All right, well, good afternoon, everyone.

Welcome to the Administration, Investment, and Fiscal Management Board meeting for Thursday, November 20th, 2025.

Clerk, can you please call the roll?

Thank you, Chair.

Member Tamayo?

Present.

Member Colville?

Here.

Member Zemanjian?

Present.

Member O'Toole?

Present.

And Chair Coletto?

Thank you. We have quorum.

All right. Thank you. So please rise if you're able for the land acknowledgement and pledge of allegiance.

To the original people of this land, the Nisanan people, the Southern Maidu, Valley and Plains Miwok, Patwin-Wintoon peoples, and the people of the Wilton Rancheria, Sacramento's only federally recognized tribe,

may we acknowledge and honor the Native people who came before us and still walk beside us today on these ancestral lands

by choosing to gather together today in the active practice of acknowledgement

and appreciation for Sacramento's indigenous people's history, contributions, and lives.

Thank you.

Salute and pledge.

I pledge allegiance to the flag of the United States of America

and to the republic for which it stands, one nation, under God, indivisible,

with liberty and justice for all.

All right.

It's hard.

It's a lot.

So first we'll take up the consent calendar.

Before I ask for a motion,

were there any questions or member comments on consent?

I just have a question on the resolution approving

and retaining outside counsel item.

I'm just looking for a little more information

than what was included in the packet.

Just generally, what is the outcome that you're looking for?

or staff on this?

And then is there sort of an estimate

or some sort of scale the size of the surplus?

So as to the scale of surplus,

the actuary's gonna speak later,

and so we're gonna come in around 110%

as of the previous fiscal year.

So any surplus that's out there,

you know it's gonna change based on our valuations

all the time, so there's not like a fixed number.

But we were told, the plan was told decades ago that in order for any potential surplus to be accessed or used,

it needed to be called out in the charter.

And they never took it up in the 90s.

And so we, myself, and our council do not have that expertise.

So we've been working actually for, I think, two or three years to find outside council that had this expertise.

So basically the scope of the work is just to help us talk through and try to figure out how we would potentially be able to get that language into the charter,

which would have to be voted on.

And then what happens with that surplus, that's a whole different conversation.

But it needs to be, per the IRS regulations, the surplus has to be called out in the charter.

So we have to address this.

I mean, it's been something we've been working on for eight or nine years.

And so now that there is actually a surplus, people are a little more interested in actually making this happen.

So that's why we've retained the council.

Thank you.

Thank you.

Is there a motion for consent?

I have one more question.

That's okay.

So I'm hoping really the city attorney committee clarify.

My reading of it could be completely different, but Section 393, it says management or cost incurred for management and investment of funds.

I mean, does this qualify as something pertaining to the management or investment of the funds?

Because it seems more of a city governance type of situation that we have to handle, and wouldn't that be then something the city pays?

I think it's, you know, and I'd have to look at the language from the, in front of me, but we've looked at the language in section 393.

And it, you're talking about essentially the management of the funds.

There are questions about what to do with the funds.

Obviously, you know, if you have more than sufficient money to pay the beneficiaries, you know, the question is what to do with the surplus.

You can't just let the surplus continue to get bigger and bigger.

The fact is that the charter and the city code didn't sort of take into account what would happen at this point.

And so, yes, we need to know.

And it is about, if you will, management of the funds.

Absolutely.

Yeah, it just threw me off a little bit because I think the city covered or the treasurer office covered the first initial portion of it.

So it just seemed that there might be some gray area there where it might be considered as something that we have to pay for or something that maybe the city pays for.

So I do know, and I don't know the exact section of the code, but it is called out that for external legal counsel that the fund should pay for it, not the city.

So that's what we're going off of.

The treachery opted to pay for the initial analysis because we had actually engaged a couple different attorneys down the line.

and we ended up just spinning our wheels.

So in order to not go through and bring something to the board

and then end up having an attorney that couldn't help us,

the treasurer opted to pay for the beginning just to make sure we actually had what we needed with this council.

Yeah, fair enough.

I just wanted the city attorney just to clarify the language because it seemed a little vague.

I'm looking at the language right now.

