##VIDEO ID:WqVNKUsmWaY## e e e e e e e e e e e okay good morning everyone we're about to get started I think they will well they actively selling okay good morning everybody we are ready to get started let's call yes you're on okay call to order the finance committee meeting of December 6 and we Richard benali we've got here over from pfm and lean and all of us let's go around introduce ourselves and then we'll get going okay you Bill starting with Bill just to let you know we do have new microphones so when you press the button there's a little red ring around the at the top that's how you know you're on so if you push the button up here and you know you're on yep you're you're on Mr here oh yes I'm sorry it's not easy to say okay I'm on real time okay Bill Moore a citizen member of the finance committee Doug Draper with Bank of America I'm sorry George Elmore a member of the committee Jack Warner still the uh second newest member of the committee Michael coner finance committee Paul Dumar finance committee Patricia Morales office of General Council Frank leato JP Morgan Mike Baldwin Jeff Ron heran Treasury Department Rick Patterson Raymond James and Associates Kristen Yaki Treasury Department christe price Treasury Department Heather fredri Chief Financial Officer Leanne Evans Treasurer Richard palii P f m Asset Management well there are a couple new faces that I see over here to my right the Christians and the Christie yeah and and I'll go ahead and chrisy price is the manager in my office working on investments and debt so you'll be seeing her at all the meetings she actually prepared the annual investment report and annual debt report so at some point I'm going to get her talking at the meetings but I promised her not today um and Kristen yakie is also in my office and she do does the quarterly investment report so she helped compile data as well and Ron haran um he used to do a lot of the debt um but now he's doing just the capital budget and still helping with debt so um we got a couple people from my office and Brenda GM Petty is in the back and she's the one that makes sure you have badges so everybody I know came in and got their badges okay if you run into a problem with that Brenda is the person that can take care of that for you so yeah we have a couple more people from my office today yes we do do you have a Santa hat as as well this your have jacket all right well welcome everybody not a lot of new faces though this group has been pretty steady for many years and done a great job yes appreciate that so lean go ahead we've got our comments I guess yeah are there are there any public comments was there any public I don't think so so I think we can move on um we do have the agenda that we need to approve the agenda and the minutes first okay so the agenda just to summarize for the group we'll be going through the annual debt and investment reports the quarterly investment reports I have a change that I want to make to the investment policy that will review um the financial advisor and investment advisor contracts have been negotiated I'll give you an update on those and then just to let you know we do have some other contracts coming up and I want to make sure you're aware of those and that would cover the meeting for the day and we'll just go through each one of those good enough so um the first is the approval of the agenda right motion to approve second all in favor agenda is approved am minutes of August 9 we have them I guess you have a pile everybody should have a pile of document it's a little different the minutes is a second document it's the second document there if you've had an opportunity to read it well you're probably one of a few approval move approval is there a second second all in favor any opposed okay then we're up to your items okay so I have the annual debt report and I wanted to let the group everybody know Laura how is online um the um hotels are are pretty full in palach county and she was looking for rooms and um it came up at $5,000 a night and I told her she could attend virtually today um she wanted to be here she will be here as we work through the underwriter selection process um next month $5,000 for d yeah I think yep we we've heard it from a couple people so there's some yeah there's some expensive hotel rates right now so I appreciate the people that came here from out of town um that were able to find good hotel rooms or drove in this morning um I got a couple extra [Laughter] bedrooms give us your address Bill okay so I'm going to go through the annual debt report pretty quickly you all have seen this we do this every year it's as of June 30th so it's not new news but these the two annual reports will go to the school board at the December Schoolboard meeting um and your respective board members could contact you and ask you questions on it so I want to make sure you had it that's why we printed hard copies so in case it comes up and you need to have a copy you have a hard copy and that's what most your package is is the annual reports they are pretty lengthy um the annual debt report really was created based on policy but we've added to it over the years because I consistently would get questions on why did we issue debt why do we have so much debt service payments what did we do with it so this really tells the story of why we issued debt what's still outstanding what we did with the money um and right at the first page we give credit to this finance committee for the work that we've done so since the finance committee came into being which was in 2001 um we've done 91 transactions totaling 8.5 billion um and a present value Savings in excess of 175 million and that's something to definitely be very proud of and I commend the finance committee we would never have been able to do a lot of the transactions we've done over the years without the review of this committee and I know this the school board certainly appreciates your expertise that you lend to us in these meetings well there were some tough times in there there was including the had when the swaps were around if you recall bmore at that point in time said get out of the swaps by noon if you recall and we oh you you don't remember this m oh it was memorable because you got us out we heard from pfm that we were in these swaps everybody was having issues we got out of them by well we we 8 830 or something like the bill I think that's the floor that's that was the the SBA that was the investment pool that was the SBA investment pool yes then we got out of the swaps thereafter but it was a trying time y you on top okay okay so um what I wanted to focus on in the reports is just point out the things that are new in this report it does go through why we built schools what we did there's a section in here that is a little that I've added language on that is regarding Charter Schools um back in 2017 they they made some some changes about sharing capital outlay millage but in 2024 the legislature put in place that we are required to share the capital Outlet millage on a per student basis and there is a you get to deduct the amount of Debt Service associated with debt issued prior to March 1 2017 um so we get to deduct that off the top and then share it on a per student basis and that's being rolled in it was 20% in FY 24 40% this year it'll be 60% and so on by 2028 it'll be full it'll be fully out there that we're sharing on a per student basis and all the debt that was issued prior to 2017 will mature in 2032 so those numbers continue to rise the amount of money we're giving to Charters will continue to Rise um when the when we get to 2032 the amount we're paying annually to Charter schols is 70 million a year over the 10 year cap 12- year Capital plan we have right now we've estimated $747 million we going to Charter Schools so that's certainly something we're paying attention to it's a little challenging because we don't know what enrollment is going to be and what the percentage of our revenues would be going to Charter so it's something we'll continue to Monitor and update every time we do a capital plan but that's really one of the key drivers as to why we needed to go out with for the sales tax that was recently approved um do we B do we follow and monitor the money that goes to the Charter Schools how it's used that that will be part of their audit certainly and the sales tax will also be chared shared with Charter Schools by Statute so the sales tax share will be reviewed by the oversight sales tax oversight committee and then for the regular Capital outlay they have to submit a plan of how they're going to use it um to make sure it's and we have to verify that it's in compliance with statute so that is a new section I wanted so I wanted to brief you on that um and then the leases the equipment leases we the final payment on those