Mar 24, 2026 Port of Galveston Meetings - Wharves Finance Committee

GOOD MORNING, DEAR.

YOU GO, MUST HI.

THANK YOU FOR THIS BOARD TODAY AS THEY LABOR FOR THE GROWTH AND DEVELOPMENT OF THIS PORT AND THE BENEFIT OF THIS CITY.

THANK YOU FOR THE WORK THEY HAVE ACCOMPLISHED AND THE WORK THEY'RE YET TO DO.

I ASK THAT YOU GUIDE THEIR THOUGHTS AND THEIR WORDS, WHICH YOU GRANT THEM WISDOM AND DISCERNMENT AS THEY MAKE PLANS AND DECISIONS.

HELP THEM TO LEAD WITH INTEGRITY AND COMPASSION.

YOUR WORD INSTRUCTS US TO TRUST YOU WITH ALL OUR HEART AND NOT LEAN ON OUR OWN UNDERSTANDING, TO ACKNOWLEDGE YOU IN ALL OUR WAYS AND TO MAKE, UH, AND THAT YOU WILL MAKE STRAIGHT OUR PATHS.

SO WE ASK YOU TODAY TO MAKE OUR PATH STRAIGHT.

GIVE US THE DESIRE AND THE ABILITY TO TRUST YOU.

HELP US TO RECOGNIZE THAT OUR OWN UNDERSTANDING IS FALLIBLE, BUT THAT YOU ARE TRUE AND YOUR WAYS ARE GOOD.

AND AS WE TRUST YOU, PLEASE GIVE US THE COURAGE TO ACKNOWLEDGE YOU AS DIVINE CREATOR, LOVING FATHER AND SOVEREIGN LORD.

THE TRUTH IS, WE NEED YOU IN EVERY ASPECT OF OUR LIVES.

WE DO NOT TAKE A BREATH, BUT THAT YOU GIVE IT TO US.

SO MAY YOUR PRESENCE, YOUR WILL AND YOUR POWER BE EVIDENT IN THIS MEETING AND IN ITS OUTCOMES, SO THAT IN THIS ROOM AND THIS CITY, WE MAY KNOW YOU AND HONOR YOU AS GOD.

IN THE NAME OF JESUS CHRIST, WE PRAY.

AMEN.

UH, ANY OF THE, UH, TRUSTEES FEEL LIKE THEY HAVE A CONFLICT RELATED TO OUR BUSINESS TODAY? NO, SIR.

ON THE AGENDA IS A PRESENTATION BY .

SO THE FIRST ITEM

[B. PRESENTATIONS AND ANNOUNCEMENTS]

UH, THIS WILL BE RELATED TO OUR .

SHE WILL BE GIVING THIS PRESENTATION.

THIS IS THE ANNUAL REVIEW BY THE ACTUARY OF OUR, UM, DEFINED BENEFIT PENSION PLAN.

WE'LL GET THIS WHEN, ONCE THIS IS, Y'ALL HAVE GONE THROUGH AND ACCEPTED THIS, I CAN TURN IT OVER TO THE AUDITORS, OUR FINANCIAL AUDITORS, TO FINALIZE THE, THE FINANCIAL AUDIT.

THERE'S, UM, WE CAN'T FINALIZE THE DEFERRED INFLOWS AND OUTFLOWS BY ACCORDING TO GS BEATS, UH, UNTIL THIS IS, UNTIL THIS IS DONE.

SO ANYWAY, UH, JENNIFER'S COME DOWN TO, ACTUALLY, SHE'S GONNA RUN THROUGH THIS ANSWER ANY QUESTIONS Y'ALL HAVE.

AND THEN, UH, DURING THE FULL BOARD MEETING, I'LL MAKE A RECOMMENDATION TO CONTINUE TO FUND AS WE ARE FUNDING, AS WE BUDGETED TO FUND.

SO WE'LL BE CONTRIBUTING MORE THAN, THAN THE REQUIRED MINIMUM.

THAT'S ALL YOURS.

UM, SO FIRST I'LL LOOK AT JUST SOME HIGH LEVEL HIGHLIGHTS FROM THE YEAR.

UM, WE HAD A GOOD 2025 WAS GOOD ASSET RETURNS, ABOUT 14% ON MARKET VALUE.

UM, AND WE HAVE NOW, LAST YEAR WE HAD SWITCHED FROM USING JUST THAT MARKET VALUE FOR FUNDING AND CONTRIBUTION CALCULATIONS.

WE'VE SWITCHED TO A SMOOTH ASSET VALUE.

UM, AND SO YOU CAN SEE THE RETURN ON ACTUAL VALUE ASSETS IS THAT 8.4%, WHICH IS STILL ABOVE THE SEVEN.

IT JUST SPREADS OUT THAT HUGE GAIN THAT WE HAD FOR 2025.

SO THAT'S WHY THAT PERCENTAGE ON THE ACTUARIAL VALUE, THE SMOOTHED VALUE, UM, IS 8.4.

UM, SO WE ONLY RECOGNIZED A PORTION, AND I THINK IT WAS ABOUT A MILLION DOLLARS EXTRA THAT THE PLAN HAD EARNED ABOVE THAT 7%.

AND SO INSTEAD OF RECOGNIZING THAT FULL MILLION, WE JUST RECOGNIZE 20.

IF I INTERRUPT, YEAH, JUST A MOMENT.

IF Y'ALL WANT TO FOLLOW THIS ALONG, IF YOU'LL GO TO TAB TWO BEHIND THE ORANGE TAB.

UM, STARTING WITH THE SECOND PAGE.

IF Y'ALL WANNA FOLLOW FOR PRESENTATION, PULL THIS ON OR NOT.

IS THIS

[00:05:01]

ON? I CAN'T EVEN TELL.

SO THE, UH, SO YEAH, SO THAT WAS THE ASSET PERFORMANCE.

UM, SO INSTEAD OF RECOGNIZING THAT FULL MILLION, WE'LL RECOGNIZE ABOUT 200,000 THIS YEAR.

UM, SO IN FOLLOWING YEARS YOU'LL HAVE A GAIN.

NO MATTER WHAT HAPPENS DURING THE YEAR, YOU'LL HAVE THAT GAIN TO KIND OF OFFSET IF YOU DO HAVE ANY LOSSES.

UM, SO WE HAVE DONE THAT JUST TO SMOOTH OUT A LOT OF THE CALCULATIONS FOR CONTRIBUTIONS.

UM, LIABILITIES CAME IN A LITTLE BIT HIGHER THAN EXPECTED.

UM, THERE WAS SALARIES THAT WERE A LITTLE BIT HIGHER THAN WE EXPECTED.

UM, AND FOR LAST YEAR'S VALUATION, WE HAD ACTUALLY BROUGHT THAT UP TO 5% SALARY INCREASES.

UM, SO WE CAPTURED SOME OF THAT LAST YEAR.

UM, BUT THEY STILL CAME IN A LITTLE BIT HIGHER THAN THAT 5% WE WERE EXPECTING.

UM, YOU CAN SEE DURING 2025, THE PLAN MADE 505,000, UM, IN CONTRIBUTIONS AGAIN.

SO FOR THE VALUATION, THE PLAN LEVEL IN THE FUNDING LEVEL INCREASED TO 96, A LITTLE OVER 96%.

UM, AND THAT WAS ON THAT SMOOTH ACTUARIAL VALUE.

UM, IF YOU GET RID OF THE SMOOTHING IMPACT, YOU'RE JUST OVER A HUNDRED PERCENT.

AND THAT'S ON A LONG-TERM ONGOING BASIS USING A 7% INTEREST RATE.

UM, AND WE'LL AT THE END WE'LL LOOK QUICK AT WHAT KIND OF A PLAN TERMINATION LIABILITY MIGHT LOOK LIKE IF YOU WERE LOOKING TO, YOU KNOW, GET RID OF THE PLAN AND PAY EVERYONE OUT AND NOT DEAL WITH THIS, THIS OLD PLAN ANYMORE.

WE'LL LOOK AT THAT AT THE END.

SO, UM, AND THE RECOMMENDED CONTRIBUTION, THAT'S THAT LOOKING AT 15 YEAR AMORTIZATION, UM, THAT CAME DOWN A LITTLE BIT FROM LAST YEAR TO 1 93.

UM, AND I KNOW YOU GUYS HAVE ALWAYS MADE MORE THAN THAT, BUT YOU KNOW, IF YOU HAD CASHFLOW NEEDS THAT YOU NEEDED TO REALLOCATE 200,000 IS STILL, UM, PLENTY FOR GETTING THERE.

UM, SO WE KEEP LOOKING AT THE DISCOUNT RATE.

UM, THE, THERE'S BEEN FLUCTUATIONS MORE SO THAN USUAL.

UM, SO WE KEEP CHECKING THAT EVERY YEAR JUST TO MAKE SURE YOU GUYS ARE, YOU KNOW, WITHIN A REASONABLE, UM, INTEREST RATE THAT WE'RE USING.

UM, THERE WAS A REAL SMALL, UM, UPDATE TO SOME MORTALITY TABLES.

UM, THE SOCIETY OF ACTUARIES KIND OF A, THE POWERS A BE FOR US, THEY, UM, CAME OUT WITH A UPDATE TO TABLES AND IT WAS REAL SMALL.

I THINK IT BRINGS DOWN THE LIABILITY BY 0.5% OR SO.

SO IT'S A REAL SMALL IMPACT.

UM, BUT WE JUST WANTED TO RUN THAT BY YOU AND MAKE SURE FOR THE NEXT VALUATION, WE'RE OKAY MAKING THAT CHANGE.

I DON'T THINK WE NEED TO MAKE IT RIGHT AWAY.

THE AUDITORS, UM, PROBABLY WON'T PRESS US ON IT THIS YEAR YET.

AND THEN WE'LL LOOK AT THAT PLAN TERMINATION ESTIMATE.

UM, WHICH AGAIN IS JUST KIND OF ROUGH THAT ESTIMATE.

IF YOU WANTED TO GET RID OF THE PLAN AND PAY EVERYONE.

WELL, AND EXCUSE ME, CORRECT ME IF I'M WRONG, WE'RE STILL ON A DECLINING YEAR.

SO THIS, THIS YEAR'S PLAN IS BASED ON 15 YEARS REMAINING.

NEXT YEAR'S PLAN PLAN WILL GO DOWN TO 14 YEARS.

SO WE'RE AGGRESSIVELY, WELL, I THINK IT'S FAIRLY AGGRESSIVE.

WE SEE THAT THE END OF THIS PLAN IS IN OVER THE NEXT 14 YEARS.

IF WE DO NOTHING BUT DUE TO MINIMUMS, WE WILL HAVE IT, WE SHOULD HAVE IT FULLY, COMPLETELY 100% FUNDED.

UH, SO WE MIGHT NOT WANNA KEEP PAYING FOR 15 YEARS.

UM, RECOGNIZING THOSE GRADUALLY.

YEAH, THAT'S TRUE WITH YOUR, UH, 500, 5,000.

IT'LL TAKE A LOT LESS YEARS THAN 15 TO GET THERE.

UM, AND ALSO WITH THESE GAINS THAT WE SAW IN 2025 ASSET GAINS, YOU'LL SEE THE PROJECTION AND CONTRIBUTIONS.

THEY REALLY HELP YOU OVER THE NEXT FEW YEARS.

UM, SO THIS IS JUST A COMPARISON FROM THE LAST THREE EVALUATION YEARS.

UM, SO LAST YEAR WE HAD SWITCHED SOME OF THE ASSUMPTION UPDATES YOU GUYS HAD APPROVE.

UM, SO THAT WAS THE 1, 1 25.

THE ONLY CHANGE IN 1 26 NOW IS THAT SMOOTHING OF THE ASSETS.

SO WE KIND OF STARTED THAT AS OF 1 1 25 AND THEN RECOGNIZED DURING 2025 THOSE GAINS AND LOSSES.

SO THIS IS THE FIRST YEAR THAT WE'RE ACTUALLY SEEING THE IMPACT OF THAT CHANGE.

UM, SO THE FUNDING LATENCY IS STEADILY CREEPING UP.

UM, THE CONTRIBUTION IS AT THE BOTTOM.

UM, IF YOU, WELL, IF YOU LOOKED AT HISTORY, IT'S REALLY BEEN VOLATILE UP AND DOWN.

YOU KNOW, SOME YEARS IT'LL BE 500,000, IT'LL DROP BACK DOWN TO A HUNDRED AND IT'S BEEN REAL VOLATILE.

UM, WE'RE HOPING THAT THIS ASSET SMOOTHING WILL KEEP THAT A LITTLE SMOOTH, YOU KNOW, A LITTLE LESS VOLATILE.

SO WE WENT FROM TWO 11 DOWN TO THE 1 93, WHEREAS IF WE RECOGNIZE ALL THE ASSET GAINS, IT PROBABLY WOULD'VE GONE DOWN CLOSER TO ZERO FOR THIS YEAR.

AND BOB UP AND DOWN LIKE IT HAS BEEN.

UM, WE, SO YEAH, THAT'S, THAT 15 YEAR, IF YOU GET A HUNDRED PERCENT BY 15 YEARS, THAT'S WHAT YOUR CONTRIBUTION WOULD LOOK LIKE.

IS THAT 1 93?

[00:10:02]

ANY QUESTIONS ABOUT THE KIND OF BIG PICTURE? LOOK AT SOME MORE DETAILS.

ALL RIGHT, SO THIS IS THE FUNDING PERCENTAGE AND THE UNFUNDED LIABILITY, THAT HISTORY OF THIS.

UM, YOU CAN SEE IT'S BEEN REALLY VOLATILE WITH THAT UNFUNDED, YOU KNOW, FULLY FUNDED, UNFUNDED UP AND DOWN.

UM, SO WE, THAT'S WHAT WE'RE HOPING THIS IMPACT OF THAT SMOOTHING THE ASSETS WILL HELP GET RID OF SOME OF THIS VOLATILITY FROM YEAR OVER YEAR.

THIS IS THE, SO THERE'S NOT A TON OF ACTIVE PARTICIPANTS LEFT.

THESE ARE PEOPLE WHO ARE STILL EMPLOYED BY THE, UM, HORSE.

SO WE'RE DOWN TO NINE PEOPLE TOTAL.

TWO OF THEM AREN'T EARNING ANY MORE BENEFITS IN THIS PLAN.

THEY HAD TRANSFERRED OUT MANY YEARS AGO TO A SEPARATE PLAN.

THEY MADE AN ELECTION.

SO THERE'S JUST TWO OF THOSE LEFT.

THEY'RE APPROACHING RETIREMENT AGE, SO WE'LL START TO SEE THEM FALL OFF.

UM, SO THAT'S KIND OF THE ESTIMATED ACTIVE PARTICIPANTS.

HERE'S THE PROJECTED CONTRIBUTION.

SO YOU CAN SEE THE FIRST TWO YEARS WE HAVE A FAIRLY SIZABLE AMORTIZATION PIECE LEFT, BUT ONCE WE RECOGNIZE THOSE BIG GAINS AND LOSSES, WE'LL EAT AWAY AT THAT AMORTIZATION.

SO THAT'S THAT UNFUNDED PIECE THAT WE'RE TRYING TO GET FUNDED WITHIN 15 YEARS.

ONCE WE RECOGNIZE THOSE ASSET GAINS OVER THE NEXT FEW YEARS, IT'LL REALLY HELP BRING IT DOWN.

