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[00:00:03]

OKAY, WE'RE GONNA GET STARTED.

[Ad Hoc Committee on Pensions on December 14, 2023.]

IT IS NOW THREE OH FIVE.

WE ARE GONNA CALL THE AD HOC COMMITTEE ON PENSION TO ORDER.

FIRST, I WANT TO THANK EVERYONE FOR COMING TODAY.

YOU KNOW, WE ARE GATHERING HERE TODAY TO ADDRESS A PRESSING MALOR CONCERN, THE FINANCIAL STABLE STABILITY OF THE DOLLAR POLICE AND FIRE PENSION AND THE EMPLOYEE'S PENSION.

ALSO, YOU KNOW, I'M HONORED TO BE HERE WITH ALL MY COLLEAGUES HERE BESIDE ME TO MAKE SURE THAT WE DO HAVE A PLAN TO MAKE SURE THAT WE MAKE SURE WE GOT A STRONG FOUNDATION AND MAKE SURE THAT WE ARE GONNA MAKE SURE THAT WE WILL, TO MAKE SURE THAT WE DO COME UP WITH A PLAN THAT EVERYONE WOULD ENJOY.

WOULD, WOULD, UM, BE PART OF IT.

UM, RIGHT NOW THE FIRST ORDER OF FIRST ONE GONNA BE GONNA BE THE EMPLOYER RETIREMENT FUND OF THE CITY OF DALLAS, WHICH CHERYL OLSON AND DAVID TRICH.

ARE YOU READY? GO AHEAD.

YES, SIR.

UH, GOOD AFTERNOON, MAYOR.

APPROACH HIM ATKINS AND COUNCIL MEMBERS.

MY NAME IS CHERYL ALSTON.

I AM THE EXECUTIVE DIRECTOR OF THE DALLAS EMPLOYEES RETIREMENT FUND.

I'M JOINED TODAY BY DAVID ETHERIDGE, WHO IS THE DEPUTY DIRECTOR FOR THE FUND.

CAN I CUT YOU ONE SECOND? LEMME GET A MOTION FOR THE MINUTES.

I FORGOT YOU GOT A MOTION FOR THE MINUTES.

ALL IN FAVOR SAY AYE.

AYE.

AND OPPOSED AYE.

ASK KAREN.

THANK YOU.

GO AHEAD.

NO PROBLEM.

UH, SO, UH, I'M JOINED TODAY BY DA UH, DAVID RIDGE, WHO'S THE DEPUTY DIRECTOR FOR THE DALLAS EMPLOYEES RETIREMENT FUND.

AND OUR GOAL TODAY IS TO, UH, PROVIDE A LITTLE BACKGROUND, UH, THIS FOLLOW UP TO OUR MEETING THAT WE HAD A FEW MONTHS AGO, AND THEN ALSO, UH, PRESENT TO YOU SOME CONSIDERATIONS FOR A, UM, A FUTURE SOLUTION FOR THE FUND.

AND SO, JUST, UH, NEXT SLIDE.

UH, JUST AS BACKGROUND, JUST OUR, UH, FUND WAS ESTABLISHED IN 1944.

IT IS A SINGLE EMPLOYER DEFINED BENEFIT PLAN, UH, THAT PROVIDES RETIREMENT, DISABILITY, AND DEATH BENEFITS FOR THE CIVILIAN EMPLOYEES OF THE CITY OF DALLAS.

WE ARE GOVERNED BY A SEVEN MEMBER BOARD, WHICH CONSISTS OF THREE, UH, THAT ARE APPOINTED BY THE CITY COUNCIL, THREE EMPLOYEES ELECTED BY THE MEMBERSHIP AND THE CITY AUDITOR THAT SERVES BY VIRTUE OF HIS POSITION.

UH, JUST BY A LITTLE ABOUT THE DESIGN.

AS YOU KNOW, THE CITY OF DALLAS DOES NOT PARTICIPATE IN SOCIAL SECURITY.

UH, DALLAS, ERF DOES NOT AND, AND HAS NEVER HAD A DROP PROGRAM.

AND ALSO THE COST OF LIVING ADJUSTMENTS ARE BASED ON CP, UH, THE CONSUMER PRICE INDEX.

UH, AS OUR BOARD CONSULTANTS, OUR ACTUARY GO ROTOR SMITH, OUR INVESTMENT CONSULTANT WILSHIRE, AND WE HAVE THREE LAW LEGAL LAW FIRMS THAT WE WORK FOR WORK WITH.

UH, NEXT SLIDE.

THIS IS A LITTLE GLIMPSE OF OUR INVESTMENT HISTORY SINCE 1995.

AND AS YOU CAN SEE, UH, UH, AND THE GREEN LINE IS THE 7.25%, WHICH IS OUR ACTUAL RATE OF RETURN.

UH, WHAT YOU'LL SEE THROUGH, UH, THIS IS THAT TWO THIRDS OF THE TIME WE OUTPERFORM OUR ACTUAL RATE OF RETURN.

AND, UM, UH, AND ACTUALLY AS OF NOVEMBER 30TH, UH, 2023, OUR YEAR TO DATE RETURN WAS 6.53, JUST FRESH OFF THE PRESSES AS OF YESTERDAY.

'CAUSE YESTERDAY WAS A VERY GOOD DAY IN THE MARKET AS OF YESTERDAY.

UM, WE LOOK AT OUR INVESTMENT RETURNS EVERY DAY, AND ESPECIALLY AS WE GET CLOSE TO OUR END OF YEAR.

UH, AS OF, UH, DECEMBER 13TH, 2020 3 23, UH, WE HAD A NET RETURN OF 8.4%.

AND SO WE'RE CLOSING IN AT THE END OF THE YEAR.

AND SO IT LOOKS VERY GOOD THAT WE ARE GOING TO EXCEED OUR ACTUAL RATE RETURN.

NEXT SLIDE.

SO THIS IS A LITTLE OLDER.

THIS IS NOVEMBER 30TH, UH, 2023.

BUT ONE NUMBER I DID WANNA NOTE IS THAT SINCE INCEPTION, UH, SINCE 1985, OUR RETURN HAS BEEN 8.63%.

UH, OUR ASSETS UNDER MANAGEMENT AS OF NOVEMBER 30TH, THAT'S 3.55 BILLION.

WE DO CONDUCT OUR, UH, ACTUAL EVALUATION ANNUALLY.

WE ALSO CONDUCT AN EXPERIENCE STUDY.

SO WE ACTUALLY GO OUT AND LOOK AT OUR, UM, ASSUMPTIONS AND WE, UH, LOOK AT THE EXPERIENCE, OUR ACTUAL EXPERIENCE, AND DO THE STUDY EVERY FIVE YEARS.

AND WE MAKE ADJUSTMENTS AS NEEDED.

WE DO AN INDEPENDENT PEER REVIEW AUDIT EVERY FIVE YEARS.

UM, SO WE ACTUALLY TAKE OUR ASSUMPTIONS, GIVE IT TO A COMPLETELY INDEPENDENT ACTUARY, AND THEY RUN THAT THROUGH THEIR SYSTEM TO MAKE SURE THAT THEY ARE GETTING THE SAME NUMBERS AS OUR ACTUARY.

AND THEN OUR FUNDED RATIO AS OF, UH, 1231 2022 IS 73%.

NEXT SLIDE.

SO ON THE NEXT SLIDE, UH, MAYOR PRO TIM ATKINS AND COUNCIL MEMBERS, WE WANTED JUST TO SHARE A COUPLE OF FACTS AND FIGURES REGARDING THE CIVILIAN EMPLOYEES.