Basically, hold on.

I mean, I think that really what it shall not be considered costly, shall be considered a charge against the assets and a portion among the fund.

And I just don't think that there's any question that we're talking about the management of the funds here.

And so that's why we were comfortable with this because, I mean, what else is this?

I mean, other than what to do with surplus funds, you know?

The fact is we have more than enough funds now to meet our responsibilities to the beneficiaries.

We have nothing in the code that addresses what to do.

The city itself, you know, doesn't, you know, it's not the city's funds in a sense.

They're the funds, if you will, of SCRS.

And so ultimately it makes all the sense in the world for the SCURS fund to sort of deal with how to manage its own funds.

Additionally, I want to add to that, if the city was paying for the attorneys, then there might be a bias towards their response, too, I think.

Yes, that's true, too.

But I would say in any event, it's very simply a situation where you have 110% right now.

But my guess is because of the actuarial tables, two years from now, it's going to be substantially higher than 110%.

The problem is just going to keep getting bigger, if you will, of what to do with the surplus money.

So is there a time frame that we have to have this figured out by?

Well, we have one active employee still.

So we haven't really hit a closed nature of the plan.

And so there's going to be triggering language that we have.

So depending on when this individual retires, we can move forward.

Okay.

Are there any other member comments or questions on consent?

I'll move consent.

We have a motion.

Do we have a second?

I'll second.

Is there any public comment?

Thank you, Chair.

Chair, we have no public comment.

All those in favor, please say aye.

Aye.

Opposed?

Abstentions?

Okay, motion carries.

So the next item is the quarterly investment performance report.

Okay, thank you.

Good afternoon, everyone.

We actually have two reports here because we didn't meet during the summer.

So we have both a second quarter report as of June 30th and a third quarter report as of September 30th.

So let me start with the second quarter report.

and this in some ways is ancient history but just a quick reminder what's been going on in

in the markets uh which is a lot um liberation day was april 2nd jeff can i just get you to come

forward to what for that'll no just come to the forward the most recent report we don't have a

problem with that do they want to look back six months do you want to see the performance of the

fiscal year, which is in this report?

Yeah, that's true.

Okay.

That'd be good.

Let me.

We don't need the commentary.

Okay.

Okay.

So this is performance as of June 30th.

So the close of the fiscal year,

you can see the second column there,

10.6% return for the fiscal year versus the 6% actuarial

assumption. And the 10.6 was also a little bit ahead of the custom benchmark. And the

individual components are shown down below. Any question on that?

No. Great job.

Let me get to the third quarter report.

thing I would remind you is that as of July 1st, the policy allocation to international equity,

which had been 2.5 percent, that was gotten rid of. That money was put into fixed income.

So we had another strong quarter of stock performance following the second quarter.

Yield curves are here on the upper right. The Fed actually cut rates, you remember, in September,

the first move they'd made since December of last year.

They cut again last month.

We'll see if they cut next month.

After today, it's appearing less likely.

But with rates generally falling, bond prices went up,

so had positive returns on stocks and bonds.

Here are allocations.

Allocations, the one on the left is the most recent quarter here.

And here's another view of that.

If you combine all the equity together, 59.1%.

And here's relative to policy, so slightly underweight in the large cap growth,

slightly overweight in the equity income and cash positions, but small amounts there.

And performance, so this is as of September 30th, again, very strong quarter, almost 5.5%

in absolute terms. So that's a nice start to the fiscal year. And that was, again, ahead

of the custom benchmark. You can see the individual components, the growth portfolio basically

in line with its index, which is the S&P 500. The equity income outperforming, this is the

value index that it's compared against. And then the fixed income portfolio down here

at the bottom also with some slight outperformance, but positive across the board in the quarter.

I mentioned today's news. Obviously, the last week or so, October was another strong month.

stocks and bonds were up.

Last week or so has been a different story.

A little bit of concern about, I guess,

spending on artificial intelligence.

I think it was Meta, Facebook,

came out a week or two ago with their earnings,

talked about how much they spend on artificial intelligence,

and their stock was down 10% in one day.

Markets kind of saying, okay,

we need to see some returns on this spending.

