's one of our uh roles with you, and and this will not change every quarter.

This is a long-term strategy that we're you were in it for for a long period of time.

We will, as I mentioned earlier, do rebalancing.

So when we look at the current um the asset allocation versus the target allocation, um, you're at 39%, so you're just two percent above the uh below the ask the actual asset allocation.

So when that misaligns, we'll do some adjustment.

But that's why we do want to bring in the real estate real asset class here so we can better match the policy.

So we'll come back on that analysis.

And there was also a cash equivalent in the policy that you're really not using cash in this portfolio, so we'll address that as well when we look at the policy.

Are there any questions on that?

Okay, no questions.

Um, so I'm that's it for the permanent fund, and and I'll move on to the core investment and liquidity components if there's no questions.

Thanks.

Okay, I can't see you guys.

Oh, there you go.

Okay, I can see you now.

Perfect.

Um, so this is a lot of information, but um it it's uh and I will work on getting a nice framework for you going forward, but I thought it would be interesting to get kind of the summary, as I know several of you are new on the board as well.

So GPA has been managing the city's portfolio with Carol prior to Stephanie for about two years now, and so we're managing the ongoing operating funds and liquidity components of your portfolio.

This portfolio, I always say that the the short-term investments I think are actually harder to manage than the long-term permanent funds, and that's because there's a lot of different things that impact our operating funds in in local governments.

One is the ongoing cash flows and debt service payments and bond proceeds, and there's money in and out.

So we have a program uh to support the city where we're looking at different uh portfolio structures uh for you and use that as as a discipline to make your investments.

But the short-term interest rates really do impact this portfolio a lot.

So if you look at the the box up there on the right-hand side, the three-month bill last year was at a 462, it ended this quarter at a 393.

On October, I think it was October 20th, uh, the Fed moved interest rates, the overnight interest borrowing rate down to uh three and three quarters to four percent.

So we're now going to start seeing money market funds, the LGIP pool rates, short-term rates below 4%.

We haven't seen that for several years.

You can see that's back into that 2022 environment where we peaked up uh at 5% on this graph.

But yeah, we always have to look back to where we were in 2020, where we were darn near zero percent.

So the goal for the operating fund is to create a balanced income for the city that's we can budget to.

Frank works with Stephanie on looking at budget numbers uh for every year for going forward on where the portfolio is today and where uh possible expectations are for different rate environments and what is expected on return.

So there's a there's a lot happening.

The other thing that's interesting, I mentioned that yield curve uh shift.

You'll look at the two-year note on that top part of this graph and see that that really hasn't changed over this last year.

So that's what's happening where that front end's coming down and the long ends kind of holding a little bit more stable.

So at GPA, we expect rates to trend down.

We're not gonna fight this trend, but it's really just how far how far and how low it goes is our big question.

I don't expect it to go back to zero percent.

That would take a major crisis to hit us, and I'm hoping we stay in that three to three and a half percent to provide good returns for the the city and our other local government accounts.

The two the two measures that the Fed is watching to control that Fed funds rate is employment and consumption as well as inflation.

The employment numbers were just now getting data now that the uh federal government has reopened.

We were really on hold of getting any economic um statistics out of the federal government.

The market remained amazingly calm through all that the fixed income market.

We kind of held right here on the two-year note and didn't change, which really surprised me.

Um I think our number this morning on labor was a little bit stronger than we expected, but as long as that stays stays in this trend down lower movement, the Fed will move interest rates down another notch, and that's still priced into the market.

The other data we're waiting on is inflation.

We're hearing a lot about the tariff impacts.

Are the tariffs still working?

Are they are they even in place?

And so that will that will drive inflation, and that drives the longer end of the market.

So we're watching those numbers pretty closely.

And then lastly, is this dot plot up on the left hand side?

I try to bring forward in our reports for you the kind of the themes that you'll see in the news and you'll see on in the paper on key indicators that we're watching.

But with this dot plot, we're watching for that trend line going down.

That means that overall the consensus group of the 18 members of the FOMC are uh they're forward looking as their uh as a group would be rates would drop from three and a half, three and three quarters where we are today, down to two and three quarters.

But you can see there's still a range from four to two and a half.

So that's that's our that's our we're not sure.

But trend line down.

So what we're doing in the portfolio is is looking at opportunities to make sure that we're fully invested, but always having that liquidity on hand.

So for our report, we we cover the compliance report.

So you also you have the policy for the permanent fund, and then you also have the policy for the investment portfolio.

We review this every two years as well.

Um so this is a report that gives you a comparison of your investment positions in the operating fund and bond proceeds relative to your policy limits.

So at the end of the quarter, you end up ended up with 58% in US Treasuries, about 12% in agencies, and the remaining balances were in the bank deposits at 17%.

So we're monitoring and looking at how much you should keep on hand versus invest, and we're targeting right around 20% to maintain in liquid assets, and then the remaining we invest in a laddered approach in the market.

The other part of the policy that you have limits on are your maturities, and so you have a seven-year maximum maturity for any single treasury and agency investment, but we're managing it more to a five five-year maximum.

Um, and then you have an overall weighted duration and maturity of uh one of three years, and you're right now at 122.

So we'll always be well below your maximum maturity structure and manage within that.