UH, IT'S RARE THAT WE WOULD JUST TALK ABOUT CIVILIAN EMPLOYEES, BUT AS YOU THINK ABOUT THEM FROM A RETIREMENT STANDPOINT,

[00:05:01]

THE AVERAGE RETIREE RECEIVES A BENEFIT OF JUST OVER $40,000 A YEAR.

UM, AND LAST YEAR WE PAID OUT A TOTAL OF 317 MILLION, UH, FOR THE TOTAL HEADCOUNT OF RETIREES THAT WE HAVE.

AND AS YOU CAN SEE, THAT'S ABOUT 77, A LITTLE BIT MORE THAN 7,700 RETIREES, UH, CLOSE TO 6,000 OF OUR MEMBERSHIP.

WE HAVE ABOUT 15,000 A LITTLE BIT ABOVE THAT ACTUALLY LIVE IN THE CITY OF DALLAS AND OUR RESIDENTS.

BUT WHAT'S ALARMING FOR THE FACTS THAT WE'RE SHARING WITH YOU IS THE RATE OF TURNOVER.

ANYTIME THAT WE LOOK AT MODIFYING OF THE SUMMARY PLAN DOCUMENT, WE HAVE TO LOOK AT SOME KEY FACTS.

RIGHT NOW, THE CITY'S RATE OF TURNOVER IS 17% FOR CIVILIAN EMPLOYEES.

WHEN YOU LOOK AT POLICE AND FIRE, UH, YOU'LL SEE REPORTED FROM THE HR DEPARTMENT TO POLICE IS 1%, FIRE IS 2.4%.

BY THE WAY, 17% IS SIGNIFICANTLY HIGHER THAN THE BUREAU OF LABOR STATISTICS AVERAGE FOR THE SAME TIME PERIOD, WHICH RANGE FROM 3.6 TO 4.2%.

SO THERE'S A RISK WHEN MODIFYING BENEFITS OF LOSING INSTITUTIONAL KNOWLEDGE.

1100, UH, CURRENT ACTIVE EMPLOYEES ARE ELIGIBLE TO RETIRE.

IF THOSE PEOPLE WERE TO RETIRE, UH, IN A QUICK STAGE, THAT WOULD BE AN ADDITIONAL COST TO THE CITY.

WE ESTIMATED AT ABOUT $12 MILLION.

ON THE NEXT SLIDE, WHAT WE WANTED TO ALSO SHOW WAS THE AVERAGE BENEFIT AND HOW IT RANKED AMONG THE HEALTH AND HUMAN SERVICE.

UH, HUMAN UH, SERVICES, UH, DEPARTMENTS, POVERTY LEVEL, PARTICULARLY AS IT RELATES TO, UH, RELATES TO AFFORDABLE CARE ACT.

THIS IS THE NUMBER THAT THEY USE TO DETERMINE HOW MUCH PREMIUM, UH, A PERSON SHOULD PAY WHEN THEY'RE ACTUALLY TAKING OUT A, A HEALTHCARE PLAN WITH THEM.

AS YOU CAN SEE ON THE AVERAGE BENEFIT, BASED ON THE AVERAGE BENEFIT THAT WE PAY OUT, UH, WE'RE RANKED BETWEEN A SIX MEMBER AND A SEVEN MEMBER HOUSEHOLD.

NOW, MOST OF OUR RETIREES ARE NOT IN A SIX OR SEVEN MEMBER HOUSEHOLD.

UH, BUT WHAT WE'RE SAYING IS WE DO HAVE TO TAKE INTO CONSIDERATION WHERE THESE, UH, RETIREES WILL LAND AS IT RELATES TO COST OF LIVING WITHIN THE COMMUNITY.

ON THE NEXT SLIDE, I'M GONNA SKIP OVER TO SLIDE EIGHT.

WE WANTED TO JUST GIVE YOU A LITTLE HISTORICAL PERSPECTIVE, UH, SLIDE BEFORE THAT PLEASE.

UH, THE HISTORICAL PERSPECTIVE BEFORE THAT, UH, IS THAT WHEN WE MODIFIED BENEFITS IN 2016, WE REDUCED THE BENEFITS, UH, FOR THE NEW TIER OF EMPLOYEES, TIER B BY 39%.

THESE ARE THE TOP SEVEN ITEMS THAT WE ACTUALLY REDUCED IN THE BENEFIT PLAN.

UH, BUT I WILL TELL YOU, UH, SOME DAYS I THINK ABOUT IT AND I STILL HAVE A HEADACHE.

WE LOOKED AT 47 DIFFERENT SCENARIOS, UH, WITH OUR ACTUARIES, BUT THESE WERE THE TOP SEVEN THAT GOT US TO THE DESTINATION.

WE DIDN'T NEED TO REDUCE ANYMORE, BUT 39% WAS SIGNIFICANT.

AND AGAIN, WHEN WE LOOK AT CHANGING THE PLAN, WE CONSIDER, UH, THOSE FACTORS MENTIONED BEFORE.

SO YOU MAY BE ASKING, AND I KNOW THAT WE MENTIONED THIS IN OCTOBER, WELL, HOW DID WE GET HERE? UH, ON THE NEXT SLIDE, ON SLIDE NINE, WHAT YOU'LL SEE IS EVERY CIVILIAN EMPLOYEE AS A CONDITION OF EMPLOY EVENTS MUST PARTICIPATE IN THE EMPLOYEE'S RETIREMENT FUND.

AND SO WHAT THAT MEANS IS THE HEAD COUNT OF THE CIVILIAN EMPLOYEES ACTUALLY DETERMINES THE CONTRIBUTION AMOUNT THAT ERF RECEIVES.

AND SO I HAPPENED TO OFFEND THE HR DIRECTOR BACK IN THE DAY, BUT IN 2009, WE MADE A SIGNIFICANT CUT.

AND THAT WAS OF COURSE, BECAUSE THE MARKET HAD FALLEN OUT.

UH, WE HAD SOME 717 ODD LAYOFF NOTICES THAT WE GAVE AT THAT TIME.

UH, WE SPUN OFF THE ZOO, THE CITY DID.

AND SO OUT OF THAT 717, THERE WAS 300 AND SOME ODD, UH, EMPLOYEES WHO WERE LAID OFF.

AND THEN THOSE HEADCOUNTS BASICALLY REDUCED THE HEAD, REDUCE THE AMOUNT OF, UH, CONTRIBUTIONS MADE TO ERF.

THAT BEING SAID, IF YOU LOOK ALL THE WAY THROUGH TO 2022, YOU'LL SEE THAT WE NEVER RETURNED TO THAT HEADCOUNT.

THAT BEING SAID, THAT MEANS THE CONTRIBUTIONS HAVE BEEN REDUCED SINCE 2009, AND WE'RE STILL WORKING THROUGH THE MATH OF HOW THEN OUR FUNDING LEVELS ARE.

ON THE NEXT SLIDE, YOU'LL SEE JUST A QUICK NUMBER.

AND I KNOW THIS IS A RECAP, SO I'M GONNA GO THROUGH REAL QUICK, THE BALANCE.

IF WE WERE TO HAVE KEPT THE HEAD COUNT THAT WE HAD IN 2008 AND 2009, UH, WE CALCULATED AND ESTIMATED THAT THOSE CONTRIBUTIONS WOULD'VE EQUATE TO ABOUT 1.3 BILLION.

AND THAT MAY HAVE CHANGED, UH, THE DISCUSSION THAT WE'RE HAVING TODAY.

SO WE WANTED TO BRING THAT TO YOUR ATTENTION.

AND THEN ON SLIDE 11, JUST WANTED TO HIGHLIGHT THE, UH, FUNDING SOUNDING RESTORATION PLAN.