NVIDIA had a great announcement today.

Stock market took off.

A surprisingly strong jobs report came out.

This, I guess, was delayed because the government had been shut down,

and that seems to have spooked the market, and it ended up, well, last I saw, it was down a percent or so.

That all changed within the time I drove up here from the East Bay.

So volatility continues.

And I mentioned the Fed meeting next month.

That strong jobs report is kind of leading to the idea that, okay, they're not going to cut rates next month.

Inflation is still higher than they like.

And they were sort of concerned about employment, job creation, that sort of thing.

But based on that report today, things look pretty good.

so then they pivot back to concerns about inflation,

and the idea is that that will cause them not to cut.

We'll see.

Chairman Powell last time said, you know,

basically it's really up in the air whether they cut or not.

So they've got some more data to look at before they meet.

But as of today, it's looking a little less likely.

But I'm not going to predict.

Any questions?

Can I get a motion to accept the investment report?

Both 9 and 10.

9 and 10, yeah.

I'll make a motion.

Second.

Second.

Do we have any public comment?

Thank you, Chair.

I have no comments for either items 9 or 10.

Okay.

We have a motion and a second.

All in favor, please say aye.

Aye.

Aye.

Any opposed?

Abstention?

The motion carries.

So now we'll move on to the quarterly investment report.

And do you wanna take them both together?

Yeah, I can take them together.

I'll just briefly touch on

if you want some good

as the whole other conversation.

I just wanna point out that report

that our tenure average now

8% a year ago, it was,

a year ago June it was 7.4%.

So we're seeing the long-term returns

really starting to pick up as some of the,

there's a couple years in there

where we had negative returns.

So they're getting muted with the positive returns of the last few years.

For the fiscal year, the option program was up 0.10%.

I'll touch more on that when we get to this quarter's report.

And then lastly, in the fixed portfolio, we were and we still are short duration, short maturity.

So I anticipate underperforming the benchmark a little bit because obviously now that the Fed is cutting rates,

the front end of the curve is what's coming in.

So that's where we have more exposure.

In the past few years we've outperformed the fixed bucket because we were not subject to the movement.

So I do anticipate that we will underperform.

As the new assets are coming into that from the asset allocation and some other strategic moves we've been making,

I am trying to extend that and going a little bit longer on the curve so that we can get a little bit closer to the benchmark.

So that's really all I had for the fiscal year report.

If you have any questions, otherwise I'll move on to the more recent report of what we're doing.

So, as Jeff mentioned, 5.3 percent, so annualized. We're talking about 30 percent for the first

quarter which is a little bit crazy. As of yesterday, the portfolio was still up about

four, four and a half percent. I don't know where we ended today, but obviously we'll

see that come in a little bit. So, still really strong, but pretty dramatic if you look at

a one month chart on any of these names or any of these indexes.

In mid-October we did realize that a lot of these assets had grown a little too fast and

I took $5 million out of the two domestic equity buckets. I sent $3.5 million over to the fixed

fund to add some funds there and I sent $1.5 million to the operating account to pre-fund

the December amounts that were needed. We just felt like that we might as well book those

gains. So as of today it looks like a smart move. But it's really more just about the

Statistically, the numbers got too big,

so we opted to liquidate those.

So as I mentioned, so with those funds

that came in in October, I'm really trying to add

to duration and maturity in the fixed fund.

As a result of higher interest rates

and the new allocation to the fixed fund,

I just thought it was really interesting anecdotally

that in fiscal year 21-22, the fixed account

was contributing 2.6 million in income to the plan.

And as of today it's now up to 4.3 million.

So as we continue to add assets to the fixed fund at these higher, longer term higher interest rates,

we're able to add more to that operating account which is, you know, in the grand scheme of things really what we're trying to do,

to not take as much risk.

I'm sure when the actuary talks and they talk about our funded status, they'll probably concur that this is a plan that does not need to take additional risk at this time.

time. And then the last thing I wanted to mention in mid-October when these gains were

really out there October 24th was kind of like our high water point I had my team do

an exercise to analyze at what point could we liquidate the entire equity portfolio,

park it in the pooled funds earning 3 percent, leave the fixed fund as it is and end the

year to see if we could hit 10 percent with the notion that we could go back into the

the equity markets July 1 of the following fiscal year. Just kind of a conservative take

a look at it. In mid-October that number came in around 8, 8.5%. So as we stand today we'd

have to see equity markets move another 5%. It was 2 to 3% when we did the analysis.

