Good evening.

Welcome to the regular investment advisory board of the City of Re Rancho.

Call on the meeting to order first.

Let's stand for the Pledge of Allegiance.

Liberty and Justice for all.

Thank you.

Next on the agenda, it looks like it's roll call.

Thank you, Chair Wainwright.

Member Bills?

Present.

Member Baker.

I didn't hear what you said.

Member Baker.

Member McCray.

Member Jablonsky.

And Chair Wainwright.

Present.

Thank you.

Sir, we have a quorum.

Okay.

Next.

Let's see.

Discussion and deliberation.

See Clerk Davis to present.

Consent calendar.

Yes, consent calendar.

All right.

If I can please get a motion to approve the consent calendar, which is the approval of the November 19th, 2025 regular meeting minutes.

I'll make a motion to approve.

Thank you.

If I can please take the roll.

Here.

Member Baker.

Yes.

And Chair Wainwright.

Yes.

The consent calendar is approved.

And next.

Looks like we are accepting nominations for chair of the board.

Is this correct?

Is that where I'm at?

Uh yes, sir.

Item number two is the selection of a chair and a vice chair.

Yes, annually we are required through the city charter to go ahead and select the chair and the vice chair.

And so I would like nominations for chair.

I second that.

Chair Wainwright, do you accept your nomination?

Sure.

Accept it.

Okay.

Status quote.

Um for the record, Member Jablonski has arrived.

He arrived at six oh two PM.

Um I will go ahead then and conduct a roll call for Chair Wainwright to remain as chair.

Um, Member Jablonski.

Yes.

Member Bills?

Yes.

Chair Wainwright?

Yes.

And Member Baker.

Yes.

Thank you.

Chair Wainwright remains chair.

And if I can get a nomination for vice chair.

Make a motion to keep Member Baker as vice chair.

I second.

Member Baker, do you accept your nomination?

Yes.

Great.

Uh member Baker.

Roll call.

Yes.

Member Jablanski?

Yes.

Member Bills?

Yes.

And Member Wainwright.

Yes.

Congratulations.

Chair and Vice Chair remain the same.

Thank you.

Next.

Looks like we're going to review an input on the permanent fund performance.

Do we have Deanne Woodring?

I am here, Chair.

Can you hear me okay?

We can.

Okay, well, good evening, everyone.

It's nice to see you.

I'm going to pull up my slide deck and uh we'll review the performance of the permanent fund.

Uh and then I'll also be reviewing the performance of the operating portfolio and the bond proceeds that you have.

So pull the slides up.

You should all have my slides with you.

Technical difficulties.

Okay on sharing.

Okay.

So as many of you recall, I know several of you, the members here are newer.

Uh I just uh became the uh over sight uh advisor for your permanent fund.

One second.

Um Mr.

Chair, I don't see those slides on our screen.

Is it possible to get that on our screen?

Yep, we can now.

Thank you so much.

Okay, perfect.

Uh so I thought I would kind of step back and look at some of the components of the permanent fund.

We will be looking at the investment policy for the permanent fund later in this agenda.

Uh so I'm gonna hit on a couple key points uh for you as board members to kind of consider or think about as we're going through this.

I do, so all the monies up at the uh in the permanent fund are managed by the State Investment Council up in Santa Fe.

All of them are managed by various investment portfolio managers that are selected by SIC.

And I take the data and the equity reports that they're providing from their um RB Coons, who is their oversight consultant, and then I add my own uh commentary regarding the markets, et cetera.

So I just wanted to go through so and and touch on a couple areas to to key in on.

So the permanent fund is invested in U.S.

equity securities that's up here on the top.

You're also invested in international securities, which is represented by the MSCI uh international fund.

So these are the return components for the year of each of these sectors.

Um the jet Japan, United Kingdom, and Canada are just the the countries that we're representing, but it's mainly these two asset classes and then also the government bond market.

So when we're reflecting on this page, we're kind of looking at what's happened to the overall sectors.

I was uh I'm primarily work in the bond market.

I also do asset allocation for the SIC funds for several New Mexico accounts.

But it was amazing when I looked at these returns from the international sector.

So the international sector over the last or so far, year to date, up and for the calendar year has performed at 31%.

