Village Board - Regular Meeting

All right. I will call to order the village board meeting of Monday, March 16th. We call the role. Yes. Trusty Dutman here. Trustee Howler here. And Lonely. Trustee Casper here. Sorry, Jacob. Trustee Saran here. Trustee Van Even Hovind here. And President Bley

here. Thank you. Uh next is the consent agenda. We got six items. minutes of the regular meeting March 2nd. Also the check register from February 2026 resolution 3196 adopting the 2025 WPDEES storm water discharge permit. Um the annu safety netting improvements at Craig Council Park storm sar outfall rehab design services contract and finally storm and sanitary sewer planning professional services agreement. Both of all three of all four of those things were spoken of at the public works committee and probably were unanimous passages. Uh any comments or concerns? Otherwise, a motion to approve.

I would move to approve after commenting that if you haven't read the storm and sanitary sewer planning professional services agreement, and you should. They're very interesting documents. 100%. Second. Thank you, Brian. Any further discussion? Hearing none. All those in favor say I. I. I. Any opposed? Motion carries. To the village officers. We will skip the village attorney. Village manager.

Um I just wanted to thank our DPW crews who have had a very few heavy a very heavy few weeks of work. Um last week they completed that final spring leaf collection after the snowstorm at Thanksgiving last year. Um and made really efficient progress in that pass. I think they were completed in three days. Um, and then we're sweeping behind. As of Friday, we still had half of the village still to sweep. So, once the snow goes away, we'll get right back on that as well. Um, and then last night they had plows out at 7:30. Um, continued for the majority of the day today. They are off right now. Um, given that the roads are fairly clear, but we'll do another final pass starting at 1:00 a.m. this evening um into the morning to clear like areas where they had parked cars or boulevards. Um, so that's our typical process, but especially in large events that tends to happen. So, thank you to them. Um, and then, uh, secondly, the election ballots did arrive today, which was exciting news in our office. Uh, so we had poll workers working in the afternoon, um, to get out that first batch of absentee ballots, which is around 1,175 ballots. Those should be in the mail tomorrow or Wednesday.

Okay. Um, yeah, village president report. The only thing I was going to talk about was the DPW and the amazing job that they've done over the last 24 hours, but you're right, the last couple of weeks. Any miscellaneous trustee comments, months?

I just call out um I know the Sendex development is going up and it's going up uh really fast and I think when we were going through that process, it was a long drawn out process of planning every little granular bit and now seeing it in action. Uh, I just, you know, want to say thank you to all the people involved in planning that because it's very clear, you know, how quickly it's moving, how professionally it's moving. You know, they're building that building like 2 feet away from the old building and making it work. Um, it's really a sight to behold. So, good job. Agreed.

Any other comments? All right. We will then move on to petitions, communications. This is an opportunity for anyone in the audience to address the village board. However, I don't think there's anyone here from the public at all. So, I will close petitions and communic communications and move on to our general business items. We have two tonight. The first is discussion on an actuarial study for the villages oped liabilities. Kelsey,

so I'm actually going to introduce both of the items together. And Jack, if you want to come up, feel free um to do so. I think it's important at the beginning to understand how they go hand in hand because it may spark some um questions uh for our presenter this evening. Um so this is the first item is a presentation by um Jack Schmelski. Um he's a principal and consulting actuary at Milleman. Um every two years the village completes an actuary study to look at our other postemployment benefits which is oped is how you typically see it in the newspaper different um how we see it in our financial uh studies as well. So every two years these studies happen um and that allows us to have kind of a brief snapshot in time to look at how our oped obligation is our liability is trending against the balance. Uh so we did ask um Jack to present this evening uh because we wanted to make sure everybody understands what it is. Um and this is for the fiscal years 2025 and 2026. But more specifically because during the financial management plan, Ellers, who's the village's financial consultant, had actually recommended an adjustment to our unrestricted unrestricted general fund balance. Currently the village carries a a percentage of 35 and that's been based on um recommendations by crediting agencies historically but recently um they've seen that those same agencies are looking favorably at a range of 35 to 50%. So we're not out of range however we are in the low end of that range. And so they had suggested that increasing that percentage to 40% um would help us basically make sure we're maintaining that rating. I'm I'm sure there are opportunities to maintain it outside of just this but that was an opportunity that they saw and recommended. So the way that our um those funds work is they do as I mentioned before work hand in hand in the sense that at the end of each year

