* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:01] RICHARD MOORE [A. CALL TO ORDER] HERE. FINANCE COMMITTEE. VICE CHAIR WILLIE GONZALEZ HERE. FINANCE COMMITTEE MEMBER SHEILA LID STONE. HERE. ALSO IN ATTENDANCE IS CHAIRMAN JEFF PATTERSON. TRUSTEE MAYOR GREG BROWN. TRUSTEE ERIC STR. AND WE WILL HAVE ROGER RIES BROWN SHORTLY. THAT SOUNDS LIKE A THREAT. . OKAY, WE HAVE A QUORUM, UM, I BELIEVE OF THE COMMITTEE. US THREE, RIGHT? SO, UM, IS THERE, UH, ANY RULES AGAINST CHANGING THE ORDER OF PRESENTATIONS AND ANNOUNCEMENTS AND PUBLIC COMMENTS? NO, I THINK YOU, WE DON'T HAVE OUR LEGAL COUNSEL POWERS VEST IN ME, I WOULD SAY ON HAND. YOU CAN DO THAT. ALRIGHT THEN. THAT'S WHAT WE'RE GONNA DO. AND, UH, IF YOU DON'T MIND, I WOULD LIKE TO, UH, DO, WE'VE GOT THE QUORUM, LET'S HAVE THE INVOCATION FIRST AND THEN WE WILL GET GOING. INVOCATIONS PASTOR TREY DOWDY. ALRIGHT. UH, THEY ASKED ME IF I WANTED TO SPEAK. I DID NOT. SO I JUST WANT PRAY. IS THAT OKAY WITH YOU GUYS? YES, SIR. UH, WANT TO INTRODUCE MYSELF IF YOU DON'T KNOW WHO I AM. I'M PASTOR TREY. I'VE BEEN HERE ABOUT 15 YEARS. MY GRANDFATHER WAS THE PASTOR OF THE CHURCH. I PASTOR. NOW, UH, WE HAVE TWO LOCATIONS, ONE ON SEVEN MILE ROAD AND ONE DOWNTOWN GALVESTON. SO, UH, LET'S PRAY AND PRAY UP TO YOUR OWN CONSCIOUS. I'M AFRAID OF JESUS. SO FATHER, THANK YOU FOR YOUR GREAT LOVE FOR US. FATHER, JUST PRAY FOR THIS, UH, PORT MEETING. FATHER, I PRAY THAT YOU WOULD GIVE EVERYONE HERE WISDOM IN YOUR WORD. IT SAID, IF WE LACK WISDOM, IF WE ASK YOU, YOU WOULD GIVE IT TO US. AND SO I ASK FOR WISDOM, ASK FOR INNOVATION. FATHER, I ASK FOR FAVOR FOR THE CITY AND THE PORT OF GALVESTON, GOD, THAT WE WOULD INCREASE IN YOUR BLESSING AND YOUR GOODNESS, THAT YOUR MERCY WOULD COVER THIS PLACE AND THAT YOUR FACE WOULD SHINE UPON THIS CITY. I THANK YOU FOR THIS FATHER, I PRAY FOR EVERYONE HERE. FATHER, I PRAY FOR, UH, IF THERE'S ANYTHING THAT, UM, NEEDS RECONCILIATION OR FORGIVENESS, FATHER, PRAY THAT WE WOULD LOVE ONE ANOTHER. WE WOULD ESTEEM OTHERS BETTER THAN OURSELVES. I THANK YOU FOR THIS. IN JESUS NAME I PRAY, AMEN. AMEN. BLESS YOU. THANK YOU SO MUCH. OKAY, ANY, UH, CONFLICTS OF INTEREST BY TRUSTEES? SO NEXT [C.2 PUBLIC COMMENTS ] WE'LL JUMP DOWN TO, UM, PUBLIC COMMENTS. AND WE HAVE ONE PERSON, AND THAT'S MS. CHARLOTTE OOR. SHE WANTS TO DISCUSS THE A CFR. TONY'S NOT HERE WITH THE CLOCK, SO SHE'S GOT ALL THE TIME. GOOD MORNING. TAKE CARE. YOU'LL DO THAT. I APPRECIATE IT BECAUSE I HAVE A QUESTION ON THE, ON THE AER AND YOU HAVE THE AUDITORS HERE, AND THEY EXPLAIN IT SO WELL IN SIMPLE ENGLISH THAT I CAN UNDERSTAND. AND ON PAGE 29 OF YOUR EFFORT, IT TALKS ABOUT FINANCIAL AND CAPITAL ASSETS UNDER G. AND WHEN I LOOK AT IT, I'M UNABLE TO TELL FROM THE DESCRIPTION, WHICH OF YOUR AGREEMENTS ARE P, P OR P THREES, WHICH ARE SCAS, DO YOU HAVE ANY? AND WHICH ARE GOING UNDER THE CATEGORY OF, UM, 87. SO I THOUGHT WHEN THEY PUT IN GS B 94 IN 2002, IT CAME OUT IN JUNE. AND SO THE FIRST TIME YOU MENTIONED IT IS IN 2023. I THOUGHT BY THEIR DEFINITIONS THAT YOU HAD TO DEFINE WHAT EACH ONE WAS AND WHICH DB RULE APPLIED. AND SO I DON'T WANT TO OPEN RECORDS ALL YOUR AGREEMENTS AND SAY, GO THROUGH THAT QUESTIONNAIRE OF, YOU KNOW, WHICH ONE IT HITS. I WOULD JUST LIKE TO READ IT AS A MEMBER OF THE PUBLIC IN YOUR AER. SO IF Y'ALL WOULD CONSIDER THAT, I'D APPRECIATE IT. AND HOPEFULLY THAT THEY CAN ANSWER THAT ABOUT, UH, GS B 94. WHICH ONE'S GS B NINE FOUR. WHICH ONE'S GS 87? WHICH ONE MAY BE BOTH? WHICH ONE'S A P THREE? I THINK THAT WOULD BE PURE 10. I DON'T KNOW ABOUT THE OTHER ONES. I'VE NEVER SEEN YOUR 16 LEASE OR AGREEMENT I SHOULD CALL IT BECAUSE I DON'T EVEN KNOW IF IT'S A LEASE. UM, THE OTHER THING I HAVE IS ON BONUSES. IF YOU LOOK AT PAGE 76 AND 77, 1 OF THE THINGS I'VE NEVER UNDERSTOOD IN THE A FIRST, WHEN YOU PUT IN YOUR BONUS, YOU AGREED THAT NOTHING WOULD EVER BE CHANGED ON THE FORMULA. AND ONE OF THE THINGS I'M WONDERING IS WHEN YOU PUT IN GASB 87 AND 96, DID, DID THAT INCLUDE TAKING OUT YOUR NON-CASH PORTION [00:05:01] OF 87 AND 96? AND IF NOT, DID YOU CHANGE THEN YOUR FORMULA IF YOU, IF YOU'RE NOT TAKING THAT OUT AND SHOWING THAT OPERATING INCOME? SO THAT'S A QUESTION. WAS IT SURE OF? I LOOK AT IT AND IT LOOKS LIKE YOU'RE NOT TAKING IT OUT AND THAT MAY CHANGE THE AMOUNT OF YOUR BONUS. SO APPRECIATE YOUR TIME. THAT WAS QUICK. WASN'T TOO BAD, RIGHT? NO, THANK YOU. AND IT'S OVER. THANK YOU. YOU STILL HAVE 12 SECONDS, . OH MAN, I COULD'VE USED THAT. 12 SECONDS. ALRIGHT, [C.1 APPROVAL OF THE MINUTES ] SO WE'RE, SO NOW WE WILL, UM, HAVE THE APPROVAL OF THE MINUTES. EVERYBODY HAD A CHANCE? EVERYBODY'S GONNA A CHANCE TO READ SECOND. SECOND. UNDERSTAND. UM, OKAY, THEN LET'S MOVE TO, GO AHEAD. CALL THE QUESTION. SO THEY'RE APPROVED. I'M TRYING TO GET THIS BACK IN ORDER. PRESENTATION. [B. PRESENTATIONS AND ANNOUNCEMENTS] PRESENTATION, YEAH. PRESENTATIONS AND ANNOUNCEMENTS. NOW THESE ARE GONNA BE, UH, PROBABLY KIND OF LONG. I'M NOT, I DON'T MEAN THEY, THEY DON'T HAVE TO BE , BUT THEY TEND TO BE GENERALLY, UH, SOME OF THE LONGER PRESENTATIONS THAT WE GET. SO LET'S START WITH, UH, FORBIS, WHO'S GONNA DO A PRESENTATION OF THEIR RECENT AUDIT OR JUST COMPLETED AUDIT OF OUR ANNUAL FINANCIAL. GOOD MORNING. MORNING. GOOD MORNING. SO OUR 2025 AUDIT WAS CONDUCTED BY OUR AUDITORS, ORBIS MAZARS. UM, THIS INCLUDES THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, THE FEDERAL, SINGLE AND STATE AUDIT, AND THE DEFINED, UM, BENEFIT PENSION PLAN. UM, JOINING US, WE HAVE OUR AUDIT PARTNER, ANGIE DUN, WHO WILL PRESENT THE AUDIT AND HIGHLIGHT ANY KEY ITEMS FOR YOU ALL. SO I'LL NOW TURN IT OVER TO YOU, ANGIE. GREAT. ARE YOU, ARE YOU A COURT INVOLVED? YES. I'M SORRY, I DIDN'T, I DIDN'T REALIZE THAT. WHAT'S YOUR NAME? DEANNA CORTEZ. DEANNA CORTEZ. YES. THANK YOU SO MUCH. GOOD MORNING. GOOD MORNING. MORNING. HOPEFULLY Y'ALL CAN HEAR ME OKAY. UM, BUT I TALK LOUD AND, UM, I KNOW HE ALLUDED TO THESE ARE SOME OF THE LONGER PRESENTATIONS. I WON'T BE UP HERE LONG . UM, BUT IF YOU DO HAVE ANY QUESTIONS, DEFINITELY FEEL FREE TO ASK. AS DEANNA SAID, I'M THE AUDIT PARTNER, UM, FOR THE PORT OF GALVESTON, UH, ACT FOR AUDIT AS WELL AS THE PENSION PLAN AUDIT. AND THEN I ALSO HAVE WITH ME HERE TODAY, CATHERINE DALEY, UM, WHO SERVES AS OUR, UH, SENIOR ASSOCIATE AND IS REALLY THE BOOTS ON THE GROUND, UM, THAT DOES THE MAJORITY OF THE WORK. SO, UM, YOU DO HAVE IN YOUR MATERIALS, KIND OF OUR COMMUNICATION THAT WE WANTED TO SHARE WITH YOU TODAY. UM, THERE'S PROBABLY MORE INFORMATION IN THERE THAN WHAT I'LL ACTUALLY, UM, COVER. UH, BUT REALLY THIS IS TO DISCUSS THE RESULTS OF THE AUDIT OF THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, AS WELL AS THE, UH, PENSION PLAN REPORT. SO IT'S ENCOMPASSED IN BOTH. AND SO JUST TO MAKE YOU AWARE, UM, FROM A TIMING PERSPECTIVE, UH, WE GENERALLY START OUR, OUR PLANNING AND INTERIM TESTING IN OCTOBER. WE GO THROUGH, UM, APRIL, UH, IN TERMS OF DOING THE AUDIT FROM AN O OVERALL STANDPOINT, WE WILL, OR WE HAVE ISSUED UNMODIFIED OPINIONS ON THE FINANCIAL STATEMENTS AND THEN AN UNMODIFIED OPINION ON THE PENSION PLAN, FINANCIAL STATEMENTS. AND THEN I'LL JUST GO IN A LITTLE BIT MORE DETAIL AS WE GO THROUGH THE PRESENTATION. UM, WE ALSO, UH, PROVIDE A REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE. UM, AND WE ISSUED THAT REPORT. AND THEN AS ALSO MENTIONED, WE DO PERFORM AUDIT PROCEDURES ON YOUR FEDERAL AND STATE FUNDING, UM, THAT YOU RECEIVE. SO IT'S A FEDERAL AND STATE, UH, AUDIT. AND WE FOLLOW THE PROVISIONS OF UNIFORM GUIDANCE AND THE TEXAS GRANT MANAGEMENT STANDARDS. UM, AND THEN WE, THERE ARE KIND OF WHAT WE CALL OTHER NON-AUDIT SERVICES. AND SO ONE OF THE, UH, THINGS THAT YOU ALSO HAVE TO FILE IS A DATA COLLECTION FORM WITH THE FEDERAL AUDIT CLEARING HOUSE THAT JUST OUTLINES, UM, THE AUDIT OF THE FEDERAL AWARD. SO WE ASSIST IN PREPARING THAT DOCUMENT. AND THEN ALSO, UM, THE