UM, AND ONCE IT'S FULLY FUNDED ON THIS, YOU KNOW, USING A 7% INTEREST RATE, UM, ONCE IT'S FULLY FUNDED, THEN YOU JUST HAVE A NORMAL COST AND AN EXPENSE LOAN.

SO THE NORMAL COST REPRESENTS HOW MUCH BENEFITS EACH PERSON IS EARNING DURING THAT YEAR.

UM, AND SO YOU KIND OF PAY THE, THE EXPENSE OF A PERSON WORKING ANOTHER YEAR AND EARNING ANOTHER YEAR OF SERVICE AND SALARY.

SO THAT'S WHAT THAT GRAY BAR IS THERE.

AND WE ALSO HAD AN EXPENSE LOAD.

WE HAD CHANGED THE METHOD FOR HOW WE CALCULATE THAT.

SO IT'LL BE A LITTLE MORE SMOOTH AS WELL THERE.

UM, WE BROUGHT IT UP TO, I THINK 45,000 THIS YEAR.

AND WE'RE DOING A ROLLING AVERAGE FOR THAT NOW.

INSTEAD OF JUST RECOGNIZING, YOU KNOW, A FLAT AMOUNT, WE'RE LOOKING AT WHAT ACTUAL EXPENSES HAVE BEEN OVER THE LAST COUPLE YEARS AND AVERAGING THAT OUT.

UM, SO THAT'S HOW WE COME UP WITH THAT EXPENSE PIECE.

AND THEN A SMALL BIT OF INTEREST JUST FOR THE TIMING OF THE CONTRIBUTION.

'CAUSE THIS IS ALL, ALL OF OUR VALUATION RESULTS ARE AS OF JANUARY 1ST, 2026.

UM, SO WE MAKE IT A LITTLE ADJUSTMENT KNOWING THAT THE CONTRIBUTION WON'T COME IN IMMEDIATELY.

SO I'M NOT A HUGE FAN OF THIS SLIDE THIS YEAR.

UM, THEY'RE, THIS IS A BENCHMARKING SURVEY THAT WE MOST USE FOR LOOKING AT INTEREST RATES.

THEY HAD A CHANGE IN METHOD, SO I DON'T KNOW IF IT WAS A COMPLETE CHANGE IN FIRM OR IF IT'S JUST THE METHOD THAT CHANGED.

SO YOU CAN SEE IT'S KIND OF WACKY, THAT AVERAGE INTEREST RATE, IT'S SHOWING THAT IT WENT FROM 6.9 TO 6.7.

UM, BUT REALLY WE THINK THAT WAS MOSTLY A CHANGE IN METHOD.

SO I THINK ONCE WE, YOU KNOW, GET BACK A FEW YEARS IN THE FUTURE, THAT'LL LOOK MORE NORMAL THAN IT DOES THIS FIRST YEAR.

UM, SO I'M NOT A HUGE FAN OF THIS.

I LIKE THIS ONE BETTER.

SO THIS IS A SURVEY OF, UM, LARGE PENSION PLANS ALL AROUND THE COUNTRY.

UM, THEY SURVEY, I THINK, I DON'T KNOW, 400 DIFFERENT PLANS.

AND YOU CAN SEE THAT BLUE BAR, THE DARK BLUE BAR, THAT'S WHAT PEOPLE, WHAT PLANS ARE CURRENTLY USING.

UM, AND YOU CAN SEE ABOUT HALF OF THE PEOPLE ARE USING 7% BASICALLY, WHICH IS WHAT YOU GUYS ARE USING.

UM, SO YOU'RE RIGHT IN LINE WITH, UM, HIGH, YOU KNOW, PLANS IN THE NATION.

UM, AVERAGE ON THIS ONE ALSO CAME OUT AT 6.9, SO THIS ONE STAYED MORE STEADY.

I THINK IT WAS 0.01% DIFFERENT THAN LAST YEAR.

SO IT'S BEEN PRETTY SIMILAR.

UM, BUT YEAH, A LOT OF 'EM USED 7%.

UM, AND YOU CAN JUST SEE KIND OF THE HISTORY, THE RED BAR AND THE RED BAR IS THE 20TH.

THAT'S WHEN I STARTED MY CAREER.

WE WERE, EVERYONE WAS USING 8% AND IT'S JUST TRENDED DOWNWARD EVERY YEAR.

SO, YEAH, SO I'M HAPPY WITH THE DISCOUNT RATE.

UM, AS YOU GUYS START TO THINK ABOUT IN THE FUTURE GETTING RID OF THE PLAN, WE'D PROBABLY WANNA START MAYBE SHIFTING DOWN TO MORE OF A, UM, CONSERVATIVE ASSET ALLOCATION.

SO ONCE YOU KIND OF GET CLOSER TO THAT, WE'LL START TALKING ABOUT MAYBE SWITCHING MORE TO BONDS, GET SOME OF YOUR, YOU KNOW, DON'T WANNA LOSE YOUR EQUITY COMPONENT IF YOU HAVE A BIG SWING WHEN YOU'RE GETTING CLOSE TO TRY AND GET RID OF THE PLAN.

UM, SO WE'LL, ONCE WE GET CLOSER TO THINKING ABOUT THAT, WE'LL WANNA LOOK AT MORE CONSERVATIVE ASSETS AND WE'LL HAVE AN OPPORTUNITY TO DISCUSS THAT WITH FROST.

AND THEY, 'CAUSE THEY'LL COME IN WITH THE, UH, UH, RESULTS ON THE

[00:15:01]

FIRST QUARTER.

JUST REMIND ME, JUST YOU SAY GETTING RID OF THE PLANE.

REMIND ME AGAIN WHAT THAT, WHAT THAT MEANS.

SO, SO USUALLY WHEN YOU GET RID OF A PLAN, YOU KNOW, IF YOU, YOU KNOW, WANNA JUST STOP DEALING WITH IT, YOU KNOW, CLOSE IT DOWN COMPLETELY, UM, USUALLY YOU WOULD GO OUT TO YOUR ACTIVE EMPLOYEES AND NORMALLY THEY CAN'T TAKE A DISTRIBUTION IF THE PLAN IS, YOU KNOW, GONNA BE ONGOING AND THEY'RE STILL WORKING.

UM, BUT IF YOU GET RID OF A PLAN, YOU USUALLY GO AND OFFER THEM A LUMP SUM, A ONE TIME LUMP SUM PAYOUT.

AND IF THEY DON'T WANNA TAKE THAT, YOU CAN'T REALLY FORCE 'EM TO TAKE THAT.

BUT IF THEY DON'T TAKE IT, THEN YOU'D GO OUT TO AN INSURANCE COMPANY AND PURCHASE ANNUITIES.

UM, AND YOU'D ALSO PROBABLY, FOR THE PEOPLE WHO ARE CURRENTLY GETTING A CHECK WHO ARE ALREADY GETTING PAID, USUALLY WE DON'T RECOMMEND OFFERING THEM A LUMP SUM PAYOUT LIKE YOU DO FOR THE OTHER, FOR THE ACTIVE EMPLOYEES.

UM, SO FOR THOSE RETIREES, YOU'D GO OUT AND BUY, UH, INSURANCE, UM, ANNUITY GROUP CONTRACT KIND OF THING.

SO PRICING'S A LITTLE BIT BETTER THAN AN INDIVIDUAL ANNUITY.

AND THIS IS JUST ON THE DEFINED BENEFIT PLAN.

REMEMBER IN 2010, THE PORT CHANGED.

ANYONE HIRED AT BEGINNING JANUARY 1ST, 2010, THEY GO AUTOMATICALLY INTO A DEFINED CONTRIBUTION PLAN PLAN.

WE HAD, WE OFFERED THE EXISTING EMPLOYEES THE OPPORTUNITY TO BE FROZEN TO NOT, I MAY NOT BE USING THE RIGHT TERM.

NO, THAT'S OKAY.

BUT TO NO LONGER ACCRUE BENEFITS IN THE DEFINED BENEFIT PLAN, BUT CHANGE OVER TO THE DEFINED CONTRIBUTION PLAN.

TWO OF THE, THOSE EMPLOYEES ARE STILL EMPLOYED HERE.

THEY'RE THE ONES THAT ARE NOT ACCRUING ANY MORE BENEFIT UNDER THE DEFINED BENEFIT PLAN.

THEY CHANGED OVER TO THE DEFINED CONTRIBUTION PLAN NOW.

UH, SO WE ACTUALLY HAVE SEVEN ACTIVE EMPLOYEES STILL IN THE, IN THIS DEFINED CON, UH, BENEFIT PLAN.

AND THEY TEND TO BE EMPLOYEES THAT HAVE BEEN HERE A LONG TIME.

FOR THE MOST PART, THEY'RE MOVING UP AND WELL MOVING UP INTO THE OR UP IN THE ORGANIZATION.

UH, AND, UH, WELL, THEY'VE BEEN LONG TERM EMPLOYEES, THEY HAD TO BE HERE BEFORE 2010 MM-HMM .

SO THEY, THEY, THEY'VE BEEN AROUND OVER 15 YEARS ANYWAY.

OR LONGER AT A MINIMUM.

AT A MINIMUM MARK.

HOW, HOW IS IT DETERMINED, OR I GUESS IT'S ALREADY BEEN DETERMINED WHO'S, UH, TAKING THOSE, THE DIVINE CONTRIBUTION PLAN PLAN, WHERE THEIR MONEY IS GOING.

HOW, HOW IS THAT DETERMINED IN THE DEFINED CONTRIBUTION PLAN? RIGHT.

UM, WE OFFER, WE'RE USING MISSION SQUARE AND MISSION SQUARE OFFERS A BLOCK OF DIFFERENT INVESTMENT OPTIONS, RIGHT? WE DO NOT OFFER INVESTMENT ADVICE.

MISSION SQUARE WILL DO SOME FINANCIAL PLANNING FOR 'EM, BUT ULTIMATELY THE EMPLOYEE HAS TO DECIDE WHERE THEY WANT THE MONEY.

BUT IT STAYS WITH MISSION SQUARE UNTIL THEY SEPARATE, THEY HAVE TO LEAVE IT WITH MISSION SQUARE UNTIL SEPARATION OF SERVICE WITH THE COURT.

IT DOESN'T MEAN THEY HAVE TO RETIRE.

THEY CAN, THEY CAN ROLL IT OVER TO ANOTHER PLAN UPON SEPARATION, BUT IT HAS TO REMAIN WITH MISSION SQUARE UNTIL SEPARATION OF DUTY.

AND WHERE IS MISSION SQUARE LOCATED? I CAN'T TELL YOU THE CITY THEY'RE LOCATED, BUT THEY, UH, USED TO BE I-C-M-A-R-C AND, UH, THEY'RE ONE OF THE LEADING THE LARGEST GOVERNMENTAL TYPE 4 0 1 A AND RELATED TYPE.

THE THREE OR FOUR PAGER THAT COVERS THE ENTIRE PLAN, WHICH, HOW IT'S SET UP, WHICH THE ONE WITH INVESTMENT, THE, THE, THE MISSION, THE DEFINED CONTRIBUTION PLAN.

THEY, THEY SPEC, THERE'S A HUGE, THEY HAVE, THEY SPECIALIZE IN A LARGE BLOCK OF, UH, GOVERNMENTAL STATE LOCAL GOVERNMENTAL ENTITIES.

AND THE EMPLOYEES SEEM TO BE PRETTY SATISFIED WITH THEIR SERVICE.

WELL, UH, FOR THE MOST PART, YES, I BELIEVE SO.

THANKS.

THAT'S, I KNOW I HAVEN'T, WE HAVEN'T DONE A SURVEY ON THAT IN A WHILE, BUT NO NEWS IS, GOOD NEWS.

, I MEAN, THERE ARE SOME PEOPLE THAT WOULD LIKE TO BE ABLE TO DO, UH, MORE AGGRESSIVE INVESTING AND SPECIFIC OF INVESTING, BUT, UH, GENERALLY IT'S SET UP WHERE YOU, THEY INVEST IN CERTAIN RIGHT.

UM, UH, EQUITIES, TYPES OF EQUITIES, CERTAIN EQUITY TARGET INDEX FUNDS TO WRITE THAT.

MARK, COULD YOU SHARE THAT, UH, SUMMARY PLAN, DESCRIPTION DOCUMENT WITH THE BOARD WHEN YOU GET A CHANCE? THAT'S LIKE THE,

[00:20:01]

THERE SHOULD BE A CONTRIBUTION SUMMARY DOCUMENT FOR I CAN, I'LL HAVE A CHART FOR THANK YOU.

WE, WE DO, UM, GET THE INVESTMENTS THAT ARE, UM, THEY'RE OFFERED.

IN OTHER WORDS, THE BOARD, UH, AND WHEN I FIRST GOT HERE, THE BOARD MADE SOME CHANGES TO THAT BECAUSE THERE WERE SOME ANNUITIES THAT WERE BEING OFFERED AND THERE WAS A BOARD MEMBER THAT DID NOT LIKE THAT.

AND SO WE, THE PRICING PROBABLY KNOW, BECAUSE IT'S A DOUBLE, IT'S A DOUBLE TANK, YOU KNOW? RIGHT.

IT DOESN'T GIVE YOU THAT MUCH BENEFIT.

LIKE 1% WHAT THE BENEFIT THERE IS A TAX BENEFIT.

SO, AND IF WE DO CLOSE DOWN THE PLAN AND GET RID OF IT, THE PEOPLE THAT DO TAKE THAT LUMP SUM OPTION AND GET THEIR PENSION PAID OUT JUST IN THE ONE TIME, UM, THEY CAN ROLL IT OVER.

SO THEY'D HAVE THAT OPTION TOO, TO ROLL IT INTO THE, YOU KNOW, THE DC PLAN THAT YOU GUYS HAVE.

SO THEY COULDN'T ROLL IT INTO AN IRA WOULD.

AS LONG AS IT'S A QUALIFIED RETIREMENT VEHICLE.

IT COULD BE ROTH WOULD BE ONE THING THAT COULDN'T BE.

BUT YEAH, ANY QUALIFIED RETIREMENT VEHICLE, USUALLY EMPLOYEE PUT SELF-DIRECT FUNDS.

EITHER AN IRA OR USUALLY EMPLOYEE, YOU KNOW, PLAN.

UM, SO THIS JUST GIVES KIND OF A HISTORY OF THE, UH, THE PEOPLE WHO ARE LEFT IN THE PLAN.

UM, SO AT THE TOP, THEY'RE THE ACTIVES.

THEY'RE GETTING A YEAR OLDER, THEY'RE GETTING A YEAR MORE OF SERVICE.

THEIR PAY IS GOING UP KIND OF AS EXPECTED.

UM, YOU CAN SEE THE PAY JUMPED A LITTLE BIT MORE THAN WE WOULD'VE ASSUMED, UM, THIS YEAR.

AND THEN THOSE COUNTS AT THE BOTTOM.

SO THE TOTAL THERE, WE HAVE THOSE SEVEN PEOPLE WHO ARE STILL EARNING A BENEFIT IN THE DEFINED BENEFIT PLAN.

THOSE TWO PEOPLE WHO ELECTED TO TRANSFER OUT TO THE DC PLAN, UM, AND THEN TERMINATED VESTED WHEN THOSE WERE TRYING TO WORK DOWN.

UM, THOSE ARE KIND, THOSE ARE PEOPLE WHO NO LONGER WORK WITH THE COURT, BUT THEY HAVEN'T STARTED THEIR MONTHLY BENEFIT YET.

