Fiscal Sustainability Ad Hoc Committee - Regular Meeting

Yeah. I think we could go ahead and get started. Yes. ZJ had notified us that he won't be making it today.

Yeah. So with that, since we don't have an official chair, I guess I'll call the meeting to order. So I'm gonna take roll real quick. So I'll just go down the line. Ted Kim?

There's a button on your microphone you can hit.

You just say present or you're

So press the press the button on the bottom, and I'll be

able to Yes. Perfect. ZJ Han. Council member Charles.

Present.

Thank you. Yoon Jae Park? Aye. Present. Thank you. And David Galumpic? Present. Thank you. Okay. And then, I guess with that, Lucinda, our city clerk, will be, conducting, the oath of office and orientation.

I'm in here sans agenda. It's very strange for me. So good afternoon slash early evening. I'm Lucinda Williams. I am your city clerk, and thank you, those of you who are new to the committee and for being here tonight.

First step of order is to make you official committee members. Council member, you've already taken a note of office, so you can join along just for fun if you want to. But, for the rest of you, I'll ask you to rate, if you will I state your name, do solemnly swear that I will support and defend the constitution of The United States and the constitution of the state of California against all enemies, foreign and domestic, that I bear true faith and allegiance to the constitution of The United States and the constitution of the state of California. Don't repeat this part. Sorry.

Frog in my throat. That I take this obligation freely without any mental reservation or purpose of evasion and that I will well and faithfully discharge the duties upon which I am about to enter upon which I'm about to enter. That was the hardest thing you're gonna do tonight, so congratulations.

Yes. Orientation.

Okay. I also normally, I take the new committee members through I can just go back a little bit. I always joke that I'm, like, HR for the committee. So when I come when you hear from me, I'm, like, fill out an application. Do this form. Let me tell you about new rules. The staff here are the ones you really will you wanna hear from them. They're the fun stuff. But please don't ignore my emails if I need something for you. It's probably statutory and wanna keep you out of trouble.

But, normally, I do about a half an hour to an hour long, depending on how chatty the group is orientation with all the new committee members. We have a lot of new rules coming, in by July 1 this year, so I'm gonna give you the very quick orientation tonight, and then I'll give you the more thorough information as we work out how we're going to apply the new bill that kicks in on July 1. Just so you know, the law that governs doing public meetings is called California Brown Act, and it basically says, do the public's meeting in public. You're here to represent them. They're you should have all gotten a copy of it from me in email a few weeks ago just before the holidays.

So that's part of the law that by January 1, had to give a very copy of the Brown Act. So in case you haven't memorized all that, there are really just two main things you need to know for tonight. So number one, the law says you cannot discuss anything during a meeting that's not on the agenda.

I'm I'm sorry to interrupt, but we don't have the presentation on our screens. Oh, do we? Monitors. There is a presentation.

Sorry.

Thank you.

Yeah. I don't have a presentation to go with this,

but Okay.

Unless someone stole my my my slides and put them in there, which I'm not following, but thank you for that. So the two things that you need to know for tonight are don't discuss anything that's not on the agenda because, the Brown Act says that the public has to have a chance to have ample notice and an opportunity to part participate any of the discussions you do during these meetings. So, while it's a little frustrating sometimes that you can't always make decisions quickly, it's there for a good reason. Democracy is a great thing. It's just not as fast as some people might wish it to be.

So please keep that in mind. So if it's not on the agenda, you can't have a full blown discussion about it here in the chambers. If it's something that's in the committee's purview and you wanna talk about it at the next meeting, ask your staff to put it on the agenda, and then you can properly discuss it. Part two of that also means outside of a meeting here in the council chambers, the committee members cannot discuss business of the committee because it's not done in the public forum and the public doesn't have a chance to get notice and participate in that discussion. And that basically means discussion amongst yourselves as committee members.

You are welcome to talk to staff one on one about things in purview of the committee at any time. That's okay outside of a meeting, but just don't accidentally create some sort of inadvertent inadvertent consensus where a quorum of you talk to staff and somehow you all know how each other are feeling. And all a sudden, you have you've kinda made a decision outside of the legislative process. So those are the two things that'll keep you out of trouble. The good news is this committee is pretty much advisory, so there's not a lot of decision making that can happen outside of your committee anyway, but just wanna make you aware of what the laws are.

And believe it or not, people pay attention to these. So that's what's you need to know for tonight. And, again, the Brown Act has a whole bunch of updates coming that on July 1. We'll get through those. Look at the slides later. You can have a longer orientation. No. It's okay. A couple other things since the slide is up, just to know your agendas will always be posted, seventy two hours at least before your meeting unless you have a special on the fly meeting, which requires a twenty four hours notice. These laws just, you know, apply to any legislative body, in Fullerton from council all the way down to the committees.

So you're all under the same rules. So now you can gotcha no. Don't gotcha the other committees. But now you know the rules that apply all of you. Also, there are not on these slides, but there are two new bills, last legislative sessions that will kick in this year that might apply you.

One for sure does, s p eight five two. I'm sorry for all the numbers in the bills, and even I get them confused sometimes because I don't work well with numbers. But this bill requires, won't be a change for you because you haven't filed the economic interest form under the old process, but committee members used to file the form with me. The economic interest form is filed with the city well, filed thirty days within assuming office annually while you're in office, and then you have to do a leaving office to close the loop within thirty days of leaving. Those used to be filed directly with me at the city.

Starting January 1, the state had decided any anybody dealing with investments has to file directly with them. So keep an eye on your email for something from I think it's the email address is form 700. It might is it the person who gets it is nodding yes. You'll get an email from form 700. It's not junk mail. It is the state f political practices commission. Sorry. I almost said f p p c FPPC. And they'll they'll guide you through your filing. You file through their online system.

It's a very simple form for the most part. You shouldn't have to report too much unless it applies specifically to what you do on this committee. And the nice thing is once you file in the system, if nothing's changed next year, you just hop in, you open up your form, you just check more or less, nothing's different, I'm filing for this year, and you're done. So the online filing is really handy. But please file because the FPPC is a little meaner than I am about nagging you for filing.

They will definitely remind you if you haven't filed. So please do that. And then just a heads up that we're still discussing whether it applies to this body or not because it is advisory, but there's also a bill s b eight two seven. So I just took care of one of your your other agenda items on there, which is require requiring certain folks to deal with investments and finance at the city to take a two hour financial training. So stay tuned. You may have to do that one also. But you will have also, as a committee member, two hours of ethics training, two hours of harassment prevention training. We won't make you do them all in one shot. Well, don't worry about it trying to do it tomorrow. We'll set up trainings for you and make sure you're in compliance with all the rules.

But that's that's a quick orientation to get you through what you need to do this evening because I don't wanna tie up too much of your time while you have the consultants here who are gonna do hopefully, not to you. What they do to me is think I've wasted my life and put all my money in the wrong places every time I hear their presentations. So, hopefully, PERS is doing a good job for me. So so I'll leave you to the rest of your meeting. Thank you.