THE PLAN THAT WE ARE WORKING TOWARD BASICALLY SAYS THAT IF WE ACT BY SEPTEMBER, 2025, WE CAN BASICALLY PARTICIPATE IN A 30 YEAR AMORTIZATION.

IF WE MISS THAT DATE, IT BECOMES A RISK AND AN INCREASED COST TO THE CITY AS THAT AMORTIZATION THEN WOULD GO DOWN TO 25 YEARS.

SO IT'S LIKE THE BANK SAYING TO YOU THAT NOW YOUR AMORTIZATION JUST CHANGED FROM A 30 YEAR AMORTIZATION TO 25, PLEASE INCREASE YOUR PAYMENT.

SO WITH THAT, TURN

[00:10:01]

IT BACK OVER TO CHERYL.

NEXT SLIDE.

UH, FOR THE CONSIDERATIONS FOR, UH, WE LOOKED AT ALL DIFFERENT PROPOSALS AND, UM, THE CONSIDERATION WE'RE PUTTING IN FRONT OF YOU TODAY.

FIRST I WANNA MAKE A NOTE.

IT DOES NOT INCLUDE A REQUEST FOR BONDS.

IT DOES NOT INCLUDE, SO, UM, THE REQUEST HAS TWO THINGS.

ONE, CURRENTLY WE HAVE A 36% CAP ON CONTRIBUTIONS.

AND SO WHAT WE'RE PROPOSING IS THAT WE, UH, ELIMINATE THE MAXIMUM CONTRIBUTION CAP OF 36% OF PAY, AND THEN FOR THE VALUATION PERIOD, STARTING EFFECTIVE JANUARY 1ST, 2025, AND REPLACE IT WITH THE ACTUARILY DETERMINED CONTRIBUTION RATE.

THAT'S GONNA BE IN THE VALUATION REPORT.

AT THAT POINT, THE ALSO WE'RE RECOMMENDING, OR OR FOR YOUR CONSIDERATION, INCREASING THE EMPLOYEE CONTRIBUTION TO A MAXIMUM OF 14%.

IT'S CURRENTLY AT 13.38.

AND SO, UH, WE'RE, UH, PROPOSING TO INCREASE THE EMPLOYEE CONTRIBUTION.

THE NEXT POINT, WHICH IS THE SELECTING THE APPROPRIATE AMORTIZATION SCHEDULE.

AND IT'S REALLY AROUND THE FACT THAT I KNOW THERE'S BEEN, UM, QUESTIONS OR IDEAS THAT MAYBE IN A FUTURE TIME YOU, UM, THE CITY MAY HAVE THE ABILITY TO PUT AN INFUSION OF, OF CAPITAL INTO THE FUND.

AND SO WHAT WE ARE PROPOSING IS THAT ANY LUMP SUM CONTRIBUTION FROM THE CITY AT ANY POINT IN TIME, UH, WILL HAVE A POSITIVE IMPACT EFFECT ON THE CITY'S CONTRIBUTION.

AND THEN WHAT WE'LL DO IS WE'LL RECALCULATE THE CITY'S CONTRIBUTION RATE, UM, TO BE, UH, OF COURSE IT WOULD BE LOWER AT THAT POINT.

SO ANY LUMP SUM AT ANY POINT IN TIME IN THE NEXT 30 YEARS, IT WILL BE COMPLETELY UP TO THE CITY COUNCIL TO DETERMINE WHAT THAT IS.

AS A PART OF THAT, WE'LL HAVE TO AMEND DRAFT CHANGES TO CHAPTER 40 A.

RIGHT NOW IT HAS TO, UM, GO TO THE VOTERS AS PART OF THE APPROVAL PROCESS.

AND SO IN WHAT WE'RE RECOMMENDING IS THAT FOR THE, TO MAKE THE MAY BALLOT, AND WE'LL TALK A LITTLE ABOUT THE REASONS WHY WE WERE RECOMMENDING MAY, IT'LL HAVE TO BE VOTED ON BY THE CITY COUNCIL BY FEBRUARY, 2025 IN ORDER TO CREATE THE REFERENDUM TO MAKE IT ON THE MAY BALLOT.

AND THEN THE CONTRIBUTION RATES WOULD GO INTO EFFECT, UM, OCTOBER 1ST, 2025.

SO THINK ABOUT IT FOR THE BUDGET YEAR 20 25, 20 26.

NEXT SLIDE.

SO ALSO, ONE OF THE THINGS WE WANTED YOU TO KNOW WAS, AND SOMETHING AS AS, UH, AS IMPORTANT AS THIS, UH, THE BOARD HAS HIRED AN AN INDEPENDENT ACTUARY.

AND WHAT THEY HAVE DONE IS TAKEN ALL THE SCENARIOS THAT WE'VE DONE TO PART OF THIS PROPOSAL AND THEY'VE RUN IT THROUGH THEIR OWN SYSTEM AND THEN CONCURRED WITH THE RESULTS.

'CAUSE WE WANTED TO MAKE SURE, UM, JUST HAD AN INDEPENDENT SET OF EYES, UH, LOOK AT IT.

AND SO WE WANT YOU TO LET YOU KNOW THAT MILLIMAN WAS HIRED AND MILLIMAN HAS REVIEWED AND CONCURRED WITH ALL THE PROPOSALS.

SO THEREFORE, WHEN YOU LOOK AT IT, WE'RE ASSUMING, UM, A RATE OF RETURN OF 7.25, WHICH IS OUR NORMAL RATE.

UH, THE PENSION OBLIGATION BOND DEBT SERVICE IS PAID FROM CONTRIBUTIONS LIKE IT IS RIGHT NOW.

AND WE WOULD HAVE A PHASE IN SCENARIO.

SO AS I SAID BEFORE, THE 36% CAP IS REMOVED, MEMBER CONTRIBUTIONS CAPPED AT 14%, AND THEN WE'RE GONNA PHASE IN THE CITY'S CONTRIBUTIONS AT 2% EACH YEAR UNTIL WE GET TO THE ULTIMATE LEVEL PERCENT OF PAY.

AND SO, AND THE CITY CONTRIBUTION PREDICTED TO FULLY FUND THE PLAN 30 YEARS FROM NOW.

SO FOR EXAMPLE, YOUR SOMEONE MIGHT SAY, HOW MUCH IS THAT? RIGHT? SO FOR 2025, THE UH, WOULD BE AN ADDITIONAL 7 MILLION FOR THE CITY, AND THE EMPLOYEES WOULD CONTRIBUTE AN ADDITIONAL 3.5 MILLION.

IN 2026, IT WOULD BE, UH, 10.5 MILLION FROM THE CITY.

AND AS WELL, THE CONTRIBUTION RATE WILL BE BASED ON PAYROLL.

SO BASED ON HOW PAYROLL GROWS.

NEXT SLIDE.

THIS CHART GIVES YOU A, A DEPICTION OF HOW, UH, THE PHASE AND SCENARIO WOULD LOOK.

SO IF YOU LOOK AT THE FIRST YEAR, IT GOES FROM 23 TO 24.

WHY? BECAUSE THE SIT, BECAUSE THE EMPLOYEES ARE COMING UP WITH ALMOST 1% FOR THAT 25, THAT 2% CONTRIBUTION.

SO, AND THEN IT GOES FROM 24 TO 26, AND THEN SO ON, UM, WHEN WE GET TO 30 YEARS, YOU'LL SEE THAT A DRAMATIC DROP BECAUSE ONCE THE UNFUNDED IS PAID OFF, IT IS JUST THE NORMAL COST.

THE NORMAL COST OF THE PLAN IS 14.5%.