So the key when we're looking at these different asset groups is the diversification that you have in this permanent fund.

This permanent fund is a longer term uh initiative, so you have you have a lot of ability to take on a lot of price change.

And since you've started, the price has only been up.

But it's important to have different asset exposures so that when one sector does well, usually another sector doesn't do as well, and that's that diversification component.

So when we look at how you're invested, they're gonna be tied back to these indices that uh SIC manages each of your components for.

And the equity market, as we all know, has been really strong into last year.

It did slow down a little bit this last quarter, and we are hitting some bumps in the tech sector.

Um and the international market, as I just mentioned, is really on fire and it continues to uh be accelerating.

You're also exposed in some real estate uh exposure.

Uh and these asset classes I'm gonna talk about because we're gonna be looking at that within your policy as well.

And then as far as the bond market, bond market also here to date has had very strong returns.

Uh we've we've coming off a very high level of interest rates from 5%, which we hit back in 2024, and interest rates have declined dramatically since that period.

The investment component of the permanent fund is has a much longer duration than your operating funds.

So that means that when interest rates drop, you get a much quicker or larger appreciation in those bonds.

So the things that are impacting our interest rates, I'll go into detail uh in my session on the operating account, but we're mainly focused on inflation and what the Federal Reserve is doing and what employment is doing.

Right now, the uh employment numbers are providing an opportunity for the Fed to drop interest rates again lower in the very short term rates.

Um that is impacted by uh the Fed what the Federal Reserve does.

They dropped the Fed funds rate three times last year in 2024, and we're anticipating another two times or a 50 basis point drop this year.

So all those trend lines means that there'll be appreciation in the bond portfolio, uh, although you are exposed it a little bit longer, and there may be some inflation impact that will get stirred by that.

But again, real positive returns here for the uh year so far.

And then this detail of this report is looking at the actual funds that you own uh in the uh in the uh permit fund.

So you own the large cap fund, you own the small cap fund, and this is all their indices that they direct their portfolio managers to manage to.

And so when we look at these comparisons, my eye always kind of draws to well, how's the active portfolio doing relative to the benchmark?

So passive portfolio doing relative to the benchmark.

Active means you've got the active portfolio managers that are really stock pickers and really selecting.

Passive means they're pretty much matched to the index and they just stay consistent.

Many of you have probably read over the years can you really outperform the indices?

Can you outperform the market?

And there's a lot of uh questions out there on whether you can or can't, uh, but that's what I kind of look for when I'm looking at these numbers.

Um, and there are there are small fees on all these funds.

I just went back and tracked every single transaction that occurred from the start of this fund in 2023.

Um, and the the fees are pretty limited for you uh when we look at that.

Then you have the real estate pools down here that these look like really complicated uh indices, but they're basically inflation types of numbers that we can compare the real estate market, and the real estate market has struggled.

Uh it only performed at 2.3% over this last year.

Again, that's a diversification tool.

So the international funds are doing really well.

The real estate hasn't done as well.

And that real estate and that real return pool portfolio uh was brought in just at the beginning of last year by the prior manager, and I'm familiar with them, and we're looking at those as I go through and look at kind of our next step that which I want to cover with you next quarter is the asset allocation balances.

And then in the fixed income portfolio that performed at 730, um, and you have a credit uh portfolio in the in the um permanent fund.

So I did step back so uh for a little bit of history.

So this portfolio started in Jan 1, 2023 with a seed money of 10 million dollars.

Uh in 2023, there was also a small contribution of $2 million, and then in 2024, there was another contribution of a million.

Uh no funds have been taken out of the portfolio uh to date, and the earnings in uh 2023 was about a million five eighty-three.

In 2024, a million two fifty-three, and in 2025, 2 million 57.

And so these numbers uh Stephanie will be reviewing with you when you're making a determination of of what you're doing with those allocations and how much uh you as a board can look at uh allocating out after year end.

The returns I'm Stan, I'm sorry, this is Stephanie.

I just wanted to the uh the the small donation in 2023 was only two thousand dollars, not two million.

So just wanted to.

Oh, I'm sorry, did I say two million?

I meant two thousand, sorry, but thank you.