when we have a surplus the funds go those surplus funds first go into our unrestricted fund balance to make sure that we're at that percentage. So right now it'd be at 35% perhaps in the future at 40% and then all remaining surplus funds go to our oped account. And so what we're talking about tonight basically is a balance of those two funds. So, it's the same amount of money. We're not we're not changing the amount of money. Um the funds aren't going away. So, it's not like you can't make a policy now that you can't change down the road, if that makes sense. Um but it does help um Jamie and our auditors and everyone know where those funds should be kind of earmarked or designated. And then of course helps Millan as they're doing their study to be able to look at, okay, these are the funds that are set aside for this purpose. Um so that's why I kind of wanted to explain both at the same time. Um, I did also want to note before Jack started presenting that the village did amend our retirey health insurance policy in 2012 in 2016. And that's really what he's presenting about is our liabilities in relation to employee health insurance expenses. Um, so those changes um have decreased the villages contribution to the retirey health insurance to 50% in 2012 and then 25% starting in 2016. Now, we still have employees that were hired prior to those dates that would be under those previous um programs or policies and so we haven't actually started to see the full benefits of those adjustments, but they are kind of in the pipeline and eventually we will see those benefits. Um, it also now is required that the village that the employee has worked for the village for 20 years or more in order to qualify. And so a decent amount of employees just with the way workforce trends are now wouldn't even qualify if they don't hit that 20-y year mark.

Can I ask a quick question? Um, is is the the um 20-year and and the 25% and 50% um is that regular and competitive in 2026? and you know like yeah are other municipalities following that? Yep. So my we I can certainly check and get back and why don't I do that because I don't want to misspe. My understanding when I've briefly asked these questions at the Northshore managers group is it does sound like that's very similar um to what the others are showing. But I'm happy to get that information back tomorrow. You don't need to dig into it. It's more of a Yep. I want to wonder if if

obviously we went from 50 to 25. Has anyone gone to less? Yep. I can definitely get that information that we want to do that. I just want to know. Now you get the time. We looked at that. We looked at what others were doing when we changed the policy. So hopefully that means we've stayed in line. Yeah, I can definitely get that information. I'll see them all tomorrow. And I assume that that is part of the police contract. Yes. So, we're probably that's an that's interesting that the village board, you know, went after that policy, but then they had to have then implemented it in the lease contract, which is ending in December of this year, I think.

I thought, isn't there one more year? Because I got here at the beginning, so I think it's three years. I think it's one. Yeah. Do Okay. Do we have any other um OPED liabilities outside of health insurance in this account? No defined benefit pensions or anything. It's just health. Correct. It's just the premiums on the insurance.

Yeah, that that's a great question. So with the accounting standard that we, you know, gaze 75 is the accounting standard that we have to do these calculations under. The accounting standard states that you have to value the total expected claims cost less the retirey premium. And so while the village only pays 50% or 25%, the standard states that since the premiums are the same for all active employees and pre65 retirees, the 365 retirees are generally more expensive when it comes to health care cost than a 25year-old working employee. And so we actually have a factor that is built in here that I'll talk about a little bit that we it's it's approximately two times the premium is what we're valuing for the claims and then we just subtract off the 50% or 25% of the premium and that's in your liability. So it's a little bit surprising uh asking how how do your benefits compare to others. I think they are pretty much right in line with what we see. Um, some are more generous, some are less generous, but I think you're pretty close to the middle. I think we do these types of reports for maybe 50 to 75 different entities uh in Wisconsin and around the Midwest. And so you're you're right in line with that. But this standard, just to kind of take that point a little bit further, if the village paid 0% of the retirey premium, the village would still have a retirey medical liability on the books. Even though zero dollars would actually be leaving the village, it all be paid for by the retiree, there's still a liability because we're taking that expected claims cost less the premium. Is the logic behind that that someday the insurance may look different? So you've given this guarantee of a benefit of some sort or it seems like the liability is overstated probably for

what we're going to pay.

Yeah. So correct and I think and I don't ever get into the accountancy side of things. I try to stay out of it but my understanding is that this this is considered the implicit rate subsidy. This valuing of the expected claims minus premiums. And supposedly behind the scenes there there could be some transfer of accounting liability from the active side to the retiree side. You know essentially the activives are are subsidizing the retirees. So in in total the total claims being paid by the insurance company is what it is but from an accounting perspective there might be some switching annually if that makes sense. Yeah, thanks.