have happened August 1st 2024 so we B we used those to buy school buses and some air conditioning units over the years they were they had a fiveyear term for most of them I think some were three but most were five years um so the final payment happened this past August and then for the cops we did two cops issues in FY 24 the first one um closed on was priced I guess on December 11th so about this time last year um it was $140 million to finance some construction projects so it had a coupon rate of 5% a net interest cost of 4.24% it will mature in 2040 so it's only a 16-year term we have the Capa the ability to pay it back sooner we're not issuing debt going out to 25 or 30 years if we can avoid it we're doing sooner um so that issue was was completed in December and we also did on May 6 we closed on the forward refunding that was done with Bank of America um we locked in the rate in 2021 and it was for two debt issues it was the 2012 C and the 2014c I believe the 2014c refunding is what closed this past year and we locked in the rate at um 1.37% so you know who could have guessed that interest rates were going to rise as much as they did so that was an amazing deal that we did it locked in present value Savings of 19.4% or 6.5 million between 2024 and 2031 so that's the two debt issues that were done in the last year um fantastic it was it was a really good transaction and we we announced that when it happened but again this is an annual summary um the other thing I'll mention the qualified School construction Bond or the Q skib that is going to be maturing in on August 1 2025 so we have one more year of that um and everything else is is pretty straightforward the line of credit did clo for associated with the sales tax that closed out in July of 2023 so that happened during this fiscal year um our debt ratings have not changed we have no swaps outstanding they were all terminated in 2018 um and at that this point we go through and have all the reports um this is the and it I know it's hard to see here I can make it a little bigger it's probably easier to read on paper this is the report that's actually required by the debt by the debt policy and it's a list of all the outstanding transactions it shows the original par the principal outstanding as of June 30th and we also have the principal outstanding for August 1 because we make principal payments August 1 I think it's important to show the amount that's currently outstanding when we issue the report so you have both those numbers has final maturity if it's fixed or variable and right now everything we have is fixed rate um if it was issued as new a new money transaction or it was a refunding um the interest rates any call Provisions um I've got all kinds of comments in here what it refunded if it was for construction projects if it was a taxable deal so those are my notes um of important things that I need to keep track of if there's any exposure to Market change which there is none for these because they're all fixed rate if it's a public offering or a private placement um and if there's any Hedges and we have no Hedges so this reports um this is the only one that was required in policy and I use this all the time these are truly managed documents that we use it's not something that's only updated once a year but this is as of the data as of June 30th um then we have a report that is the list of all the transactions really since the finance committee came into being that's why I can put that number on the first page because we are tracking it it lists every individual debt issue um if it was new money or refunding if it was a swap um the transaction total and the present value savings and then I've just got a count um so I can keep track of how many transactions they have they are so it it groups them all together um and it does have the grand total there's the 8.5 billion dollar of transactions that we've done um and then the present value savings so that that's that's the second report that's in here and this third one this is used by so many departments throughout the district um legal I try to make sure they have a copy of it this is really a list of all the transa all the properties that are included in the Master Lease so it's important to note that that um because if you have a school that we want to do an addition to we need to see if there's if it's already in the master lease or if a if if we want to put a cell tower on it or if we're going to sell some property or Grant an easement it's good to have this list out there of all the schools and properties that are included in the Master Lease so this gets updated annually includes the square footage the student stations how much is outstanding how much is asset versus non-asset in the transaction action this report actually came into being at the request of Moody's years ago um a couple of you in the room may know John and caria who was with a rating analyst with Moody's for a long time he he actually gave me a template build this the rating agency wanted it and it's become very helpful for us um and there's a lot of properties included in the master lease and then we have the the schematic um and pfm prepares this for us each year and it is a it's a schematic of all of our debt so we can go in and look at each debt issue and see if it was refunded and track it over the years so this this rep this is a graphic representation of all the outstanding debt that is that's the one p the last page of the report that you can fold out because if it's not 11 by 17 you could not read it so that concludes the annual debt report um this really is a report for the board and the public to see what we do and again it's really helpful information for staff to be able to manage the portfolio that we have well it's fantastic it's a tremendous amount of debt that we've issued and retired yes it's really yeah one of the question quite an amount so you're not growing though at the rate any type rate that was occurring early on in this is the school district growing in terms of numbers no stud I don't know if you want to chime in on that we're the enrollment is relatively flatted this this point a lot of the construction projects we're doing are um replacing schools that need to be replaced or adding some additions um some of the additions happened because we built classroom additions but never increased the size of the cafeteria and the office and the clinic and we call the core areas so we've had to go back and add some core space into schools otherwise the students would start lunch at 9 o'clock in the morning and finish at two and then they go home at 2:45 so we've had to do a couple of those um and we do have a couple of schools there is growth at West we've got a school Under Construction in the area where Arden is there's another school planned for the West Lake Community um so there is a lot of growth in pockets of the county that's out west for the most part yeah did you want to add you think that Miss Frederick I just wanted to add that I mean we are fortunate that we're not seeing declining enrollment at this point so we we are projecting that we are going to stay flat for next year we did have a slight increase in enrollment this current year of about 300 students and when you're looking at 170,000 that is pretty much just flat uh but when you look at Broward and Dade and and most of the districts not only across the State of Florida but nationally they are facing declining enrollment uh so I would say that we are fortunate to at least be holding and remaining consistent within our district operated schools is there that may be a challenge going forward is there any comparison between the results that the school district achieves and the charter schools that it's funding do you mean for the are you saying student achievement student achievement well one thing I will mention be um it is difficult to to do a comparison with the the achievement I mean it it differs so much we have the original purpose of charter schools was really just um you know more mom and pop type operations but as as they continue to grow I mean they are now just large management companies that open the charter schools and operate the charter schools so it's truly not much different than a district operated School schols in terms of achievement and I can say especially with the certified teachers there is definitely a difference with the charter schools not having as many certified teachers as District operated schools and they're just not required to follow the same regulations that we are as a as a district our district U is like I said fortunate that we're not seeing declining enrollment where we are seeing declining enrollment is in the charter schools so I guess what you're saying or what I'm hearing is that the academic uh qualifications of the faculty is different