Sorry with that.

Thank you.

Um so this, so it's really quite phenomenal how well this portfolio has worked.

It basically contributed at 10 million in 2023, and you ended the market value at 15 million, eight ninety-six.

So that's kind of the big picture of the portfolio.

And then this is all the detail of the funds that you currently hold.

So as we get into the policy later in this discussion, I am going to be doing a full asset allocation modeling to evaluate the variances of the active and passive and and look at this mix.

You're very diversified.

As I mentioned, you just added the real estate and real return pools at the beginning of last year.

And so this is your quarter to date uh earnings were um increased up to 15 million, so you earned about 375,000, and then since fiscal year 1 million 137.

And then these are all primarily the fees that are in the funds.

And then when we look at asset allocation, the current policy is looking at a 37% allocation to domestic equities, a 20% to international, a 5%, the current allocation 5% to real assets, and then 38% to fixed income.

Your target allocation from policy is written so you have 39% domestic equity, 21% international equity.

There isn't anything stated in policy on the real estate real asset allocation.

So I wanted to address that in policy update and the fixed income portfolio at 40%.

So what we're looking for is a board and oversight of these funds is making sure that you're aligned to your targets.

So you're pretty close, with the exception of not having any anything in there for real estate.

And that's something that we'll address both bringing that into policy, and then next quarter, I'll be bringing some asset allocation information for you.

And then this is a summary for policy, which I'll wait for Stephanie to present on this, but I did uh notice a couple components.

And I just wanted to give you that background while I was presenting this section that it's really the real return assets that I'm recommending to add into the portfolio asset allocations.

They're listed in there, but they're not part of your strategy.

And when I look at the allocations, I'm recommending to have your target right where you are about 5%.

And every whenever we're building asset allocations and targets, we look at the target and then we look at a range because what we want to be able to do is rebalance when if equities do very, very well, that portfolio that we have positioned at 55% might go up to 60%, and that's a trigger for us to go back and rebalance to our target.

So when we're looking at all these different assets each quarter, I'll be evaluating how far off you are, and then we'll recommend a rebalancing from maybe uh and you've done this quite a few times over the years, but you've reduced your equity position and moved it back to fixed income to keep that 6040 allocation.

So with that, is there any questions?

Questions?

Doesn't look like it.

Thank you.

Okay.

Um so now I'm going to go into the operating funds.

The operating and bond proceed fund is what GPA manages on individual security selection.

I work very closely with Stephanie on all decisions there at the city.

Uh I wanted to talk a little bit about the changes in short-term interest rates because these really impact the selection of the securities that we're working in.

We look year over year in 2024, the short-term at the Fed funds affected area was at 432 yield.

And uh in 2025, it dropped all the way down to 363.

The two-year note is the area that we invest in dropped also from four and a quarter down to about 348.

So the key elements that GPA is focused on for the city is to balance how much money you leave on hand and how much money you need to leave on hand and liquidity versus how much you're investing.

And uh since we started on board with the city, we really built up that core fund side.

We have an opportunity at higher rates, and you're gonna see the results from doing that.

Uh, then we'll consistently that higher earnings yield that was purchased back in these four percent environments will hold up that yield for the county, I mean, excuse me, for the city as uh interest rates change.

The key things that are driving this change in rates is we'll hear more about the Federal Reserve.

We just had a new chairman uh put in place uh and was announced in January.

He is supposed to be taking over in May.

I have been extremely amazed at how quiet uh overall the fixed income market rates have been with so much turmoil going on in the world and in the markets.

We've really ranged between 340 and 370, uh, which is a pretty tight range.

Um, and the anticipation is down there in that bottom graph where the market, we can look at bonds and read what it's anticipating in future rates, and it's is and just is uh anticipating declining rates, but not too bad, down to three percent.

To give you some historical perspective, in 2021, that first graph I pulled up, we we were in a 1% to a 0% interest rate environment.

So the amount of earnings that we're able to earn on the portfolio in this three to four percent environment is substantially increased.

However, we do expect those earnings to drift a little bit lower as these rates trend down.

So this is all about kind of managing those expectations of what's going to happen within the portfolio.