Yeah, with that if you just want to hop in.

Okay. My goal is to try to keep this high level uh not to bore you but give you enough information so that you have uh a great feel of what's being valued here and I can't make any promises. I am an actuary so boring is kind of my forte. But uh so on this page here what we're looking at as mentioned before what are we valuing? Uh we're valuing the retirey medical liability for police officers once you attain age 55 and completed 20 years of employment with the village and for all others you have to attain uh age 55 with 20 years and we also pay the village pays 50% of the single family premium if you are hired before 11 2016 otherwise that has switched to 25%. % we we use many assumptions that go into this report and so I'll just do a high level on these assumptions. You may not be able to read that. Um but some of the assumptions we have to project all of these liabilities out into the future. So somebody's brand new hired today. We're projecting them out to retirement as mentioned before these assumptions. So we have what's considered a turnover or withdrawal assumption. And so there are and that's this table here.

What what page are you on? Yeah. Oh, I'm sorry. Are we I'm actually gonna minimize this so you guys can see the pages as he's going. Okay, there we go. There we go. So, he's on page 78. Thank you. Yes. And I will not have Do we have page numbers up there? Yep, they're right here.

Perfect. Okay. I didn't bring my glasses. So, hopefully we'll be able to manage that. So the the first assumption that's very important is this turnover or withdrawal. So since you have to have 20 years to be eligible as as mentioned before, not that many people actually make it to that point. And so in in year one, these these assumptions are from the Wisconsin retirement system pension plan. So we assume that your your group is pretty similar to that group. Uh they are within that group for the pension. Uh and so just looking at police on the far right there, you know, we assume 15% of police in year one terminate employment and so on and so forth down the line. So really maybe only 10 to 20% of people from hire make it to retirement and get these benefits after all of that is said and done. Um

can I ask do we how do we count those 20 years? Is it the 20 years specifically here at White Fishbay or if they are someone who was part part of WRS in another entity can that be compounded onto it or for example our village manager it's only here it's only here or the village whitefish paid not another WRS qualified okay right and I think that's the big difference between the pension and WRS versus these OPED benefits okay sorry to interrupt

no continue to ask questions that's what I'm here for Uh a few other main assumptions that are on page 79 are 90% of those that become eligible for these benefits are expected to take the coverage. So the reason it's not 100% they may have spouse coverage still working whatever the case might be. So not everybody that becomes eligible will take that benefit. as well as 60% of those that do end up taking the benefit uh also elect family coverage or spouse coverage with them. So those those can be pretty pretty big factors in the total liability when we you know they're multiplicative. So it it has an impact. And then the other main assumption here at the bottom of that page is as we mentioned before that implicit rate subsidy. So four pre65 retirees, we expect the claims to be about 2.18 times the premiums. And so that's that's inflating the total liability that we're we're showing in our accounting report quite a bit versus what the actual cash outlay will be for these benefits. Any questions? All right, I will move to the actual numbers and page 70. So we show two years of reconciliations. This report covers both the fiscal year ending 123125 and 123126. And I'll just go through the the left column here on how how these liabilities work. So as mentioned before we do evaluation every two years. So we do a snapshot of the data uh two years and then we project that data out into the

future discount it back to today's dollars. So we are doing a present value calculation. This is in today's dollars. So at the beginning of the year the liability was 4.9 million. The next component is what's considered the service cost. So this liability is not a full value of liability for activives. We prorrate it essentially based on years of service. So if somebody has to work 20 years after one year we're showing about 5% of their liability. Two years 10% so on and so forth until they're fully eligible we're showing the entire benefit. The part that's not in uh is acred each year in the service cost. So one additional year of service, we're adding that one slice of proration into the liability. So we're continually adding on to this liability as active employees get closer to retirement. That cost was 281,000 in 2025.

How does it go down for 2026 then?

Great qu Man, you're full of great questions. I love it. So we use a discount rate uh since the plan is not funded. I think there is a fund which we're talking about, but under Gazsby 75, it has to be there's there's got to be like three specific things that allow you to account for it under Gazsby 75. One being that it has to go strictly for retirey medical benefits. So, you're kind of tying yourself into it. So, a lot of municipalities are just earmarking money versus actually setting it aside in a trust. So with that, since it's unfunded, you use a discount rate that is the 20-year um municipal bond index at the end of the fiscal year or as of the measurement date.