UM, AND SO THAT COULD BE ONE AREA WHERE, YOU KNOW, A, A BABY STEP TOWARDS, UM, YOU KNOW, CLOSING DOWN THE PLAN WOULD BE TO TRY AND FIND ALL THOSE FORMER EMPLOYEES AND EITHER, YOU KNOW, GET 'EM TO START THE BENEFIT OR, YOU KNOW, TAKE A LUMP SUM PAYOUT.

UM, SO THAT'S ONE KIND OF THING YOU CAN LOOK AT IS STARTING TO WORK ON THAT GROUP FIRST.

UM, BEFORE THE PACKAGE, WE, I THINK WE ATTEMPTED THAT SEVERAL YEARS AGO AND THERE WAS MAYBE TWO OR THREE PEOPLE THAT WE COULDN'T FIND.

AND WE HAVE ADDRESS LOCATE SERVICES TOO THAT WE HAVE.

SO IF WE DO WANNA TRY, YOU KNOW, TRACKING DOWN SOME OF THE STRAGGLERS, WE HAVE A WAY TO DO THAT.

AND THEN YOU HAVE 75 PEOPLE WHO, THOSE ARE THE PEOPLE YOU LIKELY GO BUY AN ANNUITY FOR.

YOU CAN OFFER 'EM A LUMP SUM, BUT I DON'T KNOW, I'M, I'M A LITTLE MORE RISK ADVERSE.

SO I FEEL LIKE PEOPLE CAN MAKE A BAD DECISION IF YOU GIVE THEM THAT LUMP SUM OPTION.

UM, 'CAUSE INSTEAD OF GETTING THEIR, YOU KNOW, $200 A MONTH PAYMENT, YOU GO AND OFFER 'EM, HERE'S A HUNDRED THOUSAND DOLLARS.

AND PEOPLE ARE LIKE, YEAH, I WANT A HUNDRED THOUSAND DOLLARS.

BUT THEN THEY START TAKING CRUISES.

YEAH, EXACTLY.

THEY BUY A BOAT.

EXACTLY.

SO, AND THEN, YOU KNOW, THAT RUN MONEY RUNS OUT.

IT CAN BE KIND OF A PR ISSUE TOO FOR COMPANIES IF PEOPLE RUN OUTTA THAT MONEY INSTEAD OF GETTING THEIR LIFETIME ANNUITY THEY'RE GETTING NOW.

SO I TEND TO NOT LIKE TO OFFER THEM A LUMP SUM, BUT IT IS, IT IS ALLOWED, BUT WE TEND TO NOT AND THAT'S ALL CALCULATED FOR US, RIGHT? MM-HMM .

YEAH, WE WOULD DO THIS.

SO THE, THIS IS JUST SHOWING THE HISTORY OF SOME OF THOSE COUNTS.

UM, YOU CAN SEE THOSE ACTIVES, THEY'RE GRADUALLY COMING OFF AS THEY GET TO BE RETIREMENT AGE.

UM, SO THEY WANT THE TERM VESTED, YOU KNOW, WORKING THEM DOWN AS WE GO.

UM, AND PEOPLE IN PAYMENTS STAY PRETTY LEVEL.

UM, WE'VE NOT HAD A TON OF DEBTS, SO THAT COUNT HAS KIND OF BEEN STAYING FAIRLY LEVEL.

SO THIS SHOWS THE ASSETS, WHAT HAPPENED DURING THE YEAR.

UM, YOU CAN SEE CONTRIBUTIONS COMING IN A 5 0 5.

THE INVESTMENT INCOMES WAS THAT 2.2.

UM, AND THAT WAS ABOUT DOUBLE WHAT WE WOULD'VE EXPECTED FOR THE PLAN TO EARN.

AND SO INSTEAD OF RECOGNIZING THAT FULL EXTRA, YOU KNOW, MILLION DOLLARS OR SO, WE END UP KIND OF BACKING OFF 800,000 BASICALLY.

UM, AND SO YOU HAVE THIS, ONLY 200,000 OF THE EXCESS GETS RECOGNIZED.

UM, YOU CAN SEE BENEFIT PAYMENTS COMING OUT ABOUT 1.3 MILLION.

UM, THERE'S THOSE EXPENSES THAT WE'RE LOOKING AT, AT ROLLING AVERAGE NOW.

SO THERE WERE 74 LAST YEAR, WHICH IS A LITTLE HIGHER THAN THEY NORMALLY ARE.

I THINK THERE WAS MAYBE JUST A TIMING OF, I DON'T KNOW IF IT WAS AUDIT FEES OR OUR ACTUARY FEES WERE MAYBE NOT PAID UNTIL THIS

[00:25:01]

YEAR.

SO I THINK THAT WAS MAYBE A TIMING ISSUE.

I DON'T THINK THAT A EXPENSES HAVE TRULY GROWN A LOT.

UM, AND THEN, YEAH, SO YOU CAN SEE ONE POINT OR 16.7 IN THE BANK.

CAN I GET YOU TO POINT OUT ONE THING? YOU KNOW I'M GONNA MM-HMM .

TOTALLY DISRUPT YOU WHAT YOU'RE DOING, .

NO, THAT'S FINE.

UM, SHE'S LOOKING AT THE ASSETS HERE AND WHAT WE'VE DONE AND WHERE WE ARE.

THIS IS THE ACTUARIAL AMOUNT AND THIS HAS THE SMOOTHING EFFECT IN IT.

BUT AFTER, YEP.

WHEN WE, FOR FINANCIAL REPORTING, WE HAVE TO USE GA B 67, 68, AND 67.

68 DOES NOT ALLOW US TO DO THE SMOOTHING.

SO WHEN YOU LOOK AT THE FINANCIAL ACT, THE AND THE RELATED FINANCIAL STATEMENTS, IT WILL NOT HAVE THAT SMOOTHING EFFECT IN THERE.

IT WILL HAVE A, WE WILL HAVE AN INCREASE IN DEFERRED ASSET OR DEFERRED OR, UH, DEFERRED LIABILITY.

BUT YEAH, THE, THE FUNDED STATUS, THAT'S HOW THE GS B WORKS.

SO THE FUNDED STATUS FOR THE G BEER VILLE BOUGHT A HUNDRED OR 1 0 1 PER 101% FUNDED.

SO WHAT, SO NEXT MONTH WHEN WE BRING THE TO YOU, THERE'S GOING TO BE AN ADJUSTMENT BASED WITHOUT THE SMOOTHIE.

SO IT'S GONNA BE AS THOUGH IT WAS FUNDED AT A 1 0 1 0.6, I THINK, AS OPPOSED TO THIS.

AND IT'S GOING TO REFLECT THE FULL, UH, ACTUALLY IF YOU GO TO THE NEXT REPORT IS THE GAS.

WE MAY JUST FLIP OVER AND LOOK AT THAT, UH, WHEN WE GET FOR OH SURE.

JUST THE REPORT.

OH, YOU CAN BRING THAT UP TOO.

SURE.

WE CAN PULL THAT UP AND JUST FLIP OVER TO THE PAGE THAT HAS THE YEAH.

THE GAME THAT EXECUTIVE JUST SO WE'LL UNDER, JUST SO WE ALL WILL UNDERSTAND.

JEFF HAD A QUESTION.

SO IN MY HEAD, DOES, IS THERE A SURVIVOR BENEFIT FROM THIS? YEP.

SO THEY KIND OF, THE DEFAULT, IF SOMEBODY DIDN'T PICK AN OPTION WOULD BE A 50% JOINT SURVIVOR.

UM, SO IT'S KIND OF THE DEFAULT.

BUT WHEN THEY DO RETIRE, THEY HAVE A NUMBER OF DIFFERENT OPTIONS.

THEY CAN TAKE JUST A LIFE ONLY ANNUITY, UM, FOR JUST THEIR LIFETIME.

THE LIFE ANNUITY TENDS TO BE PROBABLY THE MORE POPULAR ONE 'CAUSE IT'S THE BIGGEST AMOUNT PER MONTH.

UM, SO THE ANNUITY OPTIONS FOR IF YOU DO HAVE SURVIVOR BENEFITS, THEY'RE PRICE DOWN A LITTLE BIT.

AND THIS PLAN OFFERS, IF THEY TAKE THE DEFAULT, IF THEY TAKE THE DEFAULT TO 50%, THERE'S NO ADJUSTMENT TO THE RETIREES PLAN.

IT, IT, IT, WE DO THAT FOR AND WITHOUT IT, WITHOUT REDUCING THE, THE, UH, PARTICIPANTS.

NOW IF THEY TAKE ONE OF THE OTHER OPTIONS AND WANT TO HIRE, THEY HAVE TO, THEY HAVE TO GIVE A LITTLE MM-HMM .

BUT IF THEY TAKE 50%, IT STAYS FLAT.

AND THERE HASN'T BEEN COLA ADJUSTMENTS I DON'T THINK TOO OFTEN ON THOSE.

MAYBE NOT OFTEN.

WE DON'T THINK COLA'S REGULARLY.

SHE'S ONE ABOUT FOUR YEARS AGO THROUGH A, A QUESTION I HAD.

SO 90% OF THE PARTICIPANTS ARE, ARE, HAVE SINCE TERMINATED AND THEIR DEFINED BENEFITS ARE SET AS FAR AS WHAT THEY'VE GOT ON THE BOOKS.

CORRECT.

SO REGARDLESS OF IF THE PLAN HAS EVER ENDED, WOULDN'T, WOULD, WOULD IT BE WISE TO, TO CHANGE THAT, THAT ASSET, UH, MIX? I, SINCE THE MOST OF THE PARTICIPANTS AREN'T BUILDING UP, UH YEP.

SO WE KIND OF TAKE THAT INTO ACCOUNT IN OUR VALUATION THAT THEY, YOU KNOW, MIGHT NOT, YOU KNOW, EVER HAVE AN INCREASE IN BENEFIT.

UM, WHEN YOU GO AND PURCHASE AN ANNUITY FOR THEM, IT WOULD KIND OF BE LOCKED IN AT WHATEVER MONTHLY AMOUNT THEY PICK.

UM, SO YEAH, IT WOULD BE FROZEN, BASICALLY LIKE A FORMER EMPLOYEE CLOSE TO A HUNDRED PERCENT FUNDED NOW WITH A FEW PEOPLE STILL, UH, ADDING TO THAT LIABILITY.

BUT A MAJORITY OF, OF THE PARTICIPANTS, WE KNOW WHAT THEIR BENEFITS ARE GONNA BE.

WE'RE AT A HUNDRED PERCENT FUNDED.

DO WE, DO WE CHANGE THAT RISK ALLOCATION TO WHERE WE JUST HOLD STEADY INSTEAD OF RIDE THE ROLLERCOASTER? MM-HMM .

WE, WHAT WOULD HAPPEN IF YOU, IF YOU TERMINATED THIS PLAN, WE WOULD END UP EITHER GIVING PEOPLE MONEY THAT THEY CAN ROLL OVER IF THEY'RE STILL ACTIVE EMPLOYEES OR FIND THEM AN ANNUITY.

AND THOSE WHO HAVE ALREADY SEVERED FROM, UH, FROM WORKING HERE, BASICALLY THEY WOULD GET AN

[00:30:01]

ANNUITY.

WE WOULD ELIMINATE OUR MARKET RISK MM-HMM .

WE WOULD BE BUYING THE ANNUITY AND WHOEVER ASSUMES THE ANNUITY WOULD ASSUME THE MARKET RISK.

BUT REGARDLESS OF TERMINATING THE PLAN, YES, WE COULD STILL MAKE CHANGES TO THE, THE RISK ALLOCATION.

OH YEAH.

FOR ASSET, WE'RE FUNDED NOW WE'RE CLOSE TO BEING FUNDED.

MAYBE WE LOOK AT THAT ASSET MIX AND TRY, JUST TRY TO HOLD WHAT WE GOT.

I THINK THAT'S NEXT MONTH, THAT'S FROST AND THAT'S, AND THEY WILL BE HERE NEXT MONTH.

I'LL MAKE SURE THEY'RE HERE NEXT MONTH PREPARED TO DISCUSS THAT THERE'S SOME VOLATILITY GOING ON.

AND IF YOU DO KIND OF WANNA LOCK IN YOUR GAINS, UM, UH, THE PENSION LIABILITY WORKS SIMILAR TO A BOND FUND.

YOU KNOW, IF THE ASSETS GO UP FOR A BOND FUND, LIABILITIES TYPE TYPICALLY GO UP.

UM, AND SOME, SO SOME ASSET ADVISORS WILL KIND OF DO AN ASSET LIABILITY MATCHING WHERE THEY TRY AND, YOU KNOW, HAVE, SO YOU'RE NOT VOLATILE.

UM, SO IF YOU EVER WANTED TO LOCK IN YOUR GAINS AND YOU KNOW, NOT HAVE AS MUCH RISK GOING FORWARD, IT WOULD MOSTLY BE KIND OF A BOND FUND, UM, THAT YOU'D MOVE TOWARDS.

AND CURRENTLY WE'RE RUNNING A THOU 80% EQUITY SO THAT WHEN OUR, AND THAT'S HOW WE COME UP WITH THAT 7% INTEREST RATE.

SO IF WE DO START SHIFTING THAT ALLOCATION, WE'LL HAVE TO START LOOKING AT, YOU KNOW, BRINGING THAT INTEREST RATE DOWN.

UM, BUT YEAH, IT CAN BE DONE KIND OF STEPWISE IF YOU HAVE KIND OF A TARGET OF, YOU KNOW, FIVE, 10 YEARS FROM NOW, YOU CAN KIND OF STEP DOWN AND GET TOWARDS YOUR BONDS.

SO, BUT I'M UNDERSTANDING RIGHT, 90% OF THE PARTICIPANTS DON'T NEED A 7% MM-HMM .

IT'S MORE SO FOR THE PLAN, MAKING 7%, TWO, TWO QUESTIONS MM-HMM .

THE EXPENSES, YOU'VE GOT, UH, ADMINISTRATIVE AND INVESTMENT EXPENSES MM-HMM .

DID WE NOT FIX THOSE EXPENSES? SO WHILE FOR THE, FOR THE ADMINISTRATIVE EXPENSES THAT GO INTO YOUR CONTRIBUTION, WE'RE LOOKING AT A ROLLING THREE YEAR AVERAGE NOW.

UM, SO WE LOOK BACK AT THREE YEARS, TAKE THE AVERAGE AND THE INVESTMENT EXPENSES, THOSE ARE WORKED IN.

SO BASICALLY THE 7% INTEREST RATE THAT WE'RE USING IS NET OF EXPENSES.

UM, SO IF WE, YOU KNOW, IF YOU GUYS DECIDED TO NOT PAY INVESTMENT EXPENSES AND YOU KNOW, PAY 'EM OUTSIDE OF THE PENSION PLAN, UM, THE INTEREST THAT 7% INTEREST MAY MAKE STUFF UP A LITTLE BIT.

SO WHAT, WHAT CONSTITUTES THAT INVESTMENT EXPENSE? FUND MANAGERS? YEAH.

THAT'S JUST THE INVESTMENT MANAGERS AND ANY KIND OF TRANSACTIONAL TYPE FEES THEY CHARGE, I ROUGHLY, I ROUGHLY CALCULATED IT AT, UH, 0.5%.