SO THE CITY'S CONTRIBUTION RATE WOULD GO FROM TO 9% AND THE EMPLOYEES TO 5.5% THE YEAR, UH, ON THE 31ST YEAR.

AND I THINK THAT'S IMPORTANT TO KNOW THAT IT'S, THAT IT'S NOT A CONTRIBUTIONS, UH, INCREASE IN CONTRIBUTIONS FOREVER.

THERE IS A TIME PERIOD WHERE IT WILL BE PAID OFF AND THEN EVERYONE'S CONTRIBUTION COMES DOWN AND PAYS THE NORMAL COSTS.

AT THE, AT THE RATE WE HAVE NOW, WHICH IS THE 63% THAT'S PAID BY THE CITY, 37% IS PAID BY THE EMPLOYEES, AND, AND AT THAT POINT THEY WILL PAY THE NORMAL COST.

NEXT SLIDE.

SO HOW DOES THE CONTRIBUTION

[00:15:01]

RATE COMPARE TO OTHER CITIES, UM, OF COMPARABLE SIZE? SO YOU'LL SEE RIGHT NOW WITH THE CITY OF DALLAS ERF, UM, THE CONTRIBUTION RATE IS 22.68%.

UH, RIGHT WITH THE PENSION OBLIGATION BONDS WE'RE, UM, 8% GOES FOR THE BONDS.

THE REST COMES TO THE FUNDS.

WE'RE REALLY ONLY GETTING BETWEEN 14 TO 15%.

UH, TO, UM, AS A CONTRIBUTION, YOU'LL SEE THE CITY OF AUSTIN, CITY OF FORT WORTH, UH, CITY OF HOUSTON, ALL AT HIGHER RATES.

SOME OF THEM ALSO HAVE THE ADDITION OF SOCIAL SECURITY, BUT WITH THE RECOMMENDED, UM, SCENARIO THAT THE ERF, UH, THE CITY'S CONTRIBUTION WILL BE BETWEEN 24 TO 33% AND THAT PUTS THEM RIGHT IN THE MIDDLE OF, OF, UM, SOME OF THE COMPARABLE CITIES.

NEXT SLIDE.

SO GOING BACK TO THE TIMELINE, UM, AS YOU SAID, WE HAVE WORKED WITH, UH, CITY STAFF, WE HAVE WORKED WITH, UM, OUTSIDE INDEPENDENT ACTUARIES.

UM, OUR RECOMMENDATION OR PROPOSAL FOR YOUR CONSIDERATION IS THAT, UM, IF THE COUNCIL, UM, GIVES US APPROVAL TO GO MOVE FORWARD, WE WOULD AMEND NOT APPROVAL, BUT UH, DIRECTION TO MOVE FORWARD.

THEN WHAT WE WOULD HAVE TO COME BACK TO YOU WITH FOR THE FULL CITY COUNCIL IS THE ORDINANCE CHANGE TO AMEND CHAPTER 48 IN FEBRUARY OF 2024 WITH THAT, PUTTING IT ON THE BALLOT IN MAY OF 2024.

AND THEN IF THE VOTERS APPROVE THAT, THEN IT GOES INTO EFFECT JANUARY 1ST, 2025.

UH, THE, THE DELAY OR, OR THE TIME PERIOD IS IMPORTANT BECAUSE WE HAVE TO CHANGE OUR SYSTEMS IN ORDER TO ACCOMMODATE THE CHANGE IN THE, UH, CONTRIBUTION RATES.

AND SO WE WILL NEED THE TIME IN ORDER TO DO THAT.

NEXT SLIDE.

SO JUST AS A FINAL, UM, SUMMARY, UH, OF OUR CONSIDERATIONS THAT IT DOES NOT INCLUDE A REST REQUEST FOR BONDS, UH, WE'RE ACTUALLY LOOKING FOR TWO CHANGES.

ONE IS THE ELIMINATE THE MAXIMUM CONTRIBUTION RATE OF 36%, THE CAP INCREASE THE EMPLOYEE CONTRIBUTION RATE TO 14%, AND THEN AMEND THE LANGUAGE SUCH THAT IF THE CITY WOULD LIKE TO PUT AN INFUSION AND CAPITAL IN THEY CAN AND THAT IT WILL ADJUST YOUR CONTRIBUTION RATE AS DETERMINED BY, UH, THE ACTUARY.

AND THEN, UM, AND THAT'S SAYING WITH THE TIMELINE, AMEND THE DRAFT CHANGES TO CHAPTER 40 A, UH, THE COUNCIL VOTING ON IN FEBRUARY TO PUT IT FOR THE DALLAS CITIZENS CITIZENS TO CONSIDER IN MAY OF 2024.

AND THEN THE CONTRIBUTION RATES WOULD NOT GO IN IMPACT, UM, GO INTO EFFECT UNTIL OCTOBER 1ST, 2025.

AND WITH THAT, I'LL SEE IF YOU HAVE ANY QUESTIONS.

THANK YOU.

UH, I JUST WANNA MAKE SURE THAT PEOPLE WHO LISTEN TO THIS AND YOU ARE SAYING YOU WANT TO GO TO THE VOTERS, YOU KNOW, SOMETIME IN MAY AND AND THEY GOT TWO ITEMS THAT YOU WANNA PUT ON THE BALLOT.

CAN YOU JUST SLOW AND SAY WHAT ARE THE TWO ITEMS AND THE REASON WHY THOSE TWO ITEMS NEED TO BE, NEED TO BE PUT ON THE, THE BALLOTS IS NOT BY INCREASED BENEFIT OR ANYTHING, BUT YOU NEED TO DO THAT BECAUSE YOU GOT A TIMELINE.

YES, YES.

SO THE AMENDMENT PROCESS CURRENTLY FOR THE FUND IS THAT ANY CHANGES HAVE TO BE APPROVED BY THE COUNCIL, THE BOARD AND THE VOTERS.

AND SO, UM, SO THAT HAS TO GO IN A GENERAL OR SPECIAL ELECTION.

AND SO THAT IS WHY WE'RE LOOKING FOR MAY.

THE CHANGES WE'RE REQUESTING ARE SIMPLY THREE.

ONE, ELIMINATE THE CAP OF 36%.

TWO, ALLOW FOR THE, UH, EMPLOYEE CONTRIBUTIONS TO GO UP TO A MAXIMUM 14%, AND THREE, PUT IN THE LANGUAGE THAT WILL ALLOW THE COUNCIL TO PUT IN AN INFUSION OF CAPITAL AT SOME POINT IN TIME.

AND THEN AT THAT POINT THE CONTRIBUTION RATE FOR THE CITY WILL BE ADJUSTED.

AND IF THOSE ARE THE THREE THINGS, IF, IF YOU MISS THAT DEADLINE, I KNOW THERE'S A, A, A CARRY IN AT THE END OF THE LINE THAT YOU MIGHT HAVE TO CHANGE, UH, FROM 25 YEAR TO 30 YEAR.

COULD YOU EXPLAIN THAT WHY? YES, NO, WE CAN.

SO THE PENSION REVIEW BOARD, WHICH IS THE GOVERNING BOARD AT THE STATE LEVEL, UH, BASICALLY HAS AUTHORIZED THROUGH STATE STATUTE THAT WE HAVE TWO OPTIONS.

OPTION ONE IS WHAT WE'RE PROPOSING TODAY THAT WE, UH, PRESENT A 30 YEAR AMORTIZATION AND THAT WE HAVE THAT IN EFFECT BY SEPTEMBER 1ST, 2025.

SECOND OPTION, IF WE MISS THAT DEADLINE, MEANS THE AMORTIZATION GOES DOWN TO 25%, WHICH MEANS THE COST GOES UP 25, 25 YEARS.