In the year one here, that's 4.08%. Year two, it moved up to 4.83%. And so a higher discount rate generally means lower liabilities. Thank you. Definitely. which is like a counterintuitive concept because you'd think a higher interest rate would be worse. Discount rate that's um correct is the discount if interest rates go down on GO bonds our liability will go up like so as rates come down right is that right? Yes. So, it's something to keep in mind. All else being held

the So, you talked about the Gazsby 752. Doesn't that allow you to take the portion that you have funded at your kind of um investment return rate and then the rest goes in at the the bond rate? Is that right? Yeah. So, that that's that's exactly correct. If you have a trust that is you have to have trust.

Yes. That's accounted for under Gazby 75. instead of using this 20-year municipal bond index, depending on your funded status, you can use just the expected return on those assets. And so that would be one reason why you would maybe set it into a trust and and have it accounted for Gazby 75. Then you could use a discount rate of six, six and a half, whatever your expected return on those assets are. And so that would show a lower liability. But again, there there's pros and cons to doing that. But so the actual go bond rate went up from 25 to 26. That seems surprising I guess when you think of just bond interest. Um

yeah. So it's that much. It's based off Yeah, it's significantly increased. Um it based off the measurement date. So the the rate as of 123124 was 4.08%. 123125 is 4.83%. If we look back historically over the 10-year period, let's say, yeah, uh the majority of the time it was in the high twos, low 3%. So, currently the these two years are significantly higher than it's been in quite a while. Is that just general market rates, federal funds rates driving that? Yes. Long-term again, government bond rates. So, even as the federal funds rates come down, it's gone up 80 basis points. Correct. 75. Correct.

Surprising. Okay. Is that just general indebtedness? The short end of the spectrum or time horizon is where the really the decreases have been which then it's led to actually an increasing slope yield curve on it which the higher longer rates out in the future. Okay. I was going to guess I get the interest rate concept. I was going to guess that the service costs looked down because we have we are slowly getting rid of the 50% folks and now adding 25% folks. Is is that part of the service cost decrease?

Yes. Yeah. I think since since this valuation uses the same data for both of those two years, it's not really in these two numbers, but over time, you're exactly correct where that service cost since the benefit is less, the service cost will be less going forward. Would the service cost come down because you actually have a slightly lower 10-year population? Is that what it would be? That your your average life of service is slightly lower? Generally, a huge decline. Yeah. Generally when you get a you mean between these two years? Yeah. Yeah. It's possible that one person is expected to retire or two people. So then we're not replacing them in this. We're just kind of

they just fall off and so they would have zero service cost, you know, and drop it off there a little bit as well. Okay. Whenever there's no questions, take the opportunity everybody off. That's right. Give Sam 30 more seconds. I'm gonna have I've got more. Keep moving.

Fair enough. So, next in the uh reconciliation is the effective plan changes. We were just made aware of that that 2016 change this year. And so we valued that for the first time this year. So that decreased the liability by about 340,000. So pretty significant impact on the liability. The next line item is since we do evaluation every two years, we get new data every two years. Two items that went into this 1.2 million increase over what we were expecting. The first is uh we actually looked the premiums increased from 24 to 2025 by about 18%. Uh we assumed around 6%. So one of our assumptions we have medical trend inflation built in. uh it went up 18%. Again, that was about 11% uh loss on the liability. The other item that I had marked that I I forgot um was that that 2.18% or 2.18 factor on the expected claims in the prior valuation that was 2.01. And so that that assumption based on your demographics increased that another 11%. Those two combined created that $1.2 million loss more than expected.

And we all know why the health insurance went up so much. It's because we have that surplus or that um sir charge for entering the state health insurance. And that's highest this year. It's half next year and then it will roll off. Yeah. Yeah, actually it it increased in 2025 before the huge that and then so then 2026 is also built we built that in as well but we're also removing the search charges in 27 and 28 which I think we we met a couple weeks ago and talked it it almost comes right back to level so there wasn't much of a change when it comes back to it again projecting this out into the future

I guess I guess I'm surprised that the search charge is incl is part of the calculation because it's not really predictive. We we could I mean there could be another we won't have another we chose to have this search charge right we could have stuck with our former insurance insurer so I'm a little surprised that it's part of the predictive nature of your calculations yeah so we're actually right we we included it because next year it it is in the premium and a part of the cost but again we are removing it in 27 and 28 based on so it it it wipes away it's probably a blip in a year and then kind of wears away pretty quickly Um but we don't have anything built into the future that this could happen again.