AND THEN ONE, ONE OTHER QUESTION TOO.

UM, YOU HAD A PREVIOUS SLIDE UP THERE THAT SHOWED BENEFITS.

UM, I THINK IT MIGHT HAVE BEEN, UH, THAT ONE RIGHT THERE.

THE AVERAGE PLAN COMPENSATION MM-HMM .

IS THAT WHAT THE AVERAGE PERSON'S GETTING? I MEAN OBVIOUSLY THEY'RE, IF THEY'RE RETIRED YEP.

NO, SO THAT, SO THIS IS SHOWING THE, THE ACTIVE PEOPLE.

SO THAT'S WHAT THEIR, YOU KNOW, SALARY HAS BEEN.

UM, I DON'T HAVE, I DON'T KNOW IF WE HAVE A SLIDE THAT SHOWS AVERAGE.

SO YOU'RE SAYING AVERAGE COMPENSATION FOR THE YEAH.

THE SALARY THAT'S GOING INTO THEIR, CALCULATING THEIR BENEFIT.

SO THAT'S 126 AND IT'S A FIXED PERCENT THAT WE SAY IT'S THE SAME PERCENT I GUESS THAT WE DO FOR EMPLOYEES.

NO, THIS IS A CALCULATION.

IT'S THE AVERAGE OF THE HIGH FIVE YEARS.

NO, I UNDERSTAND THAT.

MY MY POINT IS, IS THAT THAT SALARY DETERMINES HOW MUCH BEFORE PAYS INTO THE PLAN ON THEIR BEHALF.

IT GETS WORKED INTO THAT NORMAL DEFINE CONTRIBU.

IT GETS WORKED INTO THE, THIS IS ACTUARILY.

THIS IS ACTUARILY, THIS IS WHERE WE'RE, WE'RE CALCULATING THE ACTUARIAL MINIMAL CONTRIBUTION MM-HMM .

AND THEN FOR MOST, WELL PRETTY MUCH SINCE 2015 ISH, 1617, SOMEWHERE THERE WITH THE EXCEPTION OF THE YEAR WITH NO SALE ORDER, WE HAVE MADE, UH, CONTRIBUTIONS IN EXCESS OF THE REQUIRED CONTRIBUTION, UH, DUE THE NO SALE ORDER, WE DROPPED IT DOWN.

SO WHAT IS THE PERCENT FOR THE DEFINED CON FOR THE DEFINED CONTRIBUTION EMPLOYEES MEAN THE BACK TIME WE WORK HERE? OH, IT IS 3% FOR THE FIRST FIVE, 6% FOR THE FIVE THROUGH 10 AND THEREAFTER NINE.

TO CONTRIBUTE TO OH, IN THAT ONE.

AND THAT'S NOT MATCHING, THAT'S JUST EMPLOYER, THAT'S EMPLOYEES AREN'T ALLOWED

[00:35:01]

AND WE, WE SEND THOSE CHECKS EVERY MONTH.

EVERYBODY'S ONE ACCOUNT AND THEY'RE SPREAD OUT.

AND THAT WOULD BE IN THE SUMMARY OF PLAN DESCRIPTION FOR THE DEFINED CONTRIBUTION, RIGHT.

AS FAR AS WHAT THEY DID THE BREAK, WHEN THEY DID WHAT PERCENTAGE? YES.

I MEAN, OVERALL OUR PLAN'S VERY HEALTHY.

I MEAN, IN TERMS OF PLANS AROUND WHAT I'VE SEEN, WE'RE VERY, WE'RE IN GOOD HEALTH.

ABSOLUTELY.

A LOT OF PLANS ARE, I, I WORK ON PLANS THAT ARE 50, 40% FUNDED.

SO IT'S GOOD TO SEE A, A BOARD THAT REALLY TAKES IT, YOU KNOW, SERIOUSLY TRYING TO CONTRIBUTE.

UM, SO YEAH, YOU GUYS ARE DOING GREAT COMPARED TO AVERAGE PLANS AROUND THE COUNTRY.

DO YOU CONTINUE AND THEN THIS IS THE, JUST SHOWS THE HISTORY OF THE MARKET RETURN, UM, ACTUARIAL OR THE RETURN ON ASSETS.

UM, AND THIS IS KIND OF WHAT WE'RE TRYING TO SMOOTH OUT, UM, WITH THAT NEW SMOOTHING METHOD WE'RE USING FOR THAT, UM, ACT, ACTUAL VALUE OF ASSETS.

UM, 'CAUSE BEFORE OUR CONTRIBUTION WOULD'VE BEEN SWINGING UP AND DOWN JUST LIKE THESE MARKET RETURN VALUES.

SO YOU CAN SEE KIND OF THE AVERAGES IN THE HISTORY.

THIS IS JUST SHOWS A SNAPSHOT OF THE A, UM, ASSUMPTIONS THAT WE'RE USING.

WE HAD CHANGED A COUPLE OF THESE LAST YEAR.

THE PAY INCREASES WE HAD CHANGED.

UM, AND THEN WE SWITCHED TO THAT ASSET VALUE WHERE WE'RE ONLY RECOGNIZING THE 20%.

UM, AND WE HAD THE RETIREMENT RATES.

IT USED TO BE WE ASSUMED EVERYONE WOULD GO OUT RIGHT AT AGE 65.

AND NOW WE KIND OF HAVE A GRADED, YOU KNOW, SOME PEOPLE WILL GO OUT BEFORE THAT, SOME PEOPLE WILL GO AFTER THAT.

SO THAT RETIREMENT RATE WE CHANGED LAST YEAR IS NOW KIND OF GRADED INSTEAD OF A FLAT AGE 65.

THIS IS THE, I MENTIONED BRIEFLY THAT MORTALITY TABLE CHANGE.

UM, THIS IS WHAT THE IMPACT WOULD'VE BEEN IF WE HAD IMPLEMENTED IT THIS YEAR.

UM, BUT WE WOULD LIKE TO, FOR NEXT YEAR'S VALUATION, AS LONG AS YOU GUYS ARE OKAY WITH HAVING YOUR LIABILITY GO DOWN A LITTLE BIT, UM, WE'D LIKE TO MAKE THAT CHANGE FOR THE 1 1 20 27 VALUATION.

IT'S SMALL ENOUGH CHANGE AND IT'S, YOU KNOW, IN THE RIGHT DIRECTION.

I, I DON'T KNOW IF WE NEED A VOTE OR AN APPROVAL OR ANYTHING FOR THAT OR WE'LL NEED TO DO THAT FULL BOARD MEETING.

AND I WOULD, MY RECOMMENDATION IS THE SAME AS FIRST IS THAT WE GO AHEAD AND UPDATE THE MORTALITY TABLE.

MM-HMM.

OR FOR THE NEXT, UH, WHAT THE PLAN THAT WOULD BE EVALUATED ON THE 12 31 21 26.

SO THE GSB REPORT AS OF YEAH.

FISCAL YEAR 26.

AND WE DO, WE HAVE THAT ON THE AGENDA FOR TODAY.

UH, WE HAVE ACCEPTANCE OF A REPORT.

UM, HOW DID WE THAT MAKE THAT MOTION FOR THE COMMITTEE? IT WOULD BE A RECOMMENDATION TO THE BOARD TO ACCEPT THE, UH, ACTUARIAL VALUATION AND THEN TO RECOMMEND A CONTRIBUTION YES.

SO THAT WOULD BE A CHANGE IN THE RELATED ASSUMPTIONS.

SO RIGHT NOW WITH THE 7% INTEREST, YOU'RE ASSUMING THAT THE PLAN IS GONNA, YOU KNOW, GO ON IN PERPETUITY.

IT'S, PEOPLE AREN'T LIVING QUITE AS LONG AS THEY WERE PROJECTING WHEN THEY DID THE LAST STUDY IS BASICALLY WHAT HAPPENED.

THE ONLY GROUP THAT'S LIVING LONGER THAN THEY WERE PROJECTING IS, UM, MALE PUBLIC SAFETY POLICE AND FIRE OFFICERS.

SO A LOT OF MY PLANS THAT HAVE POLICE AND FIRE, THE LIABILITY ACTUALLY WENT UP A LITTLE BIT FOR THEM.

BUT, UM, IN GENERAL, NOT QUITE AS MUCH IMPROVEMENT IN MORTALITY.

SO THAT'S WHAT THE, THAT WOULD LOOK LIKE BRINGS THE FUNDING PERCENTAGE UP A LITTLE BIT.

IS THAT, IS THAT UP TO, UM, YOU READ SOMETHING THE OTHER DAY, IS IT 79 THAT THE AVERAGE MALE IS BE 79? YEAH.

SO DEPENDING ON WHAT GROUP, IF IT'S JUST GENERAL EMPLOYEES, IT WENT UP FROM NOTHING AVERAGE ABOUT HIM.

JUST A TINY BIT.

LIKE WENT FROM YEAH.

79 TO, YOU KNOW, 70 AND A HALF OR SOMETHING.

IT WAS A REAL SMALL INCREASE.

AND KIND OF THESE MORTALITY TABLES, INSTEAD OF JUST SAYING LIKE, HERE'S YOUR RATES TODAY, THEY'RE GONNA STAY THE SAME FOREVER.

THEY KIND OF ASSUME THAT PEOPLE ARE GONNA LIVE A LITTLE BIT LONGER EACH YEAR.

YOU KNOW, MEDICAL IMPROVEMENTS AND THINGS LIKE THAT GET WORKED IN.

UM, AND SO THE LAST STUDY WAS ABOUT SIX YEARS PRIOR.

UM, AND WHEN IT SAYS PUB 2016, THAT'S LIKE THE MIDPOINT OF THEIR STUDY PERIOD.

SO THE LAST STUDY PERIOD WAS THE MIDPOINT WAS 2010.

AND SO NOW SIX YEARS LATER THEY'VE UPDATED IT.

BUT IN 2010 THEY WOULD'VE PROJECTED, YOU KNOW, A LITTLE BIT OF INCREASE EACH YEAR.

UM, AND NOW WHEN THEY REDID IT, IT HADN'T GONE QUITE AS MUCH AS THEY WERE EXPECTING.

SO, OKAY.

KNOWING THAT, SO YEAH, THAT'S KIND OF THAT SMALL CHANGE THAT WE'D LIKE TO MAKE FOR NEXT YEAR.

AND THEN THIS IS THAT PLAN TERMINATION ESTIMATE THAT WE HAD TOUCHED ON.

UM,

[00:40:01]

UM, IF YOU DID WANT TO CUT IT OFF AND CLOSE THE PLAN AND GET RID OF IT, WE'RE LOOKING AT A HIGHER, UM, 19.9 LIABILITY.

AND THAT'S BECAUSE ANNUITY PROVIDERS, THE INTEREST RATE IS CLOSER TO 5%.

WHAT THEY ASSUME THEY'RE A LOT MORE CONSERVATIVE.

AND THEN THEY ALSO ADD IN, YOU KNOW, SOME PROFIT MARGINS.

UM, SO RIGHT NOW WE'RE SEEING AN AVERAGE FOR ANNUITY PURCHASES OF AROUND 5%.

SO THAT'S WHY WE RAN IT AT THIS.

UM, SO THAT'S JUST KIND OF A ROUGH ESTIMATE OF IF YOU DO WANNA CLOSE DOWN THE PLAN AND PAY EVERYONE OUT AND BUY ANNUITIES, WE'RE LOOKING AT ABOUT A $3 MILLION SHORTFALL CURRENTLY .

BUT WE CAN KEEP KIND OF LOOKING AT THIS ESTIMATE EACH YEAR AND MAKE SURE YOU'RE MAKING PROGRESS.

BUT YEAH, WITH YOUR 505 CONTRIBUTION HELPS A LOT.

AND THIS IS ONE OF THE QUESTIONS THAT COMES, HAS COME UP ON PAST FORWARDS IS HOW CLOSE ARE WE TO GET TO WHERE IT MAKES SENSE TO BUY IT OUT.

UH, WE'RE NOT MAKING A RECOMMENDATION THAT WE DO THAT AT THIS POINT, BUT WE WANT TO MAKE YOU AWARE OF THIS IS HOW CLOSE WE ARE TO BEING THROUGH WITH THE DEFINED, UM, BENEFIT PLAN.

AND SO WE DON'T WANT, THAT COULD BE KIND OF A TARGET, YOU KNOW, HOWEVER LONG YOU WANT, YOU KNOW, TO LOOK FORWARD AND KEEP THIS PLAN.

YOU CAN KIND OF START STEPPING TOWARDS AN ALLOCATION THAT WOULD GET YOU CLOSER TO THAT 5% LIKE YOU WERE TALKING ABOUT, AND DO IT STEPWISE OVER A NUMBER OF YEARS.

SO THREE OR FOUR YEARS, IT MAY MAKE SENSE.

IT SEEMED LIKE SEVERAL YEARS AGO WE HAD A PRETTY SERIOUS CONVERSATION ABOUT DOING SOME OF THAT.

WE ELECTED MM-HMM .

IT'S GOOD TO KEEP THAT ON THE HORIZON.

BE THINKING ABOUT IT.

I THINK WE ELECTED TO WORK ON THE ROADS.

I THINK WE HAD, I THINK WE HAD SOME OTHER, OTHER PRIORITIES.

SO YEAH.

MAYBE THAT WALKOVER.

YEAH, .

SO MY LEGALESE, THAT WAS ALL I HAD.

IF YOU COULD PULL UP THE, UH, GAS 67, 68 REPORT REAL FAST.

YOU CAN TELL ME START, WE'LL START PAGE TWO AND YOU, YOU'LL KNOW WHICH SPOT YOU WANT US ABOUT.

THIS IS PROBABLY THE EASIEST.

THIS IS KIND OF A SNAPSHOT OF KIND OF THE MOST IMPORTANT PIECES THAT GO INTO THE .

UM, SO YOU CAN SEE WE HAVE THAT HIGHER FUNDING RATE OF 103.6, UM, 'CAUSE THAT YOU JUST USE THE MARKET VALUE THERE.

UM, BUT EVERYTHING ELSE, THE CALCULATIONS ARE PRETTY SIMILAR.

THE LIABILITY CALCULATION IS SIMILAR TO WHAT WE DO FOR THE VALUATION, USING THAT 7% INTEREST RATE AND THIS, AND THIS.

WHAT THE FOOTNOTE WILL BE IN THE FINANCIAL.

THIS IS THE REPORT WE GIVE TO THE AUDITOR AND THEY YEAH.

MOST THE FINANCIAL, THIS, THIS IS WHAT WILL, WHEN THE PUT, WHEN THE, WHEN THE PEN, THE REFERS TO THE PENSION.

THESE, THIS IS THE, THESE ARE THE SCHEDULES THAT THEY, THE PENSION THE WILL BE USING.

MM-HMM.

UM, AND JUST, THERE'S BEEN SOME CONFUSION IN PAST YEARS AND JUST WANTED TO POINT THAT OUT SO Y'ALL CAN ASK QUESTIONS ABOUT THE DIFFERENCE.

BUT THIS FALLS IN THE, UH, ACCOUNTING STANDARD INSTEAD OF AN ACTUARIAL STANDARD.

SO THIS YEAR THEY'RE ACTUALLY GONNA, INSTEAD OF AN EXPENSE, IT ENDS UP BEING A, AN INCOME.

I GUESS THAT'LL BE RECOGNIZED THAT 3 81 IS KIND OF THE COST OF THE PLAN DURING YEAR.