So Lucinda gave a high level overview of your orientation. Just wanna remind you guys that there is an orientation packet, in your agenda, with several other slides and information. So feel free to read up on that. And if you have any questions, you could email myself or even reach out to Lucinda City Clerk as well. So next on the agenda, we do have public comments. As we, you know, haven't selected a chair or vice chair yet, I'll just ask the crowd if there are any public comments that wanna address the the committee.

No public comments in Zoom either, so we can move forward.

Okay. I am seeing, that there are none. Great. So next, we go to the action and discussion items, and the first item is the selection of the chair and vice chair for the investment advisory committee. Sure. Thank you, Lucinda.

I'll put on my para parliamentarian hat for a moment. Nominations. So for nominations, we'll need a chair and a vice chair for the committee. It's a one year term. We'll need to open nominations then close nominations, and then you will select from those nominations someone to serve as chair and then another round as vice chair. I'll remind you that you have just one more member that's not here tonight. Right? Yes. Because you have a vacancy. Sorry.

I'm trying to manage all 10 committees in my head. So your other member that's not present, well, you can always voluntold them and nominate him as a chair for next meeting, surprise if you like or Jike's chair. But you can also nominate yourself or nominate one of the other committee members to do this. So I will, if you no one minds, I'll open your floor to nominations. And committee members, you can name your nominees.

Okay. I would like to nominate my colleague, David Golumbik, for chair.

And this is for chair. I should have specified that. Yes. Okay. And I would

like to nominate David Golumpic as well.

Okay. You don't need to.

You've already been nominated. Yeah. You can vote for yourself, but you don't need to nominate yourself

There's a second.

Okay. We don't need a second for this, but we have one anyway. So there you go. Anybody else for chair? Otherwise, we'll take a motion to close the nominations, and anybody can make that motion.

Okay. I'll move to close the nomination. I think I do need a second for that.

Yes. We do need a second.

I'll second that.

Okay. We have a motion to second the close the nominations. Please take the roll call vote, sir.

Okay. I'll take the roll call. Ted Kim?

And you're just saying yes or no whether you're okay with closing the nominations?

Yes.

Council member Charles?

Yes.

Eunjae Park? David Galumbic?

Yes.

Okay. Nominations are closed. You can now, since there's only one one nominee, if there is no, we could accept it by acclamation. That's the word I'm looking for. It's been a long day. So if there's no objection, mister Columbic can be your chair. Okay. Chair is accepted by acclamation. If you don't mind, sir chair mister chair, I will lead you through the, the nomination process for vice chair, then you can delve into the hard stuff.

Oh, okay. Sounds great. Thank you.

Got staff's here to guide you the rest. Okay. Now we need a a same process for the vice chair. So if anybody would like to nominate a vice chair.

So I would like to ask my colleagues if if either of you two would like to do it. I should not be nominated. I just wanna point that out. So if either of you two would like to do it, you're you're welcome to step forward and say that you would like to. I I know it's your first meeting, and that's difficult. I mean or we could also nominate, mister Zijay Han, who was here from last year, if you if you feel more comfortable with that. Whatever you two feel comfortable with, I think, is good. Okay. So it seems like they do not want to be vice chair, either one. So I'll nominate, ZJ Hun.

Okay. And he's not here up here to object. So You snooze nose. He he might be voluntold by next meeting. I'm sure he would be fine with it knowing him. But, in that case, we'll take a motion to and a second to close nominations.

I second.

Oh, yeah. Move. Nobody's moved yet. Do wanna move move to close the nomination? Even

better. You get the motion.

Ah, okay. Move to close nominations.

And is there

a second? Okay. And then we will vote to close nominations for vice chair.

Okay. Ted Kim?

Yes or no on closing the nominations?

Thank you. Yes. Yes. Oh, thank you. Councilmember Charles?

Yes.

Yoon Jae Park? Yes. Thank you. And David Golombic?

Yes. Thank you.

And that item passes. And, again, we can accept, mister Han as chair vice chair by acclamation if there's no objection.

Okay.

Okay. I lied. The oath was the second hardest thing you're gonna do tonight. I swear it gets easier from here now. But, in that case, I will turn the meeting over to the chair, but don't worry. Staff will guide you through the rest of the agenda since you got put in this position unaware. So thank you.

Okay. So the next item on the agenda is the approval of minutes from the regular meeting of 01/16/2025. Were there any comments on the minutes at all? I know you guys weren't on the committee at the time, but just any general comments at all.

I I was on the committee, and I I reviewed it.

And to me,

it looked fine.

Okay. Perfect. Okay. With that, if there's no discussion, I'll entertain a motion to approve the minutes. I'm gonna take a roll call vote to approve the minutes. Ted Kim? Yes. Thank you. Councilmember Charles?

Yes.

Yoon Jae Park? Yes. Thank you. And David Golumbik?

Yes.

Okay. Thank you very much. And we'll move on to our next agenda item, which is gonna be the review of the city's pension and OPEB plan one fifteen trust investment portfolio. I believe Ashley Barris with PARS is gonna start the presentation off.

Good evening. Good evening, committee and council member Charles. My name is Ashley Byrus. If we go to the second page, you can see my contact information there. Jennifer Mesa is also with Par. She'll probably be with us at the next meeting. And then we have Keith Schirpling, which is your city's assigned portfolio manager from PFM, who'll be going over the city's investments and performance. Alright. So page three shows your PARS one fifteen trust team. We are the trust administrators.

We are the central point of contact for this plan, and we also work with US Bank. They are the trustee. They are the custodian of the assets. They hold the money. And then we work with the investment manager or the portfolio manager, which is represented by Keith Stribling here today.

Now page four shows a visualization of our combination one fifteen trust. So you can see a sneak peek of the assets in each one of those buckets. OPEB stands for other post employment benefits, so these are most likely health benefits, and then you have pension. And any money in the OPEB bucket can be used for OPEB expenses. Any money in the pension bucket can be used for pension expenses.

So we combine the assets to reduce fees. However, those assets are kept separately for accounting purposes and in relation to any reimbursement requests or benefit requests. Now we're gonna get into pension. So this slide is gonna be helpful, page six, to really explain why the city is pre funding their pension obligations. So the first one we have there is complete local control over assets.

So the city is able to control how often a contribution is made, the frequency of that contribution, the disbursements, the timing, the risk tolerance, investment levels, all of that the city has control over. Also, it is a pension rate smoothing tool. So we're going to see in a few slides that pension fluctuates, and this plan is a good tool in order to prepare for those fluctuations or to smooth out those fluctuations. Thirdly, this is a rainy day fund. So if the city ever has difficult fiscal year, you're actually able to take reimbursements of your pension payments or your OPEB payments and take from the one hundred fifteen trust to reimburse the city.