COURT USES ONE OF OUR, UH, FINANCIAL REPORTING TOOLS CALLED THE REPORTING SOLUTION TO ACTUALLY DEVELOP THE ACT FOR FINANCIAL STATEMENTS. AND SO THOSE ARE CONSIDERED NON-AUDIT SERVICES THAT WE PROVIDE. AND THEN THESE NEXT TWO SLIDES ARE JUST KIND OF OUR REQUIRED COMMUNICATIONS, UM, TO YOU. JUST TO MAKE YOU AWARE, UM, WHAT THE SCOPE OF OUR AUDIT WAS. WE AUDITED AS OF DECEMBER 31ST, 2025. UM, WE ARE RESPONSIBLE FOR, UH, RENDERING OPINIONS ON THE FINANCIAL STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. AND WE AUDIT UNDER GENERALLY ACCEPTED AUDITING STANDARDS AS WELL [00:10:01] AS GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS. UM, WE ALSO JUST LIKE TO MAKE YOU AWARE THAT WE ARE INDEPENDENT, UH, WITH RESPECT TO THE OPERATIONS, UH, OF THE PORT OF GALVESTON AND THE PENSION PLAN. GOOD MORNING. AS I MENTIONED, UM, THERE ARE KIND OF ADDITIONAL REPORTS BESIDES JUST THE OPINION, UM, THAT WE ISSUE THAT WAS UNMODIFIED, IS THAT WE ALSO HAVE THE INTERNAL CONTROL OVER FINANCIAL REPORTING AS WELL AS INTERNAL CONTROL OVER, UH, REPORTING AS IT RELATES TO THE FEDERAL AWARDS. AND WE DO ALSO PROVIDE WHAT WE CALL AN IN RELATION TO OPINION ON YOUR SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND SCHEDULE OF EXPENDITURES OF STATE AWARDS. TO SAY THAT IT IS MATERIALLY CONSISTENT WITH, UH, YOUR FINANCIAL STATEMENTS AS A WHOLE. THERE IS OTHER INFORMATION THAT'S INCLUDED IN THE, UM, , WHICH IS PRIMARILY THE TRANSMITTAL LETTER AND THE STATISTICAL SECTION, UM, OF WHICH WE DO NOT AUDIT. THOSE ARE CONSIDERED UNAUDITED, BUT WE DO REVIEW THEM, UM, TO MAKE SURE THAT THEY'RE INTERNALLY CONSISTENT, UM, THAT THEY'RE MATERIALLY REPRESENTED. AND WE DID NOT IDENTIFY ANY ISSUES WITH RESPECT TO, UH, THOSE ELEMENTS OF THE, UM, FINANCIAL STATEMENTS THAT WE DO NOT SPECIFICALLY, UM, PERFORM AUDIT PROCEDURES ON. AND THEN AS IT RELATES TO JUST OTHER MATTERS THAT WE WANNA SHARE WITH YOU, UM, THE SIGNIFICANT ACCOUNTING POLICIES ARE INCLUDED IN NOTE ONE OF THE FINANCIAL STATEMENTS. UH, THERE WERE NO UNUSUAL POLICIES OR METHODS, UM, THAT HAD TO BE ADOPTED. UM, THIS YEAR, THIS WAS KIND OF A, A SLOW YEAR FOR ADOPTION OF NEW STANDARDS. UM, THERE IS ONE NEW ACCOUNTING STANDARD THAT WILL BE ADOPTED IN, UM, THE 2026 AUDIT. THAT IS GA B 1 0 3, WHICH IS THE FINANCIAL REPORTING MODEL. UM, AND THAT WILL HAVE SOME IMPLICATIONS TO THE COURT. UM, THERE'S SOME SPECIFIC REQUIREMENTS AROUND MANAGEMENT'S DISCUSSION AND ANALYSIS. UM, THERE'S SOME SPECIFIC REQUIREMENTS AS IT RELATES TO, UM, SUBSIDIES AND HOW THAT LOOKS IN A PROPRIETARY FUND TYPE FINANCIAL STATEMENTS OF WHICH SUPPORT IS. AND SO WE'LL BE WORKING WITH MANAGEMENT, UM, WITH RESPECT TO THAT IMPLEMENTATION. AND IF THERE'S ANY KIND OF NUANCES THAT, UM, WE NEED TO BRING TO YOUR ATTENTION, WE'LL DO THAT, UH, AHEAD OF TIME. SO YOU CAN SEE THAT THERE MIGHT BE SOME MODIFICATIONS IN WHAT YOU'VE SEEN HISTORICALLY FROM A FINANCIAL REPORTING STANDPOINT. UM, THERE WERE NO ALTERNATIVE ACCOUNTING TREATMENTS THAT WERE MADE, UM, EMBEDDED IN THE FINANCIAL STATEMENTS ARE DEFINITELY JUDGMENTS AND ESTIMATES. UM, FOR THE FINANCIAL STATEMENT STANDPOINT, UM, THE FAIR VALUE OF INVESTMENTS IS SOMETHING THAT IS CONSIDERED AN ESTIMATE. AND SO WE DO LOOK AT THAT AND, AND LOOK AT A, UTILIZE AN INDEPENDENT THIRD PARTY TO HELP US VALUE THOSE INVESTMENTS, UM, TO MAKE SURE THAT THEY'RE REASONABLE. UM, WE DO THE SAME AS IT RELATES TO THE PENSION PLAN, 'CAUSE THAT'S A BIG ESTIMATE. AND THE PENSION PLAN IS THE INVESTMENTS. UM, ALSO THIS YEAR, UM, THE PORT, UH, HAD A NET PENSION ASSET. IN THE PAST IT HAD A NET PENSION LIABILITY. SO WHAT THIS MEANS IS THAT YOUR, BASICALLY YOUR FIDUCIARY NET POSITION, WHICH IS YOUR INVESTMENTS, WAS GREATER THAN THE ACTUARILY DETERMINED LIABILITY. SO YOU HAVE A NET PENSION ASSET, UM, AND THAT'S, UH, AN ESTIMATE. AND THEN ADDITIONALLY, UM, YOUR LEASE RECEIVABLE, THERE'S AN ESTIMATE, THERE'S ESTIMATES INVOLVED IN THAT BECAUSE YOU'RE DETERMINING WHAT A DISCOUNT RATE IS, YOU'RE LOOKING AT THE, THE LEASE TERM, UM, TO MAKE THOSE DETERMINATIONS AS WHAT THAT LEASE RECEIVABLE SHOULD BE. AND THEN SIMILARLY, AS IT RELATES TO THE FINANCIAL STATEMENT DISCLOSURES, ALL OF THOSE ITEMS THAT I JUST DISCUSSED ARE, ARE, UM, DISCUSSED IN THE, UH, FINANCIAL STATEMENT DISCLOSURES. AND THERE'S A LOT OF INFORMATION, UH, IN REGARDS TO THOSE, UH, ITEMS. AND THEN THERE WERE NO, UH, ISSUES OR ANY KIND OF MATTERS REPORTABLE AS IT RELATES TO THE QUALITY OF YOUR ACCOUNTING, UM, POLICIES AND PRINCIPLES. AND THEN FROM AN ADJUSTMENT STANDPOINT, WE DID HAVE ONE, UM, ADJUSTMENT ON THE FINANCIAL STATEMENTS THAT IS REFLECTED IN THE FINANCIAL STATEMENTS BECAUSE YOU DID HAVE A NET PENSION ASSET THIS YEAR, UM, THAT IS REQUIRED TO BE, UH, REFLECTED AS RESTRICTED IN THE NET POSITION CATEGORY. UM, SO THAT IS SOMETHING THAT YOU SEE NOW, UM, IN YOUR, UH, NET POSITION CATEGORY, THAT THERE'S A RESTRICTED, UH, NET PITCHING ASSET. AND SO, UH, THERE WERE NO OTHER, UM, ADJUSTMENTS THAT WE PROPOSED OR THAT WERE IDENTIFIED, UM, IN THE, IN THE AUDIT THIS YEAR. AND THEN OUR LAST KIND OF FEW COMMUNICATIONS IS JUST TO MAKE YOU AWARE, WE DID NOT HAVE ANY DISAGREEMENT WITH MANAGEMENT. WE DID NOT HAVE TO CONSULT WITH ANY OTHER, UM, PARTIES OUTSIDE OF OUR ENGAGEMENT. WERE NOT AWARE OF MANAGEMENT CONSULTING WITH, UH, ANY OTHER THIRD PARTIES IN RELATION TO ACCOUNTING POLICIES. UH, THERE WERE NO, AGAIN, SIGNIFICANT [00:15:01] ISSUES DISCUSSED WITH MANAGEMENT. UM, AND I, I WOULDN'T SAY ISSUES, BUT YOU KNOW, THERE WERE SOME NEW LEASES ENTERED INTO, UH, THIS YEAR THAT, UM, HAVE BEEN APPROPRIATELY REFLECTED IN THE FINANCIAL STATEMENTS. SO YOU DO SEE THAT LEASE RECEIVABLE HAD INCREASED, UM, PRETTY SIGNIFICANTLY, UH, FROM, FROM PRIOR YEARS. SO, UH, NOT AN ISSUE, BUT JUST, UH, A, A TRANSACTION THAT OCCURRED THIS YEAR. UM, THERE WERE NO DI DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT. AND THEN ALSO IN YOUR, UH, PRESENTATION MATERIALS, YOU DO HAVE COPIES OF THE MANAGEMENT REPRESENTATION LETTER FOR BOTH THE, UM, AUDIT AS WELL AS THE PENSION PLAN AUDIT. AND YOU CAN SEE THAT ALL IN THERE. SO THAT REALLY, UM, CONCLUDES MY PREPARED REMARKS THAT I WANTED TO SHARE WITH YOU WITH THE CONDUCT OF THE AUDIT THIS YEAR. UM, BUT IF THERE ARE ANY QUESTIONS, UM, THAT THE COMMITTEE OR THE REMAINDER OF THE BOARD HAS, I'M MORE THAN HAPPY TO ADDRESS THOSE. I ACTUALLY YOU CAN GIVE YOURSELF PERMISSION. I THINK I KNOW THE ANSWER TO THIS, BUT WOULD YOU SAY THIS IS THE OFFICIAL ANNUAL COMPREHENSIVE FINANCIAL REPORT? OR WOULD YOU SAY WHAT'S IN THE CITY'S FINANCIAL REPORT RELATED TO THE PORT IS THE OFFICIAL REPORT AND IT COULD BE BOTH, IS THAT A TRICK QUESTION? NO, UM, I MEAN, FOR THE PORT OF HOUSTON AUTHORITY, OR EXCUSE ME, SORRY, PORT OF GALVESTON, UM, THAT IS YOUR OFFICIAL RECORD OF THE OPERATIONS OF PORT OF GALVESTON. I THINK THERE ARE ELEMENTS, AND I HAVEN'T LOOKED AT THE CITY OF GALVESTON'S FINANCIAL STATEMENTS, BUT SINCE YOU ARE A COMPONENT UNIT OF CITY OF GALVESTON, THE INFORMATION THAT'S PRESENTED THERE, UM, IN ESSENCE GETS INCORPORATED INTO THE CITY OF GALVESTON'S, UM, AUDITED FINANCIAL STATEMENTS. BUT I WOULD SAY THIS IS THE OFFICIAL RECORD FOR, SO Y'ALL OPERATION, SO Y'ALL, AS THE AUDITOR, DON'T HAVE ANY INTERACTION WITH THE CITY WHENEVER THEY DRAW THIS INTO THEIR ANNUAL FINANCIAL REPORTS. WE DON'T HAVE LIKE, DIRECT INTERACTION WITH THE CITY, BUT THE, UM, AUDITORS OF THE CITY, THEY HAVE, UM, AS PART OF BEING A COMPONENT UNIT, LIKE THEY WILL SEND US A LETTER, UM, YOU KNOW, BASICALLY KIND OF INSTRUCTING US THAT, YOU KNOW, THE AUDIT NEEDS TO BE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES UNDER GOVERNMENT AUDITING STANDARDS. AND THEN IF THERE ARE ANY LIKE, SUBSEQUENT EVENTS BETWEEN THE DATE OF, UM, THE PORTS REPORT AND THE CITY OF GALVESTON, SINCE YOU ARE, UH, DIFFERENT FISCAL YEAR ENDS, THEN THEY ASK US TO REPORT ON ANY SUBSEQUENT EVENTS THAT