Got it.

Next uh line item is effective assumption changes. So we mentioned the participation rate, marriage rate. Those changed a little bit. The other biggest impact here is the discount rate. I think it was 326 in the prior valuation. It went up to 4.08. So that decreased the liability. Those assumption changes decrease liability about 450,000. And then benefit payments again. So, I think we'll get into the actual cash payments later, which is significantly less than this benefit payment. But when we're reconciling this, we have to have the assumed Gazsby 75 benefit payments, which includes those expected claims over the the retirey premium. So, we have under GSBY75 around 306,000 in benefit payments. You sum those up and the liability went from about 5 million to 5.5 million uh last year. I was going to save this to the end, but um you mentioned demographic changes and and the possibilities of

what what happens when somebody retires if they pick the insurance or not pick the insurance. Um I can't recall what our policy right now is on um bonus payments for people who decide not to take insurance prevent. Do I can't do we have something like that? It's like5 or $6,000 a year, something like that. Do do we have that postretirement as well? So, we implemented that this year and then no one took it. Oh,

but that was the feedback we heard from the retirees when there was concern about the changes and so we did try it. Um, but I think the amount that we have as that opt payment I'll say is low. Um, it's it's $500 a month. It's 3,000 a year. half that 15 double it. So when you're talking about like competing with the mark if you're going out to the market to buy health insurance, you know, you need that number to be competitive. It's more about this hopefully you have a spouse that's still working. I mean, you know, if you're in you're 50 or 55, chances are you might be married and have a spouse who is doing it.

I don't know. Can you at least analyze the $3,000 and making it higher so maybe we can catch a couple of fish? Yep. Sorry, that's that's internal stuff. Yep. That could be built into our assumptions though. So, it is always great to know and understand what you all are thinking or doing because then we can value that out or show what we think it might have the impact of. Thanks. That that's kind of where I wanted to stop and give you enough information, answer any other questions. I can go into details and bore you more, but I think, you know, maybe we can end there.

What's What's our asset balance, Jamie, on this? It's like two and a half million. Two. So, we're like 40% funded. It's in the It's in It's later on in here, right? I was actually just going to What is What in your experience is like a best-in-class funding rate of this liability? I know you're going to say 100%. But what do you see from Yeah. other communities or other peers?

Yeah. Some some again it there's a full gamut of different ideas and thoughts here. Some are strictly on a pay as you go basis. They're they're not funding anything. And I think those are the ones that are a little bit concerned because with medical inflation increasing your budget can change quite significantly year-over-year going that route. Uh very few are 100% funded or you know even close. uh some I think I think being around 50% funded too is nice because one of the reasons I I fear going too high is the fact that these benefits can change as you mentioned in 2016 the benefits were changed right I mean technically these benefits could be taken away completely and you wouldn't need to have any asset set aside

I don't think that would happen but you know I think that's why a lot of municipalities are not wanting to go all the way because then it's Yeah, especially if it's not the cash. It's not what we actually pay in cash. It's just the full cost. Do you know like what is the benefit cost in this calculation versus the premiums? Like how much extra is it? What percentage of the total does the premium cover? Yeah. Just so you're saying to reward that a little bit, this is 5 million in liability. Yeah. What would the expected cash what would be the premiums discounted back to today? Not the full the employer premiums. So yeah, the village premium what we would pay in cash.

Yeah. So just as a quick outline of this. So if let's just say the premiums are $10,000 a year. We're valuing 2.2 times 10,000. So we're valuing 22,000. And if we look at the the 50% group, the the employee is paying 5,000, the village is paying 5,000, right? And so we're valuing in this liability 22,000 minus 5,000, so 17,000, whereas the village is really only paying 5,000. And so I think a rough estimate, you know, if you look at this, the cash value might be about 25% of this,

okay, liability shown here. So, by that logic, we're we're well funded for what we would pay. Yeah. I mean, I I think what I was I think I unders um it prompted a new question, which is simply the concept of how much runway we have with $2 million. And I think that the answer to that is a lot. A very very long runway, right? Yeah. Yeah. Okay. I think too, I mean, just to go a little bit further, it depends on what your assets are invested in too. If your assets are earning Bitcoin, perfect. Yeah. Then then you have all the runway in the world. Um, no, but like if they're out earning the liability, that helps. If it's earning 1% and the liability is growing at 4% or 5%, then the runway shrinks,