So it allows for some extreme flexibility in case there's ever some years where the city needs some extra money you can pull from this fund. And fourthly, diversification. So usually, you're not able to invest in stocks with the city's funds, but this one fifteen trust is an irrevocable trust. So you're able to diversify, which allows for greater earning potential, and we'll be able to see that in the next slide. So slide seven shows a summary of the pension plan.

So started with us back in 2015, the first contribution didn't come in until 2020. We see that first contribution of 100,000, and then the city made additional contributions totaling $487,000. No disbursements have come out of this fund so far. Net investment earnings, 261,000, about half of what you put in. So that's some excellent earnings there.

Account balance at 748,000. And I will note that the investment strategy for the pension is the balanced strategic blend account, and that strategy can be changed at any time. And if we go to page eight, this is a history of the contributions and total asset growth since inception. So we see that all of the contributions came into the first year, that the plan was open. No contributions since, and like I had mentioned, no disbursements, leaving those total assets at 748,000, and this is as of November 30.

We are just shy of the December data. Page nine shows the city of Fullerton's CalPERS pension plan funding status. And so if we look here, the latest valuation that we have available is from 2024, And I went ahead and compared that to 2023. These are the same numbers that I showed you at the last meeting, but just wanted to go over it. The actual liability for the city's pension plan, CalPERS pension plan, 967,500,000.0.

And we see that the funded ratio for the plan is at 67%. Employer contribution for the most recent fiscal year, 34,100,000.0. But if we look at the projected increase, and this is all coming from the CalPERS pension report. If we look at the projection for fiscal 3132, we see an increase of 20%. So 40,900,000.0 that the city is going to have to figure out how to pay in the next few years. That is where this plan comes into play. We see those fluctuations year by year, and plans like this help smooth those fluctuations.

Can I interrupt with a question? Yes.

Of course.

And this came from a resident who actually came to see me in my office hours today and asked a specific question, and and I didn't know if there was even an answer. But you might have heard, from the news, it's in the Fullerton Observer, that the city of Fullerton has issues right now with CalPERS where we're dealing with some retirees who were kept on, you know, longer, and there's a an an ongoing issue there. And the resident asked me, does that issue affect how much we're going to have for our pension liability? My guess was no, but I wasn't sure, and I thought this would be a good place maybe to see if you have a take on that.

You know, I am not able to answer that definitively, but I can do some research and see if I can get an answer

for you. Thank you. You're welcome.

Okay. Page 10 shows the pension plan total returns. So year by year, we're showing the returns, that this plan has had. June 2025 was the last full fiscal year returns returning just shy of 11%. So far into fiscal year end 2026 returning 6.74% with an inception to date annualized return of 9.23%.

All right, and now I'm going to get into the OPEB side of the trust. So page 12, again, why pre fund OPEB? So there are a few reasons. First, reduce cost, diversification allows for a greater rate of return. Number two, it also improves your discount rate.

When the city continues to continually continuously makes payments towards their one hundred fifteen trust, your actuary will eventually grant you a higher discount rate, which will lower your your liability. And also, according to GASB 75, your OPEB liabilities are placed directly on your balance sheet, but any assets that you have in the one fifteen trust will be able to be list as listed as well, offsetting those liabilities. And lastly, it improves credit ratings and has a positive impact towards any long term borrowing costs. Costs. So page 13, this goes over your latest actuarial results.

So your actuary is GovInvest and the latest report that they have is dated 10/29/2024, and this does have a measurement date of 06/30/2023, so next time we meet we might have a new report to go over. But this report shows that there are seven twenty four participants who are or who will one day receive a benefit from this plan. Page 14 shows some more results here. So here we see the total OPEB liability. So as of that latest valuation, $26,200,000 is the liability.

You have, according to the last report, but again, it is a little outdated, 70,000 in assets, leaving a net pension liability, net OPEB liability of 26,100,000.0. I will also note that your discount rate did slightly increase from the previous year, which did have a positive effect on your total OPEB liability. It did decrease slightly. And so we'll see if the city ever does continue to contribute to the 115 trust, your actuary will most likely award you a higher discount rate continuously lowering that total OPEB liability. And then the actuary has determined your ADC, your actually determined contribution of $1,800,000.

This is what the actuary recommends that the city puts into the one hundred fifteen trust every year. That hasn't been the case, but that is what the actuary recommends. And then your annual benefit payments, 971,800.0. And these, this is your retiree benefits, so this is just paying as you go. It's paying the bill as the bill is due. So that is for fiscal year 3234. Page 15, very similar to pension. Same strategy as pension, the balanced strategic blend. This plan was started in 2015. It's a bit older than the other one.

First contribution came in in July 2017. So the city can technically take a reimbursement of one fund, put it back into the general fund, and if it needed to, use it for the other fund. But for accounting purposes, they are separate and will remain separate as they're irrevocable.

They they cover different liabilities. Let me just start on, page 3.1, which will be a performance page. I won't spend a lot of time on it, but I'll spend a lot of time.

So pick I'm sorry.

Point one. I'm sorry.

It's a little hard to hear you if

you could close to the mic. You can also move the the the podium actually comes up if you on the underneath the podium, there's a switch. If you push it, it goes up. Do you need that?

It's just a little hard to hear you.

Oh, I see. Oh, very nice. Thank you.

You're welcome.

I like that. Alright. So these are the investment returns through September for the for the portfolios. They're both in the balanced strategic blend, which is the active strategy. The strategic asset allocation for that strategy is a sixty forty mix of stocks and bonds.

As Ashley mentioned, the the pension has grown at a 9% compounded number since inception and the OPEB up eight and a half percent basically since inception. They were in the capital appreciation strategy up until October 2024, and then the committee decided to it had been a pretty good period for risk taking, so the committee decided to reduce the risk a bit. And also with interest rates higher, it made the, the portion that's in, fixed income more attractive anyway. As you can see, the year to date number, through September, the portfolio was up, 11.24%. I will tell you that the next quarter was also positive.

So I think this strategy is gonna be up about 13 and a half percent for the one year period 2025. So it's another fantastic year. And so that pretty much covers the the return portion, but, basically, it's, you know, just been a very good time for risk taking and financial assets. If we go back to the colorful slides, that would be 2.8. I'll talk briefly about the economy and then, the portfolio positioning, and then I'm glad to take any questions.

In terms of the economy, it's continued to be a policy driven market. Trade relationships and tariffs are sort of in the spotlight. They're being challenged in the Supreme Court currently, and, there's some skepticism within even the, conservative justices that, tariffs should really be treated as a tax, and the tax authority is clearly with congress. I'm sure that the, Trump administration has nine different ways that they're gonna try and get around that if they get reversed. So, stay tuned for that.

But companies are suing to get their tariff money back. I I don't really think they're gonna be successful with it, but we live in America, and we have a legal system. And you can sue anybody for any reason. The other areas, deregulation, supportive to risk taking and to financial markets. The big beautiful bill was a tax and spending bill that is a very pro business bill.