THEY NEED TO BE CONSIDERED. SO WE HAVE SOME INDIRECT INTERACTION WITH THE AUDITOR, BUT NOT THE CITY ITSELF. SO IN REALITY THOUGH, THEY, THEY INCORPORATE THESE FIGURES AND AMOUNTS IN THEIR ANNUAL FINANCIAL REPORT? YEAH, SO THEY, UM, UH, IF I REMEMBER CORRECTLY, LIKE YOU'RE CONSIDERED A DISCREETLY PRESENTED COMPONENT UNIT. SO TYPICALLY THE AUDITORS RELY ON THE AUDIT OF THE PORT OF GALVESTON, AND THEN THE CITY WILL PULL IN THAT INFORMATION FROM YOUR AUDITED FINANCIAL STATEMENTS. BUT THEY'RE ALSO PULLING IN THEIR DECEMBER, YOUR DECEMBER 31ST, 2024 INFORMATION BASED OFF OF THEIR YEAR END. SO THE DECEMBER 31ST, 2025 INFORMATION WILL BE IN THERE SEPTEMBER 30TH, 2026 AUDIT. OKAY. ANYBODY ELSE HAVE YOU ALONG THOSE LINES? UH, IS THIS SENT, IS THIS SENT TO THE CITY? DID THEY RECEIVE A COPY? YES, SIR. WE WILL. WE ARE MAKING COPIES AND WE WILL TAKE THEM TO THE CITY FOR THE COUNCIL MEMBERS, UH, THE MAYOR, CITY SECRETARY FINANCE DEPARTMENT. THANK YOU. ONCE WE FIGURE OUT, UH, DID ANYBODY ELSE HAVE ANY THOUGHTS OR QUESTIONS? OKAY. ALRIGHT. THANK YOU VERY MUCH. NOW WE'RE GOING TO TALK ABOUT, SHE WAS VERY, SHE WAS VERY CONCISE. WE JUST HAVE TO, SO NOW WE'RE GONNA HAVE A PRESENTATION ABOUT FALSE BANK ON . BEFORE WE GET STARTED, DO YOU NEED A DECISION OUT THIS? UH, UH, JUST, [00:20:01] I THOUGHT, HEY, IN MY CONVERSATIONS WITH MARK BEFORE HE WENT OUT, HE HAD GIVEN ME A HEADS UP OF WHAT MAY BE COMING. AND MY UNDERSTANDING IS JUST BREAKING IT DOWN WAS THAT, YOU KNOW, IF THERE'S GONNA COME A POINT IN TIME THAT THE PENSION FUND'S GONNA BE FUNDED AND IT'S GONNA BE UNWIND, AND THE PROCEEDS FOR THOSE THAT ARE STILL IN IT WILL HAVE ANNUITIES COVERED AND EVERYBODY WILL BE GOOD. THE QUESTION THAT MARK PRESENTED TO ME THAT, AND I MAY BE JUMPING AHEAD, IS AT WHAT POINT DO WE START TO DE-RISK AND START TO BRING THAT DOWN TO GET IT? CURRENTLY THE PORTFOLIO IS SITTING AROUND $17 MILLION RIGHT NOW, AND I BELIEVE THE TARGET FOR THE COMMITTEE TO UNWIND IT IS AROUND 20 MILLION. AM I CLOSE? I THINK THAT'S ABOUT, I THINK THAT'S IN THAT, LET TAKE A LOOK. YEAH. SO IF WE TAKE A LOOK AT THAT, THAT'S A NEED RETURN OF ABOUT 17%, GIVE OR TAKE. LOOK AT THAT RIGHT NOW. SO IF, IF MARK SAID, HEY, WE'RE KIND OF LOOKING AT MAYBE TWO, THREE YEARS TO DO THAT, THREE YEARS YOU NEED A 5% RETURN, TWO YEARS, YOU'RE PROBABLY LOOKING AT ABOUT AN EIGHT AND A HALF PERCENT RETURN. SO THE QUESTION WOULD COME UP BASED ON THE PRESENTATION AND THE COMMITTEE'S APPETITE FOR RISK, IS HOW MUCH DO YOU WANT TO DIAL BACK? BECAUSE I'M, AS I'VE SAID TO THIS COMMITTEE, I'M A BIG BELIEVER IN MURPHY'S LAW AND IT WILL GO WRONG IF THE WORST POSSIBLE. SO, UM, YOU DON'T, YOU DON'T NEED THAT DECISION TODAY. NO. WHATEVER I WILL MANAGE ACCORDING TO WHAT WE HAVE AND A POINT IN TIME AND I'LL, WHEN WE TALK ABOUT THE ASSET ALLOCATION, I CAN WEIGH IN ON THAT. RIGHT. OKAY. UM, PAGE ONE, WE'VE SEEN IT, WE WERE RUNNING OUR EQUITIES AT AROUND 82%. THIS IS AT THE END OF MARCH, AND IT JUST HAPPENED TO BE ONE OF THE LOWS DUE TO THE WAR IN THE GULF. SO AS OF RIGHT NOW, THE MARKET VALUE ON THE PORTFOLIO AS OF BEING TAKEN YESTERDAY'S DOWNSIDE. BUT WITH THIS MORNING'S RALLY, LET'S JUST SAY IT'S THE WASH. SO WE'RE SITTING AROUND 17 MILLION, UM, THERE IF WE'RE, SO 82% IS OUR TARGET FOR EQUITIES, JUST A TAD UNDER 15% FOR BONDS. AND WE'RE KEEPING AROUND 3% FOR EQUITIES. SO WE'RE ON THIS PAGE, AND I'M GONNA DOVETAIL A LITTLE BIT INTO, UM, JUST RETURNS HISTORICALLY. A AND WE'RE JUST USING BENCHMARKS OVER TIME. SAY THE S AND P 500, THE MSC AQUI, UH, BLOOMBERG, UM, AG AND 91 DAY TBIS, A PORTFOLIO THAT HAS A 82, UH, WHAT WE DEFINE AS A CAPITAL APPRECIATION TYPE OF TARGET HAS HISTORICALLY HAD A RETURN OF ABOUT 8.7%. THIS IS NOT LISTED, I PULLED THIS UP LAST NIGHT. A PORTFOLIO THAT WE DEFINE AS LONG-TERM GROWTH, WE'LL JUST SAY RIGHT NOW IT'S AROUND 70 30 IS AROUND 8%, AND YOU GET DOWN TO BALANCE, IT'S AROUND SEVEN. YOU LOOK AT THE NUMBERS HISTORICALLY, YOU KNOW, FOR EVERY 10% OR YOU JUMP UP, YOU'RE PICKING UP ABOUT 50 BASIS POINTS IN A YEAR OF RETURN. IF THIS COMMITTEE WISHES TO DIAL DOWN AND WE TAKE IT IN STEPS, YOU KNOW, WE CAN EASILY TAKE THIS DOWN, UH, TO A 70 30 MIX VERSUS AN 80 20, YOU WOULD THEN BE PEELING OFF APPROXIMATELY 2.22 MILLION IN EQUITIES AND MOVING THEM INTO BONDS IF WE WANNA START DE-RISKING, OKAY, WHEN I BUILD THE PORTFOLIO, UM, YOU KNOW, YOU BASICALLY THE PORTFOLIO AND IT'LL BE A FIXED INCOME PAGE, BUT THE PORTFOLIO IS A LITTLE BIT LONGER THAN WHAT I WOULD DEFINE AS A BLOOMBERG ONE TO FIVE GOV CREDIT INDEX. SO WE'RE NOT GOING OUT THAT LONG BECAUSE, FOR EXAMPLE, MY WINDOW IS TWO TO THREE YEARS NOW, OR SOMEBODY WHO IS CLOSER TO RETIREMENT. WE JUST USE AN EXAMPLE OF A CLIENT THAT I MAY TAKE CARE OF THESE TWO, THREE YEARS FROM RETIREMENT. WE'RE NOT GONNA BE 80% IN EQUITIES. WE'RE GONNA BE START DIALING BACK TO START PROTECT THAT. 'CAUSE YOUR WINDOW TO MAKE THAT UP IS SHORTER THAN NORMALLY WHAT YOU WOULD HAVE. SO ANYWAY, THAT'S WHERE WE'RE AT AT 80 20. UM, YOU CAN SEE ON PAGE THREE, JUST THE INFLOWS, THE OUTFLOWS OF WHERE YOU'RE AT, UM, OVER THE LAST FIVE YEARS. SO THIS IS A PAGE THAT'S ALWAYS BEEN IN THE PRESENTATION WITH YOU. NEXT PAGE, JUST THE RETURNS ON A YEAR TO DATE NUMBER, UH, JUST A SLIGHT NEGATIVE. AGAIN, THAT WAS FOR THE FIRST THREE MONTHS OF THE YEAR, UH, BEING DOWN A LITTLE OVER 3%. AND THAT WITH THE MARKET RALLYING BACK TO WHERE WE'VE BEEN, [00:25:01] UM, AS OF TODAY, YOU KNOW, THOSE NEGATIVES HAVE BEEN ELIMINATED. YOUR AND YOUR BACK INTO THE POSITIVE TERRITORY. UH, JUST JUST A SAMPLE ON THE PORTFOLIO, UM, AVERAGE, AS I SAID, WE KEEP IT CONSERVATIVE. UM, IN TERMS OF MY MEASURE IN TERMS OF MATURITY AND DURATION, UH, AVERAGE MATURITY AROUND FOUR YEARS, AVERAGE DURATION AROUND 3.5. WHERE WE TAKE OUR RISK IS BUYING CORPORATES AND PICKING UP THE SPREAD OVER THE TREASURIES AND AGENCIES. PAGE SEVEN JUST STARTS GETTING INTO THE PORTFOLIO. UM, YOU CAN JUST SEE THE BONDS THAT WE HAVE. ALL CORPORATES, ALL MY, ALL MY CORPORATE BONDS ARE RATED A BETTER, UM, EITHER BETWEEN MOODY'S OR S AND P. AND AGAIN, WHEN YOU GO THROUGH JUST THE PORTFOLIO THAT'S BROKEN OUT, UH, BY SECTORS, WHETHER IT'S TELECOMS, WHETHER IT'S CONSUMER DISCRETIONARY, WHETHER IT'S STAPLES, UM, ENERGY, FINANCIALS AND HEALTHCARE INDUSTRIALS, WHICH HAVE HAD A NICE INDUSTRIALS, HAVE HAD A NICE RALLY. UM, YOU KNOW, GET INTO THAT A LITTLE BIT BY AI DRIVEN. UM, AND THEN ON TECH AND THEN, UM, MATERIALS, REAL ESTATE, UTILITIES, YOU KNOW, AS I'VE ALWAYS SAID IN THE PAST, WE TRY TO BUILD A DIVERSIFIED PORTFOLIO. YOU WILL ALSO FIND WITHIN THERE, UM, SMALL CAP, MID CAP DEVELOPED INTERNATIONAL. WE TALK, WE'VE DEVELOPED INTERNATIONAL, REALLY TALKING, UM, EUROPE AND JAPAN, AUSTRALIA FOR EXAMPLE. AND THEN WE TALK ABOUT EMERGING MARKETS. AND WE'RE, AGAIN, WE ARE THINKING OF CHINA, INDIA, BRAZIL, MEXICO, SOUTH KOREA FOR EXAMPLE. AND THAT IS BASICALLY THE MIX UP. OUR TAKEAWAY BASED ON THE PORTFOLIO CONSTRUCTION IS WE REMAIN HEAVY TO US INFLUENCE OR US POSITIONS RELATIVE TO THE M-S-C-I-A. WE, UH, WE DID MAKE A MOVE. WE DID, UH, BASED ON WHAT WE SAW FOR EARNINGS, UH, WITHIN THE EMERGING MARKET AREA, WE DID SHIFT A LITTLE BIT OF MONEY OVER FROM MID CAP INTO EMERGING MARKETS. QUESTIONS TO THE COMMITTEE BEFORE I MOVE ON TO ECONOMIC AND MARKET UPBEAT. ARE YOU, ARE YOU CONSIDERING ANY AL ALTERNATIVE ENERGY NOW THAT WE KNOW HYDROCARBONS ARE NOT NECESSARILY THE SAFEST INVESTMENT IN THE ENERGY SECTOR? NOT, NOT AT THIS TIME. GOT IT. YOU KNOW, YOU LOOKED AT RIGHT THERE, WE LOOKED AT SOLAR. I MEAN, YOU'RE NOT REALLY MAKING ANY MONEY, YOU KNOW, IT'S WORKING. WE STILL CONTINUE TO MAKE MONEY. AND IF WE WEREN'T IN OIL AND GAS BASED ON THIS, YOU KNOW, THE EXXONS, THE CONOCOS, THE CHEVRONS, THOSE ARE OFF ALLS. THE 25 TO 30%. YEAH. YES SIR. YOU MENTIONED DE-RISKING WE'RE AT 80 20, CORRECT. RIGHT NOW AND TO GO TO 70 30, IS THAT A RECOMMENDATION OR IS THAT