AND THAT'S BECAUSE OF THAT ASSET RETURN AND BEING LOOKING LIKE YOU'RE OVER A HUNDRED PERCENT FUNDED ON THIS BASIS.

IT'LL BE THE SUITE FROM THE DEFERRED, UH, UM, LIABILITY WE HAD LAST YEAR TO A DEFERRED, UH, RECEIVABLE.

DEFERRED ASSET WILL BE ON THE BOOKS THIS YEAR.

NO, NO P AND L EFFECT.

UH, IT WILL, SO THAT WOULD BE THE P AND L WILL BE THAT EXPENSE.

KIND OF THE LAST YEAR IT WAS AN EXPENSE OF, I CAN'T READ THIS FROM HERE, BUT FOUR 60 I THINK IT IS.

UM, AND NOW THIS YEAR IT'S SHOWING AN INCOME OF 381,000.

THAT'S KIND OF THE, YOU KNOW, INCOME.

IS THAT OTHER, IS THAT OTHER INCOME OR IS THAT LINE, OR IS THAT A, WE'RE STILL DISCUSSING THAT WITH THE AUDITORS.

SOMETIMES IT'LL BE, SOME OF IT'LL BE ABOVE AND SOME OF IT'LL BE BELOW, LIKE THAT NORMAL COST PIECE OF, THAT'S MORE OF AN EMPLOYMENT COST.

SO I'VE SEEN PEOPLE RECOGNIZE THAT AS, YOU KNOW, WHERE THEY RECOGNIZE PEOPLE'S PAY SALARY MM-HMM .

EXACTLY.

YEAR WE BROUGHT THAT UP FROM THREE TO FIVE.

AND YOU CAN SEE THAT SALARY INCREASES, UM, KIND OF IN THE MIDDLE OF THOSE PERCENTAGES.

LAST

[00:45:01]

SO THAT'S, THIS IS NON CASH BASICALLY, RIGHT? I MEAN, THESE ADJUSTMENTS ARE NON-CASH.

IT IS NOT, IT IS A NON-CASH INJURY ACCRUAL.

IT'S AN ACCRUAL OF, UH, THAT'S WHY IT'S CALLED A DEFERRED ASSET.

OR DEFERRED LIABILITY.

ANY OTHER QUESTIONS? BOX? ALRIGHT.

AND THIS WILL COME UP IN THE NORMAL BOARD MEETING, UH, WITH THE INTENT FOR Y'ALL TO ACCEPT THE PLAN, ACCEPT THE PRESENTATION AND MAKE THAT ONE CHANGE.

TONY, WE CAN MAKE THAT ONE CHANGE TO THE ASSUMPTIONS.

AND THEN DOES THAT REQUIRE BOARD APPROVAL? I, I THINK IT DOES IN THE PAST WE HAVE.

AND, UH, INCLUDE DOCUMENTS.

THEN WE'RE ALSO GOING TO BE ASKING THE BOARD TO APPROVE THE CONTRIBUTION TO REMAIN 505,000 ANNUALLY.

UH, AS WE HAVE BUDGETED, THAT'S GONNA BE FULLY, THAT'S GONNA BE THE, WE NEED, THIS BOARD NEEDS TO MAKE, I MEAN, THIS NEEDS TO MAKE A RECOMMENDATION.

THERE'S AN AGENDA ITEM.

I THINK HOPEFULLY 30 MINUTES.

THAT'S ALL.

ANYTHING ELSE? COOL.

ALL THANK YOU SO MUCH.

SO MUCH.

AND NOW IT'S TIME FOR, UH, PUBLIC COMMENTS.

AND I, I THINK JENNIFER'S GOING TO LEAVE GO STAND IN LINE TO GET BACK ONTO A PLANE.

I GOT TS.

[C.1 Approval of the Finance Committee Minutes]

YOU.

NEXT WE HAVE APPROVAL OF THE FINANCE COMMITTEE MINUTES.

DOES EVERYBODY HAD AN OPPORTUNITY TO REVIEW THOSE MINUTES? DOES ANYONE HAVE ANY MOTION TO APPROVE? MOTION APPROVED.

SECOND.

ALL THE FAVOR.

IT'S, IT'S APPROVED.

[C.2 Public Comments]

WE DO HAVE ONE PERSON THAT WOULD LIKE TO MAKE PUBLIC COMMENTS WITH JEANNIE COLLIER.

AND WE'RE HERE ABOUT THE PIER 19 PORTA-POTTIES.

WE'RE DOWN THERE QUITE A BIT WITH THE VARIOUS DOLPHIN TOUR WITH OUR FAMILIES.

AND I WAS THERE, UH, FRIDAY NIGHT AND THE PORTA-POTTIES WERE FULL AND THERE WAS POOP IN THE URINAL AND IT WAS BAD.

AND THEN, UH, WE CAME BACK SUNDAY MORNING BEFORE THE RESTAURANTS WERE OPEN AND I AM VISUALLY IMPAIRED.

I WALKED IN AND THERE WAS POOP EVERYWHERE AND THERE WAS POOP ALL OVER ME.

AND MY HU DEAR HUSBAND'S CLEANING IT OFF.

THERE WAS NO, UM, THERE WAS NO SANITATION.

THERE WERE NO TOWELS, THERE'S NO SOAP, NOTHING.

AND, YOU KNOW, THERE'S MORE AND MORE FOOT TRAFFIC, YOU KNOW, BOTH FROM THE SHIPS AND FROM THE VARIOUS TOUR DOWN THERE.

AND WE NEED TO DO SOMETHING ABOUT THIS.

THIS IS NOT SAFE.

THE SCIENCE EFFECT.

IT'S JUST INCREDIBLY GROSS.

SO YEAH, OUR QUESTIONS ARE, WHO IS, THAT'S ST.

TOR AREA DOWN THERE AT PIER 19.

UM, WHO IS IN CHARGE OF THOSE? PORT-A-POTTIES? YEAH, WE WERE HAVING PARTIES.

OUR, I MEAN, WILLIE, IT SEEMS LIKE EVERYONE RUNS INTO WILLIE G'S WHO HAS TWO WOMEN'S BATHROOMS. SOMETIMES ONLY ONE IS WORKING.

WE HAVE THE ALYSSA DOWN THERE, BAYWATCH, OCEAN STAR MUSEUMS, CRUISE SHIPS, RESTAURANTS.

THEY HOLD EVENTS.

THE USS TEXAS IS GONNA BE MOVED DOWN THERE.

UM, THERE'S TWO PORTA POTTIES.

ARE THOSE FOR WORKERS? ARE THOSE FOR THE TOURISTS? I I, I I KNOW THIS IS GONNA SOUND BUREAUCRATIC.

TODAY WE CAN CERTAINLY ACCEPT YOUR COMMENTS.

UHHUH .

BUT WE CAN'T RESPOND TO IT.

OH, THAT.

WE CAN'T, THAT DOESN'T MEAN THAT THE PORT CAN'T RESPOND.

, WE TAKE THE PORT.

THERE'RE ALSO, THERE'S NOTHING HANDICAP ACCESSIBLE DOWN THERE.

IF SOMEONE IS VISUALLY IMPAIRED, THERE'S NO LIGHTS, THERE'S NO HAND WASHING, THERE'S NO SANITATION.

YOU KNOW, EVERYONE KNOWS SOCIAL MEDIA NOWADAYS.

IF ANYONE WANTS TO SEE THE VIDEO OR PICTURES OF THIS PORTA POTTY, WE DO HAVE IT.

IF THIS GETS OUT ON SOCIAL MEDIA, WE ALL KNOW GALVESTON HAS BROWN

[00:50:01]

WATER.

WE WILL DEFINITELY BE KNOWN AS THE BROWN STATE OR BROWN CITY.

BUT BRETT, GO AHEAD.

AND THAT IS OUR CONCERN.

WE DON'T, I'M BRETT, I'M THE DEPUTY DIRECTOR.

DO UNIQUE, SORRY THAT YOU OBSERVE THAT AND HAD TO GO THROUGH THAT .

I'M USUALLY WITH HER AS HER GUIDE PERSON, BUT I WAS NOT WITH HER THAT TIME.

SO TRY TO HELP OUT.

ARE THESE THE, THE TEMPORARY PORT CANS OR IS THESE THE RESTROOMS OUTSIDE THE FISHING, UH, THE PARTY BOATS.

THE, UH, CON THE, UH, CONCRETE STRUCTURE.

THEY'RE THE TWO PORTA POTTIES.

I'M HERE .

BY MAY WATCH.

THOSE ARE, I BELIEVE FOR CONSTRUCTION WORKERS, THEN THAT'S A NOHA ISSUE.

UM, WHERE IS THE PUBLIC SUPPOSED TO USE? THERE'S NOTHING FOR THE PUBLIC.

WOULD THEY GO TO BAYWATCH CONTINUE AND ALL THAT? GOING TO THE, THEY SUPPOSED TO USE RESIDENT.

WE'RE GONNA, YEAH, LET'S, MAYBE Y'ALL COULD TAKE THIS OFFLINE OR, OKAY.

WE, THIS JUST HAPPENED THIS WEEKEND AND WE STARTED MAKING PHONE CALLS AND THIS IS WHERE WE WERE TOLD TO THANK YOU FOR CONTRIBUTING.

BRINGING TIME.

SO Y'ALL HAVE, THIS IS A TOURIST ISSUE TOO, RIGHT? OKAY.

AND THERE'S MORE, MORE FOOT TRAFFIC FROM THE SHIFT.

AN THANK YOU.

YOUR TIME.

Y'ALL HAVE A GREAT, HAPPY EASTER.

MARK.

YOU WANT TO GET MY, TO START OFF WITH ROGER?

[D.1 CFO REPORT/CONSENT AGENDA]

SUBJECT FOR THE MONTH OF, HERE WE GO.

UH, FEBRUARY, YOU KNOW, THE FIRST FEW MONTHS OF THE YEAR, THERE'S ALWAYS A LOT OF THINGS GOING ON.

WE TRY TO SEE WHAT'S, WHAT'S GONNA BE WHERE, BUT I'VE NEVER, YOU KNOW, WE DON'T ALWAYS GET IT RIGHT.

WELL, THIS YEAR ON, UM, FOR THE MONTH OF FEBRUARY, REVENUES WERE WITHIN A HUNDRED THOUSAND DOLLARS UNDER BUDGET.

UH, WE HAD SOME WARPAGE, SOME LAY DOCKAGE.

THEY WERE ALL, PARKING WAS UNDER SLIGHTLY AND PASSENGER SERVER CHARGES.

THAT'S FOR THE MONTH OF FEBRUARY.

UH, OUR OPERATING EXPENSE BEFORE DEPRECIATION WE'RE RIGHT, PRETTY MUCH RIGHT ON BUDGET.

UH, NON-OPERATING EXPENSES WE'RE UNDER BUDGET, UM, DUE TO RECOVERY RESTORATION.

WELL, DUE TO SOME OF THE, UH, FUNDS THAT WE'VE RECEIVED FROM AND RECORDED, IT'S THE OFFSET FROM HURRICANE I SOME, THE OFFSET FROM HURRICANE I.

WE CONTINUE TO TURN THINGS IN.

UH, TEE THEM CONTINUES TO PROCESS THEM AND THEY PROCESSED ANOTHER INVOICE.

SO WE HAD TO, WE HAD TO RECOGNIZE THE, UH, REDUCTION TO THAT RECEIPT TO THAT PAYABLE.

SO, UH, AND THEN, UH, UTILITIES.

HERE'S, UH, JUST THE FINANCIALS FOR THE END OF THE, FOR THE MONTH.

UM, WE'LL NOTE THAT WE, WE HAD CAPITAL EXPENDITURES OF TWO AND A HALF MILLION FOR THE MONTH OF FEBRUARY ALONE.

AND HERE'S OUR REVENUES.

AND IF YOU LOOK AT THE, THE VARIOUS LINES OF THE REV, HOW THE REVENUES BREAKING DOWN, REALLY WHERE THE DIFFERENCE IS IS WHEN WHEN'S COMING.

IT JUST DIDN'T COME IN FEBRUARY.

BRETT'S GOT IT SCHEDULED.

IT IS JUST, IT'S, WE EXPECTED IT TO BE MORE WIND TO BE HERE IN JANUARY AND FEBRUARY.

IT'S PUSHED OUT A LITTLE BIT LATER, BUT IT'S STILL, IT'S STILL COMING.

THE FINANCIAL, UH, EXPENSES FOR THE MONTH.

THE LARGEST, UH, SINGLE ITEM THAT WE HAVE A SWING ON IS, WELL, TWO THINGS.

REPAIRS AND MAINTENANCE.

WE SCHEDULE IT DURING THE COURSE OF THE YEAR.

UH, A LOT OF THE REPAIRS AND MAINTENANCE, WE HAVE TO WAIT TILL IT BREAKS OR WAIT TILL THEY'RE NOT WORKING ON, UH, CAPITAL.

THEY REMEMBER SOME OF OUR REPAIRS AND MAINTENANCE CREWS WORK ON CAPITAL ITEMS. SO THEY DON'T GET THEIR, WE DON'T CAPITALIZE THEIR LABOR, BUT THEY'RE NOT, THEY'RE NOT HAVING CAPITALIZED, UH, MATERIALS.

EXCUSE ME.

THEY ARE USING CAPITALIZED MATERIALS, NOT MATERIALS THAT WE HAVE IN THE EXPENSE.

[00:55:02]

ON THE UTILITIES, WE, THERE WAS AN ERROR IN BILLING.

WE HAVE JUST ABOUT GOT THAT RESOLVED AND THERE WILL BE, THERE WILL BE A REDUCTION IN THE UTILITIES.

THAT WASN'T THE CITY PROBLEM.

, LET'S JUST SAY ATTENTION, LET'S JUST SAY IT'S BEEN, WE'VE BEEN IN TOUCH WITH THE, UH, UTILITY THAT'S, UH, HAD THE ISSUE.

AND, UH, WE HAVE IDENTIFIED WHAT THE ISSUE IS AND IT'S, WE'RE GETTING WAITING FOR THE, WE'RE CLOSE TO HAVING THE FINAL NUMBER.

CUSTOMER SERVICE IS REALLY GOOD.

CUSTOMER SERVICE IS WORKING OUT.

MARK, I HAVE A QUESTION.

YES, SIR.

HERE ON, ON THAT TAB YOU HAVE THE EMPLOYEE EXPENSES, UH, ACTUAL 1.5.

AND THEN ON THE CONSENT TAB FIVE, IT LOOKED LIKE CASH PAYMENTS TO EMPLOYEES AT 2.2.

WHAT ARE THE DIFFERENCE IN THE, IN THE EXPENSES TO EMPLOYEES AND CASH PAYMENTS TO EMPLOYEES FOR THE MONTH OF, WELL, FEBRUARY, IT COULD BE TIMING, IT'S COULD BE TIMING OF WHEN PAYROLL HIT AND THE ACCRUALS.

UH, AND WHEN WE, WHEN WE PAY TAXES AND ALL THAT.

SO WE, WE, UH, ON A CASH BASIS, WE REPORT WHEN CASH GOES OUT THE DOOR, BUT THEN ON THE FINANCIALS WE MAY BE ACCRUING IN JANUARY AND THEN PAYING AT THE VERY BEGINNING OF FEBRUARY.