for the charter schools not as high as the public school for many of them and it is it is mixed you know you have it you have some charter schools that are very high achieving and others that are not you know so it is it is truly a mix when you when you look at our Charter Schools we do have some high performing charter schools within our district yeah okay are there any questions on the annual debt report Bravo thank you so if you could if the committee could vote to accept that report is there a motion so Mo move is there second okay all in favor any opposed motion carries okay the annual investment report is the next one and this is really the report as of June 30 so I'm going to highlight just really one item that I wanted to cover on here um um when we looked at the total interest earnings I think it's is it this page it is um total interest earnings for the year was $107 million um as compared to 71 million in FY 23 so I mean that that's a credit to the um interest rate changes I'd love to pay personal credit for that um not not going to do it but that that's where it is um so this report it it is basically the quarterly investment report that that you all received back in June so I'm not going to go through all this but the first couple pages is just a summary it does go through what happened over the course of the year with interest rates we do have cover that we have a lot of bank accounts and we do manage acttiv you manage um to try to prevent fraud on the accounts and we did have 360 um attempts um 360 exceptions and 118 items were returned as fraud um over the course of the year um so that that's really it for the investment report um everything else is as of June 30th so it's it's not current data I don't really want to spend a lot of your time on it because you've seen it I'd rather spend more of our time on the most recent quarter and turn that over in a moment but I wanted to make sure you had a chance to see it if you have any questions on the annual investment report I'm happy to answer them or go through this in more detail what is our return again it was 107 million um we have different portfolios the return on the the core portfolio was 5.02% which The Benchmark was 4.53 nice going it's terrific any comment from the investment bankers okay so if you would mind voting to accept the annual investment report your motion so moved y George all right jack okay all in favor any opposed motion carries okay with that we're going to go into the quarterly investment report this would be as of September 30th do you want to take over the mouse I'm GNA turn it over to Richard penelli to give us a market update um so good morning and uh you know I I wish we could take credit for that great result but really it's it's the FED uh and the actions of the FED in response to uh the economy that you know uh help generate a lot of that um so we'll we'll start off talking about the FED um the FED uh controls short-term rates uh the district is largely a short-term uh investor so we uh really focus on what the FED is doing um and what I pulled up here is an you know an overview of what we've seen in the cycle as the FED has been you know fighting inflation uh that Rose to uh you know an excess of 9% um they uh paused uh and then in September of this year uh finally began uh going in the other direction uh in the cycle and started uh tightening again and cut cutting interest rates uh they LED off with a uh 50 basis point cut uh in uh September um they they started sort of you know taking their Victory lap about a achieving a soft landing at the Jackson hall meeting in in in in August uh when they cut 50 basis points in September um they you know communicated that maybe if they'd had a little more data um at their July meeting they might have started then which is why they did uh essentially two cuts at that September meeting uh rather than just starting off with 25 basis point so they've uh created a course for themselves here uh which uh would have them uh do uh basically 25 basis point cuts at the remaining meetings this year they did just did one in November following the election they're likely to do uh the next one um uh here in in December um so you know we we show here and this is data as of 9:30 a couple different things I want to highlight you know one as we went back to the 80s and looked at and said well what's the average pace of cutting uh and and what is this uh cycle look like uh compared to that um and uh they really had uh were projecting to cut at a much faster rate than what they've done in an average uh tightening uh cycle uh to get back down to uh what they think uh or project to be sort of the neutral rate in in the economy which we'll talk about in a second here um you know in September the market uh thought that uh they uh would actually maybe go um uh you know in line with what they're projecting uh early in the year uh the market really thought that uh they would uh have to cut actually much faster I think at the beginning of the year the uh projection was that the you know econom is going to be much weaker as we get to the end of the year and the FED would have to cut significantly uh that view uh changed uh as we got a lot of positive economic data in the beginning of the year and then as we went into the summer it was it was quite the opposite where all of the the data was much weaker than uh than expected um where we are now is that uh the the the Futures curve is really thinking that it's going to be you know slower uh than this uh especially post uh po post election uh and we'll touch on some of that as we go through here um so the uh labor market was one of those factors that supported the FED um uh saying that uh conditions were weakening and that uh that it was time for them to start cutting uh if you go back into last year uh the you know average uh growth in non-farm payrolls was something like 200 to 250,000 if you average out uh the month so very very strong tight labor conditions uh that uh really weakened up uh in in 2024 particularly in the uh you know in the summer um uh we show uh here you know the September reading was was you know strong at 254,000 um but sub quently October was weak um and there was a lot of things that muddied that number including a couple hurricanes and uh the um and and Strikes uh and the reading was 12,000 uh new jobs added um I just saw you know a minute ago that uh it looks like this number uh has come back and and sort of shows a you know a bit of a correction uh we're back to 220 something, uh you know net new jobs being added so if you look at the average of those there's somewhere in that you know 100 to 150,000 uh net new jobs being added range which is what the FED thinks is is more of a balanced uh Labor uh you know labor market and what they would expect uh out of the labor market um the uh the unemployment rate uh you know going into for I guess leading up to to to May of this year had been below uh 4% um indicated again very tight uh labor conditions um as as mentioned before you have to go all the way back to the 60s to find another period in time when you had 24 months full two years uh where the unemployment rate was below uh four 4% um you know since then the uh the unemployment rate has gone up to uh 4.3% 4.2% it's come back down to 4.1 uh the reading today was uh was again 4. 2% and and this is about where the FED has projected and expects uh the Unemployment uh rate to to stay um uh it uh indicates uh basically full employment uh in in the economy um so taking uh overall uh the the the the labor market has cooled and is basically brought itself Back in Balance um at one point we had uh you know two uh job openings for every unemployed person who was looking for a job uh prior to the pandemic you know the ratio was something like 1.1 uh it's now back down to again around that 1.1 uh range again labor market is is is is in uh balance at uh at this point um so you know the FED has two two uh mandates uh one is full employment and as we just talked about the employment picture uh is looks to be imbalance the other is inflation uh and inflation uh High inflation was what caused the FED really to rapidly increase uh interest rates um so uh inflation has come down uh it still hasn't reached uh their uh Target of of of 2% um the uh drivers of inflation coming out of the pandemic were largely Goods related uh it since shifted into service uh and then uh as the labor market has cooled uh now what we see sustaining uh the inflation rate above the fed's target are shelter costs housing market uh housing costs shelter costs continue to be uh the Big Driver of the inflation um we show here um you know if if you took the shelter component out that uh the CPI number would be uh more like 1% uh inflation so that CPI the the shelter component rather is really a big uh component