SOMETHING IT'S A FIVE, UH, A SUGGESTION TO THE COMMITTEE, WHAT I DO IS MORE TOWARDS A RECOMMENDATION. KNOW THAT I, NOW THAT I KNOW WHAT YOU'RE TARGETING AND THAT'S BEEN SHARED WITH ME, IT REALLY SHOULD BE A STAIR STEP TYPE OF PROCESS. HEY, WE TAKE IT DOWN TO 70, WE, WE HAVE ANOTHER GOOD YEAR, LET'S CHOP IT DOWN TO 60 50, RIGHT? SO WHEN WE GET TO THAT, YOU KNOW, OUR VOLATILITY IS GONNA BE MAYBE A SMALL PERCENT WITHIN EQUITIES AND THE LION'S SHARE IS GONNA BE IN SHORT TERM, HIGH QUALITY BONDS. SO WE WANT TO MINIMIZE THAT VOLATILITY WHEN YOU'RE READY TO PULL THE SWITCH. GUESS MY QUESTION IS MORE GEARED TOWARDS THE, UH, COMMITTEE AND STAFF IS WHEN AND HOW DID WE GET, DID WE SET THAT $20 MILLION GOAL AND HAVE WE REVISITED, REVISITED IT LATELY TO DETERMINE IF IT'S STILL A GOOD NUMBER? AND IF WE GO TO THAT PROCESS AND FIND THAT, IN FACT, YOU KNOW, WHERE WE'RE AT NOW IS GOOD. I THINK WE HAD A PENSION PLAN, VALUATION PRESENTATION LAST MEETING, AND IT LOOKED ROUNDABOUT, YOU KNOW, THAT IT WAS ALMOST FULLY FUNDED SOMEWHERE AROUND AROUND 96% AND ABOUT 90% OF THE PARTICIPANTS WERE FIXED OR KNOWN BECAUSE THEY'RE, THEY'RE NO LONGER WORKING HERE OR GAINING, UH, BENEFITS. SO MAYBE WE JUST NEED TO REVISIT THAT NUMBER. YEAH, I I I DON'T THINK THE COMMITTEE HAS MADE A FIRM DECISION OR WE HAVEN'T BEEN TASKED TO MAKE [00:30:01] A FINAL DECISION YET. UH, AND I THINK WE PROBABLY SHOULD IN THE NOT TO DISTANT FUTURE. I THINK THAT 20 IS, IS A TARGET, BASICALLY KIND OF LIKE OUR TARGET FOR WHAT DO WE KEEP MONEY DAY, DAYS, UH, DAYS PERFORMANCE. THIS IS SEPARATE FROM NO, I KNOW THAT. YEAH, HE KNOWS THAT. BUT, UM, WE, WE POSSIBLY SHOULD, POSSIBLY SHOULD MAKE THAT, UH, OFFICIAL DECISION. YEAH. SO IF WE HAVE THE, THE AUDIT SHOWS THAT WE'RE A NET PENSION ASSET BECAUSE OUR, AGAIN, ESTIMATES ARE OUR VALUATION IS GREATER THAN OUR LIABILITY THAN MAYBE THE $20 MILLION MARK NEEDS TO BE REVISITED. IT IS LOWER. AND IF WE ARE YOU SAYING LOWER? LOWER? WELL, I'M NOT SAYING TO DO ONE OR THE OTHER, BUT IF WE FIND THAT THE $20 MILLION NUMBER IS NOT ON THE MARK AND IT'S IN FACT A LITTLE BIT LOWER, THEN WE'RE CLOSER TO BEING READY TO DE-RISK, DE-RISK, THEN WE MAYBE THINK WE ARE. RIGHT. THAT'S, THAT'S SOMETHING WE WOULD WORTHWHILE WE'RE ALL DISCUSSING. LET'S, LET'S, UH, MAYBE AT THE NEXT MEETING WE CAN GO OVER THAT. UH, RICHARD, JUST A QUESTION. IF WE SAY WE MOVE TO, UH, MORE OF A 70 30 ARRANGEMENT, UH, AND MOVE MORE INTO BONDS AND FIXED INCOME, IS THAT FAIRLY LIQUID? CAN WE MOVE, CAN WE, IF WE NEED FOR SOME REASON, WE CAN MOVE OUT OF THAT PRETTY QUICKLY. YEP. WE CAN, YOU KNOW, WE CAN PUT IN TRADES AND, UH, RAISE THE CASH POSITION. LET'S JUST SAY WE DID THAT WHEN WE WERE TARGETING ANOTHER $2 MILLION, RIGHT? WE WOULD GO THROUGH THE PORTFOLIO, UH, REALIGN THE PORTFOLIO, BRINGING IT DOWN $2 MILLION, TAKE THOSE PROCEEDS, AND WITHIN A COUPLE OF DAYS WE WOULD BE BUYING THE BONDS, UM, AND COMING OUT OF THE BONDS. WE CAN COME OUT OF THOSE PRETTY QUICKLY WITHOUT A SAME THING. ABSOLUTELY. WITHOUT ANY, UH, PENALTY OR ANYTHING. NO, THE ONLY, THE ONLY THING THAT IS, IS THE CHANGE IN PRICE. YOU KNOW, EVERY DAY THE BONDS ARE PRICED. UM, BUT AS WE GET CLOSER AND THEN, YOU KNOW, MAYBE AS A THOUGHT, HEY, I MAY BE BUYING IN THE ONE TO THREE YEAR. OKAY, YEAH. WE'RE PICKING UP SOMETHING ON THE YIELD CURVE RELATIVE TO MONEY MARKETS, BUT IN MY PRINCIPLE FLUCTUATION WILL BE MINIMIZED. UM, AND IN TERMS OF PRICE SWINGS, RIGHT? WE JUST, I BELIEVE WE HAVE, UM, PARTICIPANTS IN THE PLAN THAT ARE GONNA DRIVE THE FINAL DECISION. NOT, THEY'RE NOT GONNA MAKE THE DECISION, BUT WHETHER OR NOT WE HAVE PARTICIPANTS IS, IS A FACTOR THAT WE'LL HAVE TO TAKE INTO CONSIDERATION ALSO. YEAH, I JUST FROM A, I GUESS RICHARD OR, OR, UH, FROM A STAFF RECOMMENDATION STANDPOINT, YEAH. WHAT THOUGHTS ON THAT WHOLE ISSUE WITH THE PENSION AND AT WHAT POINT WE DO THAT? I KNOW WE'VE TALKED ABOUT IT OVER, YOU KNOW, MULTIPLE TIMES OVER THE YEAR, BUT FROM A STAFF THOUGHT PROCESS, WHAT DO Y'ALL KIND OF, KIND OF THINKING ABOUT THERE? WELL, I'M NOT THINKING ABOUT IT TO BE HONEST WITH YOU. I MEAN, I, I THINK IT'D BE, SO WHAT YOU YOU'RE SAYING WOULD BE, EVEN THOUGH WE'RE OVERFUNDED, YOU ARE, THE COST OF AN ANNUITY AS IT RELATES TO JUST BEING OVERFUNDED IS DIFFERENT, RIGHT? IF WE WERE TO GO OUT AND BUY AN ANNUITY, THERE'S AN ADDITIONAL COST TO, THERE'S ADDITIONAL COST. WE LIQUIDATED THE PORTFOLIO TODAY AT 17 MILLION, RIGHT? AND TO THE POINT, YOU KNOW, WE'RE PRETTY CLOSE AT 96 IS THE NUMBER RIGHT? HARD CI, BUT YOU ALSO HAVE TO ADD IN THE COST OF THE ANNUITIES, RIGHT? SO CAN THAT BE TAKEN OUT OF THE PLANT? 'CAUSE WE'RE NOW OUT THERE, OR DOES THAT HAVE TO BE A KICK IN FROM THE BUDGET? WE, WE CAN CERTAINLY DO ANALYSIS ON THAT. I MEAN, WHAT THAT WOULD KICK A DAY IN TIME AND SEE WHAT THAT WOULD HAPPEN IF WE SCALED DOWN INTO BONDS AND, AND THEN, UH, WHAT, WHAT'S AVAILABLE AFTER THAT COMPARED TO THE LIABILITY AND THE COST OF THE ANNUITY AND HOW MUCH OUT OF POCKET ARE WE GONNA BE FOR THAT? AND THAT'S MY ONLY CONCERN IS BEING, IS WHAT'S THE, WHAT'S THE COST TO THE PORT OUT OF POCKET WHEN WE'RE, WE HAVE A LOT OF PROJECTS GOING ON. YEAH. THAT'S THE LAST TIME WE GET AND YOU WANNA PUT YOUR MONEY IN THAT, WHETHER THERE'S, YOU KNOW, IT'S A SUNK COST AS A PAYER COMPARED TO CONTINUE TO BUILD YOUR REVENUES. YES. AND BUT ON THE OTHER HAND, ONCE YOU TAKE THAT FINAL STEP, YOU'RE GONNA HAVE THE OFFSET OF THE EXPENSES OF THE FEES FROM THE ACTUARIAL FOR UM, YOU KNOW, THE AUDIT. ALL THOSE THINGS WILL ALSO GO AWAY. I JUST DON'T KNOW WHAT THE END, THAT'S WHAT I SAY. IT'S PROBABLY WORTH THE ANALYSIS. WE'VE BEEN THROUGH THIS I THINK BEFORE, BUT WE'VE NEVER BEEN THIS FUNDED EITHER. YEAH, WE LOOKED AT, I'M SORRY, WHEN WE LOOKED AT IT SEVERAL YEARS AGO THAT [00:35:01] I FORGET THE CHUNK OF MONEY THAT WE HAD. IT WAS JUST MORE THAN WE REALLY WANTED TO. SHEILA MEMBERS, I THINK YOU WERE CHAIR OF THE FINANCE COMMITTEE, BUT IT WAS A BIGGER CHUNK. NOT, WE WEREN'T COMFORTABLE YET BECAUSE WE WERE, I THINK WE WERE LOOKING BITING OFF A PART OF IT. RIGHT. NOT THE WHOLE PIECE, BUT IT WAS A PRETTY GOOD CHUNK. SEVERAL, MULTIPLE MILLIONS OF DOLLARS AND WE JUST FELT THAT WASN'T, THAT WASN'T THE BEST USE OF OUR FUNDS AT THAT POINT. BUT THE CONSIDERATION OF THE MIX AND AND DE-RISKING CAN HAPPEN REGARDLESS OF WHETHER OR NOT WE'RE CONSIDERING TO END THE PENSION PLAN THOUGH. CORRECT. I MEAN, YOU'VE GOT, IF YOU'RE IN THE PLAN AND YOU HAVE TO GO THE ANNUITY ROUTE, THEN THERE'S ADDITIONAL COSTS. IF YOU DON'T GO THAT ROUTE, YOU STILL HAVE THE LIABILITY FOR THIS PENSION PLAN TO PAY OUT INDIVIDUALS OVER TIME, WHICH IS AN ESTIMATE ON THE LIABILITY. YOU CAN STILL DE-RISK, RIGHT. IF WE'RE FULLY FUNDED OR ABOUT FULLY FUNDED AND YOU CAN ANTICIPATE WHAT THAT LIABILITY IS INTO THE FUTURE. 'CAUSE MOST OF THE PARTICIPANTS ARE DONE, THEY'RE NOT STILL BUILDING BENEFITS, YOU CAN STILL DE-RISK THE MIX OF THE FUND. CORRECT. ASK HIM A SHORT ANSWER. ANSWER. SHORT ANSWER AGAIN, YOU SAID YES. IT'S CHANGE THE INVESTMENT. IT'S CHANGING INVESTMENT. THE CLOSER YOU GET FUNDED SHOULD BE RISK. WHY TAKE THE ADDITIONAL RISK? WHAT'S YOUR GOAL? WHAT'S YOUR CLOSE, WHAT'S YOUR UPSIDE? SO LET'S, UH, ROBERT, COULD, COULD YOU, UH, DID YOU TAKE, TAKE OUR DISCUSSION TO MARK WHEN HE GETS INCIDENTALLY, MARK HAD A KNEE, UH, KNEE REPLACEMENT. KNEE KNEE REPLACEMENT. HOW'S MARK, HOW'S HE DOING? I THINK HE'S STILL HONORINGS EVER , THAT'S A GOOD SIGN. IF HE'S BACK BEING ON OLD NORMAL MARK, HE'S GOOD UNTIL THEY GOT TO REHAB. THAT'S THE HARD PART. I REMEMBER AT NIHAR THE, IT WAS THREE AND A HALF MILLION TO FUND THE PLAN IF WE WANTED TO FUND IT IN THE PLAN WAS THREE AND A HALF MILLION DOLLARS. RIGHT. BUT THAT JUST, THAT JUST GETS TO A HUNDRED PERCENT. THAT DOESN'T INCLUDE OUR COST OF GOING TO GETTING AN ANNUITY AND SETTING ALL THOSE OTHER THINGS UP RIGHT AT THAT POINT, WHICH WE'RE PROBABLY STILL TOO FAR AWAY. I DON'T THINK WE'RE, LIKE ROGER SAID, WE DON'T WANNA FUND THREE AND A HALF MILLION YET. RIGHT. AND THAT'S WHY WE'RE HAVING THIS CONVERSATION THAT WE NEED TO START THINKING ABOUT IT. RIGHT. EITHER WE TAKE, WE GET FULLY FUNDED OR MAYBE MORE OF OUR APPETITE IN A COUPLE YEARS THAT WE'RE WILLING TO, UH, FUND A MILLION DOLLARS IN IN THE PLAN. 