And, then we also have the other policy area that's, in the news quite a bit is deportations. I would say that the big beautiful bill and deportations have the potential to be inflationary. Changing to the other side of the equation, monetary policy. The, Fed has cut interest rates twice now and, recently and, basically become more worried about the labor the health of the labor market. So if you look at the unemployment rate, it's been quite stable.

However, the demand for labor and the supply of labor are both falling at a similar rate, keeping that number constant. But, the Fed is worried about the, demand for labor side of the equation. Supply of labor is, falling because we have baby boomers retiring, and we have, deportations. And, both of those are affecting, the labor market on the supply side. On the demand side, companies have AI.

And, you know, I think maybe there's some uncertainty about what their needs will be and, you know, how AI will affect that. So that's kind of slowing the, demand for labor. Ten year treasury has been, pretty much range bound between four and four and a half percent for a long time, but the shorter term rates have come down quite a bit. So the yield curve has steepened, implying an an expanding economy. We did have a government shutdown for a while, so the, Department of Labor statistics are a bit old and some of the economic data that the Fed's working from is a bit stale, but that should start to normalize pretty soon here.

In terms of the stock market, we had a, small AI, artificial intelligence stock correction in November and con concerns over AI valuations and some of the circular nature of the deals had people a bit worried, but it seems to be forgotten about already. In general, the stock market's been very strong. Good economy, positive tailwind from deregulation. AI investment is driving earnings growth as well as driving the multiple of the market higher. So that's a compounding effect for the stock market to perform well.

And, of course, more expectations for the Fed to continue cutting rates. Those are all supporting the stock market. If you'll flip one more page. In terms of positioning, I like to consider this the, fairway slide because

I'm sorry. Do you mind if we just go back? Because we didn't really talk too much about the the lower right hand corner, which is to me the most fascinating. But political policy risks, you had it at very negative, moving to slightly negative. I'm wondering, does this take in and and it it definitely does focus on foreign policy here?

It would be prior that would be prior to

some of problems.

Pre Venezuela. Yes.

And and not assuming Greenland,

which I've heard would have

a massive effect if, god forbid, we should do that?

I think, I am not the one that sets the, I'm not on the asset allocation committee, but I'm gonna bet that that is going to nudge back over to the left when we, get the next readout from this slide because this is basically off of September. So it's before some of the more recent geopolitical decisions.

Okay.

Yeah. So in fact, I was gonna mention that in the next to some degree in the next slide. So, this is our, you know, our fairway slides, basically positioning. As you can see, we're positioned right up the middle of the fairway, neutral to the strategic asset allocation, balancing policy uncertainty, some of the stuff I talked about earlier, the changing nature of policy, elevated valuations, you know, market multiples risen. And I would say I was gonna suggest geopolitical risks may come back into the fore as well.

That was a risk earlier in the year, and it seems to be maybe even more prevalent now. Along with the fact, you know, we're balancing that against a good economy that supports company, growth and fundamentals, some of the, the big beautiful bills, pro business, and the deregulation, all those things kinda helping the the economic part of the economy. And then, of course, rate cuts from the Fed is always supportive for risk assets. So, you know, when you have that's both sides. It's always easy to find, the things that could go wrong and the things that could go right and, you know, some right now, the scale's just sort of tilt to leave it in the middle.

That's all I have. You know, other thing I'd just say is saving is a habit. And I know it's not easy, but, getting money set aside in these plans will really benefit the city over the long run.

So here's a one other question. Do those, disbursements have to come from the general fund, or could they come from, we're talking about putting a sales tax, for example, that's dedicated to public safety and dedicated to roads. Would that offset the public fund, basically general fund expenditure here maybe if we did that? Or could some of that go to this kind of fund?

So if you have a sales tax and it pay it it pays some of your bills, then that would free up other money to move into the so it's, you know, buckets of money and accounting for how you wanna do it. But, you know, if that eases the the pressure on the budget and and leaves you with more money in your general fund, then you have money to contribute to these. So I think that would be a positive.

And just to confirm, these are separate from the reserves that Mhmm. Were discussed in November, I believe it was? There we have 17,000,000 in reserves?

Yeah. This

This is entirely separate.

This is entirely separate. Yeah. This is set aside for these liabilities.

Thank you.

Yep. Yes. So they're they're two different accounts we have. You know, $1 you know, one liability is the OPEB, the, you know, its other post employment benefits that we you know, if we we could potentially, you know, withdraw some funds to contribute towards that purpose and the same with the the the the the pension side of things. And I believe the pension side of things, it's related to public believe public safety is is who contributed to that pension, trust.

So, and pub public safety is our, you know, our biggest pension, you know, UAL, unfunded unfunded liability costs. So potentially, you know, we could we could draw down and and pay towards those increases that we're experiencing year over year, you know, as well. And then, you know, as as I mentioned, we could redirect other funds elsewhere. Yeah.

K. Nice to see everyone.

Thank you very much, Ashley and John. Appreciate that. So, next, we have John Grady from PTA, Public Trust Advisors, to give a presentation as a

We're doing the review a market update and current investment portfolio for the quarter ending 12/31/2025?

Yes, sir. Thank you. Thank you, council member Charles. Mister chair, committee members, congratulations, first of all, on your appointment to this committee. I'm John Grady with Public Trust Advisors, and this is my colleague, Sarah Meacham. And, we won't repeat really what Keith talked about, but we'll spend a few minutes. This is a general format of on an economic update as as council member Charles knows. I think you've heard us present in the past, and then we'll tie in the economic update, generally just covering a couple of economic indicators, couple of yield curve charts, and then we'll tie that into the city's investment program. The difference between our presentation and PARs is that this presentation actually covers the operating dollars of the city's funds. So these are not retirement funds.

These are monies that you need on a day to day basis. And then some of those, of course, are longer term over the next couple of years, and then you have some in reserve funds. And we'll talk about the strategies that are in place for these types of funds based on that. This investment program is actually back based on California code, fifty three six zero one, and, that code specifies certain investments, not just the investment type, but maturities, rate minimum ratings, and so forth. And your policy actually pretty much follows California code.

You're actually a little more conservative in some of your percentage allocations, but your policy is well written. It was recently updated as of November 2024. We generally reviewed that with the city at least on an annual basis. And whenever there are needed changes or recommended changes, whether it's through us, committee discussions, whether it's a strategy change or potential changes in code, then this policy is is brought forth to this committee, discussed. And then if there are changes that are recommended, then now Steven would take that to the council for approval.

So that's how that works. Just wanna give you a little background on that, on the policy, and then California code. So let me just jump right into our economic update. And the first slide thereafter are all of our legal disclaimers here is gross domestic product. And as Keith mentioned previously, so, of course, some of this data has been released much later than it normally would be.

In late December, we did receive the the third quarter GDP. Couple of high level comments. It's actually 4.3% growth you see there on the far right hand side of the chart, and it was actually driven primarily by consumer growth and consumer spending. The good news is consumers make up around three quarters of the economy. And so when we're spending, that certainly is generally a good thing for the economy. The other component that was positive for for the quarter, you've seen that light green bar is net exports. It represented around 1.6% of the overall GDP. That's positive. It and that was mainly due to we had a higher level of exports versus imports during the quarter. Part of that is also still kind of tapering off from the 2025.