SO LIKE BONUS, MAYBE IT COULD BE A DIFFERENCE BETWEEN, AND I'M GOING, I I'M NOT LOOKING AT A CALENDAR.

SO, ALRIGHT.

IS YOU TALKING, YOU TALKED ABOUT THE CURS TO THE CASH FLOW.

UH, ERIC, SO WE HAVE THIS FIGURE RIGHT HERE ON THIS, UH, SLIDE.

AND THEN ON TAB FIVE OF THE CASH FLOW.

YEAH, THE CASH FLOW ON PAYMENTS TO EMPLOYEES.

THAT ALSO INCLUDES ON HOW WE FUND IT IN THE .

THAT INCLUDES ALSO CONTRACT LABOR.

WE PAID.

SO THAT'S THE, THAT WILL BE ONE OF THE DIFFERENCES WILL BE THE CONTRACT LABOR AND ALSO, UH, THE, THE CHANGE IN CASH ON THE BALANCE SHEET.

SO ANY, ANY ANYTHING WE MAKE TO CONTRACT LABOR THAT, UH, IS ALSO INCLUDED UNDER ALSO.

SO THAT WOULD BE SHIFTING SOME OF THE OTHER CONTRACTING SERVICES INTO THAT.

BUT WE ALSO HAVE, WE STILL ALSO HAVE A, A DIFFERENT, WE MAY HAVE A DIFFERENCE IN THE, UH, THE CRUS.

'CAUSE IT COULD VARY FROM A FEW DAYS TO A FEW, UH, ALMOST TWO WEEKS.

YEAR TO DATE, UH, YEAR TO DATE, OUR REVENUES ARE 200,000 UNDER BUDGET.

THERE AGAIN, IT'S THE BIG, THE BIGGEST ISSUE IS WARPAGE AND LATE AND WARPAGE IS THERE AGAIN, SAME ISSUE.

WIND.

WIND IS NOT, IT'S COMING, IT JUST HASN'T GOT HERE YET.

AND, UH, ON THE EXPENSES, OPERATING EXPENSES BEFORE DEPRECIATION, IT'S 1.4 MILLION UNDER BUDGET.

UH, PART OF THAT IS SALARIES AND THEN THAT'S, THAT'S GONNA BE GETTING CAUGHT UP OVER A COUPLE OF MONTHS BECAUSE OF THE TIMING OF THE ACCRUALS.

UM, THAT'S REALLY WITH NEW HIRES, KIND OF HOW WE, THERE BE SOME NEW HIRES IN THERE BUDGETED OUT.

BUT IT ALSO DEAL SOME WITH THE ACCRUAL THAT WE HAD REVERSED OUT FOR LAST YEAR AND THE WAY WE BUDGETED.

WE, WE, WE BUDGETED FOR 31 DAYS IN JANUARY, BUT THE WE PART OF, PART OF IT WAS ACCRUED AND REVERSED OUT AND WE HAD TO RE-APPROVE IT.

AND THAT'S JANUARY.

YES MA'AM.

DID YOU, UH, MARK ON, WHEN DO YOU FORESEE THAT, UH, GETTING BUDGET FOR THIS COMING YEAR HERE? I, THE ADMINISTRATION SEEMS TO BE REALLY PUTTING A, PUTTING A HO ON MOST OF THESE PROJECTS.

I'M JUST WONDERING, I THINK THESE PROJECTS ARE ALREADY COMMITTED.

ELEVATOR AREA PREPARED AT TIMES TO, UH, BRING THE, UH, THE WIND IN.

SO LIKE A LITTLE, LITTLE INFORMATION WE CALL LAST YEAR WE HAD, UH, A SIGNIFICANT VOLUME.

WE IS SPREAD OVER BY, SPREAD OVER THE ENTIRE YEAR BY ONE MANUFACTURER.

UH, THIS YEAR WE'RE GOING TO HAVE PREDOMINANTLY ONE MANUFACTURER.

THIS YEAR WE'RE GOING TO HAVE FOUR DIFFERENT MANUFACTURERS CALLING HERE.

UM, BUT IT'S GONNA BE MORE OF A CONDENSED TIME REALLY SHOWING UP IN END OF MAY AND JUNE AND REMAINING THE REMAINDER OF THE YEAR.

SO THERE IS THOUGHTS BETWEEN, UH, MYSELF AND OUR PARTNERS THAT LOOKS LIKE WE COULD EVEN HAVE MORE THAN WE HAD LAST YEAR.

IT'S JUST GONNA BE REALLY CONDENSED.

IT'S ONE REASON WHY WE'RE REALLY GETTING THE, UH, A DM THE, UH, GREAT

[01:00:01]

IN FACT, WE JUST GOT A NOTIFICATION THAT WE'RE GONNA HAVE A WIND CHIP IN THE FIRST WEEK IN APRIL AND WE HAVE ONE, UH, AS WELL AS THE LAST WEEK IN APRIL.

SO WE'RE GONNA START HAVING THEM.

THESE ARE ALREADY PROJECTS THAT, IS THIS THE PROJECT IN NEW MEXICO? BRETT? THIS, THIS ONE IS THE OTHER ONE.

THE OTHERS ARE NOT.

SO THAT MANUFACTURER GE THEY'VE BEEN HERE.

THOSE ARE THE ONES WENT PRIMARILY TO THAT SITE.

THE OTHER THREE MANUFACTURERS THAT WE'RE GETTING ARE GOING TO DIFFERENT AREAS.

THEY'RE ON, THEY'RE ON SITE ONSHORE.

ONSHORE.

WILLIE, DID YOU SERVE QUESTION? DID YOU HAVE A QUESTION? NO.

ANYBODY ELSE? GO AHEAD.

BUT ON THE CASH FLOW AND THE ASSUME THAT'S REC, THE DIFFERENCE IN THE BUDGET ON CASH FLOW, ASSUME THAT'S DIRECTLY RELATED TO THE, THE DIFFERENCE ON THE NON-OPERATING INCOME BEING LESS.

THAT'S A QUESTION.

UH, ABOUT YEAR TO DATE.

A YEAR TO DATE.

YEAR TO DATE, I'M ASSUMING IT'S RELATED TO SHORTAGE OF NON-OPERATING INCOME.

WELL, THE NON-OPERATING PART OF THE NON-OPERATING INCOME THAT WE HAVE THIS YEAR, IT'S NOT GOING TO BE CASH.

IT'S GOING TO BE THE OFFSET TO THE, UH, ALTERNATE I PROJECT.

SEE WE HAVE, WE BOOKED LIABILITIES FOR THIS LAST YEAR.

AND THEN AS WE GET CREDIT FOR IT, YOU KNOW, IF YOU REMEMBER HOW THE STRUCTURE OF FEMA TEAM AND ALL THAT WORKS, AS WE GET CREDIT FOR THAT, IT'S GOING SHOW UP IN THOSE NON-OPERATING INCOME ITEMS BECAUSE WE NOW HAVE TO RECOGNIZE SOMETHING THAT WAS EXPENSED IN PRIOR YEARS.

SO AS THAT COMES OFF TO EXPENSES, THE OFFSET OF THAT IS, IS KIND OF LIKE WHAT SHE WAS TALKING ABOUT EARLIER ABOUT A NEGATIVE IN A, IN A INCOME AREA.

I MEAN, NO, A NEGATIVE IN A EXPENSE AREA.

IT'S VERY SIMILAR HERE.

NOW YOU'RE STARTING TO, YOU'RE STARTING TO HAVE TO RECOVER IT AND THE ONLY THING YOU HAVE TO RECOVER ON IS THIS YEAR BECAUSE, 'CAUSE YOU'VE ALREADY BOOKED IT, RIGHT? IS THAT RIGHT MARK? WE BOOKED THE ASSET.

WELL, WE'RE BOOKING THE ASSET.

WHAT HAPPENS IS, AS WE GET, WE SUBMIT MONEY REALLY TO THAT RIGHT PROJECT.

WE, WE BOOK IT, UH, SOMETHING IN CONSTRUCTION WORK IN PROGRESS, WE HAVE TO PAY FOR IT.

SO IT GOES CASH OUT OF THE DOOR.

THAT ALL STAYS ON, UH, BALANCE SHEET.

BUT ALSO ON THE BALANCE SHEET WE HAVE THIS FEMA LIABILITY.

SO WHEN TIB NOTIFIES US THAT THEY'VE APPLIED IT TO THE FEE FEMA LIABILITY, WE REDUCE THE FEMA LIABILITY AND RECOGNIZE, UH, NON-OPERATING, UH, INCOMES.

AND WE'VE STILL GOT A FEW MILLION TO GO.

SO FIX YOUR BALANCE SHEET HASN'T GONE CASH? NO, IT DOES GO IN THE BOOKS.

YEAH, IT GOES ON THE BOOK.

BUT YOU'RE JUST REDUCING THE LIABILITY THAT YOU NO LONGER OWE.

THE PROBLEM IS WE'RE NOT GETTING CASH FOR IT JUST ON THE FEMA PROJECT.

NEGATIVE.

AND I GUESS THE OTHER PART, I DON'T, LAST YEAR WE HAD TO, THE TDOT GRANT WAS PART OF THAT, WAS PART OF THE TIMING ISSUE ON RECEIVING MONIES FROM TDOT WAS WELL WE, WE'VE RECEIVED THOSE.

BUT IT'S SO THAT'S NOT, THAT'S NOT AN ISSUE.

IT'S NOT AN ISSUE RIGHT NOW.

USUALLY WITH TDOT IT'S THE VERY BEGINNING OF THE PROJECT.

WHERE THERE'S A LA WHERE THERE'S A LARGE LACK.

ONCE YOU GET INTO THE PROJECT, IT GOES PRETTY REAL.

THE THE REIMBURSEMENT IS REAL SMOOTH UNTIL YOU GET TO THE VERY LAST ONE.

THE VERY FIRST ONE ON THE VERY LAST WILL TAKE A LITTLE LONGER.

AND IT'S EVERY TO, LIKE, EVERY ONE OF THE TECH STOP PROJECTS I'VE BEEN ON, I'VE BEEN THAT WAY.

WELL, THEY'RE SETTING YOU UP IN THE SYSTEM SETTING AND THEN THEY WANT TO CLOSE OUT.

SO IT'S, WHICH MAKE IT MAKES SENSE.

PROCEED.

OKAY, HERE'S THE FINANCIAL SUMMARY HERE TO DATE, IF ANYONE HAS ANY QUESTIONS, NOTE THAT WE FINISH RIGHT AT 6.2 MILLION IN CAPITAL, UH, THROUGH FEBRUARY.

AND WELL, THERE'S OUR REVENUES.

LET ME CAVEAT THAT WHEN YOU SAY CAPITAL, WE, WE SPENT THAT MONEY ON CAPITAL PROJECTS, BUT IT'S MO MOSTLY COMING FROM DEBT PROCEEDS.

MOST OF IT'S COMING FROM DEBT PROCEEDS.

AND, UH, PART OF THAT IS US STARTING TO PAY THE, UH, FINAL RETAINAGE ON CT 16,

[01:05:02]

UH, TERMINAL AND GARAGE.

AND I THINK WE HAVE A SEPARATE DISCUSSION ABOUT THAT LATER ON, ON THE CLOSEOUT OF 60.

UH, LET'S GO HERE.

THE REVENUES TODAY, IF ANYONE HAS ANY QUESTIONS? NO, LET'S GO OVER HERE TO THE SLIDE.

YEAR TO DATE REVENUES.

I DID HAVE ONE QUESTION.

YES, SIR.

ON THE SECURITY COST RECOVERY, IT BEING UNDER BUDGET, IS THAT JUST DUE TO, UH, UH, UNDER BUDGET ON, ON TERMS PASSENGER TERMS? NO, SECURITY COST.

RECOVERY IS CHARGED ON EVERY SHIFT.

SO WHEN, UH, THE DOCKAGE AND MORPHIC IS DOWN, SECURITY COST RECOVERY IS DOWN.

NOT JUST, NOT JUST CREWS.

THAT'S CORRECT.

AND THAT'S WHY IT'S DOWN.

GOT IT.

UH, UH, OUR DOCKAGE IS DOWN.

THAT'S TERRIFYING.

LAY DOCKAGE IS DOWN.

SO THAT'S, THAT'S JUST PART OF THE, THAT'S USUALLY, UH, SECURITY, COST RECOVERY.

IT'S GONNA BE SOMEWHAT GOING IN THE SAME DIRECTION AS ALL OF OUR FORAGES AND DOCKAGE.

UH, OKAY.

WE HAD YEAR TO DATE, 22 AND A HALF MILLION IN REVENUES.

UH, THREE ITEMS MAKE UP, MAKE UP, UM, ALL CREWS.

THAT'S, UH, GROUND TRANSPORTATION, PARKING AND PASSENGERS.

THAT'S RUNNING ABOUT, UH, 73% OF THAT 22 MILLION SO FAR THIS YEAR.

EXPENSES, UH, MOST OF THE EXPENSES EXCLUDING UTILITIES OR JUST TIMING ISSUES? UTILITIES.

THERE AGAIN, WE'RE, WE'RE WORKING WITH THE, UH, UTILITY THAT HAD SOME BILLIONAIRES, AND WE DON'T HAVE THAT CORRECTED THIS WEEK.

THEY, THEY, THEY WE'RE AWARE WE'RE REALLY CLOSE TO HAVING IT RESOLVED.

WELL, WHAT HAPPENED IS, YOU KNOW, WE HAD GUS BILLS FOR OUR, FOR OUR WATER MAINLY.

THEY WERE WAY OUTTA WHACK.

AND WE WENT BACK AND DID SOME RESEARCH.

JEFF AND BRETT WENT BACK AND SAID, THESE CAN'T BE RIGHT.

AND SO THEY WERE RIGHT.

THEY WEREN'T RIGHT.

AND SO, UH, SO WHAT, WHAT'S HAPPENING IS WE'RE WORKING THROUGH THOSE, BUT ONE OF THOSE THINGS THAT, THAT'S GOING TO IS EFFECT WILL BE, AND I THINK YOU GUYS MAYBE STILL HAVE THAT DISCUSSION WITH THE AUDITORS, BECAUSE WE DID ACCRUE THOSE LARGE AMOUNTS LAST YEAR.

SO IF, IF THE AUDITORS FEEL LIKE THEN WE NEED TO GO BACK AND, AND IT'LL JUST BE AN ADJUSTMENT WE MAKE TO THE BOOKS FOR LAST YEAR, OR DO WE JUST GO FORWARD AND MAKE THE ADJUSTMENT THIS YEAR? I MEAN, I DON'T KNOW WHERE YOU'RE, YOU KNOW, I'VE HAD THIS DISCUSSION.

WE'RE LEANING FORWARD MAKING THE ADJUSTMENT FOR CONSUMPTION IN 25.

IN 25, AND THEN THE, THE ADJUSTMENT 26.

26.

SO THE INCORRECT BILLING HAD BEEN HAPPENING FOR SOME TIME? NOT REALLY, BECAUSE WE, WE, FOR SOME REASON, THERE WAS A COUPLE OF MONTHS I THINK WE DIDN'T GET A BILL.

RIGHT, RIGHT.

AND THEN ALL OF OF A SUDDEN WE GOT THIS HUGE BILL AND WE STARTED DOING RESEARCH AND WE ACTUALLY, I THINK WE BROUGHT IN SOMEBODY TO LOOK AT THE METERS AND THE METERS WERE INSTALLED WRONG, UH, OUR METERS, BUT THE METERS WE BEING CHARGED OFF OF WERE BACKWARDS.