But it was just something I thought it was important to know just to kind of look at.

So I've been told it's radical by John.

But I just thought it was important to go through as again we're looking to immunize

the portfolio from potential losses as we have such a high funded status.

And as the actuary will say, again about 110%.

And for reference CalPERS came in at 79%.

CalSTRS came in at 77%.

And the county SCRS program, which we recently just started looking at, is about 89 to 90%.

So we're sitting in a really, really great position.

And as the attorney mentioned, if things just kind of are status quo and our set of retirees continues on the path they've been on,

it's very realistic that our funded status could grow exponentially.

So that's another reason why we needed to look at the future of the fund, especially when our last retiree,

or excuse me, our last active decides to become a retiree.

So, and I'm happy to take any questions.

So Stacey says it's radical, but her and I have talked about it over the years on several occasions when the markets rallied.

We're like, let's lock in these rates and go home.

We probably should have.

It was a good exercise to go through.

So everyone in my office did their own numbers because I didn't believe my numbers, and I was wrong on parts of it.

So we all did our numbers and chat GBT did our numbers just to make sure we all came out in the same ballpark number.

So now we have that data.

I feel like we have that.

If something crazy was to happen and we wanted to address that in the future, we know what we're looking at.

We said 10% is it.

Yeah, just as a hypothetical.

We're going to talk about it and potentially do it.

If the market had run up that much and hit a 10% total return for the portfolio.

Under the scenario, yeah.

For the fiscal year.

We might be all sitting in cash right now.

Are there any other member comments or questions?

Can I have a motion on items 11 and 12?

I move approval.

Approval.

Motion.

Do we have a second?

I second.

A second.

Is there any public comment?

No public comment, Chair.

Okay.

All those in approval, please say aye.

Aye.

Aye.

Opposed?

Abstentions?

No?

They pass.

So next we have the GASB 67 and 68 report.

Good afternoon.

Thank you.

Drew Ballard with Foster and Foster, the actuary that's been mentioned a few times so far during the meeting.

So I'm going to actually go over the valuation report first, which, you know, really is the funding report.

The GASB is, you know, the county that goes in the city's financial statements.

Very similar results, but a little bit more.

I think it transfers better to go over the valuation first.

So a couple reminders as we go through this.

We do this valuation every year based on snapshot date of June 30th, so fiscal year end.

So, you know, when I say that not only are we talking about the assets and what the value was of those assets as of June 30th,

which we've kind of touched on, you know, the return for that year, but also collecting the retiree information.

Okay, so who is receiving a benefit from the fund?

What changes have happened since the census data collection last year?

We've talked about it already a little bit.

We've still got one active member remaining in the fund as of June 30th.

Sounds like as of today as well.

So I'm going to go kind of over the results of how things have changed since the last valuation.

Obviously, we've talked about the funded ratio.

So here we can just see kind of a summary of comparison of some things.

So a couple things to point out.

One active member still remaining, right?

Retirees down 5%, 376 remaining collecting benefits.

beneficiaries down a little bit as well.

One thing to keep in mind,

we actually went through

or the city went through

a pretty comprehensive data

project to look at beneficiaries

for the members.

And so there's maybe a retiree

who had they become

deceased, that benefit would continue

to the beneficiary, but the beneficiary

predeceased that retiree. So now the benefit

would stop once that retiree

deceases. So we updated that beneficiary

data, which caused a decrease in the liability more than expected.

So that updated data, I think it was about 106 beneficiaries that were identified, is

reflected in the June 30, 2025 results.

So the next section, you can see the total liability for the plan actually decreased

7%, 7.3% since the last valuation.

So from $249 million to about $231 million in liability.

and then let's talk about the assets.

You got the update, you know, 10.3% in fees return for the year.