As you may remember, you can see from that chart, it's the third bar over from the right where we had significant imports, and that's where we had that contraction in the economy simply because of all of the massive imports as tariffs became the talk. So, again, good news is if we look at those three bars from the right, you can see the blue sector, which is personal consumption, we've actually improved each quarter. So that's a good thing, and that's really been helpful for our economy, especially given that even though inflation's come down, it's still increasing. It's just not increasing at the level that we saw over the last few years. So good news is GDP has picked up highest levels since September 2023 and certainly much more improved than we saw in the 2025.

I believe the the estimated estimated range for GDP for '25 is around 2 and a half percent or so based on estimates. We'll see when that fourth quarter comes in. On the next slide, we'll look at jobs. So we'll look at jobs and inflation. And, generally, we cover these two and then the overall economy. As you know, the Fed's primary mandate is stable economic or monetary policy and then full employment. And so when we look at the labor market, Keith touched on this a bit. A couple of highlights. There's a lot of bars on the top right hand side, but if we look at that, the gray bars represent what's initially reported. The light blue bars represent the revised.

And then those light green bars, which many of those are negative, that's the difference between the initial reported jobs. And you all know, really, beginning in August, that became a highlight, a big focus of the jobs reported and then ultimately what the subsequent revised numbers were. Without going into a long winded discussion about it, which I'm sure many of you have read about, though, and that is the difficulty in collecting the data. And then it's generally reported the first Friday of the subsequent month. And so thinking about trying to gather this data and then report it within less than a week.

Sometimes it's just a matter of a few days. But nonetheless, a couple of highlights. December job growth was four was, pardon me, 50,000, slightly lower than the estimated 70,000. But I think the bigger thing to mention is that for the calendar year 2025, job growth was 584,000 new jobs. The prior year, it was 2,000,000. So it was a seven 71% decline in new job growth. So if people are mentioning a weaker labor market, there's no doubt that's certainly reflected in these figures. And I think that is a part of a concern, is that if we're not seeing job growth, that certainly impacts the consumer and our ability to spend.

Will to maintain job growth of the demographic? The understanding is generally that the economy needs to add about a 150,000 to 200,000 jobs a month to keep up with population growth and things like that. So just prefer perspective Yeah. On those numbers.

Thank you, Sarah. So I think that's a big that's gonna be a focus of the Fed, in particular is this weaker, labor market. That said, unemployment nationally ticked down just a tad in December to 4.4%. It's relative. Right? So if we look historically, 4.4 unemployment would generally be considered pretty good. I think the ten year average is around 4.7%, longer term, maybe closer to 5%. But we've come as yeah.

The thinking used to be that 5% was considered full employment, but we've lived under 5% for so long now that if we ended up back at 5% unemployment, most folks who are doing investments and, you know, managing money in the economy, sort of, you know, making decisions based on economic data might be a little nervous about a 5% unemployment rate. Councilmember Charles.

So just thinking about the denominator of that unemployment rate, it's among people who are looking for work. It doesn't take it takes people out who are not looking for work.

Correct. And what you're looking at here is the u three unemployment rate, which is the big picture. And then there's also the u six, which is a, we call that the, underemployed rate. So it counts people who want to work full time but can only find part time work. And so, like, you know, coming out of, the Great Recession o '8, o '9, like, we had this big spike in that difference between u three and u six, and then it kinda converged.

And so, you know, if you think about the types of jobs and the way that people are engaging in the workforce today, you know, you see a lot more of that part time labor. We hear a lot about of it in retail and things like that. So, you know, if you dug down into the more complex detail of these numbers, there's still a lot going on there that sort of defines this weaker labor market.

And I'm so sorry. This might break quorum for one second, but I need to take a a call from a vet

Would you like us?

Our pet snake. So I'll be back in just two minutes.

Do you want us to pause, council member Charles?

It does break quorum, so it's up to you. Because we three people is not enough.

So that sounds like we may want wanna pause for a moment. That that sounds good. Isn't that funny how that works?

Since I have I have two. I have, like, a hand like bun. They're like

Yeah. Definitely. Well, I guess since we have a moment, I if you don't mind, I'd love it if you maybe share a minute or several of your backgrounds. Is that is that fair?

Okay.

Okay.

Oh, nice. Wow. Okay. Okay.

Sorry. That's alright.

My my chair.

Alright.

Thank you, and my apologies for the interruption.

And I

Are you talking about backgrounds?

We I we didn't know how much time we so I was just asking about their background.

So I teach at Biola University as a orchestra conductor and also I teach at Fullerton College.

Oh oh, nice. Yeah. Beautiful campus.

Oh, okay. That's great. So you're a professor too.

Yeah.

I don't know if you gentlemen know my background. I'm a tenured professor over at Cal State Fullerton. I teach in public health, and I'm I'm the coordinator now of our Miles per hour program, a master's in public health, as well as serving on the council representing that district over there.

I see. Great. Alright.

Yeah. I'm I'm working for the commercial real estate agent. Okay. Yeah. Actually, a broker.

Yeah. Yeah. Thank you. Well, thank you for that. We appreciate that. We will get back into it. We were talking jobs here. Thank you for your comments. I'll just finish this. You know, we talked about the unemployment, councilmember Charles. So one thing I'll add to that based on your question about the unemployment rate that's we don't have on here, but we've had it in the past, is that it's the labor force participation rate. So that's really the number that you look at. And if you look at that number, it's been around 62.6% to be exact for several years now. Before going back to the global crisis that that Sarah mentioned, it was closer to 67 or 68%. If you look at those figures, it may be even a little higher.

That doesn't sound like a lot, but every percent based on a two seventy million working age population represents mathematically 2,700,000. So even if you're looking at 3,000,000 3% for our example, you know, that's close to 10,000,000 folks that are not included in this because they're simply they've decided not to seek work for one reason or another. So that's an interesting dynamic that that's continued to play out with our labor markets. And in spite of even what we saw with some stronger growth in '23 and '24 coming out of the the pandemic for sure. But I think is just get to get back to the point of this slide, slower job growth.

In fact, I didn't mention let me mention the fourth quarter was net negative job growth, so that's a big deal. And then I believe the tally now is over 300,000 federal jobs were lost in 2025 as well due to all, you know, a lot of these orders and and and things that took place. So weaker job growth. And and, Steven, if you don't mind, we'll talk about CPI for a moment and inflation. And and I think we'd mentioned a little bit earlier, the good news is that inflation has come down, meaning prices are not increasing as much as they were certainly a few years ago.

December this is November. I'll I'll touch on December that was just released this last week. It's actually very it's exactly the same headline or overall was 2.7%. Core was 2.6%. After moving higher in the spring and then in the summer, really, from the tariffs and some of those costs being passed along, we actually saw a so I think it was a surprise to many, the the decline in in CPI in the late in late two thousand twenty five, November and December now.