Uh we also look at duration changes and the exposure of your portfolio.

So normal markets investing longer in the uh investment cycle should achieve higher returns.

I'm happy to say this last year we did get those positive returns, and this price is in and compares really like your SIC money where we're looking at price change plus interest income.

Last year for the calendar year, the sector we're investing in earned about 544.

You're right here in this zero to five year sector, whereas short money or holding in cash only earned 432.

So we're back to normal performance.

The last three to five years has been really rough, mainly because of the big jump in interest rates.

But I think going forward, coming off these higher levels, we should continue to see that trend.

Then we are not looking at this the city's investment policy, but that will be, I think, next quarter, Stephanie, right?

So your policy dictates how the securities are invested.

The guidelines are both your policy as well as state statute.

So we're actively involved in looking at any changes that are occurring in statute or how your portfolio is positioned relative to that.

So at the end of the calendar year, the total portfolio bond proceeds plus your investment portfolio was pulling about 64% in treasuries.

And that's because there wasn't a lot of opportunity within our other sector that we're able to wait into agencies.

There just wasn't a lot of added yield.

So we've mainly been writing with higher components to U.S.

Treasuries.

We will look to add to the other sectors when we see spread relationships, and then the balance of the portfolio is invested in money mark of our bank deposits at Wells Fargo.

So that's your liquidity component, and then your investment component is in treasuries and agencies.

We also have a maturity limit by policy, you're allowed to go to seven years.

By practice, we really stay in that five-year maximum maturity area.

The supranationals, we don't have any in the portfolio right now, but uh your maximum level um your maximum maturity on those is five.

So all these rules keep the portfolio safe, keep it in with guidelines that's appropriate for operating type of uh investments.

Then we look at the portfolio, there's a couple components.

You have bond proceeds that were issued for dedicated purposes.

These portfolios are laddered to expected cash flows, and we're constantly looking at spend downs on those and if you need those funds.

Uh, we just started the 2025 last year, and we have 2024 that is spending down.

Uh, we also have what's called a cash match portfolio, and that portfolio is invested to meet your debt service payments.

And then we have a core investment portfolio, and that's money that's dedicated for longer-term budgeted items, but money that you don't need to leave on hand.

And that's our real anchor that's invested at 4%.

Um, and that will drift a little lower, but we'll we will see these liquidity numbers come down faster.

So when we started working on this, the yield on the liquidity was actually higher than our investments.

Um, and now we're seeing that reversal.

So as those short-term rates come down, this 4% will hold the portfolio up quite nicely.

And then four-year quarter report, we look at changes.

So we did uh overall on your earnings yield went from a 407 to a 397.

That's mainly because of these drops in the liquidity rates.

Um, and we did have a little bit of drop in your cash match portfolio because we were reinvesting at lower rates.

Again, all expected as an oversight board, you want to make sure that the portfolio is doing what it should be doing in interest rate market changes, and and it is, it's it's coming down a little bit, but not rapidly because of that diversification of maturity.

The unrealized gains at the end of the year were uh up $2 million.

So just rates came down, so the price and the value of the portfolio went up.

We look at a couple other tools with this portfolio.

We make sure we are diversified.

We do have one super, I think I mentioned uh we were low on that, but we have one supernational, a few agencies, and then we're using the you do have a uh high grade corporate fund in there, and then the remaining is all in U.S.

Treasuries.

This is just another way of looking at those various uh asset allocations.

And then we also diversify by maturity.

So those are the main tools that we have to maintain stability within the portfolio.

This is just focusing on just the operating components.

You ended the year at a market value of 282 million.

And the earnings to date fiscal year so far is 5.7.

So we're halfway through, so you should be earning right about 10 million uh on earnings income coming into the fiscal year end.

And then this is the last slide in here to look at overall balances.

So this is where we look at the health of the city and the growth.

You guys are a growing community, so we'd expect to see these types of stability uh in your numbers.

You are up a little bit, about 14 million this year from last year.

And when I look down here at the earnings, we have stable earnings, we have relatively stable book yields with that trend line down, and then stable durations.

So everything's sitting really well positioned for a declining rate environment.

And I'm really excited about the increase in in dollars that we did get invested in that higher um income period.