'CAUSE UH, ONCE WE FUND, ONCE THE PLAN ENDS, IT TAKES AWAY OUR RISK FROM THE PLAN, UM, OTHER FINANCIAL THINGS WE DON'T DO TO AUDIT IT ON IT ANYMORE AND THINGS LIKE THAT. BUT I THINK WE'RE STILL PROBABLY, LIKE STEVEN SAID, WE'RE STILL A COUPLE YEARS LATER FROM THAT POINT. RIGHT? WELL IT'S, IT'S SORT OF LIKE A CONUNDRUM NOR HERE TO FOUR. WE'VE BEEN FIDUCIARILY RESPONSIBLE TO MAKE SURE THAT THE PLAN MEMBERS HAVE PLENTY OF MONEY AND, AND WE MAY BE INVOLVING TO A POINT TO WHERE WE NEED TO DECIDE ABOUT THE, AND THAT THAT WOULD DRIVE A, A MORE AGGRESSIVE INVESTMENT POSITION. SO WE'RE SORT OF GETTING INTO A SITUATION AND I THINK WHAT HE'S EXPLAINING TO US IS WE MAY WANT TO GET QUITE A BIT MORE CONSERVATIVE AS WE GET DOWN TO THE LITTLE BIT. YEAH, A LITTLE BIT. OKAY. GO AHEAD. UM, JUST BRIEFLY, OUR ECONOMIC AND MARKET OUTLOOK. UM, YOU KNOW, SINCE, YOU KNOW, I WANT TO TRY TO BE CONCISE AND IT'S ALWAYS A CHALLENGE FOR ME. UM, FACE THINGS WITH CAUTIOUS OPTIMISM. WE ALL HAVE TO HAVE A BASE CASE AND, UH, OUR BASE CASE IS, AND ON SOME DAYS IT DOESN'T SEEM THAT THE STRAIGHT WILL REOPEN, UH, COMMODITY FLOWS WILL NORMALIZE AND THE GLOBAL ECONOMIC EXPANSION WILL BE SUSTAINED. YOU SAID, YOU SAID WHEN, SORRY, WHEN, WHEN THAT'S GONNA HAPPEN. I DON'T HAVE A WIND. THAT'S, YOU KNOW, AS I SIT WITH WIND CLIENTS DAY, I CAN GIVE YOU WHAT IT'S GONNA LOOK LIKE. JUST TELL ME WHEN AND, YOU KNOW, YESTERDAY DIDN'T HELP THAT. UM, SO, BUT BASED ON OUR ECONOMIC AND MARKET OUTLOOK, UH, WE REMAIN AT THE HIGH END OF A FOR WAITING RANGE. UH, WE, LIKE I SAID, WE OVERWEIGHT US. UM, ALTHOUGH WE SOLELY MOVE SOME TO, UH, EMERGING MARKETS, UH, YEAR TO DATE, UM, AS THIS WAS AS OF LAST NIGHT, THE S P'S UP FIVE IN CHANGE, GROWTH OF THREE VALUE OF NINE MID CAP, SMALL CAP IS A SHADE UNDER 10%. THOSE, THOSE NUMBERS ARE LITTLE DATED, DEVELOPED INTERNATIONAL, ABOUT FIVE EMERGING MARKETS ON AVERAGE OF OF ABOUT 15 TO 17%. UH, GOLD UP FOUR AND OIL UP ABOUT 80% PLUS LOWER. AND, UM, AS OF FUTURES LAST NIGHT, OIL, UH, WEST TEXAS [00:40:01] TRADING AT A 1 0 5 AND, UH, BRENT WAS TRADING AT AROUND ONE 14. I KNOW THEY'VE COME OFF A LITTLE BIT THIS MORNING. UM, MARK THE S AND P'S UP ABOUT 70 BASIS, 70 POINTS. UM, INTERESTING WHEN WE LOOK ON PAGE 16TH ON THE BOTTOM, UM, CREDIT SPREADS, UM, IS KINDA LIKE THE PROVERBIAL CANARY IN THE COAL MINE WHEN THERE'S RISK. AND, YOU KNOW, CREDIT SPREADS HAVE REMAINED, UM, HAVE REMAINED FAIRLY CONSTANT AS YOU SEE BOUNCING ALONG THE BOTTOM. AND WHEN WE TAKE A LOOK AT TREASURY YIELDS AND YOU LOOK AT THE SHAPE OF THE YIELD CURVE, UM, AND WE LOOK AT THE PREMIUM, IT SEEMS THAT LONG TERM INFLATION EXPECTATIONS ON THE LONG RUN REMAIN ANCHORED. UM, SHORT TERM INFLATION, YOU KNOW, I HATE TO USE THE WORD MAYBE TRANSITORY AS WE LOOK AT OIL PRICES. UM, AND WILL THAT, THAT SHOULD PASS THROUGH ONCE WE GET MORE NORMALIZED. UM, IT'S INTERESTING, YOU CAN SEE PCE IN THE UPPER CHART AROUND 3%. THE FEDS TARGETS TOO. BUT I THINK THE FED HAS COME TO THE REALIZATION THAT YOU'RE NOT GONNA GET TO THREE. UM, BUT YOU DO HAVE 3% INFLATION AND YOU HAVE FULL EMPLOYMENT, WHICH ARE THE TWO GUIDES OF THE FEDS NEXT PAGE. YOU TAKE A LOOK AT ENERGY A LITTLE BIT ON THE BOTTOM IS THE PRICE OF GASOLINE. AND YOU CAN SEE WE'RE ABOUT FOUR BUCKS A GALLON. AND IT'S INTERESTING WHEN YOU LOOK AT A US CONSUMER WHERE THEIR PAINT TOLERANCE IS, YOU KNOW, UM, FOUR, YOU'LL START WINDING A LITTLE BIT, FOR LACK OF A BETTER WORD. YOU START PUSHING FIVE, THEY'LL START COMPLAINING ON THAT. AND IT'S INTERESTING HOW WELL OFF WE HAVE IT IN EUROPE, FOR EXAMPLE, AND YOU MEASURE LITERS AND YOU KNOW, TWO LITERS ARE APPROXIMATELY EQUAL TO A GALLON. YOU'RE PROBABLY LOOKING AT CLOSE TO $10 A GALLON THERE. UM, WE HAVE BASICALLY BECOME THE SWING SUPPLIER, UM, TO HELP MAKE UP THOSE DIFFERENCE BOTH FOR ENERGY AND NATURAL GAS. PAGE 19, YOU TAKE A LOOK AT THE TOP CHART ON THE RIGHT AND IT'S INTERESTING, WE TALK ABOUT THE BOOST IN AI, WE TALK ABOUT THE CAPITAL, UM, IMPROVEMENTS THAT ARE BEING MADE. AND I THINK THE CHART ON THE RIGHT, WHETHER IT'S SOFTWARE OR WHETHER IT'S INFORMATION PROCESSING EQUIPMENT OR BUSINESS INVESTMENT HAS ALL TICKED UP UPWARD. AND SO IT'S, IT IS, UM, PLUS, YOU KNOW, FOR CAPITAL IMPROVEMENTS OR CAPITAL SPENDING, YOU ALSO HAVE, YOU AGREE WITH THE TAX BILL THERE. PLUS YOU ALSO HAVE A LITTLE BIT OF TAILWIND FROM INTEREST RATES BEING CUT AND, YOU KNOW, FOR CAPITAL EXPENDITURES, YOU KNOW, EVERYTHING CAN BE DEPRECIATED INSTANTANEOUSLY. SO THAT GOES RIGHT TO THE BOTTOM LINE. UM, WORKFORCE, UM, YOU KNOW, UM, NOT AS MANY JOBS AS CREATED LAST YEAR AS WE'D LIKE TO SEE, UH, BUT IT'S, IT'S KIND OF A SHIFT WITHIN THE POPULATION. YOU HAVE AGING PEOPLE COMING OUT. YOU DO NOT HAVE, UM, AS MANY IMMIGRANTS WORKING IN THE WORKFORCE NOW. UM, AI ELIMINATING JOBS LAST SUMMER. I HAVEN'T SEEN IT FOR THIS SUMMER YET. THE LAST SUMMER WAS ONE OF THE TOUGHEST SUMMERS FOR COLLEGE GRADUATES TO GET JOB ENTRY LEVEL JOBS TO GET IN. I HAVEN'T SEEN IT FOR HOW IT'S GONNA LOOK THIS YEAR YET. UM, UM, WOULD YOU TAKE A LOOK AT ON PAGE 21, JUST GDP GROWTH? UH, FIRST QUARTER GDP WAS AROUND 2%. UM, THAT WAS BASICALLY DRIVEN BY INVESTMENTS. UM, AND SO YOU CAN SEE IT'S PRETTY SOLID. YOU KNOW, WE HAVE BEEN LOOKING IN THAT TWO AND A HALF TO THREE RANGE WITH GDP GROWTH, BUT WITH EVERYTHING THAT'S GOING ON IN THE MIDDLE EAST, WE HAVE PROVED BACK OUR ECONOMIC GDP OUTLOOK PROBABLY TO ABOUT THE ONE AND A HALF TO TWO. SO TAKING SOME OFF THE TABLE AND GOING TO THE CHAIRMAN'S COMMENT. SO YEAH, I DUNNO WHEN IT'S GONNA END. I'M JUST LOOKING. UM, YOU KNOW, LET'S TALK ABOUT, UM, HOW THE CONSUMER IS. UM, A COUPLE THINGS WE LOOK AT, WE TAKE A LOOK AT THE BALANCE SHEETS AND YOU TAKE A LOOK, UM, WHETHER IT IS AUTO LOANS, MORTGAGES, CREDIT CARDS, STILL WITH, UM, TICKING UP A LITTLE BIT, BUT STILL BASICALLY FOR OVER THE LAST TWO YEARS, THE LINE THAT YOU SPIKED UP WAS THE STUDENT LOANS, WHICH WAS BASICALLY THE PURPLE LINE, WHICH WAS THE DEFERMENT OF, OF THOSE BEING PAID OVER TIME. AND ON THE BOTTOM, BOTH PERSONAL INCOME AND SPENDING ARE PRETTY SOLID. AND AS YOU KNOW, THE ECONOMY MAKES UP ABOUT 75% OF FED, UM, FED'S BASICALLY ON COAL. UH, UM, YOU KNOW, AND, AND YOU KNOW, WE'RE TALKING, LAST TIME I HAD THE OPPORTUNITY TO PLAY, WE WERE LOOKING AT MAYBE ONE, THE MARKET WAS PRICING IN TWO. AND YOU KNOW, OUR [00:45:01] RATIONALE WAS AT THE TIME THAT, YOU KNOW, IF THE ECONOMY WAS GROWING AT TWO POINT HALF TO 3%, INFLATION IS 3%, TWO AND HALF RIGHT AROUND THE YEAR. WHY DO WE WANNA CUT RATES MORE? I MEAN, YOU'RE KIND OF REACHING THAT STEADY STATE AND YOU KNOW, AND THE FED IS NOW TAKING THAT BACK SEAT TO SAY, WELL, LET'S SEE HOW THINGS PLAY OUT IN THE GOLF AND WHAT ARE THE IMPACT OF ENERGY PRICES. UM, AND AS YOU REMEMBER, UH, FED POWELLS CHAIRMANSHIP ENDS ON MAY 15TH AND MR. WALSH HAS BEEN VOTED BY, UH, BY THE SENATE BANKING COMMITTEE BY A 13 TO 11 VOTE. UM, THAT WILL NOW PROCEED TO THE SENATE FOR A FULL VOTE FOR HIM FOR CHAIRMANSHIP. SO WE'RE NOT QUITE THERE YET FOR HIM. IT WAS INTERESTING WHEN I CAME LAST TIME, I SAID, THIS IS MY GREEN SHEETS SHOOTS. UM, IT WAS FOR HOUSING AND, UM, JUST NOT HAPPENING YET THIS YEAR, UM, UH, HOME SALES ARE DEPRESSED. UM, MORTGAGE RATES HAVE TICKED UP, WHICH MAKES IT TOUGH. UH, MORTGAGE RATES PICK YOUR SIX, 6.2 TO SIX AND A HALF RIGHT NOW. THAT NUMBER REALLY NEEDS TO GET UNDER SIX FOR PEOPLE TO STEP UP. AND IT'S INTERESTING WHENEVER YOU SEE RATES TICK UP, THE CORRESPONDING IS MORTGAGE APPS PICK UP AT THE SAME TIME. SO THAT SHOWS ME THERE'S PEN UP DEMAND OUT THERE. IT'S JUST TRYING TO GET IT. BUT YOU THINK OF WHAT IS GONNA THE ORIGINAL HIGH PRICE OF THE COST OF A HOUSE, YOU THINK OF WHAT THE MORTGAGE RATE'S GONNA BE AT 6.4 INSURANCE COSTS ARE GOING UP. 