I'M SORRY, I SAID 25%.

WHY 25 YEARS? UH, THE REASON WHY WE THINK IT'S IMPORTANT TO GO IN MAY ONE, CHERYL TALKED ABOUT THE SYSTEM CHANGE.

UH, WE HAVE A FAIRLY NEW PENSION AND ACCOUNTING SYSTEM, WE WOULD HAVE TO MODIFY IT.

WE WOULD ALSO HAVE TO GO BACK TO THE PRB BOARD TO MAKE SURE THAT WHAT'S BEING PROPOSED AND THE VOTERS HAVE APPROVED IS ALSO ACCEPTED BY THEM.

AND THEN WE ALSO NEED TO COMMUNICATE WITH THE EMPLOYEES THE INCREASE IN COST TO THEM.

SO THERE ARE SOME THINGS THAT WE NEED TO DO, AND SO THAT'S WHY WE'RE PROPOSING TO GO SOONER RATHER THAN LATER.

[00:20:01]

OKAY.

WITH THAT COUNCILOR BLACKMAN, UH, THANK YOU.

UM, DAVID, YOU HAD MENTIONED BECAUSE OF THE DECREASE IN, UM, OUR EMPLOYEES, KIND OF WHAT STARTED A TRAJECTORY.

WHAT ARE YOU PROJECTING TO BE OUR BASELINE FOR EMPLOYEES GOING FORWARD WITH THESE CHANGES? YOU KNOW, THAT'S A GREAT QUESTION.

UM, COUNCILWOMAN BLACKMAN, I DON'T KNOW THAT WE HAVE A BASELINE.

IF I WAS TO PROFESSIONALLY SUGGEST ONE, I WOULD REALLY SAY IT'S APPROXIMATELY 8,000 EMPLOYEES IN THE ACCOUNT.

OKAY.

NOW, BECAUSE RIGHT NOW YOU'RE AT, YOU'RE AT 74 64.

YES.

SO WE WOULD YES.

OKAY.

YES, BECAUSE I KNOW IT MATTERS HOW MANY PEOPLE YOU HAVE EMPLOYED THAT ARE PAYING INTO THIS.

YES.

NOW WE ACTUARILY CAN'T SAY TO YOU, 8,000 WILL DO X, Y, Z TODAY.

OKAY.

I'M JUST SUGGESTING TO YOU, WHEN YOU LOOK AT THE ROADMAP OF WHERE THEIR HEAD COUNT STARTED TO REDUCE, UH, THE AVERAGE IS RIGHT AROUND 8,000 THAT COST THE, THE ERF FUND A SIGNIFICANT FUNDING LEVEL.

OKAY.

ARE WE DOING THE ONE QUESTION OR DO WE GET TO ASK 2 0 2? UM, THAT, THAT'S IT FOR RIGHT NOW.

OKAY.

COUNCILMAN WILLIS, THANK YOU SO MUCH FOR THE PRESENTATION.

SO, UM, MR. ERIDGE, YOU MENTIONED, UH, YOU HAD STATISTICS FROM THE BUREAU OF OF LABOR STATISTICS ABOUT THE TURNOVER RATE FOR CITY EMPLOYEES AND IT, IT, IT TRACKS HIGHER THAN A STANDARD.

AND SO WHEN WE TALK ABOUT INCREASING THE EMPLOYEE MAXIMUM CONTRIBUTION TO 14%, I MEAN, I KNOW THAT'S A 0.62% INCREASE, BUT I'M WONDERING, ESPECIALLY WITH YOU HAVING WORN ANOTHER HAT BEFORE AN HR, UM, HOW WE FEEL ABOUT THAT AND THE IMPACT IT COULD HAVE ON EMPLOYEES, OR DO WE FEEL LIKE THIS IS SOMETHING THAT COULD BE BORN, UH, WITHOUT TOO MUCH OF A RIPPLE? ANOTHER GREAT QUESTION.

UH, I WOULD TELL YOU, REWINDING THE CLOCK BACK TO 2016, WE AGONIZED OVER THIS NEW TIER OF BENEFITS.

UH, WE EVEN DID SURVEYS FOR CONTRACTED, UH, SANITATION EMPLOYEES TO SEE IF THEY WOULD ACCEPT THE PERCENTAGE OF PAY.

AND THEY DID.

WE HAVE HAD TWO OR THREE INCREASES.

I'M, I DON'T HAVE 'EM IN FRONT OF ME.

UH, BUT WE DO THINK THAT CAREFUL COMMUNICATION TO OUR EMPLOYEES, THEY WILL UNDERSTAND THE BENEFIT INCREASE BASED ON THE COST ANALYSIS OF WHAT THEY'RE RECEIVING.

WHAT WE ARE CONCERNED ABOUT IS GOING ABOVE THAT 14%.

THAT IS THE CONCERN THAT WE HAVE.

AND YES, WE WANNA MAKE SURE THAT WE DON'T REDUCE, OR I SHOULD SAY INCREASE THE 17%, UH, BY MAKING MASSIVE ADJUSTMENTS.

UH, BUT WE DO THINK THAT WE CAN PRESENT THE INCREASE AS IT IS, AS CHERYL SAID, ROUGHLY 1% AND WE THINK THAT EMPLOYEES WOULD ACCEPT ON THE TURNOVER RATE NUMBER.

YOU SAID 17% IS THAT REFLECTIVE OF THIS LAST YEAR? SO WE RECEIVED THIS NUMBER FROM THE HUMAN RESOURCES DEPARTMENT.

THIS IS FOR THE CALENDAR YEAR OF 2022.

OKAY.

SO IN THE CALENDAR YEAR OF 2022, THE TURNOVER RATE FOR CIVILIANS WAS 17%.

AND LIKEWISE, POLICE, UH, ONE AND FIRE 2.4.

AND I ASK THAT BECAUSE I KNOW THAT WE HAVE APPROVED ACROSS THE PAST TWO AND A HALF YEARS ADDITIONAL BENEFITS FOR EMPLOYEES.

UM, WE'VE, WE'VE ADDED, I MEAN, EVERYTHING FROM PET INSURANCE TO, UM, SOME OTHER THINGS THAT WERE REFLECTIVE OF WHAT WE WERE HEARING FROM CITY EMPLOYEES.

SO I'M, I'M HOPING THAT COULD BE SOME SORT OF OFFSET, I GUESS WE WON'T KNOW ABOUT WHAT THE TURNOVER RATE OR WHAT THE KIND OF IMPACT, UH, THAT THAT WOULD MAKE IN THE COURSE OF THIS LAST YEAR.

DO YOU KNOW WHEN WE, WE GET THESE NUMBERS, TYPICALLY, IS IT IN I, I GUESS IN Q1 24 THAT WE MIGHT KNOW WHAT THE TURNOVER RATE IS? I WOULD HAVE TO DEFER TO THE HUMAN RESOURCES DEPARTMENT TO ANSWER THOSE QUESTIONS.

UH, I WOULD JUST SAY HISTORICALLY WE'VE LOOKED AT 'EM AT A FISCAL YEAR, ON A FISCAL YEAR BASIS OR A CALENDAR YEAR BASIS.

IT REALLY DEPENDED ON THE NEEDS OF SERVICE AND THE IMPACTS, UH, FORECASTED.

OKAY.

WELL IT'S AN IMPORTANT NUMBER TO WATCH, OBVIOUSLY.

THANK YOU CHAIR REMER MIDDLE.

JUST TO MAKE SURE I UNDERSTAND THE RULES HERE, IT'S TWO QUESTIONS, BUT WHAT ABOUT LIKE STATEMENTS? TWO QUESTIONS.