So we do track total return and performance of the portfolio, like your SIC funds.

The yield earnings are not quite as fun as that international uh portfolio, but the total return for the um investment portfolio is about 561.

I mentioned that benchmark of 544.

So we're outperforming due to um tactical allocations that we're working on in the portfolio.

And that is it for my report and stand for any questions.

All right.

Thank you, Dean.

Uh-huh.

Thanks.

I'll call on Director Yara with the permanent fund investment policy statement revision.

Yes, Chair Wainwright and members.

Um according to um your charge, the first meeting is both to look at our permanent fund investment earnings and and um weigh in on their use and also to look at the permanent fund investment policy statement.

Um Deanne has actually went ahead and provided some recommendations that she saw based on our our asset class classes and the allocations.

Um I did not prepare any uh different recommendation for you to review.

Um and if any of the members have their own recommendations, we can certainly discuss that and um send that up to the governing body.

So I'm not sure if Deanne can pull up her um yeah, I can pull that up.

Thank you.

So it was really um some small uh changes on the policy.

Uh so I I wanted to correct some terminology that was in there.

One is you were uh giving the authority to an investment manager of external funds, and really the SIC is your is an investment advisor.

Um the investment guidelines, I wanted to their description of real returns, as I mentioned, were in there, but there wasn't anything addressing how much you should buy.

So that again, that was purchase.

I'm fine having those in the portfolio.

I think they're a good diversifier.

Uh I wanted to set a target of just 5%.

Uh so it made that recommendation in the asset allocations.

Um, and then change the selection of investment managers to investment of external investment pools, and that's more of a language of how SIC is structured in that they call it pools.

There's they you know they have a lot of different buckets of money up there at SIC, and these in internal external pools are available for local governments like yourselves, and they are limited.

So it was important just to distinguish that those are the pools that local governments are allowed to purchase, and that's what you're investing in.

And then recommended to add the uh real return constraint and clarify how the performance uh is being tracked and run.

So I'm not running the full performance numbers.

I don't have all those details to the those specific indices that SIC does, very few managers do.

So I am utilizing the consultants data, RV Coons that provides that to SIC to share and pass on to you.

So those were the main changes within the policy, and I can pull the policy up if that would be helpful.

Okay.

So Chair Wainwright and members, if you have any other input, um we can um I I think you can entertain a motion to um recommend Ms.

Woodring's um changes or other changes or no changes.

Um we can certainly talk about that more if you need more time to review the policy.

Woodring's um changes or other changes or no changes and we can certainly talk about that more if you need more time to review the policy motions or suggestions, comments I make a motion to accept the the changes as proposed or second second seconded and discussion.

Thank you.

Member Jablonski?

Yes.

Chair Wainwright?

Yes.

Vice Chair Baker.

Yes.

And Member Bill Upps.

Thank you.

Yes.

Motion has been approved.

Final item I see, recommended uses of the 2026 permanent fund distribution.

Which is that two million that she had brought up, is that correct?

Yes.

So Chair Wainwright and members, um, again this meeting, the first quarterly meeting of this board is for you to provide a recommendation to the governing body on the use of the earnings of the past year.

Um I just wanted to bring up the background on your authority over uh these recommendations.

First of all, the permanent fund was created and gave the governing body the authority to um decide really decide on how the earnings every calendar year would be either um reinvested, um placed into the general fund for use or um however they see fit.

Um the investment advisory board is given the charge of reviewing um the results of the previous year and making a recommendation to the governing body for their decision.

So as Ms.

Woodring stated, um the current market value of the permanent fund with SIC is fifteen million eight hundred and ninety-six thousand dollars and some change.

Um, the history of the fund, um the original contribution at its inception was 10 million.

Um between 23 and 24, we actually added uh a million two thousand to the corpus.

That was from Cell Taler Revenue, and then a small donation.

Um and over the past two years since the fund has been in place, we the city has reinvested all of the earn the 50 percent of the earnings um back into the fund.

Um total earnings of the fund beyond the corpus from inception is about 4.7 million dollars.

In 2025, we had a great year.

Um the fund earned a little over two million dollars.