'CAUSE I'M GONNA START PRICING STATE FARM, YOU KNOW, THAT'S WHO DOES MY HOME STUFF. AND THEN YOU, FOR THOSE THAT DON'T QUITE HAVE THE 20% DOWN, YOU NOW HAVE TO DO THE OVERLAY OF THE PMI INSURANCE ON TOP OF THAT. SO IT GETS A BIT PRICEY, YOU KNOW, FOR SOMETHING, YOU'RE GONNA HAVE A HOUSE, BUT YOU BE EATING A LOT OF MAC AND CHEESE. UM, TAKE A LOOK AT EARNINGS. ONE OF THE THINGS, YOU KNOW, IT'S INTERESTING, THIS QUARTER'S BEEN A BLOWOUT QUARTER. IF YOU WERE LOOKING 80, 68% OF THE COMPANIES WITH THE S AND P 500 HAD RECORDED SECOND QUARTER, UM, EARNINGS EXPECTATIONS WERE AROUND 13.5% AND YOU'RE NOW LOOKING AT AROUND 22, 20 3%. SO REALLY HAVE BEEN STRONG, DRIVEN BY PROFITABILITY IN THE MARGINS, PLUS BETTER THAN OUTSIDE GROWTH. SO, UM, YOU KNOW, THIS IS WHAT YOU KNOW, YOU KNOW, PART OF OUR ANCHOR ON HOW WE SEE THIS ECONOMY AND MARKET GOING FORWARD. AND THAT'S THE OTHER HALF OF THE THING FOR THE COMMITTEE IS THE THAT YOU MENTIONED. YOU KNOW, HEY, I GOT A STRONG MARKET. WHEN, WHEN DO I START DE-RISKING? YOU KNOW, IF I KEEP IT GOING STRONG, YOU KNOW, I'M GONNA GET YOU EVEN CLOSER QUICKER FOR THE MARKET. IS, UM, A POINT TO TAKE IN AVERAGE BULL MARKETS, UM, YOU KNOW, ON AVERAGE RUN FIVE TO SEVEN YEARS AND, UH, RETURN ON AVERAGE ABOUT 169% AND WE ARE ABOUT A HUNDRED PERCENT TOTAL. SO OUR ARGUMENT OR BASE CASES BASED ON THE EARNINGS, BASED ON THE PRODUCTIVITY, BASED ON THE AI INVESTMENTS, WE STILL THINK THIS BULL MARKET HAS COME. INTERESTING CHART. UM, THE LAST ONE WILL HAVE, UM, BECAUSE I'M PUSHING 25 MINUTES, UM, GLOBAL ECONOMY, GIMME A SECOND, THERE WE GO. JUST THE INVESTMENT OF AI AND YOU CAN SEE WHAT, UH, THE US HAS DONE FROM 2013 TO 2024, AND YOU CAN SEE WHERE THE REST OF THE WORLD IS. SO IF WE REALLY STEPPED UP TO DO THAT. AND THEN ON THE BOTTOM YOU CAN JUST SEE THE, UH, PRODUCTIVITY GROWTH CHANGE, UM, SINCE 2019 BY COUNTRY. SO, UM, YOU KNOW, AI HAS REALLY TAKEN, REALLY TAKEN HOLD AND IT EXPANDS GROWTH AND WAY FASTER THAN THE INTERNET. SO WE ARE, LIKE I SAID, CAUTIOUSLY OPTIMISTIC, HOPEFUL, UH, BUT IF THE COMMITTEE DECIDES ON DE-RISKING A LITTLE BIT, UM, ROBERT CAN REACH OUT TO ME, HEY STEVE, WE NEED YOU TO TAKE IT DOWN HYPOTHETICALLY 70% OR 65%, WHATEVER THE NUMBER IS. I MEAN, THERE'S NO EXACT MAGIC. IT'S WHAT YOU FEEL COMFORTABLE WITH AND HOW SOON IT'LL GET YOU TO THE TARGET. AND, UM, KNOWING THAT COMING TOWARDS THE END OF THIS, THEN, YOU KNOW, WE TAKE THOSE AND PUT 'EM IN SOME HIGH QUALITY, UH, SHORTER TERM NOTES. AGAIN, TO MINIMIZE MY VOLATILITY OF THE PORTFOLIO. YOU TALK ABOUT STEP DOWN, IS THAT HALF A YEAR EVERY YEAR? DOES IT? I GUESS IT, I I, YOU KNOW, IT, IT DEPENDS. LET'S JUST SAY THINGS GET RESOLVED IN THE GULF, OKAY. AND YOU HAVE, I GUESS IT'S WHAT THE MARKET GIVES US TO A DEGREE. [00:50:01] IF SAY, AND WE HAVE A 20% RETURN THERE, OKAY, I'M MOVING FASTER THAN I AM SLOWLY, YOU KNOW, TYPE OF DEAL. OR HEY, THIS, UM, YOU KNOW, FOR SOME REASON THE GOLF WAR KICKS UP, OKAY? AND WE DO START TO FACE A GLOBAL RESEARCH AND ALL THE PROBABILITY OF THAT, IF YOU'RE STARTING TO SEE GDP GROWTH, START TO DECLINE, MIGHT WANT HURRY TO TAKE SOME MONEY OFF BECAUSE THEN YOU'RE GONNA HAVE TO WAIT FOR, WAIT FOR THIS TO SETTLE. IF THEY'RE LOOKING SLOW DOWNS, THEN YOU'RE GONNA HAVE TO HAVE THE CENTRAL BANK START TO CUT RATES AGAIN AND, YOU KNOW, GROWTH. OKAY, THANK YOU. THAT'S EVERYTHING I GOT. OKAY. THANK YOU SO MUCH. ALRIGHT, WE'RE GONNA MOVE [D.1 CFO Report/Consent Agenda] INTO BUSINESS ITEMS, UH, ROBERT, THROUGH THIS. I APPRECIATE IT. GOOD MORNING. BEFORE I STARTED FROM THE, UH, BEHALF OF MARK, I WANNA THANK, UH, DEANNA CORTEZ. SHE'S OUR CONTROLLER ON HER LEADERSHIP THROUGHOUT THE AUDIT AND ALSO THE REST OF THE, UH, THE FINANCE TEAM. UH, ALL THEIR EXCEPTIONAL WORK ON THE AUDIT. IT'S A REFLECTION OF ALL THE WORK THEY DO EVERY DAY, NOT JUST DURING THE AUDIT, BUT EVERY DAY, EVERYTHING. SO WE'LL GET INTO THE CFO REPORT. UH, THE MONTH OF MARCH, UH, NET INCOME WAS A VERY STRONG MONTH. UH, NET INCOME OF 7.6 MILLION, WHICH IS ABOUT A MILLION AND A HALF OVER BUDGET. UH, OPERATING REVENUE WAS RIGHT AT 11.3 MILLION, WHICH IS A LITTLE BIT OVER A HALF A MILLION DOLLARS OVER BUDGET. UH, OPERATING EXPENSES WERE DOWN THIS MONTH, UH, TOTAL OF 3.3 MILLION OR ABOUT A HALF A MILLION, A LITTLE BIT OVER A HALF A MILLION UNDER BUDGET. AND, UH, CASH FLOWS, UH, WAS 6.8, WHICH IS ABOUT 3 MILLION OVER BUDGET. UH, AND SOME BATCH A REFLECTION OF TIMING OF WHEN, UH, PAYMENTS GO OUT OF THE MONTH AND IT'LL CORRECT ITSELF IN, IN THIS MONTH RIGHT HERE, UH, THE BIGGEST DRIVERS FOR THE REVENUE, UH, WERE, UH, PASSENGER SERVICE CHARGES. WE WERE A LITTLE OVER $300,000 OVER BUDGET, UH, PARKING AND DOCKAGE, UH, OPERATING EXPENSES AND DEPRECIATION. THE PRIMARY DRIVERS WERE, THERE WERE OTHER OPERATING EXPENSES, WHICH IS MAINLY INSURANCE. UH, TIMING OF GETTING THE INSURANCE, UH, THE NEW, THE NEW PAYMENTS IN FROM THEM. UH, SO THAT'LL BE AS JUST A TIMING ISSUE. SO WE'LL BOUNCE BACK AND BY THE END OF THE YEAR WE'LL BE WHERE WE THINK WE WORK FOR INSURANCE. UH, NON-OPERATING EXPENSES, UH, WE HAD A STRONG MONTH. WE HAD A LITTLE BIT EXTRA, UH, GRANT REVENUE THEN WE, THAT WE HAD BUDGETED, WHICH IS A TIMING ISSUE THAT WE GET SOME MONTHS OR WE GET MORE THAT WE ANTICIPATED IN JUST WHEN WE GET OUR REIMBURSEMENTS AND STUFF IN OPERATING EXPENSES. WE'RE JUST BASICALLY ON TARGET FOR THE NON-OPERATING EXPENSES. UH, HERE'S THE SUMMARY OF THE DATE. OPERATING INCOME WAS STRONG. UH, YOU KNOW, 5% OVER BUDGET, WHICH IS ABOUT 556,000. UH, THE OPERATING EXPENSES BEFORE DEPRECIATION WERE ABOUT 554,000 UNDER BUDGET, WHICH WAS ABOUT 14%. UH, AND A LOT OF THAT HAD TO DO WITH THE INSURANCE AT THE TIME OF THE INSURANCE PAYMENTS. UH, DEPRECIATION EXPENSE, UH, IT'S A LITTLE, IT'S OVER BUDGET. 126 AND I'M GONNA ADDRESS IT NOW SO WE DON'T HAVE TO GET TO, 'CAUSE IT'S GONNA BE, I THINK IT'S GONNA BE AN ONGOING THING EVERY MONTH. UH, WHEN WE DID THE BUDGET, WHEN WE, BUT WHEN WE DID THE FORECAST, WE'RE BUDGETING OUT CT 16 IN THE PARKING GARAGE. WE DID A STRAIGHT EITHER 40 YEARS OR 30 YEARS, DEPENDING ON THE STRUCTURE. UH, BUT WHEN WE GET INTO THE NITTY GRITTY, WHEN WE ACTUALLY CAPITALIZE IT, UH, THE BIG COMPONENTS GET CAPITALIZED INDIVIDUALLY. UH, AND SO SOME OF THOSE AREN'T 30 YEARS OR 40 YEARS, SOME OF THOSE ARE LESS YEARS. UH, AND SO AT THE TIME, UH, WE, THAT'S WILL, IT WILL BE CORRECTED IN THE NEXT BUDGET CYCLE BECAUSE IT WILL KNOW EXACTLY WHAT EACH INDIVIDUAL ITEM WAS BUDGETED. SO I THINK FOR NOW, FOR THE REST OF THIS YEAR, DEPRECIATION WILL RUN A LITTLE BIT HIGHER THAN WE HAD IN THE BUDGET. UH, THE BOTTOM LINE, YOU SEE THE CAPITAL EXPENDITURES FOR THE MONTH WERE $7 MILLION, UH, IN CASHFLOW IS $3 MILLION YOU SEE AT THE BOTTOM. ANY QUESTIONS SO FAR ON THESE COUPLE PAGES? 3 MILLION. 