of uh of uh what's driving the uh the inflation levels to what is that shelter inflation uh sh so it's basically the the the uh uh cost of um owning a home uh they do a calculation that's what you mean by shelter yes yeah yeah that's the the shelter component okay um so U and and so that's really kept uh infl sort of sticky when we look at core inflation levels um and we don't see an immediate uh relief to that number um uh so that's expected to remain uh the component that's likely to remain sticky for some uh period of time as the FED tries to uh get the the rate down to two 2% now there's a question of whether that really should be the Target and really if it should be something uh maybe uh higher higher than that how can you do that without increasing construction of new homes Etc uh yeah how how do you do that right I don't see how that is it manageable how do you do it I I don't know how you do that right there's a a supply problem sorry wrong one um so uh since the consumer represent you know 2third of our economy um uh the consumer has continued to hold up uh the the economy um and and so you know what is the conditions for the economy so the misery index very simple index that basically looks at the CPI rate adds it to the unemployment rate um and is sort of reflective of the conditions of the consumer um you know with a let's say 2% Target and full employment being at 4% you would expect that uh the the index reading uh to be around six to 7 to indicate that the consumer is in a healthy position you know as of September and October the the reading was around 6.7 uh and has come down significantly from being closer to 15 uh 15% so the consumer you know continues to be um uh doing well enough to keep on uh spending and driving uh the economy uh we see that in GDP the uh you know reading for the second quarter was 3% um the fourth quarter read or sorry third quarter reading this shows a projection but the actual reading was 2.8% uh again a very relatively strong number you know pre- pandemic uh the GDP uh ranged in the two to two and a half perc rate so you know these you know 3% levels continue to indicate a strong economy in terms of uh you know consumption extend iture for the consumer um we've come back to prepandemic levels and actually gone uh a a little bit uh above that again consumer continues to remain strong um but what we are seeing is the consumer is changing their buying pattern uh they're shifting from um you know higher more well-off consumers are shifting and maybe buying uh at uh you know Walmart instead of Target uh we are seeing some increases in the usage of uh of debt uh but again not at uh alarming uh levels uh quite yet so um over the course of the quarter uh interest rates uh declined as the market uh anticipated uh the rate cut uh and look forward to anticipating further rate Cuts uh we showed the two-year the two-year declined 112 basis points uh over the course of the quarter uh and that contributed to uh strong market value gains which we'll show in a second we we look at the performance um we we've since given some of that back since the election U probably about half of that has given back as we've seen an increase in um uh increase in uh in treasury rates uh this was the last uh fed projection which came out uh with the uh came out in September um we're expecting to get another one here at the next meeting in December um at that time they projected that they would cut rates another 50 basis points this year uh which they have have continued on that path and we expect another one in December um they indicated they'd cut interest rates another Point uh next year uh and then uh 50 uh uh 50 basis points in 2026 to get down to where they thought the neutral rate is which they were projecting uh at 2.9% uh at uh at that time um you know we we think um that it's probably the the new one that comes out will probably indicate a higher uh you know neutral rate and maybe that longer term rate is maybe more like 3 and a qu three and a half uh when we see the new numbers uh come out or new projections come out in in December um the uh if you look at fed funds futures for 2025 instead of that full point cut um uh in uh next year um the expectation is maybe half of that so half a percent uh in uh in 2025 um all of that is good news for the district as a short-term investor that we continue to enjoy these uh you know for handle uh type uh type rates a little bit longer um so this was the yield curve as it looked uh you know at the end of uh the quarter you know as I mentioned before since then the the you know rates have have come back um there's an expectation with the new Administration coming in uh that uh you know if you look at the policies on on balance uh they're uh likely to be uh more on the inflationary side uh and that also there would be more um uh or more continued uh treasury uh you know issuance so we have seen uh rates actually come back from the levels that you seen here um the yield curve has flattened out uh quite a bit um you know the two-year at something like this morning was something like 4 16% uh you see here it was at 360 uh at September 30 uh and the 10 year at a 4184 uh 420 and here you see it was at a three 376 uh again you know as a short-term uh investor all this is is a positive you know a positive direction for rates for uh for the portfolio uh the other thing I'll touch on before jumping into the the actual portfolio is that uh you know corporate spreads have have tightened up um uh they were they tightened up over the course of the quarter and since tightened uh even more um uh you know we're kind of in a uh risk on uh environment um so uh spreads are very narrow uh what that means for us is we're very cautious in how we buy uh you know corporate credit in in the portfolio uh trying to keep maybe a little uh dry prouder we're we're at the lower uh end of our Target uh alloc a ranges for that in anticipation that as we go into the next year and we start seeing more uh policies enacted in the you know from the administration have a better sense of uh uh how uh they'll progress and affect different markets uh we may see uh uh spreads widen out uh in uh you know in the next year um returns were uh great uh for the quarter very strong you know treasury return you know 2.87 uh% in the one the three-year uh uh area um oneyear returns very uh you know we haven't seen these kind of returns in short-term fixed income in a while uh ranging from you know 6.7% on treasuries up to you know 8 point uh you know 88.2% on uh on on on uh corporate so uh very very good returns for uh for the year I'll jump into the portfolio uh looking at the long-term portfolio um the duration continues to be uh a little bit short of the uh Benchmark duration which is 1.76 and that's a function of the uh policy uh which is not to uh sell Securities at a at a loss so as rates were Rising uh you know Securities essentially drifted in um you know as we uh rebalance and restructure you'll probably see that uh duration uh creep out a little bit uh the down side was that uh in this past quarter uh when rates dropped significantly uh you underperformed but you've all you know as rates have sort of uh bounced back and retraced a little bit uh you outperformed a little bit so um uh you know so one is sort of evened out one quarter will be evened out as when we come back in the next next quarter uh credit quality remains uh very high portfolio is predominantly invested in uh us treasuries uh and high quality uh uh corporate credit um you know I mentioned that we did uh the corporate uh allocation is is on the lower side of uh of our target range for for corporates and uh returns for the portfolio 2.57 versus 287 for The Benchmark for the quarter uh and 6.69% uh return for the uh year um versus 6.74 for for The Benchmark again um long time since we've seen those kind of returns in a short-term fixed income portfolio so pause there for questions I'll take a breath I think pretty Dar pretty darn good I have actually question more Curious anything go back couple slides the deting of federal agencies is that kind of an anticipation of things changing in this Administration or anything no no um uh you know in in the pandemic we saw more issuance uh from uh the agencies uh and that increased the spreads uh so since then spreads have tightened up and there's really not much relative value in buying the agencies compared to treasuries so good question yes just If This Were your money not the school district's money would you extend your duration or would you bring it in that's really that's the only thing it really counts so so yeah so that that question we got we we've been getting a lot of this year right clearly it's time to go out obviously the FED is going to keep cutting rates um you know let's just go all out on duration and and and