One thing that we did change here, so in previous valuations,

we had two asset values that were used for reporting,

the market value of assets, which is really, you know,

the value of the investable assets in the fund,

and then we have an actuarial value, which was a smooth value.

So as we had volatility in the markets, we reflect kind of a rolling,

I think it was over three years of how those investment gains and losses were happening.

Under each scenario, we were over 100% funded.

So what we did is actually reset to use market value moving forward.

So we're comparing liabilities to the assets.

And you can see, you know, the market value of assets actually was pretty similar,

$253.5 million last year, $253.4 million.

I'll go through the reconciliation, but we did get rid of that smooth value.

It doesn't mean we can't bring it back in.

if there is a pullback in the market.

But at this point, they were pretty close.

Either way, we were over 100% funded,

so we decided to make that change to reset it.

So at the bottom here, the plan funded status,

you can see, again, liabilities went down about $18 million.

Assets went up about $10 million.

So the unfunded liability actually went from a positive unfunded

to that surplus position.

So from a $5.8 million unfunded last year, 98% funded on the actuarial value basis,

102% funded market value basis, to now being overfunded, if you will, by $22 million.

And there's that 110%, 109.6% funded ratio based on the June 30-25 liabilities and assets.

The bottom of page one summary, there's no city contribution requirement.

this year for 26-27

for the plan being in the

overfunded position and also

that active member that is remaining

we actually our assumption is

when they reach 70

they will retire so there's

no cost of continuing to accrue

benefits because we're assuming they will retire

so that's why even though they're still active

we're assuming that

we're assuming that will end but they are still

the one is still contributing

right there's still employee contributions coming in

And we're just not saying that the city needs to contribute on their behalf based on the actuarial assumptions.

Moving forward, let me go forward a few slides here to talk about the assets.

I know you've gotten plenty of information, but just kind of a reconciliation for fiscal 24-25.

Again, starting at $253.5 million.

The benefit payments, $26.4 million.

So, you know, just over 10% of the value of the assets were the benefit payments made to retirees during the year.

And then really, you know, a city contribution of $1.4 million last year.

And then investment income obviously, you know, strong, almost $26 million.

That 10 point, you know, 10 point was a 10.5% return.

So really, you know, no change in the assets because the investment income kind of made up for the distributions that were made on behalf of the participants.

We talked about that.

So here is where we would typically talk about, okay, what's the city's budget?

How did it change from last year?

What's the contribution requirement?

So in 25-26, we did have that small unfunded liability, you know, based on the actual value of assets being 97.7% funded.

So there was a payment required to eliminate that unfunded liability.

and based on the current valuation now being overfunded,

we're basically saying, okay, we've got a negative unfunded liability,

so you would get a credit to your contribution requirement by being overfunded,

but there is no contribution requirement because there's no employer normal costs,

so you can't have a negative, right?

It's basically saying that the city does not need to allocate any more contributions to the fund

based on the current status.

You know, obviously, as a caveat, we're assuming the fund will continue to earn 6% per year based on those assumptions.

If we have a zero or a negative or something like that, this could change in future valuations where there could be an unfunded liability.

Assuming everything happens the way we expect it to, you know, as we've talked about, we would expect the funded ratio to continue to increase if we hit our assumptions, right?

Any questions on that so far?

I think really, you know, that's the highlights that I wanted to go through.

So just for full disclosure, on page 12 here, we do do a reconciliation of, okay, where were we last year?

Where did we expect to be if everything happened in line with our assumptions?

And then where did we end up?

So for that gain-loss analysis.

So here's where you can see, you know, not much change on the demographic liabilities,

but really that updated beneficiary data.

ended up with a decrease of $6.8 million in liability.

Just by looking at that and saying, okay, what is the true data that should be reflected

when determining these liabilities of how long these benefits are going to be paid off,

that caused that reduction, which obviously contributed to the surplus position.

And then the gain on that smooth value of assets, that three-year average, was $7 million.

and then kind of the consolidating

or resetting to market value of assets.

Our actuarial value would have been $14 million lower.

Still would have been over 100% funded,

so that's why it doesn't really affect anything

as far as the contribution requirements

or just the funded status,

but you're still over 100% funded,

so kind of prudent time to make that reset

and then continue to evaluate that in future valuations.