Uh 50 percent of that will go back in uh and being reinvested per the ordinance and the governing body will decide on the use of the other half.

Um you can provide a recommendation on the use of the 1,028,605.

Um it just to kind of backtrack to the city's financial position um and policies.

Um the city does have a five-year financial plan that is updated at the end of every year.

Um to anticipate what future projects and revenues that we would need to to operate the city and if there are also any capital needs that we can't fund through grants or other sources.

Um just to remind everyone that the permanent fund was established to provide an ongoing additional source uh of funding into the future.

Um again, the results the ordinance allows the governing body to add to the fund at any time by resolution.

Um some kind of things that are going on the capital side.

Um we the city has requested from the state some monies um to support some strategic plan items, quality of life items such as um constructing additional baseball fields, um, a multi-purpose sport court at Havasu Falls Park, um replacing uh the children's area at Esther Bone Library.

Um public safety, um there's always a need, of course, for additional um equipment and apparatus, fire trucks, um, trailers, and then of course police vehicles are also um always needed uh for replacement.

And reconstructing pedestrian curbs to comply with the ADA.

Staff recommendation for the use of the 50% is to reinvest this money into the permanent fund.

Right now, the general fund is pretty healthy.

Our capital funds are doing very well.

And as you saw, our our main our total or the main portfolio has done very well this last year.

So we don't feel there's a need to carve this money out for any operating use right now.

That's my recommendation.

The other options are to utilize this money to shore up funding for those projects I just talked about.

And in what amount.

Right.

So the um they will decide that I think this week.

Um the amounts that are are shown are the total amounts of those projects.

We have asked for partial funding.

Um the state will ask for a match.

Grants and stuff.

Yeah.

Yeah.

Okay.

Um but by next week.

So if we said something towards that, we wouldn't necessarily have to just say something specific.

We could say just the capital expenditures, whatever is needed to be remaining, and then anything left it looked like would go back into the permanent fund.

Right, if if that's the recommendation the body would like, yes.

Just for policy, is there a way to have because we have the investment policy on this permanent fund?

Yes.

Is there any way to inside that represents portfolio A and Portfolio B?

And portfolio A follows the guidelines.

Portfolio B has its own separate guidelines of like FDIC insured short-term money markets, daily liquid only, and that would be the rainy day fund.

And they'd be driven by the same investment policy, just AB, so that we open up another account, and that is just going to be the money we decide to take out in a good year and park it there.

That that money can be spent in any any year, because I want to tell you, if we're going to get to the point where, oh man, we really wish we had this money, it's going to be a bad economic cycle.

And we can't take money out in a bad economic cycle.

Um yes, I think that's a possibility.

That's something only that the governing body could decide on.

Okay, I would like to.

And then uh within one document, and the second document only has safe short-term liquid investments, which should be money markets, federal.

We can go into the details on what that looks like, but that's not hard to find what those are.

Right.

And then um, just have a separate account because if the Securities Investment Council puts that in money markets, there's not going to be an advisory fee on that.

And that money is available.

So if we accumulate up to half of the earnings and years that are great, we now have a pool of money for when the years are not great.

And uh that's how I operate personally, and I think that if the city ran that same way, it would it would eliminate those risks that we don't realize aren't going to happen just yet.

If you go back in time and you find when the city might have struggled, the stock market was struggling really bad.

So we're gonna have that same thing.

And I think that my my recommendation has been discussed, uh, but I feel really clear that if we were able to do that within one document, it doesn't get complicated, and the money doesn't have to go to the general fund.

Because if it goes to the general fund, it's gonna get spent.

That's just how the cities, that's how most cities work.

And I'm sure ours isn't any different.

And that was my understanding for when it was explained to me how this would work.

So that's a recommendation I like to see in the future discussed.

Now's not the time, but I think we've discussed this to the point to where I'm and where I am at right now.

Okay.

Okay.

Chair Wainwright and Member Baker, um, I can certainly work on getting something drafted to that effect and have it for you to review at the next meeting if that's what you like.

Okay.

Um I I also want to comment that um comparatively the city of Rio Ranto has a pretty um conservative reserve policy in the its general fund 25%.

Compare that to the city of Albuquerque, who is just operating on the uh D New Mexico DFA recommendation of 8.33%.