you know uh we saw a big drop 112 basis points well we've retraced that right so there's still still you know our view has been to be more more neutral to benchmarks right on on duration because there is still uncertainty right risk hasn't completely disappeared we don't know exactly what's you know what's going to happen so um we we are we have a neutral stand you have not been extending them we've been neutral to to Benchmark so we haven't overweighted versus where our benchmarks are well that are you extending the maturities at all no we're like I said we're we're just neutral to to where our benchmarks were so we we already started the process of becoming more neutral at the beginning going into this year and we've maintained that position because again we we've gone on we keep going on both sides right every three months we're sort of shifting from one One Direction versus the other direction well I guess I guess I would be uh if you really believe that uh that uh that the the federal government is going to behave themselves in a more responsible manner you would uh you'd uh you know you would extend it I but uh if somewhat skeptical right uh uh You' uh you wouldn't so I'm I guess you'd you know I guess we all have our own opinions about that but uh that's really the that's really the driving issue is how we can how we can Goose the returns just a bit uh by uh extending our at least at the moment extending or or sure I should say conversely the other way around but you know I think anybody who thinks that uh that Nirvana is going to occur anytime Within our lifetime is probably uh somewhat naive yes yeah yeah so I I guess I would manage myself accordingly but but that's I'm I'm talking about what my my little you know savings account is is doing you or you if this were your money rather than School boards I realize you have to be very prudent right but uh on the other hand I think sometime sooner later you have to kind of decide what which side of this thing you really believe what's really going to occur it's all this studying the data and all that stuff is all very interesting and it certainly is enlightening but it's not it's not fundamentally what uh drives the drives the future which is what public policy yeah yeah I mean you know if you believe that uh that2 trillion dolls could really come out of uh out of the uh federal government I mean we've we've been through this exercise quite a while the ho the the Reconstruction Finance Administration was was started in the Hoover administration and we finally wound it down in the 50s um I mean pre predated back to depression period yeah no predated the New Deal yeah okay well it was it was a depression period but it prev so trying to wind these things down and or or restoring people's appetite for prudent behavior is a is a is a an optimistic assessment I would say anyway so you're doing the same thing by the way you're not doing anything yeah well and and you know we we will see right so right now it's hope and speak and you know we'll see as things go along so but any rate yall are doing terrific job and we appreciate it thank you thank you for the iridite okay I'll take this back and I'm going to open up the quarterly the quarterly investment report that we do at the school district and Kristen and Christie are the ones that prepare this and this is very similar to what pfm does as a different look and we're looking at not just what they're investing but also what we have in money markets and pools and this is the the entire thing so it was as of September 30th it was $2 billion about 2% in cash 53% in money markets in pools and 45% in Securities um we do have tax revenues that are coming in right now I'm working with pfm to get those invested um and we're going to be blading those out as we always do based on when we think we need the cash um it has the benchmarks it does show interest earning so far is the dotted black lines this year is ahead of where we were last year um I expect at somewhere some point that those are going to even out and I think our total interest earnings for this coming year will probably be less than what it was last year um but we'll see how that goes I mean it's if they cut if they do cut and continue to cut interest rates of course our interest earnings will be less so I'm not I think gets higher now but it's it's going to level off and you'll see this quarterly as we move forward um this just shows the and let's see if I can make that a little bigger this just shows the different portfolios so we have our our short our this is what we're managing in pools and securities this is a short-term portfolio and then um this is the investment Port this is the total this is the investment this is the debt portfolio this is the money that's held with the trustee um that's Bank of Bank of New York so we technically the investment policy says we can not include the debt portfolio but it's still money that we're managing so I include it regardless because I think it's important to monitor that so this just shows where we're at um based on the maturities and this is the overall picture of where the money how the money is invested and this is the projections now this is showing that we're going to have a lot in short-term Investments coming up and that I expect that is absolutely going to happen so we'll we'll see what this looks like because right now you have a lot of projections in here when we come in at the next meeting um through December it should look something more like what you see here hopefully this is exactly what we end up doing and then we have the list of all the Securities and I'm going to pass through that and go down to the sales tax report um this is as of September 30th um and I we have since then received sales tax Vues for October and November so the total receipts if we look at this forecast the 987 it would be a the forecast for this period of time would be a billion 8,418 th000 where we're actually at is a billion three um so we're still under the trigger for um sunsetting early which is what we thought would happen um but it will certainly trigger for FY 25 it it will end a year early um which I've been saying that for almost a year now and it it's it's going to happen um our current percentage um is 129. 68% it spikes up with the money that came in November that includes the quarterly catch-up payment um that quarterly catchup payment I had a long conversation with Department of Revenue um the other day we were talking about the new tax and how it's being implemented and I started talking about the quarterly the quarterly catchup payment because it's so much bigger than it used to be and I thought it was based on small businesses and she corrected me that that's not the case the quarterly catchup the reason it's so large is because now we're accepting sales tax for items that are purchased from out of state you know that state law that changed that if you're buying something out of state but you live in Florida the other state has to transmit that tax to us and that's what the majority of that quarterly taxes so I've I've said it a couple times that it was the small businesses and that was not correct so I wanted to share with you that quarterly tax is actually mostly coming from out ofate sales and that has I mean that's new relatively new it's been a couple of years while this tax came in place um but I think people are also doing a lot of purchases online and they're buying things from all over the country and it's being shipped in and where you didn't have to pay tax on that before now you do so that that's that quarterly and it pops up every quarter it it we average around 128% and the month when we have a quarter it jumps back up so to give you an example the for the month you had see the the month just looking at the month it was 118% for the money earned in July and received in September it was 121% what we received in October for November with that quarterly amount it's 214% that quarterly payment is averaging eight or9 million so it it's a big chunk of money and that was not included in our projections because we didn't know that was going to happen there was no way to project that that was going to happen so that quarterly amount really does make a big difference in the sales tax um the expenditures to date 769 million and purchase orders in place 144 million there's a lot of contracts being issued um a lot of work being done where to the smaller projects you know all the big giant projects funding with sales ta are done so or well underway um now we're to the point where we have there's 60 schools that we still have to do but they all have much smaller dollar values of because the we the schools that needed the work the most happened first we did the larger projects first it's based on the needs of the schools so now we're down