That's all I have for the valuation report.

Any questions on that?

And then I can talk about GASB a little bit as well.

Yeah.

The 6% assumption you mentioned, do you adjust that annually, and then what is that based on?

Yeah, so it's based on, one, the strategic target allocation that's being made, right?

So we talked about the 2.5.

It's kind of been shifting more from equity to fixed income over the previous valuations.

So you've got that 2.5% international equity went to fixed income.

And then we look at, you know, we're not investment experts, right?

We look at capital market assumptions and kind of what the long-term expected return is by each asset class based on what's being invested plus inflation.

And to use that kind of building block approach to get that 6%.

We did not change the 6% just based on 2.5% change.

Still believe that's reasonable.

if you think about it

kind of the timeline of the plan

or when you're looking at investment horizon

you're subject to more

risk due to

investment volatility by being

basically 100% retirees but there's still

several years where these

folks are expected to continue to receive benefits

it's not like there's a five year timeline

right so

take those considerations

you said it is adjusted annually

it's reviewed

Yeah, yeah.

Any other member questions, comments?

Do you want to do a motion now?

Yeah, so is there a motion?

Is there a second?

Second.

Any public comment?

No public comment, Chair.

All those in favor, please say aye.

Aye.

Opposed?

Abstentions?

All right.

The motion passes.

So now we'll do the GASB reports.

Sorry, before that, can I clarify the second on that motion?

I had Joseph.

Thank you, Mr. Zeman.

You did?

Okay, so the GASB 6768 reporting, you know, this is really the accounting disclosure requirements that go into the city's financial statements.

You know, one thing, you know, not significant difference.

Using the same data, right, same valuation date, same assets.

So, you know, if you look kind of at the net pension liability calculation here,

in previous years since we were using the smooth value for the asset calculation in the funding valuation,

GASB requires that we use market value of assets, that you can't use a smooth value.

So here you basically see the exact same results that we show in our funding valuation for the just slightly different terms.

total pension liabilities, the liability, fiduciary net position, you know, market value of assets,

just a fancy term for GASB. So there you see that $22 million, you know, net pension liability,

which, you know, is negative now. It was negative last year because we were using market value of

assets for the GASB reporting. So there you see 110% funded. GASB does require that we include

a lot of information of, hey, you know, what assumptions are we using?

We are also required to show, you know, if that 6% was, you know,

I don't think we're going to increase it to 7%, but what if we decreased it to 5%, you know,

what would the net pension liability be under that scenario?

Still would be, you know, above 100% funded, even if we change that discount rate to use 5%.

Worth noting there.

You know, other things really are just kind of requirements for disclosures.

how did the pension liability change from year to year, kind of talked about that in the funding valuation.

There you can see, you know, kind of the $6 million gain.

Since, you know, you're essentially all retirees, you basically recognize that gain immediately when we're developing the pension expense,

which goes on the balance sheet, and there's actually a pension income this year, so change in assets.

So a lot of this is really just disclosures of the required information.

Did the city contribute the ADC?

Yes.

Right.

What assumptions are you using for that?

So a lot of information we've already gone through.

So I don't really have too much that I wanted to talk about as far as the GASB 68.

Here you do see the pension income, $14.4 million, based on, you know, really having positive experience over the last couple of years,

not only on that demographic but also the investment,

recognizing that earnings have been higher

than that 6% assumption over the last five years.

I blew through that pretty quickly

because I felt like the funding takes care of a lot of it,

but any questions specifically on GASB?

I imagine the auditors have probably already been through this too

and reviewed it at this point.

Thank you.

So no member questions or comments.

Is there a motion to accept the Gatsby reports?

I'll make the motion to accept.

Motion. Do we have a second?

I'll second.

Second.

Is there any public comment?

No public comment.

Okay. All those in favor, please say aye.

Aye.

Opposed? Abstention?

The motion carries.

So the next item on the agenda is member comments, ideas, and questions.

Are there any members who have any?

I'd be interested to see what the other members thought about a radical.

Did HP actually come to that point?

The idea was to just go all cash or mostly cash?