3 MILLION OVER BUDGET? YES. YEAH, A MINUTE AGO. A LOT OF THAT IS TIME OF THE PAYMENT. THE MONTH ENDED ON A TUESDAY. UH, AND GENERALLY OUR PAYMENTS GO OUT ON THURSDAY OR FRIDAY. UH, SO THAT'S GONNA BE A GOOD TIME TO ISSUE ON THE PAYMENTS OF CAPITAL. SO REVENUE IS A STRONG MONTH, 11.3 MILLION FROM OPERATIONS, UH, WITH PASSENGER PARKING LEADING THE WAY, BUT IT WAS A GOOD MONTH OVERALL. LAY DOCKAGE WAS LOOKING GOOD. UM, AND I KNOW IN THE NEXT UH, MONTHS, COMING MONTHS WE'LL GET MORE WIND CHIPS AND THAT'LL HELP WITH THE LAY DOCKAGE, THE WARPAGE AND THE SECURITY COST. RECOVERY FEES GOING FORWARD. [00:55:02] THE EXPENSES, UH, THEY'RE PRETTY MUCH IN LINE WHERE WE THINK THERE WERE GONNA BE EXCEPT THAT THE INSURANCE LINE, I'LL JUST HIGHLIGHT FOR YOU. THAT IS THE, THE LAST TIME I'LL TALK ABOUT IS ABOUT THE, JUST THE TIMING OF THE PAYMENTS GOING OUT AND WITHOUT THEM, THE, UH, WE WOULD'VE BEEN UNDER BUDGET ABOUT ABOUT 125,000, BUT WITH THE INSURANCE, WE WERE UNDER BUDGET ABOUT 420,000 FOR THE MONTH. MOVING ON TO THE YEAR TO DATE NUMBERS, WE WERE RIGHT AT 18.7 MILLION FOR YEAR TO DATE AT INCOME, UH, WHICH IS ALMOST 2 MILLION OVER BUDGET. UH, YEAR TO DATE REVENUE, WE ARE AT 31.8, WHICH IS ABOUT 300,000 OVER BUDGET OPERATING EXPENSES, WE ARE ABOUT 10 AND A HALF MILLION YEAR TO DATE WITH ABOUT 2 MILLION UNDER BUDGET. A MILLION OF THAT IS SALARIES AND EXPENSES, SALARIES AND WEIGHT EXPENSES. BUT BY THE END OF THE YEAR, THAT WILL, THAT WILL CORRECT ITSELF. UH, WHEN WE TRY TO DO A LOT OF THAT BECAUSE WE HAVE THEIR CREW, UH, SALARIES. SO THE FIRST MONTH FOR SOME REASON, THE LAST TWO YEARS IN THE BUDGET CYCLE, WE'VE NOT BEEN ABLE TO, UH, WRAP OUR HANDS AROUND, UH, THE BUDGETING OF JANUARY NUMBERS. SO BY THE END OF THE YEAR, WE STILL THINK ALONG THE, UH, THE NUMBER OUR EMPLOYEES WE HAVE ARE CONSISTENT, WHAT WE THOUGHT THEY WERE GONNA BE. WE'LL END UP A LOT CLOSER TO THE BUDGET BY THE END OF THE YEAR. AND YEAR TO DATE CASH FLOW IS 11 AND A HALF MILLION DOLLARS, WHICH IS ABOUT 1.8 OVER BUDGET. AND WE'VE HAD SOME STRONG DRIVERS. UH, PASSENGER SERVICE CHARGES HALF A MILLION BETTER THAN BUDGET PARKING, 200,000 BETTER IN DOCKAGE. UH, AND AS I SAID, THE WARPAGE, THE LAY DOCKAGE AND THE SECURITY COST, RECOVERY FEES, I THINK THEY'RE GONNA COME BACK IN LINE, UH, THESE NEXT FEW MONTHS WHEN WE START GETTING MORE WIND SHIFTS AND OPERATING EXPENSES BEFORE DEPRECIATION, UH, AS I SAID, WE'RE 2 MILLION UNDER BUDGET AND THAT'S PRIMARILY RELATED TO, UH, EXPENSES FOR SALARIES AND RELATED, UH, AND ALSO SOME OTHER, A LOT OF THIS OTHER STUFF IS TIMING FOR THE REPAIR AND MAINTENANCE AND OTHER OPERATING EXPENSES AND OFFICE SALES AND EXPENSES. THOSE ARE JUST SMALLER AMOUNTS THAT WERE UNDER BUDGET. UH, THE NON-OPERATIVE INCOME WE'RE ABOUT $800,000 UNDER BUDGET, AND THAT'S PRIMARILY DUE TO THE, THE GRANT REVENUE. UH, SOME OF THAT IS ATTRIBUTED THAT WE GOT A, WE ACCRUED LAST YEAR, AT THE END OF LAST YEAR, 1.3 MILLION. AND SO INSTEAD OF FALLING INTO THIS YEAR, IT FELL INTO DECEMBER. FINANCIAL SUMMARY, YEAR TO DATE, AS I SAID, UH, REVENUE IS ABOUT 1% HIGHER THAN BUDGET, WHICH IS RELATES TO ABOUT 3 320 9,000. THE OPERATING EXPENSES ARE 2 MILLION UNDER BUDGET. AND THE DEPRECIATION EXPENSES, AS I TALKED ABOUT, IS ABOUT 425,000 OVER BUDGET RIGHT NOW. AND THAT YOU LOOK AT THE BOTTOM CAPITAL EXPENDITURE FEE TO DATE ARE ABOUT 13.1 MILLION. UH, A LITTLE BIT OVER THAT'S A HIGHER, LIKE 4 MILLION OVER BUDGET AND CASH FLOWS ARE 1.8 MILLION OVER BUDGET FOR THE YEAR. AND OVERALL, ALL THE REVENUE WE'RE, WE'RE ABOUT WHERE WE THOUGHT WE WOULD BE OVERALL, UH, YEAR TO DATE NUMBER WE'RE 1% OVER IN OPERATIONS. SO THIS, THIS TRENCH SHOULD CONTINUE TO GO FORWARD, MOVING FORWARD FOR THE REST OF THE YEAR, HOPEFULLY. AND HERE TODAY WE'RE GETTING A PIE TRUCK, FOREARM PASSENGER SERVICE CHARGES AND PARKING FEES. THEY ACCOUNT FOR ABOUT 68% OF ALL REVENUE. UH, WE TAKE OUT THE NET INCOME FROM THE NON-OPERATING INCOME, THEY ATTRIBUTE TO ABOUT 75%, 77%. IF WE TAKE OUT, IF WE'RE JUST LOOKING AT PURE OPERATION REVENUE, IT'S ABOUT 77% IN THE 26 BUDGET. WE HAVE THEM BEING ABOUT 75%. SO WE'RE ON IT RIGHT ON TARGET, UH, FOR THOSE NUMBERS. YEAR TO DATE. EXPENSES, UH, UNDER BUDGET CURRENTLY RIGHT NOW, UH, AS I SAID, I BELIEVE THE EMPLOYEE EXPENSES WILL COME BACK IN LINE. THAT'S THE MAIN DRIVER RIGHT NOW. IF WE'RE BEING UNDER BUDGET BY THE END OF THE YEAR, YOU SHOULD BE RIGHT IN LINE. AND THE YEAR TO DATE EXPENSES, WHICH THE EMPLOYEE EXPENSES AND DEPRECIATION, UH, BEING THE TWO BIGGEST PERCENTAGE WISE OF OUR, OUR OUTLAY. ANY QUESTIONS, COMMENTS, EVERY, ANYBODY HAVE ANY THOUGHTS ON THIS? OKAY, LOOKS GOOD. YEAH, TRUST. ALL ALONG THE PRODUCT LINE SUMMARY. UH, I KNOW MARK WANT ME TO POINT OUT THAT THE NON OPERATE, THE NON NET OPERATING INCOME BEFORE ALLEGATIONS IS DEPRECIATION FOR CREWS IS ABOUT 16 MILLION AND FOR PARKING'S ABOUT 7.7 BEFORE ANY ALLOCATIONS OR DEPRECIATION. UH, CURRENTLY CRUZ IS RECEIVING ABOUT 58% OF ALL ALLOCATIONS AND PARKING GETS ABOUT 29%. AND THE REST OF THE CATEGORIES GET A LITTLE BIT SMALLER BETWEEN THREE AND 5% DEPENDING ON THE CATEGORY. AND THAT IS BASED ON THE REVENUE FOR EACH [01:00:01] CATEGORY, HOW MUCH ALLOCATION THEY GET. UH, SUMMARY, YEAR TO DATE AS USUAL, TRAVEL TRAINING AND DEVELOPMENT IS UNDER BUDGET, UH, MORE ON THE TRAINING SIDE THAN THE TRAVEL SIDE. TRAVEL, WERE MORE IN LINE WITH THE BUDGET, BUT THE, UH, TRAINING AND DEVELOPMENT SIDE WE'RE A LITTLE BIT BEHIND ON WHAT WE FELT WHERE WE WOULD BE AT FOR THE CAS POSITION. UH, TOTAL CASH ON HAND AT THE END OF THE MONTH WAS 78.1 MILLION WITH A UNRESTRICTED BEING 27.8, UH, LEGALLY RESTRICTED 32.3 AND ALL LEGALLY RESTRICTED TO BASICALLY BOND PROCEEDS, UH, DEBT SERVICE IN THE SEEKING FUND FOR INTEREST PAYMENTS AND INTERNALLY RESTRICTED. WE WERE RIGHT AT $18 MILLION. THE VENDOR REGISTERED, UH, 30% OF OUR ORDINARY OPERATING PAYMENTS WENT TO LOCAL VENDORS. AND TOTAL, YEAH, OKAY. AND ACCOUNTS PAYABLE OVER 90 DAYS. IT WAS AT ONE 19 IN ONE OF THE PAYMENTS, UH, ONE OF THE VENDORS PAID. SO IT'S REALLY AT THE END OF THE MONTH NOW. IT'S ABOUT 80,000 IF YOU GO BACK. BUT NOW WE'RE READY. ONE MONTH FINISHED AGAIN. AND THERE'S THE AR AGING PAGE AND THE CURRENT CASH POSITION. SO AS YOU CAN SEE, THE TOTAL RESTRICTED FUNDS ARE RIGHT AROUND $18 MILLION. UH, WE ARE INTERNALLY RESTRICTING, UH, FOR OUR CAPITAL IMPROVEMENTS AROUND $14 MILLION FOR THE MONTH. UM, AND SO THAT'S ALSO REFLECTED IN THE CASH FLOW. I WENT AHEAD AND UPDATED THE CASH FLOW TO MAKE IT REFLECT MORE OF THIS, UH, HOW MUCH WE'RE INTERNALLY RESTRICTING GOING FORWARD. AND THEN YOU SEE THE SEEKING FUNDS. AND I WILL POINT OUT THE BOND PROCEEDS. THIS IS IN THE ORANGE OF THE BOTTOM, THAT, THAT IS 7.8 AT THE END OF MARCH IS PROBABLY CLOSER TO 2 MILLION NOW. WOW. SINCE PAYMENTS HAVE GONE OUT FOR BROAD PROCEEDS AVAILABLE. ANY QUESTIONS ON THIS ONE? STAFFING LEVELS FOR THE MONTH, END OF THE MONTH, WE'RE AT 1 38 ON A BUDGET OF 1 44. AND COMPARED TO LAST YEAR WE HAD 131 EMPLOYEES AND PAYMENTS TO THE CITY. UH, YEAR TO DATE, WE'RE RIGHT AT A MILLION DOLLARS. WE'RE NOT INCLUDING THE PORTION THAT GOES TO THE GALVESTON ISD, SO ABOUT 1.1 MILLION, UH, WE'RE ON TRACK. THE BUDGET FOR 26 IS ABOUT IS 3.5 MILLION. AND THE ACTUAL WE PAID LAST YEAR IS ABOUT 3.1. SO WE'RE, YES, SIR. I JUST GOT A MESSAGE FROM EVAN THAT JUST POPPED FROM MY TEXT THAT IT'S ABOUT 2.8 TO VIC. YES. OKAY. ANNUALIZED, BUT IT'S A TIMING THING. YEAH. YES. YEAH, IT IS BIGGER AT THE END OF THE YEAR AND THAT'S WHERE OUR BUSY SEASON STARTS TO GET. DO DISCOUNTS. THERE'S ONLY ONE FOR THE MONTH. UH, WE CAN SEE IT RIGHT HERE. ANY QUESTIONS? DO WE, UM, DRILLING ALSO, UH, LOOK AT THE CAPITAL PLAN. IF THERE'S ANY QUESTIONS ABOUT THAT, WE CAN BRING IT UP OR ANY, WE MIGHT OPEN IT UP. YEAH, JUST WE STILL, I THINK WE'RE STILL GETTING USED TO THE NEW FORMAT, SO IT'S GOOD, I THINK TO KEEP IT IN FRONT. YES. OKAY. [D.2 Discuss and Consider for Acceptance the Galveston Wharves 2025 Financial Audit and the Annual Comprehensive Financial Report (ACFR). The 2025 ACRF includes the Federal and State Single Audit as Part IV of the ACFR - Deanna Cortez ] THE ONLY CHANGE, ALL THE LINE ITEMS IN GREEN ARE THE ONLY REFLECTION OF CHANGES IN THAT, AND THE ONLY CHANGES WERE EITHER, UH, ADDITIONAL PAYMENTS, SO THE CASH PAID WENT UP AND THE REMAINING AMOUNTS WENT DOWN. SO THE FIRST TOP SECTION IS ABOUT THE, UH, CT 16 TERMINAL AND GARAGE IN DIFFERENT CATEGORIES, BUT THE STUFF IS BROKEN OUT INTO, SO THE ONLY CHANGES FOR EVERY CATEGORY THAT'S GREEN IS JUST, UH, PAYMENTS THAT WE MAKE TO THE VENDORS. I GUESS ON 16, WE'RE GETTING CLOSE TO KIND OF HAVING THE FINAL NUMBERS OF HERE'S WHAT, HERE'S WHAT THE PROJECT COSTS VERSUS YES, SIR. YEAH. I DON'T WANNA STEAL JEFF'S THUNDER FOR LATER. YEAH. UH, THIS AFTERNOON. BUT, UH, YES, WE'RE GOOD. WE'LL GET CLOSE AND I THINK IN THE NEXT, UH, COUPLE