Um there is also other ways to create maybe a stabilization fund within the general fund reserve, which it would be similar to what you're talking about.

Um we do maintain about $50 million of liquidity that's in the overnight repo and money market.

So that would we could also think about that as well.

So uh Mr.

Chair and Director, um in regards to that strategy, I I think we could definitely put it in there.

Um would there be a restriction on earnings in taking that out?

So like let's say you took that million dollars that you are not um giving this year.

Basically, what you're trying to achieve, you're taking you're taking money off the table and putting it in a less volatile sector.

So we could totally easy to track that and run that.

I just want to make sure how that would be applied.

It's basically you're giving yourself a liquidity portfolio like what we're doing in the core funds in the operating funds, but it's still maintained in the permanent fund.

So I I think it is doable.

I just would question I want to make sure that how you pull that out so you couldn't come in in the middle of the year and say we want to take that money out, or could you?

I that's more of a question.

Or would you?

It wouldn't have these restrictions that are on the permanent fund that say that we can only take out earnings in the year.

I think if you put it into a holding account, account B that those restrictions are released, that we can take that money out at any given time that the city might need to.

So that so we can we'll look at that and see how that wording flushes through.

So you're basically saying we would take the million dollars that we have earned and have the ability to apply to the city.

We're gonna pull that out of the permit, the SIC funds and have a set account that that will reside in.

Right, but only up to 50 percent of the earnings.

50 percent, I think is reasonable because then you're leaving the other half behind.

Or using it for whatever you want to use it for that year.

I guess that would be the question, then to go back to within the policy is to see if then you could take that out mid-year, so that's more of a as uh coordinates thing.

So I just want to make sure we we let that through.

And and um Chair Wainwright and Member Baker, I think that scenario would probably need a change, a slight change to the ordinance because that's what governs a permanent fund.

But yeah.

So do we need to make a recommendation tonight as far as that 50 percent of the earnings that over a million dollars, or when would that need to be recommended to the governing body?

Chair Wainwright, um, so the first quarterly meeting is set out in your ordinance to to make this recommendation.

Um we can certainly defer that if you don't have a good motion today.

Do we need to get governing?

Do we need to get a uh a draft of what the wording would look like and what this the you know what's the process to make this happen first?

Is it doable?

Because I've hitten some walls that say it's challenging to do this because what goes into the general fund.

So maybe we should do some more homework to find out the what the process would look like and if it makes sense, and then from that point create some language around it and then have the discussion.

Is that where we're at?

Um Mr.

Chair, I think what I could do, because you have a cash component on your liquidity.

You don't see it on your policy, but there is a cash component.

So that's effectively what you're saying is take the money off the table and put it into cash.

So the one thing I wanted to bring forward next quarter was to look at the modeling and the asset allocations.

Um if you you would be keeping it in the permanent fund.

You're not taking it out of the permanent fund.

It would just be sitting in there, and we would just add a cash component.

So I think it's doable.

If that's it, it doesn't go out of the fund.

It's staying in the fund.

And then someday you could come back to it and then and that the mark has shifted a lot and said, hey, let's put some more money back in.

We don't need it.

You would have that ability to do that from uh from an asset allocation basis.

That would uh that would skew the numbers for asset allocation on portfolio A, wouldn't it?

I would I could bring it into that to do the same thing and put a range on cash, basically.

So we could establish and say that you are able to have up to 10 percent in cash, but you could go to zero to ten.

And that's how you could control it, it would stay in the permanent fund, though.

We'd have to track how much was moved over because you can only access to the amount that was moved over and not beyond that.

And if we had extra cash in a year, it could cause complexities, couldn't it?

Yes, I think so.

That part I don't know.

I don't know if you have to wait till the next year, and then that's part of your earnings if you pulled it together.

So yeah, it it does become more complex, definitely.

If you separate it, you would identify that amount of separating and having a portfolio B and a portfolio A and having a guideline in a document that references portfolio A with a different investment strategy than portfolio B allows us to see what is in portfolio B at any given time and be able to pull cash out of that at such time that we don't have market earnings and we do need to do something important.

It may never happen.

Rear ranchel is doing well.