Go all cash.

Liquidate all of our holdings and sit in the investment pool.

What's that?

Just in the equity side, not the fixed income.

When you ran the analysis on that, did you have sort of a fixed rate of return on the cash portion?

Yes.

So we used the pool A return, which the money would go into, which is the city's pool A, which is currently 3.1%.

So we just locked that for the next six months in the scenario.

Oh, so and then after the six months we would go back in to the market?

Yeah, depending on, you know, what the market cycle is.

Yeah, depending on, so when we come in spring and do an asset allocation again,

that would kind of dictate what direction to go back into the market.

it. We would still be within policy because the pool fund would stay under the umbrella

so they would each have their own separate cash balance. Technically, because we go in

and out of cash within the funds, technically they would stay under that umbrella so we

would not run into ‑‑ if we had swept it all out, then we wouldn't be within our

5% guidelines for allocations. But each fund would retain its own pool balance sitting

in cash. So we would be in compliance and then we would look at it again for the next

asset allocation which is April. Because the reality of our portfolio is

we're not really benchmark centric anymore, right? We don't really care how we perform.

Well we do care. Just to determine if we're taking on too much risk or too little or too

much risk is really the key. We're more worried about that 6%. Right? That's our bogey now.

It's not matching S&P.

It's not matching, you know, the investment grade portfolio.

You know, it's the 6% we're trying to hit.

And if we can, you know, do, you know, 115% over that, 120% over that 6% and lock it in and not carry the risk for the rest of the year, that's something we've thought.

Yeah, I mean, I'll say for me personally, I am in favor of de-risking and taking chips off the table, just given our status, you know, our funded status as a plan and, you know, the fact that it's a closed plan, one more active member.

So that's something that, you know, I think makes sense personally.

I think my challenge would probably be the fact that, I mean, I don't think that pool A is actually guaranteed or locked in, right?

I mean, it could go down with regards to the interest payments, you know,

during that six months if there is a Fed rate cut, right?

Well, you mean where the funds would be sitting?

Yeah, for the 3%.

So they're sitting in our pool.

So it's assets that are managed in-house here.

Those funds, they're fully invested over the next five years,

and so very slowly things are maturing to pay for city expenses.

So we feel fairly confident.

And it's not like a traditional money market where the minute Fed cuts rates, it's going to follow suit.

These are invested in corporate bonds, muni bonds, all the way out to five years.

So it's a very robust portfolio that's fully invested.

So if it started to come down, it would not be quick like a traditional money.

Yeah, and we're actually thinking it's going to go up because a lot of the securities we bought with the federal money was when?

2020, right?

but we bought five-year securities to earn some sort of yield.

Well, guess what?

They're rolling off now.

So we're reinvesting that money at higher.

Instead of getting 1% coupons, we're getting 4% coupons.

Approximately 20% of the portfolio is actually maturing this fiscal year,

and they're all earning under 1%.

So as these have been maturing,

we are reinvesting those at much higher interest rates.

So while some of our peers have started to see their pooled funds tick down,

ours is actually going the opposite direction because we are now in that kind of that sweet spot

where everything is starting to mature that we put on. When we got all the COVID money,

you couldn't earn anything in a money market. It was literally like 0.03% to go somewhere. So we

had to go five years to try to get 50 basis points. And so now all these are starting to

mature and we're able to reallocate 200, 300 basis points over that. So we feel fairly confident

that our level is actually rising and will rise over the next probably two years.

City Attorney. Oh I was just going to say you know obviously this is brief

comments as an agenda so you know just wrap up the discussion that's all.

All right well thank you City Attorney. Do we have another I think the next

meeting is where we talk about the asset allocation right?

That'll be in April. The next meeting is February it's just a standard meeting

nothing nothing related to how we're gonna set the targets for the next year.

Okay.

Any other member comments, ideas, questions?

No.

Do we have any public comment for items not on the agenda?

Osvaldo, Jason?

Thank you, Chair.

I have no speaker slips.

No speakers.

All right.

Well, thank you, everyone.

We are adjourned.

There you go.

I don't hit it as hard as the mayor.

I got it.

Thank you.

Thank you.