YOU CAN MAKE A STATEMENT, YOU GONNA MAKE IT, YOU GONNA MAKE A STATEMENT? YOU GONNA MAKE A STATEMENT ANYWAY? GO AHEAD.

OKAY, THANK YOU.

UM, JUST WANNA MAKE SURE I KNOW WHAT WE'RE TALKING ABOUT.

UM, SO THERE'S A LOT OF INFORMATION IN HERE AND I APPRECIATE THAT.

UM, AS A STATEMENT, I WILL SAY THAT, UM, YOUR ASSUMPTIONS ON THE GROWTH OF EMPLOYEES THAT YOU HAVE ON SLIDE 10 WHERE YOU'RE PROJECTING THREE AND A HALF PERCENT GROWTH AND THE ACTUAL HAS BEEN BELOW THAT, I HOPE THAT YOU IN THE FUTURE WE'LL REDUCE THAT ASSUMPTION.

UM, SO MY FIRST QUESTION'S GONNA BE, UM, ON YOUR SUMMARY OF CONSIDERATIONS.

UM, THERE'S MANY THINGS I AGREE WITH YOU ON.

YOU MAY SEE THAT I HAD TURNED INTO THE CHARTER REVIEW COMMITTEE FOR,

[00:25:01]

UM, ACTUALLY DETERMINE CONTRIBUTION RATE FOR BOTH OF OUR PLANS.

UM, AND SO I THINK THAT'S JUST VERY GOOD PRACTICE AND I WAS REALLY HAPPY TO SEE THIS IN THE RECOMMENDATIONS.

UH, MY MY QUESTION FOR YOU IS GONNA BE ACTUALLY ABOUT A COUPLE OF THE OTHERS, AND I'M GONNA PUT 'EM TOGETHER SINCE I ONLY GET TWO QUESTIONS.

AND THE FIRST IS, YOU'RE NOTING THAT YOU'RE NOT REQUESTING BONDS AND YOU'RE EVEN TELLING US WHEN YOU THINK WE SHOULD HAVE AN ELECTION.

BUT IS YOUR ROLE TO TELL US THOSE THINGS OR IS YOUR ROLE TO TELL US WHAT FUNDING YOU NEED FOR YOUR PLAN? NO, WE'RE JUST GIVING A, A TIMELINE.

AND THE REASON WHY IS THAT OUR PLAN'S A LITTLE DIFFERENT FROM OTHERS.

SO IT IS A RECOMMENDED GUIDELINE.

UH, WE HAVE TO HAVE THE VOTERS APPROVE AT A, AT A, UH, SPECIAL OR GENERAL ELECTION, AT LEAST MAY OF 2024, NOVEMBER, 2024, MAY OF 2025.

AND THE DEADLINE FOR THE PRB IS SEPTEMBER 1ST, 2025.

AND SO THE CLOSER YOU GET TO THE DEADLINE, THE CLOSER THAT, UM, WE MAY NOT HAVE AN OPPORTUNITY TO, TO GET OUR SYSTEMS TOGETHER AND THINGS LIKE THAT, THAT'S, SO IT IS A RECOMMENDED, UM, UH, TIMELINE.

IT IS NOT, WE ARE NOT TELLING THE COUNCIL, YOU KNOW, WHAT TIME, WHAT, RIGHT, WHAT DATE, WHAT YOU SHOULD PICK.

BUT I THINK THAT FOR US, UM, IT, IT HELPS BECAUSE WE HAVE TO GET OURS APPROVED BY THE VOTERS.

OTHER PLANS ARE NOT LIKE THAT AND WE ONLY HAVE THREE OPPORTUNITIES TO DO THAT.

AND SO OUR VIEW IS IF WE CAN DO IT SOONER THAN LATER, IT WOULD HELP US AND WE WOULD GUARANTEE TO MAKE THE PRB DEADLINE.

SO THE PRB DEADLINE IS ACTUALLY, YOU'RE GONNA HAVE TO SUBMIT A PLAN BY SEPTEMBER OF, OF 24, IS THAT CORRECT? 2045, I'M SORRY, 9 1 20 25.

NOT UNTIL 2025.

IT HAS TO BE IMPLEMENTED, LIKE EXECUTED, NOT, NOT SUBMITTED, BUT THE PLAN TO SUBMIT TO THEM THAT THEY HAVE TO APPROVE.

IS THAT NOT NEXT YEAR? WELL, FROM WHAT OUR DISCUSSIONS WITH THE PRB, THEY WANNA KNOW THAT IT'S ACTIONABLE AND FOR US, IT'S NOT ACTIONABLE UNTIL THE VOTERS VOTE ON IT.

SO I WOULD DISAGREE WITH THAT BECAUSE I DON'T THINK WE'RE GONNA HAVE ACTIONABLY TAKEN CARE OF THE OTHER PENSION EITHER BEFORE A PLAN HAS TO HAVE BEEN SUBMITTED.

AND SO WHAT I WOULD SAY IS THAT, UM, WE NEED A PLAN, AND I COMMEND OUR CHAIRMAN FOR WORKING HARD ON THIS AND FOR BRINGING US TOGETHER SO FREQUENTLY AND DOING THE EDUCATION THAT WE NEED, BUT WE DON'T ACTUALLY HAVE TO GO TO THE VOTERS IN MAY.

AND UM, I ALSO FEEL LIKE YOU MAY NOT GET AS FAVORABLE REACTION GOING IN MAY.

SO WHILE THAT IS A POLITICAL DECISION AND NOT, UM, A PENSION ONE, UM, THE, THE, THE NEXT THING I'M JUST GONNA ASK ABOUT IS THIS INFUSION OF CAPITAL.

AGAIN, I COMPLETELY AGREE WITH THAT BECAUSE OTHERWISE THE ACTUALLY DETERMINED CONTRIBUTION IS WAY, WAY HIGH.

UM, HAVE YOU CONSIDERED THAT WE MAY ALSO WANT TO PERHAPS SELL OFF ASSETS FOR OTHER PENSIONS? AND HOW WOULD WE MAKE THAT SPLIT? OR YOU'RE JUST SAYING ANY INFUSION WOULD BE HELPFUL? UH, I, I'M, I DON'T QUITE UNDERSTAND SELL OFF ASSETS FROM, FOR THE CITY TO SELL OFF ASSETS OR FOR, SO IF THE CITY SOLD OFF AN ASSET AND WE HAD $500 MILLION, IS THERE, IS, ARE, ARE YOU SAYING IN HERE THAT YOU THINK IT SHOULD GO TO ERF COMPARED TO GOING TO SOMEWHERE ELSE? OH NO, WE ARE NOT TELLING THE CITY HOW TO GET THE MONEY OR WHAT TO DO WITH THE MONEY.

WE ARE JUST GIVING THE OPTIONALITY WITHIN THE DOCUMENT THAT IF YOU WANTED TO INFUSE A CAPITAL, UH, OF ANY AMOUNT AT ANY TIME, THAT IS, THAT IS OPEN.

WE'RE NOT TELLING YOU HOW TO DO IT.

OKAY.

WELL, THANK YOU.

I THINK THAT APPROACH IS PROBABLY, UM, VERY MUCH IN LINE WITH THIS NEXT PRESENTATION.

THANK YOU.

IF I COULD MAKE ONE COMMENT, I JUST WANNA SAY I'M JUST REALLY PLEASED WITH THE FACT THAT THE LAST, UM, TIME WE PUT IT ON THE BALLOT, THE VOTER VOTERS APPROVED IT BY 69% AND WE GOT A LOT OF PHONE CALLS FROM VOTERS AND SO THEY UNDERSTOOD WHAT THEY WERE VOTING ON.