to uh they're working on Sun Coast for example right now and Sun Coast all they needed was the school to be painted and some work on the boiler so it's smaller projects it's the newer schools that's what we're touching right now so there's a lot of them but smaller dollars at the same time costs have gone up so I mean the painting is coming in double what we thought it was going to be so um it's interesting looking at all the Dynamics that go into this so that and then we have the um financing um the fees that's not going to change again that's the line of credit that's the fees we paid associated with it and it's done and we're we're finished with it so that's going to stay constant but the interest earnings keep increasing we're earning two to three million dollars a month on interest earnings at this point so the net transaction is 52 million we have spent some of that um we used some of it to um pay for the work being done at Roosevelt full service at one point we were very worried we are not going to have enough money in sales tax to finish everything on the list so we picked projects that were large that would make sense to borrow for them and the plan was to borrow for Roosevelt and when we actually got to the point of of doing the capital budget and start paying for the bills I looked at the interest earnings and said you know we should use the interest earning to pay for the project and not borrow so that was a change that happened um with the capital plan this year we flipped that back to sales tax which is what it was intended to do so that that extra sales tax um the extra income from interest earnings will help us U make sure we can finish every project on the list so that covers the I think that's the end the rest of this is just copies of reports right right we we we did adjust the revenues for those in the capital plan and right now we're showing it it's got a slight increase is it like three or 4% 5% something like that um we're using um the projections from EDR out of Tallahassee they project what the property values will be so it's certainly not double digits it's come it's come way down so I think the capital plan it varies between four and 5% um going out 12 years the state will give us projections going out five and then I lock in that last year and and use that going out for the rest of it so it is significantly less and it it will be interesting to watch you keep hearing that property values are declining you know what is that going to look like most people have um that own a home that actually live in palach County um I know I can tell you my property value is a lot higher than what's on my tax revenue so the taxes will still go that save our homes at 3% increase we'll still see those increase annually but the people that are not homesteaded we're we may see some of that drop and I'm curious to see what happens in palach County you keep hearing that the a lot of people buying homes right now because of the president and his home and we see lots of activity of people still moving here so I'm not sure if Palm Beach county is going to see a decline in property values or not I mean we'll see what happens and I think it was 133% increase last year in the AV valorium tax I think it was but we're not expecting that to happen was it was it or was it lower well for this year and I think you're also comparing us to the county so we we as a district are not subject to the 10% cap that the county is so our increase this year I believe is around I think it's going to be around 7% whereas the County's projected increase is higher than ours I think they're at at nine plus perc um but ours normally is higher than the county uh but now since it's it's almost like a true up uh because we're not subject to that 10% cap um in the increase in the property values that the county had more room to move on their side in terms of uh the increase in the property values this current year so you are going to see a difference that our projected increase in our in u the property values is less than the county for this upcoming fiscal year this current fiscal year I'll check it yeah they they are different um Sher Brown from pach County and and we we compare where what what our rates are what the increases are um it it was higher than projected this past year but it's it's going to slow down and we factored that into the budget are there any questions on the investment reports okay we had are very relevant ones we've had are very relevant so um the next item on the agenda I want to take a look at the investment policy and I've added you all have seen this investment we've gone over it many times um the the school board and the superintendent have requested that we do a very um thorough review of all of our holles and there's actually a backlog of getting them to the board um so I squeeze in one more change that I want to make before this goes to the board I think it's on page 18 and it has to do with performance um let's see if I can find it here should pop up yeah did I go past it performance measures okay so what we have right now we have two portfolios we have the short-term portfolio and the core the core portfolio is what pfm manages that is got an index of the Maryland Bank of America Maryland one to threeyear government IND index I don't want to make any changes there what I want to do with is the short term I want to break it into two pools I want to have one that's strictly overnight and one that is considered shortterm so what we had was one pool and it was the The Benchmark was the S&P rated Gip index which is the local government investment pool index so it's a short-term index those dollars are all invested typically no more than 60 days an Aver average of 45 days right now 30 to 45 days and that was very helpful in a normal y yield Cur curve enironment and what I've realized is that shortterm rate is a lot higher than the one year or twoyear at least right now and that highlighted an issue to me I don't want my short-term portfolio that is a 12 Monon um gauged against an basically an overnight rate um in a normal environment that makes sense because the overnight rate is a lot less than the two month or three Monon but that hasn't been the case in the past year with an inverted yield curve so technically I could leave it the way it is and when the yield Cur normalizes it's going to make us look really good but I think it needs to be broken out and we're tracking those separately so the overnight which is I'm saying Bank balances money markets and pools that should be checked with a benchmark of a local government investment pool rate and everything else should be something longer and I turned to pfm and they did a review of our short-term portfolio and I don't know how far far back Mr Sims went but he went back and looked at what the average was and said that a good Benchmark for that would really be the three-month t- Bill index um it's a more accurate reflection of what we're doing I mean typically when we're doing investments in December it's going to be four months out to 12 months typically but as you move along in the year that shrinks so the average of a course of time is is three months so I want to break it out and have an extra Benchmark so that and it it works on total return as opposed to just a flat interest rate so I think that's a better representation of what we should be matching our performance against so I'm just adding an extra Benchmark in we'll have to adjust our reporting it won't impact pfm other than you'll have a new Benchmark to report against um but on the report we do we'll have 3. is we'll have an overnight a short term and then the core and really the overnight is the money that we keep in again money market bank accounts and pools it's the money that we use to make payroll over the next two months I'm not investing out four months there does that make sense I I think it's the right thing to do I would need to vote um well before you do that i' like further explanation do you all understand that I certainly don't what are you changing the what month what I'm doing is adding another level in instead of having just shortterm and longterm and the core I'm adding basically an overnight pool so that comes out of the other yes other one and what do you use for that the overnight rate is going to be the local government index it's it's the pool it's the the rate of a money market or pool longer that's a much longer well I'm investing in money markets and pools so the Investments I'm doing are money market in and pools and a little bit in bank accounts but we don't keep a lot in the bank so it's really investing in money markets and pools and I'm going to compare that against an index of money markets and pools of what that rate should be so I think that's a good Benchmark for that for those short-term Ultra