Um it it historically I'd like to model if this was ever a possibility.

And the most I could come up with was uh seven, eight, and nine.

And uh 2000, 2001 would have been really good years to have a little bit of extra cash on the side.

But we made it through those, period.

That's what I can do is I can model it back and say, you know, how that fund could go 15 million back to 10, right?

If if we really got hit, that's dramatic.

But um, so that's what you're trying to protect against.

So that's why I wanted to do the modeling for you to really help you guys get some additional input into why you're why it's diversified the way it is.

Um and we can I can put a cash component in that modeling, which is effectively what you're trying to do.

Does it make sense to you this idea?

I I it does make sense if you keep it in the permanent fund.

Um I don't I can't go there on what I I don't know the ordinance parts to take it out of there, and I don't under I don't know the limits of you really being able to say that was our reserve now let's say it happened you had the million dollars over there and now we're in 26.

I don't know if you can call back.

That that would be an ordinance discussion, I think.

Yeah, we have to do that.

Yeah, you're not able to take past years earnings out of there.

So you're you're you're making that decision.

So I don't haven't been on here enough to understand that, but I think that's um I I get what you're trying to do.

You're just saying I want to I want to build up a reserve, but I think I think it is better to keep it in here than send it to general fund because it this you don't the general fund doesn't need it.

Um I just don't know the the ordinance part.

Well the general fund it will get spent.

There's a possibility that it will just get moved into something.

Whereas this would still stay part of the permanent fund, it's just portfolio B.

All right.

I uh my motion is that we table this to try to find out the process and if this is doable.

Because if we try to make a motion, I don't know where we are on this, but I think we should probably do some homework to find out is this actually doable to have fund A, fund B have a guideline that references fund A, fund B.

Fund B's investment policy is gonna be one statement, probably one paragraph.

And then have two accounts.

Maybe that's an accounting pain in the nightmare of some sorts.

Maybe it's doable, maybe it's easy.

I think we should investigate.

So how do we table this to do the homework?

Can't do that?

Mr.

Mr.

Chair, I think that um pending further discussion on this idea, I would like to at least have a recommendation to keep this money in the portfolio for now.

Um here's my recommendation.

I I let me m move something.

I move that we do what the staff recommends, which pushes back into the permanent fund.

And during the year we look into this possibility of creating this second cash account or whatever into the permanent fund that uh as we go.

And the reason I I make this motion and you know uh uh you know not look at look at doing that right now is because according to what Director Yara was saying, we have a 25 percent, I believe is what you said in the permanent fund already that can be used for something like this for emergency purposes.

And so we don't need that right now to be set up at this point, and as you were saying, as everybody was uh uh eluding to, we're doing well right now in the in the uh uh you know in the city, and so I my motion is that you know the board consider us what the staff recommends, which is putting these um this distribution back into the permanent fund.

Who's taking that motion?

Thank you.

Um Member Bills?

Yes.

Member Jablatsky?

Yes.

Member Baker?

Agree, yes.

And Chair Wainwright.

Yes.

Thank you.

We will be reinvesting.

So recommending reinvesting.

Yes, recommending the reinvestment.

Uh even if we had that other account set up, I still would have said I would have recommended leave the money in the account.

I just think that that's planning way in advance of something that could happen.

And it gives us some flexibility.

That's the only reason why I'm even making that idea.

Maybe we discussed this.

Man, it's hard for me to figure out.

I've talked to some people here, and it's it can be done, it can't be done by talking to other cities.

That's too complicated.

And they're in New Mexico.

So how do we do the research to find out if this can be done and talk about it in the next meeting?

Yeah, Chair Wainwright and Member Baker, I I'm not saying that it can't be done.

It's just we have a lot of legislative things we would have to go through.

Um and bring in front of the governing body.

So background, do some yes and not have DM look at uh you know uh possibilities as far as the numbers go.

And right.

And I think member Baker, what you're suggesting is actually just a re revisiting the composition of the permanent fund and how it's getting invested and where things stay and don't stay.

So on to the final item.

Is there any public no one has No sir?

Okay.

Nobody's come to speak.

Any more comments by the members?

No.

Then I adjourn the meeting.