MONTHS WE'LL BUILD, ABLE TO HAVE A FINAL TALLY OF WHAT EVERYTHING COSTS FOR OUR AWARD WINNING PROJECT. YES, SIR. RIGHT. VERY GOOD PROJECT. VERY GOOD. I HAVE TO SAY THAT'S A VERY GOOD CONTRACTOR. I JUST, YEAH. WHEN WE, WE HAD IT AT UTMB AND WE THEY DID GREAT. YOU THINK SOMEWHERE, I MEAN, I'LL BE SERVED SOMEWHERE AROUND 500,000 LEFT FROM CG 16. AND, AND THAT'S INTEREST, INTEREST, POSSIBILITY OF A CHARACTER. OH, THEY'RE WORKING NOW. I MEAN, THEY'RE, THE QUESTIONS THEY'RE GETTING ARE, UH, WHERE DID THE STEEL COME [01:05:01] FROM? SO THEY'RE, I MEAN, THERE'S THE DIALOGUES GOING ON WITH, WITH THE AND THEY'RE JUST, NOW THE, THE CDP IS QUESTIONING THE RAW MATERIALS THAT WENT INTO THE, UH, PASSENGER BOARDING BRIDGES YES. AND WHERE THAT CAME FROM. HMM. BUT THERE'S, I MEAN, IT'S OBVIOUSLY YOU'RE, YOU'RE READING ABOUT THEIR, THEIR, THEY'RE RE REFUNDING. YEAH. I THINK CHECKS ARE GOING OUT ON THE, THE FIRST CHECKS ARE GOING OUT ON THE 11TH. YEAH. AND I WOULD SAY INTEREST, WE AREN'T, WE AREN'T TAKING ANY CONSIDERATION OF THE, UH, TARIFF MONEY. IF WE GET IT BACK, THEN THAT WOULD JUST BE, UH, A BONUS FOR US. YEAH. IT'S TOO HARD TO TELL WHETHER IT'LL BE IN, IT'LL BE INCOME. YES. ANY QUESTIONS ABOUT THIS? OR DOES ANYBODY WANNA SEE THE CASH FLOW FOR THE YEAR? DO YOU MIND JUST REVIEW THIS, KEEP IN FRONT OF US THERE? I JUST, I KNOW ERIC USUALLY MIGHT HAVE A QUESTION ABOUT THIS BECAUSE HE'S, HE'S THE ONLY ONE WHO USUALLY ASK QUESTIONS. . SO, UH, SO WE'RE, WE HAVE STRONG CASH FLOW AT, YOU KNOW, AT THE END OF THE MONTH WE'RE AROUND 28 MILLION UNDER RESTRICT CASH. UM, TRUE UNRESTRICTED CASH WOULD BE ANYTHING INTERNALLY RESTRICTED AND THE, THE PURE UNRESTRICTED CASH. UH, SO THAT'S, YOU KNOW, WE'RE, WE'RE PUSHING AROUND 45 MILLION PURE UNRESTRICTED CASH THAT WE COULD USE FOR ANYTHING. UH, AS YOU KNOW, WE RESTRICT CASH THAT WE, WE HAVE TO MAKE AN INCENTIVE PAYMENT FOR MARKETING TO, UH, CARNIVAL. SO WE RESTRICT THAT INTERNALLY. UH, BUT ALL THE OTHER STUFF IS BASICALLY, UH, WE COULD DO WHAT IT WOULD, WOULD BE OUR RIGHT TO DO ANYTHING WE WANT TO WITH THAT CASH. SO WE, BY THE END OF THE YEAR, WE STILL THINK WE'LL TAP AROUND 26, 20 7 MILLION UNRESTRICTED. AWESOME. ALSO, DREDGING IS RESTRICTED, RIGHT? WHERE WE PUT SOME MONEY IN. YES, YES. YES, SIR. SO THAT, THAT INCENTIVE IS WELL, OUR IS PAID WITH RESTRICTED FUNDS. IS THAT WHAT YOU SAID? OUR, OUR, UH, WE RESTRICT IT ON OUR, ON OUR END. UH, BASICALLY WE'RE JUST, WE'RE BASICALLY ACCRUING IT EVERY MONTH. OKAY. AND SO WE INTERNAL RESTRICT IT SO WE KNOW THAT OUR MONEY'S ALWAYS AVAILABLE, WE'LL MAKE A PAYMENT TO THEM AND SOMETIME IN JULY FOR HALF THE YEAR. AND THEN WE MAKE THE OTHER HALF IN JANUARY, THE OTHER END OF THE YEAR, THE OTHER SIX MONTHS OF THE YEAR. WHAT WAS THE QUESTION, RICHARD? ABOUT THE CARNIVAL MONEY? WE ACCRUE THAT EVERY MONTH. I GUESS IT'S QUASI RESTRICTED. YES, YES. QUESTIONS, COMMENTS? I MIGHT JUST, JUST FOR EVERYBODY ON UNDER TAB FOUR ON THE CONSENT AGENDA, THAT PAGE FIVE, THERE'S A LITTLE SPREADSHEET THAT WE'VE ADDED OVER LAST SEVERAL MONTHS, WHICH KIND OF SHOWS THE, ALL THE APPROVED PRO SUMMARY OF THE APPROVED PROJECTS, UH, WHAT'S PAID, ACCRUED, REMAIN BALANCE, AND THEN I'M TRYING TO RESTRICT THAT, SUMMARIZE IT TO PUT IT ON SLIDE. BUT THIS, IT'S A GOOD DOCUMENT TO KIND SHOW WHAT'S OUTSTANDING AS FAR AS THE CAPITAL PROJECT, PARTICULARLY THE OPERATIONS SIDE, WHICH COMES OUTTA CASH FLOW, OUR RESERVES. THAT'S JUST A GOOD, I THINK JUST LOOK AT TAB FOUR, THE BANK RECONCILIATIONS TAB FOUR AND THEN PAGE FIVE. IT'S A LITTLE SLIDE IN THERE, RICHARD, ROBERT, OVER THE LAST NUMBER OF MONTHS TO SHOW THAT AS A SUMMARY FOR, I THINK WE PUT IT ON THE, AGAIN, THE SLIDE THAT SHOWS THE RESERVE. IT'S A GOOD DOCUMENT TO KIND OF SUMMARIZE WHERE WE ARE FROM ALL OF OUR PROJECT SPENDING, WHAT'S LEFT. SO. OKAY. GOOD JOB. NICE JOB. YEAH, NO PROBLEM. THANK YOU. ACCEPT I MOVE, WE ACCEPT THE, UH, FINANCIAL REPORTS THAT ROBERT JUST GAVE US. SECOND. THANK YOU. SHE SECONDED. YEAH. OH, GOTCHA. ALRIGHT, SO IT'S PRUDENT. THANK YOU. NOW WE'RE GOING, YEAH, THE, UM, LET ME ASK SOME QUESTIONS ABOUT THAT, ABOUT THE PROCEDURE HERE. SO WE'RE GONNA DISCUSS AND CONSIDER FOR ACCEPTANCE THAT GALVESTON MOORE'S FINANCIAL AUDIT AND ANNUAL COMPREHENSIVE FINANCIAL REPORT. WHY, WHY AREN'T WE RE WHY AREN'T WE VOTING TO RECOMMEND APPROVAL THAT THE FULL, THAT'S THE PROPER MOTION. OKAY. TO RECOMMEND THE BOARD. OKAY. SO I'LL, SO I'LL, THAT'S ESSENTIALLY WHAT WE'RE GONNA DO. THEN WE'RE GONNA VOTE TO RECOMMEND APPROVAL OF THESE TO THE FULL BOARD. I'LL SECOND THAT, IF THAT'S A MOTION. [01:10:01] I'LL MAKE IT A MOTION. I DON'T LIKE TO MAKE MOTIONS AS THE CHAIRMAN, BUT I'LL DO IT. OKAY. THANK YOU. OKAY. ALL IN FAVOR. THANK YOU. AND THEN THE, UM, [D.3 Discuss and Consider for Acceptance the 2025 Audited Galveston Wharves Defined Benefit Pension Plan Annual Financial Report for Year Ending December 31, 2025 - Deanna Cortez ] SAME THING WITH D THREE, WHICH IS THE DEFINED BENEFIT PLAN. WE'RE GOING TO RECOMMEND APPROVAL TO THE BOARD OF THIS. ALL ALL IN FAVOR. SHE COULD SECOND IF SHE LIKE OR IT DOESN'T MATTER. YEAH, SHE'S SECONDED. OKAY. AND SO, ALL IN FAVOR DIFFERENT FROM WHAT WE HAVE. WE HAVE FOUR. UH, GENERALLY THE AUDIT IS ACCEPTED BECAUSE IT'S GENERALLY IT'S ALREADY DONE. IT'S ALREADY BEEN, UH, BY THE AUDITORS AND STUFF. SO GENERALLY IT'S ACCEPTED BY THE BOARD, NOT NECESSARILY APPROVED BY THE BOARD. THAT'S SMALL DIFFERENCE. THAT'S TRUE. OKAY. BY WHICH BOARD? MORE THAN 50 BOARD. SO WHAT WE'RE DOING IS RECOMMENDING THAT THEY DO THAT. YOU'RE RECOMMENDING. YEAH, WE CAN'T. OKAY. AND THEN ON [D.4 Discuss And Consider Portfolio Performance Analysis Report, Summary Of Investment Performance Report And Investment Detail Of The Galveston Wharves Pension Plan Period Ending March 31, 2026. Also, Discuss And Consider Percentage Changes In The Fund Mix That May Be Necessary To Increase Investment Results - Robert Ramos] THE D FOUR IS DISCUSSED AND CONSIDER THE PORTFOLIO PERFORMANCE ANALYSIS REPORT, SUMMARY OF INVESTMENTS, WARS, PENSION PLAN. UH, AND I'M, UNLESS WE GET A MOTION, I'M, I THINK WE'RE PROBABLY, UM, FINE WITH THE WAY IT IS. ALBEIT WE WANT TO DISCUSS FURTHER IN THE, UH, THE CLOSING DOWN OF THE FUND LATER. I'M NOT, I'M NOT MAKING A MOTION TO THAT EFFECT ALL LATER. CAN YOU REPEAT THAT PLEASE? I'M AT D FOUR. I'M DOING IT VERBATIM. DISCUSS AND CONSIDER PORTFOLIO PERFORMANCE IS ANY, IF ANYBODY WANTS TO MAKE A MOTION TO MOVE IT FORWARD, THAT'S FINE. UH, SO MOVE. SECOND. SECOND. ALL IN FAVOR. THANK YOU. YES. AND GENERALLY HE ONLY COMES AT THE END OF, AFTER THE END OF THE SIX MONTHS AND AT THE END OF THE YEAR. BUT MARK THOUGHT HE MIGHT, Y MIGHT HAVE QUESTIONS FOR HIM NOW. UH, SO HE'LL, HE ALSO WILL BE BACK JULY. YEAH, WE'LL BE BACK IN JULY. I THINK QUARTERLY GIVE, GIVEN THE VOLATILITY QUARTERLY. AND I THINK IF Y'ALL POINT COULD DO, DO THE BEGINNING OF WORK ON THE ANALYSIS OF WHAT IT TAKES OR WHAT IT'S GONNA COST AND ALL THAT. OKAY. WE HAVE A REPORT ON AT THE NEXT MEETING, SO WE'LL HAVE TO ACCEPT THIS AT THE BOARD AT THAT TIME. YOU CAN MAKE A MOTION ON THAT YOU'D LIKE FOR US TO MOVE FORWARD ON, ON MORE STUDY OR WHATEVER AT THE BOARD LEVEL, RIGHT? MM-HMM . YEAH, HERE. AND THEN AT THE BOARD WE'LL HAVE DISCUSSION. GOT IT. ALRIGHT. [E. COMMENTS FROM THE BOARD OF TRUSTEES Pursuant to Texas Government Code Section 551.0415, Trus] SO NOW WE'RE MOVING ON TO COMMENTS FROM THE BOARD OF TRUSTEES. I HAD A BLAST. . I'LL SECOND THAT. ANYTHING ELSE? I, I, I JUST COMMENT ROBERT, GREAT JOB IN FILLING IN FOR, FOR MARK, RIGHT? ABSOLUTELY. [F. SET DATE OF NEXT MEETING, TIME, AND LOCATION] SO THE NEXT MEETING DATE, UH, IS TUESDAY, MAY 26TH, UH, NINE O'CLOCK HERE. AND SO I WOULD MOVE ADJOURNMENT. ALRIGHT. YOU WANNA HAVE US TAKE A BREAK OR YEAH, DIVE RIGHT IN. PROBABLY GOOD TO TAKE FIVE MINUTES. START. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.