AND UM, SO WE WERE HAPPY THAT, UM, THAT WITH THE 69% VOTE, THAT WE, UH, FEEL, WE FEEL GOOD THAT THEY, THEY, THE VOTERS WILL STRIVE TO UNDERSTAND THE BALLOT AND, AND VOTE ACCORDINGLY.

UM, CHAIRMAN STEWART, THANK YOU.

UM, I'M GONNA APOLOGIZE IN ADVANCE.

YOU MAY HAVE ALREADY ANSWERED THIS QUESTION, BUT I, AND WE SEEM TO BE HYPERLY FOCUSED ON THIS, UH, PROJECTED RATE OF GROWTH OF EMPLOYMENT AT 3.5%.

WHERE DOES THAT NUMBER COME FROM? IS THAT JUST A GENERALLY ACCEPTED INDUSTRY STANDARD OR, UH, FOR A NUMBER OF YEARS OUR ACTUARY HAS USED THAT AS A GROWTH, UH, BASED ON PAST PERFORMANCE OF THE CITY'S HIRING.

AND SO IT'S REALLY A MATTER OF HEAD COUNT AGAIN.

UM, UH, BUT CERTAINLY, UH, FROM THE WISDOM OF THIS COUNCIL, WE ARE ALWAYS HAPPY TO TAKE A LOOK AT IT AND HAVE OUR ACTUARIES LOOK AT IT.

BUT IT'S BEEN THE HISTORY OF THE PERCENTAGE OF

[00:30:01]

HIRES.

OKAY.

UM, AND IF GOING FORWARD, FOR EXAMPLE, HOLD ON.

I'M SORRY.

I'M SORRY.

I JUST WANNA MAKE SURE DAVID, IS THAT A GROWTH IN HEADCOUNT OR IS THAT ALSO GROWTH IN PAYROLL? GREAT QUESTION.

SO IT'S, IT'S SYNONYMOUS.

SO HEADCOUNT EQUALS ALSO A GROWTH IN PAYROLL.

SO IT COULD BE EXISTING HEAD COUNT WITH HIGHER PAY FROM ANNUAL MERIT AND WITH ANNUAL MERIT.

THAT IS CORRECT.

THANK YOU JACK FOR CLARIFYING THAT.

IT DOES INCLUDE THE MERIT.

THANK YOU.

THAT'S HELPFUL.

YEAH, I GUESS I'M JUST WORRIED ABOUT THIS OUTSOURCING.

IT'S, I DON'T KNOW THAT THIS CITY IS GOING TO OUTSOURCE, SO NO HEADLINES, NO PANIC, NO WHATEVER.

OKAY.

THIS IS JUST WHAT'S GOING ON IN MY HEAD.

UM, SO IF THERE WAS A TREND TOWARDS OUTSOURCING JOBS, IT MIGHT BE OFFSET WITH, UH, PAYROLL GOING UP.

SO WE MIGHT STILL BE AT THAT 3.5%.

I JUST WANT US TO BE REALLY, REALLY THOUGHTFUL AND KIND OF GO RUN THROUGH ALL THE DIFFERENT SCENARIOS, WHICH I KNOW MR. IRELAND WILL DO QUITE WELL.

UM, AND MAKE SURE, BECAUSE IF WE, IF WE OVER PROJECT AND WE UNDERPERFORM IN THAT I, THAT I THINK THAT'S BEEN AN ISSUE IN THE PAST AND IT'S A, IT SEEMS LIKE AN EASY FIX.

MAYBE IT'S NOT AN EASY FIX 'CAUSE IT WILL IMPACT A LOT OF THINGS, BUT IT IS SOMETHING I THINK WE COULD, WE COULD DO A REALLY GOOD JOB OF PROJECTING, RIGHT? WE COULD REALLY DRILL INTO THIS AND MAKE SURE THIS IS THE RIGHT NUMBER AND THEN MAYBE EVEN JUST COME DOWN A LITTLE BIT JUST TO BE CONSERVATIVE, JUST TO, SO THAT WE DON'T OVER PROJECT THE, THAT INCREASE OVER TIME AND WE DON'T, AREN'T THEN PERHAPS LOOKING AT THIS SITUATION IN THE FUTURE.

'CAUSE IF THERE'S ANYTHING ELSE, ANYTHING WE DON'T WANT TO HAVE HAPPEN IS TO RE REVISIT THIS SCENARIO.

UM, AND THEN I JUST NEGLECTED TO WRITE DOWN THESE TWO PERCENTAGES, BUT YOU SAID AT THE END OF THIS 30 YEAR PERIOD ARE THE NORMAL COSTS WOULD GO DOWN TO, AND I JUST DIDN'T, I WROTE DOWN 9% AND THEN I DIDN'T YES.

IF YOU GO TO SLIDE 14, THE PHASE IN SCENARIO.

OKAY, THERE YOU GO.

SO YOU'LL SEE THE 2% STEP UP.

UH, ONE MORE SLIDE.

IT'S COMING.

WELL IT'S ACTUALLY THIS SLIDE, THE CHART, SLIDE 14.

OH THE CHART.

AND SO THERE WE GO.

YES, THANK YOU.

SO YOU'LL SEE THAT, UM, IT STEPS UP 2% AND THEN, UM, WHEN THE UNFUNDED ACTUARIAL ACCRUED LIABILITY IS PAID OFF, THE NORMAL COST FOR THE PLAN IS 14.5%.

AND SO THE CITY'S CONTRIBUTION RATE WOULD GO TO 9% AND THE EMPLOYEES TO 5.5%.

OKAY.

THANK YOU SO MUCH, CHAIRMAN MARINA.

THANK YOU MR. CHAIR.

UM, STICKING ON THE EMPLOYMENT SIDE, IS THERE A CORRELATION WITH THE EMPLOYEE GROWTH, WITH THE POPULATION GROWTH IN, IN MAKING THE SERVICES? YOU KNOW, IF THE THE CITY'S GROWING, WE, WE NEED ADDITIONAL SERVICES.

AGAIN, I WOULD HAVE TO EITHER TURN TO THE HR DEPARTMENT OR TO OUR CFO FOR THAT.

WE, WE PRETTY MUCH ACCEPT THE CONDITIONS THAT HAVE OCCURRED THROUGH THE BUDGET PROCESS.

THAT'S WHAT WE DO.

AND SO WE DON'T FORECAST, UH, ANY GROWTH OTHER THAN WHAT THE BUDGET TELLS US AND ALSO WHAT THE PAST PERFORMANCE HAS BEEN.

AND SO I DON'T, I DON'T THINK WE COULD FORECAST THAT FOR YOU.

THE NEXT QUESTION'S GONNA BE ON THE POTENTIAL OF A BOND.

UM, WOULD THAT INFUSION BE, TYPICALLY BONDS ARE OVER FIVE TO SEVEN YEARS, SO WOULD WE SEE THAT INFUSION IN, IN, IN ONE YEAR OR OVER A SEVEN YEAR PERIOD? SO I, I GUESS I'M THE POTENTIAL INFU INFUSION.

WE ARE NOT, UH, SAYING THAT IT HAS TO BE, UH, WE'RE NOT LINKING IT TO ANY TYPE OF BOND ISSUANCE AT ALL.

UH, SO, BUT, BUT IF THAT WAS SOMETHING THAT WE WERE EXPLORING, WE ARE, WE ARE NOT EXPLORING, UH, A BOND ISSUANCE AT THIS POINT.

UH, SO ANY INFUSION FROM ANY SOURCE OF CAPITAL THAT THE CITY MAY HAVE FROM, UM, IT'S UP TO, IT'S UP TO THE COUNCIL TO DETERMINE WHAT THAT IS.