So that's favorable. Because if we think about inflation and we think about the labor markets, I think it does give the Fed a little bit more relief than they maybe had a few months ago. The reason is when we generally see a weakening labor market, right, the Fed is generally inclined to lower the interest rate to spur economic growth. But when you have higher inflation, they're more inclined to hold steady or potentially raise the rate to sort of stem off that higher inflation that may occur from lower rates. So they were literally had two, of their mandates were were in conflict with each other.

So now they've got weaker weaker job growth, slower inflation that we saw you then saw that they cut that rate at the most recent meeting in December. That overnight rate was five and a half percent, in 2024. They cut it to four and a half percent by the end of two thousand twenty four, then and by the end of 2025, now we're at 3.75%. And so inflation, the good news is it's coming it's drifting lower to the Fed's target. Couple of highlights, and this is big here, especially in Southern California, is shelter costs nationally were up 3.2% year over year through December.

If we go back to '23 and especially '23, maybe early into early twenty four, annual shelter costs were as high as 8%. And this was each month, 8%, and then it started to drift lower. So to see that at closer to 3% is, I think, very helpful for those who are seeking to buy a home, especially first time homebuyers. But housing market, as we know, continues to be a challenging challenge from affordability. So inflation's coming down.

That's a that's good news. And then let's just jump over to interest rates for a moment. And when we when you heard your your presentation from PARS Group earlier and you hear 10 or 11% returns, I'd love to tell you that you could earn 11% in short term treasury bonds and high grade corporates, but that's just not the world that we live in. And maybe that's not a bad thing because that would suggest some significant inflation if if rates were there. But your your investment program, again, we'll see this in a moment.

You've got very diversified program. You've got liquidity funds and then medium and then medium plus investment programs in place, and we'll see those in a moment. The Fed funds rate drives those liquidity funds. California class and LAEF are the two money market fund strategies that you utilize or local government investment pools, and they move pretty much in concert with what the Fed's doing with this overnight rate. We mentioned the target is currently at 3.75%.

If we look at this chart, look in the yellow box on the left, essentially, what we see are those negative figures. And if we go down that column, you can see that negative 1.014 in the June 17 meeting. What that is telling us is as of January 12, a few days ago, the market is pricing in the next rate cut to happen around June. If you look at it today, it actually moved back further to July. But, ultimately, if this goes through the end of the year, the market's currently pricing in one, potentially two rate cuts through the end of this year.

Many, many things could happen. You you you asked some questions and made some comments about the political environment both domestically and and globally. Things like that can certainly impact our economy as well as the global economy, which could cause this chart to shift. So this is just giving us an idea of what the market is is expecting at any given time, but that that changes over time as well. And, Sarah, any

Yeah. The only thing I would add is that the while the inflation numbers coming down, it's still above the Fed's 2% target. So what I hear when I listen to the economic commentary on the news is, like, this is the push pull. Right? Because the labor market is weakening. They have this poor mandate.

I'm sorry. You just have to use the mic because otherwise people at

home Okay.

Can't hear the broadcast.

So there's still a push pull for the Fed because 2.7, 2.6% is above their 2% target. So that's a consideration for them. And then with the weakening labor so in that case, they would wanna raise rates to bring inflation down. But with the weakening labor force, they wanna lower rates to support a a better, you know, economy and job market. So they kind of have their dual mandates at a little bit of a crossroads, and they're gonna have to decide which to prioritize. And obviously, seeing them cut rates means they're prioritizing, you know, the overall economy and the job market, the health of the job market.

Thank you. And and all this context is really exciting and interesting, but I just wanna point out, mister chairman, that, the next item is reviewing strategy and providing direction. And I only have about fifteen minutes before I have to go to a medical appointment for one of my kids.

Alright. Well, let's be

If we have to provide direction, we have to do that within fifteen minutes.

Let's be quick because we can do that. Just really quick on the last few slides because this will tie into your investment, your investment program. This next slide is the treasury curve. So just as a reminder, your maturities are limited to five years and less, generally investing in treasuries and high grade corporate notes and municipal bonds. So we're giving you a we just wanna give you a snapshot year over year through through the end of of calendar year '25. Rates the shape of the curve was similar, flat for the most part. Rates were down about three quarters of a percent. A lot of that driven in the short term by rate cuts by the Fed. And then as we get out really between one and five years, just slower growth expectations from those higher prices from tariffs and so forth kinda drove rates down. It looks pretty stable when you look at this one.

And then lastly, just to show us what we've seen over the last couple of years, and that is that rates have been very volatile, but they've drifted lower since January. And, Steven, if you wouldn't mind just one more slide, there we go, just to show you where you are. And so we're seeing these rates converge, but again, a bit lower than we saw a year ago and certainly two years ago where we saw short term treasuries at four and a half to 5%. Now we're generally in that three and a half to 3.7% range. That said, your portfolios are diversified, and we've been able to lock in some of these yields.

So even if rates drift lower, you've got a healthy amount of your portfolio that's gonna keep these yields in place at least for a couple of years and hopefully weather some of these lower rates that we've seen versus a couple of years ago. That's a summary of the economic update. Let me jump into the investment program for you. Your investment program, again, is is driven by three strategies, liquidity, a one to three year strategy, and a one to five year strategy. And I'll talk high level, and I'm I'm looking at the clock, council member Charles, so we'll get you out of here in fifteen minutes or less.

And so with the one to three year strategy, it has an average duration or maturity, which is up in the portfolio characteristics on the top left, of around one point eight years. This is a an actively managed portfolio. It's rebalanced, as we say, every four to six weeks to maintain that particular duration. The portfolio managers generally look for the security types based on yield spreads and then along the curve based on the shape to maintain. As you go down that, I really will highlight the book yield because that's a good measure of your income.

So we just saw where two to five year treasuries are yielding right around three and a half percent. The good news is your portfolio book yield is just around four slightly above 4%. So you've got that yield advantage. And in fact, during this last quarter, we reinvested around 15% of the portfolio for you, and we bought treasuries and a couple of high grade corporate notes. On the bottom right, you can see the net income for the quarter was 649,000.

It was slightly higher than a year ago. I bring that up because even though we saw rates come down by three quarters of a percent, your net income was actually up 8,000. It wasn't a significant amount, but as rates came down, this portfolio has held on to those yields and provided that income. And that's that's how this is designed. So even though your liquidity fund rates are coming down, you need those funds more in a in a nearer term, so you need those to stay liquid.

These assets can stay in, and so that's helped lock in, and that'll protect you. On the next slide, because it's total return actively managed, it's managed against a benchmark so you have an idea of how your portfolio manager is managing these funds. The benchmark selected for this one is a one to three year government corporate benchmark. It's an industry standard benchmark in the public sector. And the reason this is selected is because it has a similar asset allocation and duration, high grade treasure or I'm sorry, treasuries and a slight allocation to corporates.