but pretty quickly. Not pretty quickly. It was probably over decades. So, not in this not in not in your circumstance, but in others, right? Yes. Mhm. Yep. Um the when you look at kind of the age profile of all the people that are in this plan are covered. Do you see over time that kind of staying stable? Is it more gradual? Like if less people take this benefit over time, I guess what do you see as kind of the long-term view of that? Is it going to move gradually or are there going to be steps like groups of employees that took it? Um yeah. Yeah. Kind of a hard question, but

yeah, I think in general it's it's pretty static. It's it's not going to change much. Uh generally people, you know, retired, replaced, but there's no reason unless a large cohort was hired all in the same date at the same time, which generally is pretty uncommon. Um I I don't foresee the average age, average service, you know, average age of retirement changing much. So your current average age is around 39.6 for the 72 employees with eight and a half years of service. Okay. That's it for me. Thanks. Well, thank you. Yeah, thank you.

I don't remember ever having this before, at least in the last two years ago, four years ago. We just know how much you guys love OPED. No, I'm teasing. I We specifically wanted him to present because we're having this fun balance discussion and making sure everybody understands. So, great. Well, and and you were willing to stick around for a few minutes, so I appreciate that because other questions may come up. Um, so that's the next item. Okay. Uh, then we'll move on to item next item on um fun balance policy.

Wonderful. Could we Jamie, do you mind grabbing the mouse and moving to that memo? So, I think that table is helpful. So there's a lot of background information in this memo, but I think the table and if you could zoom in is what's really helpful. So it's basically showing our existing fund balance policy at 35% for 2024 was 4.5 million and then we had an OPED balance of just over 2 million. I will say that OPED for that year is is actually higher, but we accepted a late payment from the state for reimbursement for a grant. And so our books are just a little out of whack between last year and this year. And that's like 700,000. So it's actually slightly higher than it was in 2023. Um but regardless, to increase from 35% to 40%, uh we would have to increase our unassigned fund balance um by 647,000. So our proposal um was to focus on that and so basically use the surplus each year until we hit that 40% um to go towards that unassigned. Uh but certainly it could be a balance. You could do a a certain dollar amount or a certain portion. Still don't have uh we want to make sure we don't go below 35% on it obviously, but any step we're taking towards 40% um would be viewed favorably by the credit agency. In fact, um when we asked Ellers about this, they said even just having the policy on the book um would be a good sign. So that's why before we do our debt issuance, we thought it would be good to bring it forward.

I'm in favor. Yeah. Um do we know what the um increase to fund balance will be for 2025? Do we It was going to be sizable, I thought. Yeah. So, we're still working on closing the books. Um, but we we do know that we decreased what will be taken out in um in debt by that health insurance sir charge. Um, so I would anticipate Jamie doesn't want to say, but it I don't want to say I'm still making sure everything's right, but I we're looking at like probably 1.5 million for a variety. Yeah.

So, I I do want to preface that because that's a big number and I want to clarify 700,000 is from a late payment from the state. So, we look that's really a shifting from we look like we had a deficit last year if you look at our financial statements.

Um and then we had it was like $400,000 of police salary savings in one year uh because of turnover and honestly they were incredibly lean. We even had to change our minimum staffing levels. Um, now the good news is is we're really close and we actually had a few employees who who left and have since come back. Um, so that's all good signs, but um, regardless there was a lot there was a lot of transition in that department last year. That was a majority of the savings and we we're happy to go through that more when the books are closed. Um, but we are we do think between that and then we have huge permit revenues from the Argo, from Sendix, from apartment complexes. So, we don't we budget based on what would be a typical year. We don't budget for those really large projects. Uh where I worked in in Colorado, they did budget based on a three-year average and there were significant layout layoffs when the trends went down. And so, I was always taught you budget based on, you know, a longer term average. So, that also has inflated our surplus this year. And quite honestly, I think we'll inflate our surplus for 2026 as well because we have this index project is for the most part in 2026.

If we budget this 40% and we for some reason need to tap into those funds for any number of variety of reasons, there's not a penalty associated with that. Correct. Because it's just held in a general account and allocated for this. We we can tap into that if needed. Correct. That's Do you have any different understanding? Yeah, I agree. And I think that's part of the reason why exists that we don't have it in that trust, but that gives flexibility, right? No, that that makes sense. And and whether it's in OPED or in general fund, technically it's not restricted, correct? It's just assigned to OPED.