IS THE TWO INCH AND A 10 INCH, UH, LINE, THEY WERE REVERSED.

THEY GOT THOSE BACK.

THERE WAS ALSO UNIT CALCULATION THAT, UH, WAS INCORRECT.

WOW.

SO THEY'RE CALCULATING QUITE A BIT OF WATER USAGE AND WE'RE GETTING BILLED ON THAT.

AND IT, IT TOOK A WHILE GOING BACK AND FORTH WITH THE BILLING DEPARTMENT, UH, THAT WAS GOT THE DIRECTOR MUNICIPAL SERVICES INVOLVED, AND, UH, YEAH, WE'RE GETTING WORK THROUGH THAT.

IT WAS A SIGNIFICANT INCREASE.

YEAH, RIGHT.

GO AHEAD.

WHAT WAS THE DELTA? WHAT'S, WHAT'S THE AMOUNT THAT WE'RE TALKING ABOUT? WELL CHARGED, GIVE YOU THE EXAMPLE.

I THINK OF THE LATEST BILL WE HAVE WAS 630,000.

AND I THINK WITH IT BEING CORRECT, IT'LL BE CLOSER TO 220.

THE IMPACT IS GOING TO BE AROUND FOUR, OVER $400,000 IN TOTAL BETWEEN FOUR AND FIVE BASED UPON WHERE WE ARE TODAY.

I HESITANT, I'M HESITANT ABOUT GIVING THAT AMOUNT OUT BECAUSE IT IS NOT FINALIZED YET.

YEAH, NO, I JUST, UH, I WAS, BUT IT'S AT THAT MAGNITUDE.

UH, BUDGET, IS THAT GONNA STABILIZE MOVING FORWARD? I KNOW THINGS WERE COMING ON ONLINE AS FAR AS DEPRECIATION, THE BIG STUFF HAS COME ON, BUT WE STILL HAVE THINGS THAT WILL CONTINUE TO COME ONLINE OVER THE COURSE OF THE YEAR.

AND, UH, SAID WE'RE, AND, UH, GOOD BIT OF THAT IS IN 2025.

SO WE, WE WILL MAKE THAT IT'S MATERIAL ENOUGH TO MAKE THAT ADJUSTMENT INTO 2025.

WE HAVE A CALL IN THE MORNING AT, UH, TO DISCUSS IT WITH THE AUDITORS ARE, ARE THE DEPRECIATION,

[01:10:01]

FOR EXAMPLE, WE'VE GOT TECH STOP PROJECTS THAT WILL BE WRAPPING UP THIS YEAR.

UM, WE'VE GOT TRAILING COSTS ON, UH, CT 16 AND ON, UH, THE PARKING GARAGE, THERE'LL BE SOME TRAILING COST THAT WILL BE COMING BACK ONLINE.

SO DEPRECIATION WILL BE INCREASING, BUT NOT BY THE END OF MAGNITUDE.

IT DID NEAR THE END OF THE YEAR.

I'M GUESSING HE'S TALKING MAINLY ABOUT THE DIFFERENCE BETWEEN THE BUDGETED AND THE ACTUAL CORRECT.

I MEAN, WE ANTICIPATED WHEN DEPRECIATION WAS GONNA START TAKING EFFECT AND WE'RE OFF BY A LITTLE BIT.

I WILL, I WILL HAVE TO LOOK AT THAT AND, AND GET BACK WITH YOU.

WHAT WOULD, THAT WOULD BE ABOUT 10% OFF.

AND, UH, YOUR, TO YEAR TO DATE EXPENSES, JUST GRAPHICALLY, THERE'S PRODUCT LINE SUMMARY.

YES, SIR.

AND AGAIN, IT GOES BACK TO THE DEPRECIATION UNDER PARKING.

IS THAT PRIMARILY CC THE PARKING, UH, STRUCTURE OF CT 16? YES.

THAT'S PREDOMINANTLY THREE PEOPLE.

THAT'S, THAT'S THE VAST MAJORITY OF THAT.

AND IT'S THAT AND THE, WELL, WE PAID, PAID SOME BUSES OR SOMETHING.

WELL, WE PAID, UH, PAID, UM, THIS PARKING THAT'RE LOTS, BUT IT'S THE VAST MAJORITY, 50 MILLION OF US DOWN THERE ROUGHLY.

AND HIS PRODUCT LINE SUMMARY, UH, PLEASE KEEP IN MIND THAT THE NET OPERATING INCOME BEFORE ALLOCATION AND DEPRECIATION GIVES YOU A GOOD IDEA OF WHAT THE CONTRIBUTION MARGIN IS.

AND THEN BELOW THAT, UM, IT SHOWS YOU YOUR, SHOWS YOUR DEPRECIATION BY PRODUCT LINE.

AND YOU'LL SEE THAT WHAT'S RELATED TO THE CREWS AND TO PARKING THE, THE, THE REALLY TWO LARGE AREAS.

BUT THAT'S WHERE WE'VE BEEN HAVING ALL OF OUR MAJOR EXPENDITURES, UH, THAT HAD BEEN PLACED IN SERVICE.

QUESTIONS ON THIS HAVE NOT, UH, TRIBAL TRAINING AND DEVELOPMENT WE'RE ALREADY 65 MILLION BELOW BUDGET.

65,000, THOUSAND THOUSAND, EXCUSE ME, I DO THAT WAY TOO LONG.

UM, 65,000 BELOW BUDGET.

PART OF THAT WE'LL GET CAUGHT UP WITH, UH, WE HAD SCHEDULED FOR PART OF THE, UH, UH, EXPENDITURES FOR SEATRADE TO BE IN THIS MONTH PART.

IT'LL SHOW UP NEXT MONTH.

UH, WE HAD ALSO HISTORICALLY BOOKED A LOT OF TRAINING AND PAID FOR A LOT OF TRAINING FOR LATER IN THE YEAR.

EARLY IN THE YEAR.

NOT SO MUCH THIS YEAR.

WE HAVE DID WE DO THAT? WE'RE TR WE'RE PAYING LATER LOUD PART OF THE YEAR.

BUT, UM, WE, WE TEND TO BUDGET HEAVY HERE.

EVEN, EVEN IF WE CUT IT EVERY TIME WE CUT IT IN HALF, WE STILL SEEM TO BE OVER, UM, CA HERE'S OUR CASH POSITION WHERE IT'S SITTING ON 72 MILLION.

UM, YOU CAN SEE THAT, UM, A LARGE PORTION OF THAT IS ALREADY SPOKEN FOR AND THEN THE VENDOR REGISTER CHECKS TO LOCAL VENDORS.

AND THAT'S, THAT CAN BE FOUND IN UNDER TAB SEVEN OF THE CONSENT AGENDA.

UH, NON WERE, UM, LOCAL VENDORS WERE 2.3 MILLION NON-LOCAL VENDORS WERE 3.9 MILLION AND NON-OPERATING VENDORS WERE 1.4 COUNTS OVER 90 DAYS.

UH, WE'VE GOT THAT DOWN TO 119,000.

WE ARE WORKING WITH THEM TO GET IT COLLECTED.

UH, ONCE

[01:15:01]

WE GET THAT COLLECTED, IT, IT'LL BE AROUND 20,000 HERE.

AGAIN, THIS IS TO GIVE YOU AN IDEA ABOUT AGING.

AND, UH, THERE WE ARE, I BELIEVE, DOING VERY WELL IN KEEPING OUR AGING TO A MINIMUM.

THAT'S REALLY GOOD.

AND HERE'S OUR BREAKDOWN OF OUR TOTAL CASH.

ANYONE HAS ANY ADDITIONAL QUESTIONS ON THAT? I HAVE A GENERAL QUESTION.

THERE'S FLEXIBILITY THERE.

HOW ARE HER INCOMES FROM OPERATIONS MOVED OVER TO, UH, INTERNALLY RESTRICTED AS, AS THE BOARD APPROVES PROJECTS? IS IT DONE LIKE INCREMENTALLY OR INCREMENTALLY? OKAY.

WE DO ABOUT, WE, WE LOOK AND SEE ABOUT WHAT, WHAT WE'RE GONNA SPEND IN FOR ABOUT THREE MONTHS AND KEEP ABOUT 90 DAYS OUT.

WE JUST CONTINUOUSLY PUT, PUT MONEY IN THERE EVERY MONTH AND WE STAY AHEAD OF WHAT THE SPEND IS.

SO IF SOMETHING HAPPENS ONE MONTH, UM, OUR PROJECT GETS AHEAD OF TIME AHEAD OF US.

WE'VE GOT THAT.

BUT THAT'S, THAT'S INTERNALLY RESTRICTED.

AND WHEN YOU SEE THE , YOU WILL NOT SEE AN INTERNALLY RESTRICTED FUND.

YOU WILL SEE LEGALLY RESTRICTED AND THEN UNRESTRICTED.

TECHNICALLY WE COULD USE THAT.

WE CAN USE THAT.

THAT'S, THAT'S JUST MANAGEMENT SETTING SOMETHING ASIDE.

NOT, WE'RE NOT LEGALLY REQUIRED TO, BUT WE'RE, IT'S PRUDENT TO, AND I THINK ERIC, I'M TRYING TO REMEMBER WHERE WE DID THIS, BUT THEN YOU GOT THE JIM BOROUGH BOX HERE RIGHT.

THAT WE ADDED ON IT THAT SHOWED THE, THE REMAINING COMMITTEE THAT WE'VE GOT, THE 10.9, ALMOST 11 MILLION RESTRICTED AS MARK DESCRIBED.

BUT THEN WE HAD THE QUESTION ABOUT, WELL, HOW MUCH MORE PROJECTS FOR OPERATIONS FUNDS HAVE WE COMMITTED AS A BOARD THAT'S NOT IN THAT.

AND SO WE FINALLY ADDED THE BOX THE WAY WE KIND OF SHOW THAT WE PUT THE BOX DOWN THERE AND THERE'S, YOU KNOW, 6.4 MILLION STILL OF PROJECTS THAT WE'VE COMMITTED, UH, THAT THERE'S MONIES OUTSTANDING.

SO THAT GIVES US A BETTER PICTURE OF HOW MUCH WE REALLY COMMITTED.

AND I WANT TO COMPLIMENT ROGER AND MARK AND THE COURT STAFF.

I MEAN, WE'RE DOING A LOT OF THESE CAPITAL PROJECTS WITH INTERNALLY GENERATED CASH FLOW.

I MEAN, AND THAT'S AND I COM, UH, COM UH, COMPLIMENT TRUSTEE YARBOROUGH.

THIS PUTS A ALL IN ONE, ALL IN ALL IN ONE SPOT.

SO I THINK WE GOT TO A GOOD SPOT WITH THIS REPORT.

AND I THINK THE OTHER CON FINAL COMMENT I MADE, YEAH, THAT 6.4 REMAINING KIND OF BALANCE IS, IS QUITE A BIT LESS THAN WHAT IT HAS BEEN AS WE WERE WORKING THROUGH THE PROJECT LOAD THE LAST YEAR.

SO, SO WE'RE KIND OF GETTING TO THE END OF THAT BIG ROUND, BIG SPENDING.

YOU CAN SEE WHAT OUR CASH FLOW IS AND WE'RE REINVESTING IT WHERE WE SAID WE WERE GONNA REINVEST IT.

IT'S A WIN-WIN.

THEN LOOK AT STAFFING LEVELS.

CURRENTLY, AS OF THE END OF, UH, ACTUALLY AS OF MARCH 13TH, WE HAD 140 EMPLOYEES HERE AT THE PORT.

WE HAD BUDGETED 144 LAST YEAR.

AT THIS TIME WE HAD 130 EMPLOYEES, SO WE'RE UP 10 EMPLOYEES.

WE'RE STILL DOWN FOUR ON WHAT WE HAD BUDGETED FOR THIS YEAR.

NOW WE'VE HAD SOME, YOU KNOW, THERE, THERE IS A BIT OF A TURNOVER IN THERE.

WELL, I THINK IF YOU GO BACK AND LOOK, IT'S CONSISTENTLY HAPPENING ALONG THESE LINES PRETTY, PRETTY MUCH EVERY YEAR.

I APPRECIATE THIS.

THIS NOTES EVERY HERE.

'CAUSE IT KIND OF TELLS YOU WHERE YOUR TURNOVER IS.

THAT'S HELPFUL.

DO WE KNOW, UH, WELL WHAT, WHAT IT IS, IS IT A SPECIFIC TRADE THAT THE CNM IS, IS SHORT ON THOSE FIVE PEOPLE? ARE THERE SPECIFIC TRADES THAT WE'RE LOOKING FOR? OBJECT.

UM, AND, AND WE MIGHT HAVE FILLED SOME OF THOSE ALREADY, BUT I KNOW THAT WE HAD, UH, ONE, UH, LEAD POSITION THAT WAS NEEDS TO BE BACKFILLED.

THERE WAS, UH, ADDITIONAL PLUMBING POSITION THAT WE WERE LOOKING AT FILLING.

THERE WAS I THINK ANOTHER, AND THEN I THINK THE OTHER, THE OTHER ONES ARE JUNIOR GU, WHICH ARE KIND OF THE ENTRY LEVEL.

UM, YOU KNOW.

YEAR TO DATE WITHOUT THE SCHOOL DISTRICT 792,306 BUCKS.

THE MAYOR SLIDE IN THE CAME BACK

[01:20:01]

THAT'S MORE THAN WE BUDGET.

BUT OF COURSE THIS IS OUR BIG SEASON.

RIGHT NOW.

BUT IF YOU TAKE OUT THE 1 57 5 AND ANNUALIZE YOUR DATE AND THEN ADD BACK THE ONE 50, IT'S 3,000,009.

SIX SIX.

GETTING CLOSE TO FOUR, GETTING WELL, WE'RE ALSO TAKING OUT THE FULL AMOUNT OF THE UH, ISD ON THE FRONT ON THE FIRST MONTH.

SO WE'RE NOT, WE'RE NOT PRO RATING THAT BY MONTH WE'RE TAKING THE FULL 40,624 FOR THE SCHOOL DISTRICT OUT FROM DAY, FIRST DAY OF THE YEAR.

TONY, WHEN WAS THAT PUT IN? DO YOU KNOW? IT WAS IN THE 1960 CHARTER.

I MEAN, IT'S IN THE CHARTER.

IT'S IN THE, WELL THAT'S WHEN THE PORT, UH, ASSUMED MORE LAND OVER ON IMP PELICAN ISLAND.

THAT WAS BEFORE THE LAND WAS ASSUMED IMP PELICAN ISLAND.

THAT WAS, UH, DONE AFTERWARD.

AND THE ADDITIONAL, THERE'S NO ADDITIONAL PAYMENT IN LIEU OF TAXES FOR THAT.

THAT WAS MOSTLY TO AFTER THEY WENT BANKRUPT IN THE 1980S.

BRETT, I HAVE A QUESTION FOR YOU.

THE NON-PEAK SEASON, UH, CRUISE SCHEDULE FOR THIS YEAR IS, IS BECAUSE WE'VE ADDED ANOTHER TERMINAL, IT'S STILL GROWING RELATIVE TO YEAR OVER YEAR.

SO EVEN THE NON-PEAK SEASON'S GONNA BE BUSIER THAN A YEAR PRIOR.