So just a couple of highlights. There's a lot of data. If we look at the quarterly return, the both portfolios earned around 1.11% for the quarter. That's an annualized rate. And then for the twelve month period, the portfolio earned 5.16%, and the benchmark was 5.11.

So very much in line, about five basis points above the benchmark. The nice thing was to see 5% returns, and that was mainly due to these higher yielding securities that you've owned, and then some of that was price appreciation. Since inception, this portfolio started in 2015. So hard to believe eleven years in this particular portfolio. And over that time on an annualized basis, the portfolio return was 1.94, and the benchmark was 1.77% on an annualized basis.

I know that seems low, but if we look at short term rates over that time frame, we've got a significant number of those years that were actually where the Fed funds rate was zero until 2015. And then we also and then that went up to two and a half percent, and then we had 0% interest rates, of course, during COVID for a couple of years. So that's a a big part of that, and so that's nice to see 5% returns for that last twelve months. On the next slide, this is just showing us it's a one to three portfolio. The reason is a majority of these assets are invested between one and three years, and you see that there in the bottom in the middle.

Just to highlight here on this strategy, due to the city's decision to be disciplined, never to try to time the market or make huge adjustments in strategy, you've been able capture 97% of this portfolio is invested at 3.5% or higher yields, and actually 44 of the portfolio is invested at 4% or higher yields. Again, those securities in the portfolio designed to help maintain those yields in the next one to two and two to three year area for the for this particular portfolio. So performing well, performing in line with this with its established benchmark. I'm gonna jump over and then two slides, if you don't mind, Steven. I'm jumping over to I

just ask a quick

question? Sorry.

Yes. Please. The 86.7% United States, those are US bonds?

That's absolutely right. Yes.

Are those still as stable as they ever were, or are they getting more volatile with the administration's policies that are more volatile?

They're as stable as as they were. I mean, what the what might change is the yield being offered by treasuries or any security for that matter, but I would say that they're still considered the safest asset in the world. Sarah, if you have anything to add to that. But yet the volatility really would be more toward expectations of economic growth, inflation. That would cause those things would cause rates to go higher or lower.

They that's a great question. Now when it comes to your other holdings, corporate notes and municipal bonds, you see some allocation of those. Those spreads generally narrow or widen based on these economic scenarios that we're in. If there's if there's more concern about the economy domestically or globally, a war or something else geopolitical, then you sometimes will see a flight to quality, and that will actually drive investors out of corporate notes and into US treasuries as that flight to quality trades. So those will impact yields between those securities, but thank you for asking that.

And that's one of the reasons why you've seen the Citi and then prior members of this investment committee have actually been pretty conservative for this portfolio. You're allowed up to 30% in corporate bonds. We you have corporate bonds in here. We're very we're we we feel very comfortable with those bonds. That said, we've been very strategic, and that's why you see a much lower than 30% allocation because the spreads have been narrower than than what we would like to see until we've used treasuries as as opposed to using more corporate bonds than we might normally do.

So that's a highlight of the one to three year portfolio. And again, we'll come back around and make sure we've addressed any questions. The next portfolio you have is your one to five year portfolio. So what this does is, similar to one to three, but this portfolio utilizes securities in the three to five year area to complement the one to three year strategy portfolio. So, Steven, if you wouldn't mind, we're gonna jump forward just a couple of slides to the one to three year port I'm sorry, one to five year portfolio. It's gonna I think it's two or three ahead of this one. There we go. Right here. Perfect. Thank you very much.

Awesome. Thank you. So on this slide, again, same format of report for for both the duration or average maturity of this portfolio is not much longer,

but it's two and a

half years versus that one point eight year. Again, the idea of this is to capture some of those yields and lock them in for a little bit longer. The other thing I didn't mention earlier is the strategy for investing in these particular portfolios is, of course, based on, first and foremost, your cash flow needs. So we wanna make sure that you've always had enough money for liquidity, which you have. You've always had healthy balance in liquidity funds. And these these two portfolios were created with some of those assets that weren't needed. This portfolio also has a book yield that just right around 4%. So, again, holding on to to that nice yielding. The portfolio earned close to 600,000 for the quarter, 597,000. That's compared to 463,000 the year before.

This one had a little bit more advantage because we were still reinvesting some of those securities in these higher yielding securities available because of the longer duration. And then much like the other portfolio, high allocation of US treasuries currently just around 88 percent, just shy of 88%. And then if we look to the next page, total return. So much like the one to three, you have a one to five year benchmark as well. Same benchmark, but a one to five year duration to match the portfolio.

For the quarter, right around 1.14 for the bent for the portfolio, 1.11 for the benchmark for the year ended December 31, 5.84% for the portfolio, seven basis points above the benchmark. And then this portfolio was actually created in 2018. So this was all part of a dynamic investment program established by the city. We first started with the one to three year portfolio in 2015. A few years later, we decided diversify the overall program with this one to five year portfolio to complement that.

So this one was launched in January 2018. And then you can see the annualized return for this one since that time frame was 2.16% versus 2.11%. So again, performing in line with the benchmark and just slightly higher for the long term. On the next page, we'll see the maturity distribution. And this is where you can really see the difference between the one to three and one to five.

So this utilizes that three to five year area. In fact, 42% of this portfolio is invested out in that area. And you can see in particular, all those are gray. So when we're invested out in the long term, long term meaning three to five, we've really been focused on treasuries because we like the yields out there. And, again, narrow spreads versus corporate notes in that part of the curve and really staying in the three year area for corporate notes.

Much like the one to 91% of the portfolio is invested, three and a half percent are higher yields, and 54% are at 4% or higher. So holding on to some healthy yields, and that'll protect your income in this portfolio much like the one to three year portfolio as we look forward. I'm gonna jump over the rating page that we have for both of these, but please know for your benefit that these portfolios are very highly rated, and they, again, are compliant with your investment policy statement as well as with California code. Overall, for this and the one to three year portfolio, not much in major changes. There's been a slight increase in corporate notes from quarter to quarter.

We bought an Amazon bond and Caterpillar bonds. The Amazon bond added 30 basis points versus a comparable maturity treasury, and then the Caterpillar added 37 basis points. I mentioned that because it's important to know if you're buying outside of a treasury, what's the additional yield you're earning on that. And also know that any purchases we've made in the past, the the corporate notes or municipals, anything outside of treasuries has to be approved by a credit committee before the portfolio team can purchase that. We put a lot of value in that. So that's a bit of a summary on the one to five. I'm gonna finish off with just a couple minutes and give you an aggregate picture if you don't mind. And, Steven, if you wouldn't mind, it's probably two or three slides ahead. Am I making good time, council member? Okay. We'll be quick.

I do need to go, but I will say, in general, I'm I'm pleased with what I'm hearing that we're doing well. And I don't know if you remember because it was nine months ago. I had asked about if we were investing in anything that might, you know, not be green energy or any of that. And it seems like with 86% in treasury bonds, we're really not doing much of the other.