And then what what would we do with the remaining if it is truly let's just say it is 1.5 and we allocate roughly 700 for the additional 5% here. Does the rest of it just remain in general? So, our our um debt issuance plan that we actually just finalized with Ellers and will be on the next board agenda is to use we were going to borrow for that search charge for the health insurance if you remember. We actually going to have to pay tax on that because it's a taxable debt issuance. And so, we're proposing to spend it's basically about $700,000 between the two years on that health insurance so we don't have to borrow for that.

So, in short, decrease our debt issuance. So the surplus would be 1.5 less that at the end of the day is is how you'd think of the number. I mean if that's what it lands at, but that's not included in your 1.5

question. You you'd mentioned you know the concept of 35 to 40. The memo also says Moody's views 35 to 50 as a favorable um target and and just the the concept of having 40 on the as a policy is impressive or a positive factor for Moody's even though you hadn't reached 40. What's what's the rationale for not making it 45 or 50 on the policy? you know, and and and work to that as we decide to. You know what I mean? Like, if if 40 is positive, why don't we make it 50 as a policy and then, you know, we would incredibly slowly get to it. But, you know, you know what I'm trying to say?

Yeah. No, I do. I I think at first when I looked at this, I was concerned about that balance with OPED and like how do you disperse those funds? Um, it seems like the discussion today was maybe more positive than I wasn't ever thinking it was negative, but maybe it was more positive, but it was more just trying to strike a balance between them and how right now we look at the surplus funds. We make sure we have 35% and then all the other funds go to OPED. And so, it's just like really clear administrative. That's one thing I didn't calculate. That's true. I get it. It's not just a policy. It's ramifications to OPED as well. Exactly.

How do the rating agencies look at OPED versus general fund? Do they differentiate between those? Like if you do this and you drive your OPED balance lower as rates go up for some reason, does that impact your rating? I would assume they look at it, right? Amoodies.

Sure. Not to mention, if I'm correct, that um don't we have basically the second highest possible rating and we're probably a mile away from the highest rating from the third lowest commercial. So like whatever diversity. All right. Any further questions about this? So

I guess do we want to go this route or do we want to go to 40 more gradually just cuz I mean the OP has been in a very good place. I don't know. It feels like we have a lot of coverage. I thought you'd be able to help that discount rate by having more of this funded. It seems like if you don't put it in trust that's less valuable. Um as you think about your liability long term. Like if you would start to decrease that that asset balance and you would start to increase your discount rate, you would that would shrink like your coverage would shrink faster. But it doesn't seem like that helps our discount rate cuz it's not in trust. So I'm less concerned I guess about OPED than previously. And also knowing that it's twice as much as our cash

costs feels like we're okay there to get to 40. So, so you're saying I I think this makes sense. I mean, it's all it's all general fund reserves at the end of the day. I originally reading this thought we should continue to put something towards the OPED, but I don't know that the benefits of doing that are what I thought they were. I just misread the accounting standard. This is a goofy question, but does does valuation of OPED create like a property right for retirees? And that's a good question. What I mean by that is if if there was dire circumstances, could the village transfer from OPED back to the general fund? Yeah.

I think because it's not in trust, right? Yeah. If it's in a typically from my experience, the when OPED funds are in a trust, it's the product of a labor contract. Um it's an agreement. Sometimes if there's concern that those funds may be taken away, then they'll put them in a trust. And so these are all unreserved funds. And so you as the village board have discretion on how those are spent. So yes, in the end it's it's not super important. Nope. Really isn't. Whether it's 35 or 40, if if three years from now we decide differently, then we can change it. Yep. Okay. Any others? Or I think you should make the motion.

Yes, I am. Gladly. Um Jamie, you don't have concerns about this change, do you? from an OPED standpoint. Okay. Okay. All right. Um I move that the village board adopt resolution number 3197, a resolution amending a policy for the unassigned general fund balance of the village of Whitefish Bay. Thank you. Do I hear a second? Second. Thank you, Farah. Any further discussion or members of the public? Uh hearing none. All those in favor say I. I. Any opposed? Motion carries. Thank you. And I don't know who's going to make the final motion of the day. Yeah, we might have to be here for a while. Yeah.

Or should we call them? Anna likes to make it sometimes. Move to adjourn. Thank you. Do I hear a second? Second. All those in favor say I. I. Any opposed? Motion carries. We arejourned. Thank you so much all the folks who helped with the meeting.