short-term funds and then for the other what what we're going to call a short-term and pool that's money that we're typic more than one day yes more four month to 12 months and but the average over an average year is about 3 months so I'm using a 3mon t Bill rate and and that's the recommendation from pfm I called Richard and said this is what I think we need to do and he agreed with me but I was I was glad I I always try to check that to make sure that when I'm thinking makes sense and he and you used to use we use the the pool the the S&P local government investment pool rate was used for all of it for the short for but you're no longer using it at all no I'm going to use it just for the money market money market and I'm adding a different Benchmark instead of using that local government and pool rate I want to use a three-month rate for the short term which has an average life of three years over the course of three three months over the course of the Year trying to match the Benchmark to the life of the Securities sounds sound okay Jack because it's Leanne and Richard I I will vote to approve what I would have liked to see was the the analysis that you did okay and I mean it seems to me to be a straightforward here's the old index here's the new index and see how the new one is is better than the old one maybe maybe next time we see you we well you must have done something like that so maybe next maybe next time we see you you'll show us that right we'll bring that back so you can see it um it it's I mean this came to mind to it was my idea to start with because I'm looking at a current yield of 5% and my two month three month are earning two and three% and it's because of the inverted yield curve um this never would have come to mind if we didn't have the inverted yield curve but now I'm looking at it and saying we should have a different rate for overnight Securities versus some the things that go out longer so you you explained it conceptually perfectly every so often I like to see the numbers we're happy to bring that back um thank you we'll bring it back at the next meeting um this will I want I'd like to get the committee's approval on this but it's not going to get to the school board for approval before our next meeting so if we bring it back the next meeting I think is March 7th we'll get to that in a minute um whatever that I think it's March 7th we can bring it back at that time and if the numbers don't make sense to you and you want to switch it back we can do that because we can make the change before it actually gets to the board okay well then why don't we have a motion to approve this subject to further revie I'm sorry I didn't think to bring that and back we did we did the work and did bring it in so sorry about that we'll bring it at the next meeting okay so let's that okay for a motion for you all I have a motion fine second okay okay so all in favor I I I I all right okay thank you passes thanks um yeah the next two things um this probably could have gone on discussion the first one but I think I need to vote on this we we did go ahead at the last meeting I mentioned that we were negotiating new contracts with pfm asset management and pfm financial advisors their contracts are expiring um what we ended up doing the investment advisor contract actually had the ability to extend the contract for another five years so that's what we're doing is just extending the contract with with pfm Asset Management pfm Financial advisors we did do a new contract um the language for the contract is essentially the same we made very minor tweaks based on statutory changes but the language is exactly the same the fees did go up a little bit um percentage wise it looks big but it's it's a very small dollar amount it went from 1800 18,000 a year to for whatever we want um to I think it's 25,000 a year um percentage wise it's a big dollar amount but that dollar amount that increase is not not that significant when you think of all the things they do and how costs have gone up um what they did that's the actual dollar that will be paid out right um and that price is based on an RFP that was done at another school district that is comparable to us so that was one of the reasons it was Broward schools so they they did an RFP and we're using the pricing that came from that so it's a slight increase in fees sounds like a good deal either way but this is pfm our financial advisor they could I think they do it so those will be going to the board the investment advisor is going to the board in December the financial advisor is going to the board in January so I wanted to make sure that I advise the committee on what we had done um because when I go to the board I say that you all have reviewed it and you you you're in agreement that that's what we should do so so that's for pfm that's the two pfm and they're they're two separate companies now so it's pfm asset management and pfm financial advisors but it's the people that you're used to seeing okay and that dollar dollar figure you gave us the dollar figure is for which one or for both the dollar ma the the fees for the investment advisor did not change we just extended the contract the increase that we had is for the financial advisor see all right yes that sounds fine Jack you have a second all righty so all in favor matter of interest is the both of these two entities owned by a common parot no pfm financial adviser is um owned by is pfm um pfm asset management was sold to US bank so they're now a holy own subsidiary of US Bank did I say that correctly the holy Bank okay okay all in favor I you oppos none the mil passes okay and then the the last two are just contract up dates at some point I'll bring these to you actually March 7th I'll be bringing the underwriters back the underwriters um we're doing an invitation to negotiate and that's going out in the street in January so that's why we have Underwriters here and on the phone I'm not going to say anything about it it's going out in January um and it'll be on the street for a month and then we'll be doing a scoring and we'll have the results back to bring to you at the March 7th um Finance the next finance committee um is it the same format that we've used for yes reaching to the underwriters this is a general observation it seems to me that that uh EMP significant amount of emphasis should be put on firms that are really actually providing ongoing I know you have a financial advisor but we you know you have all these large firms and they're circling around we need for them to have a continuing uh source of of information and advice whether you follow it or not is another thing but the level of ser ongoing service should be given a considerable amount of weight those people who show up and who who've been around who claim they have some some uh knowledge but but up here when the an RFP comes around should be given short shift I'm I'm Ser I mean really true I think the frankly that the state you being the the for foremost person in that respect should have a significant say in who gets picked and having people in there for various reasons that have nothing to do with with their significant professional skills should be given very little uh time and attention and not participate in the underwriting group the reason I was smiling is my email has been flooded with proposals that are coming in right now there's there's a lot of email well everybody sniffs around and yeah I know I mean I was in the business I know all about it all right well and I can give the committee a heads up we do have a number of Securities with call dates in 2015 that are subject to refunding coming up in the next year we probably will have a refunding issue that'll come to the committee um I we're already lining up PF Laura how if she's still on the phone there they're already running numbers and working on it um so there will be a refunding issue that will probably come to you I'm not sure if it'll be in the March it probably will be at the March meeting that will bring that in so there there's and I can't the emails haven't been coming they are coming in very quickly right now but it's been consistent over the last year there's a group of firms that are very good about keeping us up to date of what's going in the mar going on in the market well they should be rewarded for that I agree good now of course we've got one that dropped out all together who is leading the group now since city city is out um I don't know who had the highest ratings I you got a bunch of them in the room they can probably tell me who the highest ranked one is right now the highest one well I thought we had a one that was leading the pack and that was not just in terms of rating but in managing had three senior in the current pool yeah we had three seniors and it was City Bank Bank of America and JP