Yes. We don't have any energy bonds in the portfolio at the moment. It's it's Amazon. It's, Caterpillar, as I've mentioned. It is

So there's not really any place for

us to worry

about divesting from oil companies or anything like that.

There's not not in that in

portfolio. From my perspective.

Thank you.

I'm glad we're already doing that, essentially.

And just to give you an idea, this will be one slide, Steven. If you don't mind, that way you can get a snapshot, and I'll give you the comments here so you can you can go one more. Oh, I'm sorry. Couple more. One more. There we go. Okay. So this is a good picture of your portfolio overall. The 32.7 dark blue bar, that means around one third of your portfolio is in liquidity, and then the balance is invested in these maturities from the one to three and one to five. I wanted to highlight that because this overall I keep using the word balance, but it truly does help you to manage interest rate environments.

But mainly, you're safe and you stay liquid with the amount you need in liquidity. That amount can be adjusted over time as you get comfortable with cash flows, and we can look at and we've done that with the one to three and one to five year where we've moved money into them as you've had healthier balances over the year. Overall, 96% of the portfolio is invested at 3.5% or higher, and this balanced maturity structure again has met the needs of the city over time. And so, Steven, unless you have any thoughts from on that one, I'll pause.

No. I I I think we're at a good point. And if there's any general direction or John, how how do we handle this in prior meetings?

Yeah. So so generally, unless there was discussion on changing strategies, I don't I don't know that there would be. I I and especially with your new committee here in place, it might be a good idea to, you know, get comfortable with what you're seeing. And then, Steven, if you don't mind, it might be a good time to mention about the changing guard of the guard, if you don't if you will.

So I just wanted to, you know well, first of thank you for all attending. I think this is the first quorum we have had in, I believe, three meetings, I want I wanna say. But, you know, I I I did wanna thank, you know, John Grady and PTA and his team. This may be this is probably gonna be his last PTA's last meeting here with the investment advisory committee. We've had a a long ten year relationship with PTA and working with John.

I've mentioned to John, you know, I'm fairly new to the role. You know, I I I wish I've had the opportunity to work with him more. But in my, you know, my interactions with John and and and Sarah and and the team, it's been nothing but great. And just the transition and shifting of the guard has nothing to do with PTA and and the services they provided the city. You know, we we did an RFP few months ago and, you know, essentially, it's, you know, it's a purchasing best practice to, you know, solicit bids and and and, you know, and from time to time and and it happens when, you know, sometimes when you have a long standing partner, sometimes it's good to go in and and and and go with a new firm and and and, you know, see what insights and strategies that they can bring to the table.

But it has nothing to do with John and his team. They've been great to work with. And I just wanna thank John for all his work with the investment advisory committee. I know many of you are new, but even, you know, with the prior committee members and and what have you not. So I don't know, John, if you have a few words.

Yeah. I I took a couple of notes, you don't mind. Yeah. I know the committee's new here, but, you know, as we step away, I just wanted to say that it's been a pleasure and a privilege to serve the city of Fullerton. You know, we we were hired in '2 at the 2014 through an RFP process.

And over those years, you know, being here each quarter and meeting with the committee members and working with the director of administration, and and Steven, by the way, congratulations on your on your new role. It's been a it's truly been a pleasure. You know, this city's investment program in 2014 was a few CDs and and some money in a bank. And now you have liquidity programs and you have multiple strategies. And while, you know, we would love to be grateful that we're part of it, it was really through collaboration with the city and with the investment committee members.

So you truly have a special role here. We're all citizens, and we all pay taxes. And so the primary goal is to have safety of these funds. And so as that time has we've built a strong relationship with the city and grateful. But more on a personal note for me, you know, I'd mentioned this when we were meeting with the city prior to this change, you know, to be able to serve the city of Fullerton, this is such a special place.

From the restaurants and the coffee shops, my office away from my home office at the FedEx on Harbor, you know, I stay at the Cal State Fullerton Marriott when I'm here and and get to walk around in the mornings. But I just wanted to say it's it's been a wonderful experience, and this is a special place. You're in great hands. This port this program is gonna continue to do well, and we're just grateful to have been a part of that for over ten years now. And we recognize changes is sometimes inevitable, but we still hope to have a partnership with the city through California CLASS. Again, Steven, congratulations. Noah, it's been great working with you, but and congratulations to you all. So I'll stop there, but it I just wanted to say thank you. It's been a pleasure.

And and John and PTA, yeah, they'll still be with us for a few more months. Yes. So, you know, I know we have some new committee members. If you guys have any questions at all, feel free to email me with any questions, and I could, you know, reach out to John and Sarah and, you know, get you some answers, you know, while they're still here.

I I really appreciate your work, and I'm I'm sad to hear you're going. This is probably my last committee meeting on this committee as well. I don't

know if the gentleman or

where that. So we'll see which which council member is appointed. Right. Supposed to be the mayor.

Okay.

I'm not the mayor, so we'll see how it goes. But I will say I am happy with what I'm hearing. I I don't feel like we need to change anything right now. People wanna let it soak in a little. And one thing I wanna mention just because this has come up in the past and as my last meeting, I wanna get this on the record for you gentlemen. Do not let any of our residents tell you that we need to invest all of it in Bitcoin. I've had people say that to me, come up and say, has to all be crypto. It's not legal. We can't do that. It's the state of California telling us what we do. Alright. So thank you so much. Thank you, mister chairman.

Thank you.

Well, John, yeah, thank you so much. I know we've only worked together a couple times. I've always enjoyed everything that you brought to the table here,

and Thank you.

I learned quite a bit so far. Thank you. I'm pretty green here as well as as well as they are, and I've always enjoyed learning as much as I possibly can. So thank you so much. I really appreciate you.

Thank you. And I I hope you'll I hope you'll enjoy the committee. I I think you you'll learn a lot. It's a really neat way to learn more about how, you know, the city of Fullerton operates and your finances and how the money is spent and how it's invested. So I wish you all the best. Yeah. Thank you, Steven.

No. Not a problem, John. Again, I thank you, and I appreciate your service to the city. And like I said before, you you guys do great work. Thanks. And just I just wanted to point out one last thing. Again, I I know you guys have received a lot of information. It's all in your packet. I think one thing we didn't cover, but it's also in your packet, we do have a a a copy of the investment policy. And I believe there's a a short slide deck on kind of the key points of the policy.

So, you know, if, you know, for those of you new, you may wanna read read on it. You know, if you have any questions, you can reach out to Noah, myself as well, and we'll be happy to, you know, help you guide you through it.

Thank you so much, Noah. So, Noah, I'm looking at the agenda. We have an update on s B827. Is that by you or

who's No. That was by Lucinda at the beginning of She did, like, a brief one. But

So we're all good on that then?

Yeah. So I think we're done. Chairman, if you wanna adjourn the meeting, if there's no more no more discussion on any of the items, please feel free to do so.

Absolutely. Meeting's adjourned. Thank

you.

Thank you.

Thank you, everybody.