FOR, FOR, FOR ONE EXAMPLE, PARTICULARLY FOR YOUR INTEREST IS WE'LL HAVE ANOTHER SHIP SAILING THE CRUISE LINE, UH, SAILING DURING HURRICANE SEASON.

SO YES.

SO IT'LL STILL BE GROWING IN, IN THOSE NON, UH, PEAK, UH, MONTHS.

THOSE, UH, FORECAST WILL BE BECOME GOING UP AS WELL.

AND THEN THE DOCTOR'S DISCOUNTS.

ANY, UH, OTHER QUESTIONS? WELL THEN MARK, THANK YOU.

WE'LL MOVE ON TO Y'ALL READY? WE'LL MOVE ON TO CAP THE MASTER PLAN.

UM, THE SHORT VERSION OF THE MASTER PLAN IS THAT WE ADDED, UH, A MICRO GRID GRANT FROM TECQ GRANT TO THE SHEET THIS MONTH.

AND THEN WE, AND THEN WE ADJUSTED FOR ACTUAL EXPENDITURES.

THAT WAS, THAT'S PRETTY MUCH, MUCH SUMS UP THE CHANGES.

THE FIRST THREE PAGES ARE CURRENT YEAR AFTER YOU PASS PAGE THREE, IT EXTENDS FROM OUT TO, UH, 2047.

SO YOU'VE GOT, UH, 26, 27, 28, 29, AND 30 ON THE FIRST THREE PAGES.

AND THEN THAT'S BROKEN DOWN A FUNDING SOURCE.

AND THEN 2031 ON THROUGH 2047, IT'S SHOWING WHAT YEAR WE HAVE EXPENDITURES, BUT IT IS NOT BROKEN DOWN INTO FUNDING SOURCES.

HAVE ANY QUESTIONS ON THIS? YEAH, WE'RE STILL, STILL GETTING YOU AT LEAST I USED TO THE NEW DIFFERENT FORMAT CHANGE FROM LAST, LAST YEARS.

SO FOR, FOR 2026 TOTAL PROJECTS FUNDED FROM OPERATIONS, I'M LOOKING AT 19 MILLION, IS THAT CORRECT? PLUS 22

[01:25:01]

THE TIME.

I THINK YOU'D GO TO THE THIRD PAGE HERE.

THERE'S SOME SUMMARIES THERE.

WE'RE LOOKING AT, UM, 22.6.

AND WOULD THAT FULL AMOUNT BE REFLECTED IN THE, UH, BOARD APPROVED CAPITAL PROJECTS, BIGGER FUNDED AND OR COMMITTED AND UN COMMITTED? WELL, IF IT'S, IF Y'ALL HAVE APPROVED THE PROJECTS, REMEMBER THIS, THIS PLAN STILL HAS SOME STILL HAS PROJECTS THAT MAY NOT HAVE BEEN APPROVED YET.

GOT IT.

UNDERSTOOD.

I MEAN, WE STILL HAD TO BRING IT BACK, GET FINAL NUMBERS AND BRING IT BACK FOR Y'ALL'S, UM, APPROVAL OF THE CONTRACT AND, AND ACTUALLY THE MAKING THE EXPENDITURES.

AND IT COULD CHANGE BECAUSE WE MAY FIND SOMETHING AS IT'S, WE'RE AT THE END OF MARCH ALREADY.

WE MAY COME BACK IN HERE, PROVE SOMETHING IN APRIL, AND THAT WE THOUGHT WE WOULD SPEND THE FULL EXPENDITURE IN 26 AND IT BLEND OVER INTO 27.

WE MIGHT ON THE NEXT, THIS NEXT COPYING JOB ON THIS IS YOU MAKE THAT GREEN A LITTLE BIT DARKER.

THAT'S NOT COMING THROUGH ON MINE VERY WELL.

IT IS NOT.

WHEN IT GOES THROUGH COPY OR IT'S NOT, IT'S NOT.

OH, I SEE.

THOSE ARE, THOSE ARE BALANCES AND STUFF THAT I THINK WE TALKED, WE GOT AGENDA ITEMS TALKED ABOUT ON THAT, BUT THESE ARE, THESE ARE CLOSEOUT ITEMS. WE YEAH, YOU'RE RIGHT.

WELL, YOU, YOU CAN SEE IT UP THERE.

OH YEAH, YOU'RE RIGHT.

NOW I CAN SEE IT SORT OF HERE.

JUST A QUESTION MARK.

WHERE ARE WE ON THE WAY FINDING PROJECT? HOW FAR ALONG WILL WE ON THAT? OR WE VISTA THAT? WELL, I'M GOING TO SOMEONE WHO'S KNOWLEDGEABLE MORE THAN NOT.

JEFF, YOU MIGHT COME ON UP.

SO WE PROBABLY HEAR YOU A LITTLE PRETTY FOLKS LISTENING IN.

WE ARE GONNA BE RECEIVING QUALIFICATIONS PACKAGES ON APRIL 7TH, AND THEN WE'LL BE MOVING INTO, UH, ENGINEERING AND THEN INTO CONSTRUCTION.

THAT'S A, UH, SEAPORT CONNECTIVITY 89 PROJECT FUNDED THROUGH THE TEXAS LEGISLATURE.

AND YOUR, YOUR GOAL, OF COURSE IS HAVE THIS FINISHED IN 26? THE, UH, THE PROJECT NOW? NO, THIS PROJECT WOULD LIKELY BE ENGINEERING IN 26TH.

CONSTRUCTED IN 27.

27.

OH.

OUR, OUR OUR FUNDING, OUR FUNDING DEADLINE FOR LETTING THE PROJECT IS AUGUST OF 27TH.

SO, BUT WE WE'RE LOOKING AT PROBABLY LETTING THE PROJECT SOMETIME GETTING OF NEXT YEAR.

THAT'S CIP MP TWO ON YOUR FRONT PAGE SHOWS ABOUT HALF THE FUNDING HAPPENING 27TH.

IF YOU DO THAT, YOU'LL STILL BE AHEAD OF BUDGET BECAUSE THE FIRST THREE MONTHS ARE OVER THERE, RIGHT? SO FAR, YES.

ANY OTHER QUESTIONS? THANK YOU.

WHAT ABOUT, UH, IS THERE ANYTHING ON THE, ON THE CASH FLOW? I MEAN THIS IS THE PROJECT SHEETS, BUT I DON'T KNOW IF WE HAVE ANY QUESTIONS ON, UH, THE ACTUAL CASH FLOW SCHEDULE IN HERE.

IT'S IN THERE.

IT'S, UH, TAB FIVE.

YEAH, I MEAN MY, MY POINT IS, IS, YOU KNOW, THIS ALL IS CLOSE CASH FLOW MM-HMM .

AND WITH THE EXPENDITURES WE HAVE THAT HAVE BEEN APPROVED, WE'RE LOOKING AT, UM, A UNRESTRICTED BALANCE AT THE END OF THE YEAR OF 28, 20 6 MILLION STILL, WHICH IS HEALTHY.

AND YOU'LL, YOU'LL NOTICE ABOVE THAT IT SHOWS WHAT WE HAVE IN, UH, ANTICIPATED TO SPEND ON TOTAL CAPITAL EXPENDITURES COURSE A YEAR.

LET ME, UH, MARK, IS IT SERENDIPITY THAT THAT, THAT THE FIGURE FOR INTERNALLY RESTRICTED FUNDS GOES TO 9.5 MILLION IN MARCH AND IT STAYS FLAT? THAT'S, UH, YOU REMEMBER HOW I TOLD YOU WE ADD SO MUCH PER MONTH, RIGHT? THAT'S, THAT, THAT'S WHAT WE BUDGETED FOR EACH MONTH EACH.

WE DO IT FLAT.

SO YOU'RE, IF,

[01:30:01]

WE'VE BEEN OVER, OVER BUDGET, BUT WE'LL HIT IT.

YEAH, WE'LL HIT, WE'LL HIT THE SEASON, THE LOW SEASON AND THE CLOSEOUT 16.

BUT IF YOU LOOK AT THE END OF THE YEAR, WHAT'S REPORTED IN THE AUDITED FINANCIALS WHEN YOU ADD BACK THE INTERNALLY RESTRICTED YEAR AT 37 MILLION IN CASH REPORTS IN A REALLY GOOD POSITION, IF WE MEET OUR BUDGET, RIGHT.

WHAT'S OUR BUT MARK, WHAT'S OUR PROJECTED NET IN THIS YEAR'S? INCOME NET, UH, REVENUE, NET INCOME.

NET INCOME.

TOTAL BUDGET TO NET INCOME FOR YEAR.

HE'S, HE'S PULLING IT UP ON THIS MACHINE.

I DON'T WANNA LIE TO YOU.

47.

IS HE HE'S BACK.

HE'S BACK.

HE DOESN'T REMEMBER ALL THIS EITHER.

HE JUST HAS, WELL, I DON'T WANT, I DON'T WANNA SAY THE WRONG NUMBER.

I HAVE GUESSED HIM IN MY MIND.

THAT WAS RIGHT.

UH, TOTAL NET BOTTOM LINE INCOME IS 58 50 58.

BOTTOM, BOTTOM LINE FOR THIS, FOR THIS YEAR.

AM I READING THIS RIGHT? THAT WE HAVE OUR CURRENT BALANCE OF 14 MILLION FOR INTERNALLY RESTRICTED FUNDS, MASTER PLAN CAPITAL EXPENDITURES FROM OPERATIONS, 23 MILLION.

IF WE END THE YEAR WITH 9.5, THEN THAT MEANS WE'VE PUT ANOTHER 18 MILLION INTO THAT INTERNALLY RESTRICTED FUND.

WE'RE ACTUALLY ANTICIPATING PUTTING IN AND SPENDING 9.5 MILLION ON A ONE MONTH LAG.

WE, WE INTEND TO KEEP, WHAT WE'RE SAYING IS WE'RE GONNA HAVE 9.5 MILLION IN THERE AT THE END OF EVERY MONTH.

NOW SOME MONTHS WE MAY SET SOME MONEY ASIDE.

'CAUSE SEE ANOTHER THING THAT GOES IN THERE ON THE INTERNALLY RESTRICTED, IT'S NOT JUST CAPITAL PROJECTS.

YOU ALSO HAVE MONIES WE SET ASIDE FOR INSURANCE.

YOU HAVE MONIES WE SET ASIDE FOR, UH, DREDGING.

UH, SO THERE'S A SCHEDULE, I'M TRYING TO REMEMBER.

IS IT THREE? NO, IT'S IN THE SLIDE DECK TO THE CFO SLIDE DECK.

IT SHOWS YOU SLIDE WHAT'S INTERNALLY RESTRICTED.

SHOW YOU YOU WANT TO MARKETING.

THAT ANSWERED MY QUESTION.

SO NOW WE ARE TO THE POINT WHERE WE CAN'T DISCUSS AND CONSIDER ACCEPTANCE OF THE ACTUARY, EVALUATION OF THE GALVESTON WARS PENSION PLAN AS OF JANUARY 1ST, 2026, WHICH INCLUDES THE GV 67 AND 68 REPORT RELATED ASSUMPTIONS AND APPROVAL OF CONTRIBUTION TO THE PLAN FOR 2026.

OKAY, NEVERMIND.

AND AT THE END OF THE YEAR ON THE FINANCIALS, WHEN YOU SEE THE CASH FLOW, YOU SEE THE CASH FLOW STATEMENT AT THE BOTTOM.

IT SAYS ALL IT SHOWS IS RESTRICTED AND UNRESTRICTED CASH.

AND ANYTHING THAT THAT'S INTERNAL RESTRICTED, IT IS ADDED.

IT'S ALL UNRESTRICTED AT THE END OF THE DAY.

[D.2 DISCUSS AND CONSIDER ACCEPTANCE OF THE ACTUARIAL VALUATION OF THE GALVESTON WHARVES PENSION PLAN AS OF JANUARY 1, 2026 WHICH INCLUDES THE GASB 67 AND 68 REPORT, RELATED ASSUMPTIONS AND APPROVAL OF CONTRIBUTION TO THE PLAN FOR 2026]

DO I HAVE A MOTION TO ACCEPT WHERE WE ARE AND RECOMMEND THIS TO THE FULL BOARD? IS THAT, I GUESS THAT'S WHAT I WANT TO DO, RIGHT? I'LL MAKE THAT MOTION, YES, BUT I'LL SECOND.

ALL IN FAVOR? THIS WAS FOR THE ACTUARIAL? YES.

WAS THERE, THERE NEED TO BE A, A CHANGE? YES.

THERE NEEDS TO BE ONE.

OH, YOU CAN GO BY A SECOND MOTION TO, UH, MAKE THE CHANGE IN THE, UH, TO THE ASSUMPTION FOR THE P 20, THE PUB 2016 AS SOME MORTALITY RATE.

UH, SO WILLIE, YOU WANNA MAKE THAT MOTION? MOTION.

WILL I MAKE A MOTION OF THE RECOMMENDED ADJUSTMENT FOR, UH, MORTALITY RATE AND, UH, SECOND.

SECOND.

A SUMMARY PLAN DESCRIPTION AS ERIC MENTIONED.

ALL IN FAVOR.

SO THAT'S, THAT'S APPROVED AS WELL.

AND I WOULD LIKE TO, UM, GET

[01:35:01]

SEND THAT OUT TO THE BOARD.

FROM THE BOARD OF TRUSTEES.

SO IF THAT'S IT, WE HAVE COMMENTS

[E. COMMENTS FROM THE BOARD OF TRUSTEES]

DO Y'ALL HAVE ANY COMMENTS? YOU WANNA SAVE THEM FOR LATER? YOU STILL NEED TO ACCEPT THE CFO REPORT AND RECOMMENDATION.

I GET TO DO THAT.

IS THAT IT? ALSO HAVE A, JUST WANTED, WE PUT A NOTATION IN HERE THAT I'VE BEEN INVITED TO THE NC CHRISTENING OF THE UNION SHIP AND IT'S IN HERE FOR ACTUALLY THIS WEEKEND.

AND I WANT TO, UH, I DON'T KNOW IF I HAVE TO HAVE APPROVAL FOR THAT, IF THAT'S INTERNATIONAL TRAVEL, BUT WHERE IS IT? IT'S IN, UM, IT'S TAP, WELL IT'S MIAMI, BUT IT COMES BACK TO MIAMI AND IT GOES ONE PLACE BACK.

THEY GO, YOU KNOW, THEY JUST, AND NC JUST TOOK DELIVERY OF THEIR NEWEST SHIP AND HAVE ASKED ME TO CHECK IT.

SO WHAT SHOULDN'T THAT BE DONE IN THE FULL BOARD? WELL, WAS IN HERE, SO IT WAS UNDER THESE ITEMS, SO THAT'S WHY I BROUGHT IT UP.

YEAH, IT CAN BE DONE.

I MEAN, IF THE BOARD APPROVES THE CONSENT AGENDA, WE CAN NOTE THAT THAT'S INCLUDED IN THERE.

CONSENT AGENDA ITEM, RIGHT? YEAH, FOR THE FINANCE.

SO WE'RE, WE'RE GOING TO ACCEPT A MOTION TO APPROVE ROGER GOING TO THE NCL DEDICATION OF THE SHIP.

UM, I, YEAH, I, I'M HAPPY TO DO THAT, BUT I THOUGHT IT WAS INCLUDED IN THE CONSENT AGENDA, WHICH I THINK WE'VE ALREADY, WE'VE ALREADY RECOMMENDED.