The components of the portfolio, we do have two the uh two bond proceeds that we're investing.

One is your 2024 and one is your 2025.

So on the bond proceeds, those dollars are invested based off of expected cash flow that are given from the project managers of those bond proceeds, and so we basically ladder those out to those expectations as maturities occur.

We touch base with Stephanie and see if they need the spending needs to go back to to pay the bills or if it's not spending as fast.

So we're part of the team on those bond proceeds and keeping an eye if we see it not being spent, um, you know, you know, we're we're watching that as well.

And then we do do arbitrage have data for arbitrage calculation, which is required on all bond proceeds.

And then within the operating fund, we have three portfolio components.

We have a cash match that basically goes out and funds your debt reserve, debt service reserve payments, um, and then we have a core investment, and the core investment is the portfolio that we really sharpened up when we took on uh your portfolio there.

We increased the size of it, and you can see the yield there at 396.

We almost are at 4% in that portfolio.

That was kind of GPA's goal is to get our get our core investments anchored down at four, and what will happen is we'll see your liquidity yields come down faster as the Fed moves interest rates down, but our core will hold in there and it will shift down, but won't shift as fast.

So having that nice balance of different components, and we're basically managing your money for the purpose of those monies.

So that helps to ensure in your oversight level that you know there's a reason we're investing in the way we are, and we're monitoring and then doing what those directives are.

And then this is just the quarterly overview of looking at the changes.

So we wrote this report just for the oversight level, so you can see last quarter versus this quarter in our annual report, you'll have a broader picture.

But you can see that the liquidity came down a little bit.

We did increase the core by about seven million.

Um the cash match stayed really stable.

So we've had really stable balances.

You are coming into tax time, so we will do some deployment at that point.

Um, but everything looks really, really good.

Uh we're at 4% on a total yield basis, and we have stable stable durations in income.

So everything looks really tight on the portfolio structures.

And we're really pleased to have gotten that core invested where we did uh before rates shifted around.

And then you're at an unrealized gain at the close of a quarter of 1.8 million.

And then so far we do do uh it's just the first quarter, so you're running at about a 3.4 million in income on a quarterly basis.

Um, and then we do monitor price change as well.

And then the two tools we're using is the direct diversification of types of securities you can do.

Um historically, we wouldn't we would not have this many treasuries, we'd have other yield opportunities in other investments, but uh the tread US Treasury has issued so much, there's so many treasuries out there, and the agencies are not issuing that we just really see the value in maintaining um U.S.

Treasuries uh in the portfolio, and until we see some spread value, uh we'll continue uh with that path.

You do have some uh ETFs in the fund in in a corporate exposure, which is nice to have about a four to five percent exposure in the portfolio.

It is a fund, so you do have um tracking and on that on a mark-to-market base basis, uh, but that adds a little, I call a little salt on the portfolio for flavoring to to balance that portfolio out, and then the other tool we use is maturity, so you can see we have investments laddered across the maturity structure, and this is where our discipline really comes in and keeps us, we know exactly where we want to place dollars when they mature or when we're adding dollars, and we hold a tight discipline to that strategy.

And that is um, I do I do have a couple more slides for you.

We do this is a I gave you the summary of the operating the bond proceeds were in those numbers.

Here's just the operating alone.

Um, so that fund is yielding a 406, and I like to look at the historical data.

So this is one item that we're hearing throughout.

You can guys are a growing community, but we have a lot of our communities that are flatlining after all the federal uh assistance that they have since COVID.

But you continue to grow.

We can see last year uh you were at same time 266 million this year at 285 in your operating uh funds, and so you're remaining stable, uh, and that allows us to stay tight on the amount that is invested relative to your liquidity.

And the bottom table down here is just a review of looking at what's happening to yield.

So because we took some money from your short-term um that were yielding higher when we started uh and invested out longer.

It appears the well, the yield did come down overall, but we're there for the long term where those two will anchor out nicely.

And as far as our risk profile from the oversight level, you're looking at that really stable effective duration that the overall portfolio operating fund is is maintaining about a one and a half year uh maturity structure, and that's what how by design, um, and that's what you should be seeing as that's what we we planned out, and that's the directives.

So clipping about a million dollars a month uh in income uh right now.

That's a little bit more, and then lastly, uh just for reporting out.

So GPA does report on a asset management basis like your SIC.

So those numbers that we saw on the SIC reports were all total return price change plus um appreciate plus interest income, and uh we also have a benchmark like all those funds do, and your benchmark is a zero to five treasury, which on the trailing one year performed at a 390, where uh the investment portfolio itself returned at a 405.

So that's on the core account.

So we're adding uh value through our management strategies, even though we're highly in treasuries, we do do tactical adjustments.

So we're pleased with those results so far.

This uh over a one-year period, and that is it for my report.

The rest of this is just holdings reports for you to review at your leisure.

Are there any questions?

Questions?

No, thank you, Deanne.

Okay, thank you.

Appreciate it.

Next item shows this public forum.

Was there any?

Yeah, Mr.

Any comments by members.

Okay, okay.

I guess that is our final meeting for 2025.

So we will get back together in was it February?

Is that what I remember?

Yes, okay.

All right, thank you all.

This meeting is adjourned.