Morgan we're three seniors in our pool okay and so City Bank is out of that bank is out um they're no longer participating in the market so it's Bank of America and JP Morgan are the current seniors in our pool I see okay and that's that's another reason I mean the fact that the contract is it actually has expired we let it expire because I didn't have any transactions and we were lining up the the process of when we were going to need to do a transaction so we're um working on on that RFP it's it's about done it's in final review I'm actually working with legal we want to make sure we have the sample contract in the document so it's it's been written um Laura how from pfm helped us and put some language in there based on current market conditions so we've we've do have that about finished and it will be going out in January okay okay the other one I still here um and did just want to say it would be it would be March that we would come back and bring the potential refundings to the committee for review yeah yeah Laura we're working on dates to go to the board um so I'll talk to you separately on that because the contract for the underwriters we need to go to the board as would the the cops issue the refunding it would go to the school board and the leasing Corp so we're we're lining up dates to get those scheduled but it would come to the finance committee March 7th um the other contract that we're working on right now our bond Council and disclosure Council those contracts are up and we would like to just negotiate contracts with them I'm working with general council's office they've they've concurred that we should just do new do updated contracts with both Greenberg TR Tri and neighbors Giblin Nickerson they've done great work for us and they're very familiar with what goes on they're the leads in the state for this type of work and we'd like to continue working with them so unless the committee tells me otherwise we're going to go ahead and negotiate that and I'll bring it back to you before it goes to the school board um prices how do you deal with it you give them the set price we we haven't gone there yet we're just getting started on that that's part of the negotiation I'll go to them and say can we just IGN keep it at the same and they're going to come back and want something different and we'll negotiate what what the rate should be so I don't know the answer to that yet can uh pfm help you compare who how do you how do you compare what the market is and what they're offering well usually what I what I what I actually what I do I reach out to other school districts throughout the state that work with the other firms and say what do your current contracts look like but if you look at a current contract it was issued four years ago that is different than a contract that was issued a year ago because there are costs that have just gone up and we saw the inflation numbers I mean there there really is increased cost I try to keep them level let's not make any changes um that's what I'll shoot for but chances are it's going to go up some okay but I don't I don't know what the rates are I'll be bringing that back to the committee right now this is really for discussion let me know if you have concerns and I'll be coming back to youan I think you have three new board members we do school board do you do any kind of uh in I'll say help them understand what all we do or you do I should say well I I know we're doing a um can't think the word onboarding so we are doing an onboarding with the three uh new board members and and the superintendent was previously the CFO um so he's able to to educate the the board members um on the importance of the committee um the reason that you have the expertise and you're there to support them well I know the county went through this last election they got three new P me there was a little bit of uproar about some of the things that were done and I say uh kind of out of left field and just so you don't get hit by that right okay well the the annual investment debt reports are going to the board in December yeah um again that's one of the reasons I printed hard copies because there are some new school board members and you may get a phone call um and I wanted to make sure you had a copy of that that you had it instead of having to find it online um the onboarding process is is getting the board members up to speed to help them understand all the things that go on um I don't know if they're planning there is a um fsba which is the Florida School Board Association offers I I know they they had a meeting this week and they do an onboarding for new school board members across the state they also offer um training for finance they do a finance 101 and I'm one of the people that do that course um it's happening in February and we did it for the last twoyear cycle of Schoolboard members I had three two-day trainings with new Schoolboard members from across the state so I don't know if our school board members will choose to do that I do it with two other um Finance officers it's a the CFO from Lake schools and then it was a CFO from St John's she's retired I think it's going to be somebody from Sarasota that fills her spot and one of we all talk about the things that we know the best so I'm talking about investments in debt and the capital budget and committees and and when I did that a lot of the Schoolboard members are from small districts you know we we're one of the largest in the state but a lot of the districts are much smaller and there was a lot of discussion about our committees and we I spent a lot of time talking about the finance committee and what you do and I ran into some of the Schoolboard me members at a meeting earlier this week and they said you know we tried to do a finance committee like you have but we're a very small district and we couldn't find people with the expertise and one of them actually pulled me aside we watching your Finance committees now because these are all on YouTube so these Schoolboard members from other parts of the state are now watching our finance committee so we do have an audience they they watch it after the fact but but they do they see it so um we we'll we'll find a way and make sure they do know all the work that you all do um I mean that's one of the reasons at on that annual report at the very beginning I I say and commend this finance committee for all the work that you all do we could not have done all the transactions we've done over the years without having this committee with all your expertise I mean there there have been times where we propose something and you'll say no we shouldn't do it that way we need to do something else and I can't promise we will always do what you recommend but I think I always have because you've got so much expertise we want to take advantage of that so I we we feel the same way frankly you're you're terrific that's right finding us folks you do a great job that's the reason I suggest since you have more Authority as it were or a a bigger ballot than anybody else in picking the underwriters because fundamentally we want people who are actually in the business a major way and have a commitment to it and going to continue to be of service between issuance not show up for the uh closing dinner well I'm hoping that the way we've the way we've adjusted the the the solicitation counts for that I'm really hoping we've got that in there because there are limits they can't give me a bigger vote that's not allowed in statute I I I'm not allowed to do that um okay but the way we write and the questions we ask hopefully will facilitate that in in in the proposals okay so that is all I had on the agenda I just want to again thank the committee for all the work that you do and all the expertise and knowledge that you share with us we really could not do what we do without you thank you for the Christmas yes indeed yes meal breakfast was beautiful I'll get up earlier next year have the so I get my the dates for the next meetings it is March 7th I remembered correctly so there's the other dates um I'll send out calendar invites later today so you have them on your calendar um I took out we used to have two extra ones in there that we always ended up cancelling I just took them out so we have the four quarterly meetings um and these align nicely with we've had sometimes where my dates are too tight to the end of the quarter and puts a lot of um pressure on pfm to get us all the reports I think I've got these in a nice range for you Richard um so hopefully we can stick with these dates this year and don't have any changes or cancellations so I'll send these out to you um this afternoon super is there motion for adjournment so moved a second from Paul all right we're adjourned thank you very much thank you man hey good to see you thank you thank you