BUT, UH, WE, BUT RIGHT AT THIS POINT OUR RECOMMENDATION IS WE ARE, WE'RE NOT REQUESTING A BOND ISSUANCE FOR US.

THANK YOU CHAIRMAN.

GRAYSON, YOU ANYTHING? OH, HI REZA, YOU HAVE A QUESTION? I THINK CHAD WESTNER WENT OUT.

CHAD, CAN YOU HEAR ME? IF YOU CAN.

WE ARE GOING AROUND.

OKAY.

COUNCILWOMAN BLACKMAN.

THANK YOU.

SO BACK TO THE EMPLOYEE COUNT, YOU'RE SHOWING THAT 1100 ARE POTENTIALLY ELIGIBLE IN LOOKING AT THE 74 64, THAT MEANS 15% OF OUR WORKFORCE COULD RETIRE TODAY? THAT'S CORRECT.

DO WE HAVE A PLAN FOR THAT? BECAUSE I MEAN, I ASSUME WE'RE GONNA TRY TO FILL POSITIONS, BUT YOU KNOW, THAT'S A

[00:35:01]

BIG $12 MILLION, THAT'S A GAP.

AND I'M NOT SAYING IT'S GONNA HAPPEN TODAY, BUT IF THEY'RE ELIGIBLE TO RETIRE, THAT'S, YOU KNOW, I'M JUST WONDERING DO WE HAVE A PLAN? SO, UH, FOR POLICE AND FIRE, THERE HAVE BEEN A COUPLE OF ACTIONS PUT IN PLACE TO HELP RETAIN OFFICERS THAT MAY BE AT THAT RETIREMENT AGE TO KEEP THEM IN THE SYSTEM LONGER.

WE DO NOT HAVE A SIMILAR THING FOR CIVILIANS, BUT WE DO HAVE BOTH ON BOTH SIDES, UNIFORM AND NON-UNIFORM, VERY HIGH PERCENT THAT HAVE BEEN HERE A REALLY LONG TIME AND HAVE ACHIEVED ELIGIBILITY.

SO I WOULD ASSUME THOSE POSITIONS WOULD GO OUT AND WE WOULD INTERVIEW AND HOPEFULLY YES, ABSOLUTELY.

AND NOT JUST ABSORB, I MEAN, 'CAUSE ABSOLUTELY WE WOULD THOSE PROTECTIONS TRY TO FILL THOSE POSITIONS IF THEY BECAME VACANT.

OKAY, THANK YOU.

COUNCILMAN WILLIS? YEAH, JUST TO FOLLOW UP ON THE TIMING OF, UM, VOTERS LOOKING AT DRAFT CHANGES THAT, THAT YOU PROPOSED, AND YOU'RE JUST SAYING THAT YOU'D LIKE THIS DONE ON THE EARLIER SIDE IN IN MAY IF POSSIBLE.

UH, CORRECT.

WE WANNA BE CONSERVATIVE AND SO WE WANNA GIVE US, UH, ENOUGH TIME IN ORDER TO CHANGE THE CHANGES.

AND ALSO WHAT'S REALLY IMPORTANT TO NOTE IS THAT WE ARE THE ONLY PLAN THAT NEEDS VOTER APPROVAL.

SO LINKING IT'S NOT THE PROCESS OF APPROVAL IS TWO SEPARATE PROCESSES.

SO THE, UH, GOING TO THE VOTERS TO APPROVE THE CHANGES IN CHAPTER 40 A IS REQUIRED OTHER PLAN, THE OTHER PLAN DOES NOT NEED THAT AT ALL.

SO IT'S, THE TWO PROCESSES ARE SEPARATE, SO YOU DON'T HAVE TO BE LINKED TO THAT IN ANY WAY, RIGHT? CORRECT.

OKAY.

AND UM, AND REALLY THIS IS JUST TIMING.

I MEAN, I'M, I APPRECIATE YOU SHARING THAT, THAT PERCENTAGE OF, UH, APPROVAL, 69% VOTER APPROVAL THE LAST TIME ANYTHING WENT BEFORE THEM, BEFORE THE ERF, SO, SO THAT'S GOOD TO KNOW.

ALRIGHT, WELL THANK YOU FOR ESTABLISHING THAT SEPARATION.

THANK YOU CHAIRMAN MENISON.

THANK YOU.

UM, SO GOING BACK TO A STATEMENT, I'LL JUST SAY THAT YOU HAD THAT VOTER APPROVAL, BUT YOU DIDN'T HAVE A POLICE FIRE PENSION HANGING OUT THERE AND JUST LOOKING AT THE FACES OF SOME OF THE PEOPLE IN THIS AUDIENCE, I ASSURE YOU THEY'RE NOT GONNA LET THIS ERF PASS BEFORE THEIR PENSION'S ADDRESSED.

SO I THINK, IS THAT A STATEMENT OR A QUESTION IS THAT'S A STATEMENT.

OKAY, LET'S, LET'S STICK WITH A QUESTION, PLEASE.

OKAY, THANK YOU.

SO, UM, MY QUESTION, THIS FIRST QUESTION IS, YOU CREATED A NEW CLASS THE LAST TIME THE PENSION WAS ADDRESSED, AND DID THE EXISTING CLASS HAVE ANY REDUCTION IN BENEFITS? DID THAT EXISTING CLASS, UM, CHANGE THEIR CONTRIBUTION AT THAT TIME? SO REMEMBER AGAIN, WE STATED, AND I WANNA BE EMPHATIC ABOUT ANSWERING THE QUESTION, SO I'M TRYING TO GET TO THE SLIDE.

SO ON SLIDE EIGHT, THESE ARE THE ACTION STEPS THAT, UH, WE TOOK TO REDUCE, THAT EQUATED TO A 39% REDUCTION OF THE TIER A PLAN TO CREATE A TIER B PLAN.

IN OTHER WORDS, WE LOOKED AT THE TIER A PLAN AND SAID, WHAT COULD WE REDUCE TO ACCOMMODATE THE GOAL AT THAT TIME? AND THESE ARE THE STEPS, UH, THE ACTIONS OF REDUCTIONS THAT WE SAID.

SO I JUST WANNA CLARIFY WHAT YOUR ANSWER IS.

SO YOU'RE SAYING THAT THE EXISTING CLASS HAD THESE SEVEN THINGS HAPPEN OR THE NEW CLASS HAD THOSE SEVEN THINGS HAPPEN? NO, GREAT QUESTION.

ONLY THE NEW CLASS.

SO THE EXISTING MEMBERS, I MEAN, I'M JUST TRYING TO MAKE SURE I UNDERSTAND YOUR ANSWER.

THE EXISTING MEMBERS OF ERF HAD NO CHANGE IN BENEFITS OR ANY OF THESE SEVEN ITEMS. THEY HAD NO CHANGES.

ONLY THE NEW CLASS WAS CHANGED THE LAST TIME YOUR PENSION WAS ADDRESSED.

YES.

AND, AND JUST TO BE EMPHATIC, IT'S A DIFFERENCE BETWEEN TIER A BEING THE CLASS BEFORE THE CHANGES OF JANUARY, 2017 AND THEN TIER B THEREAFTER.

AND SO YOU'RE CORRECT, THE TIER A MEMBERS HAD NO CHANGES, THE NEW HIRES AND THE NEW PLAN THAT WAS OFFERED TO THE NEW HIRES HAD THE REDUCTIONS, BUT THE PERCENTAGES, UH, DID CHANGE.

AND I JUST WANTED TO POINT OUT THE GOAL WAS TO CHANGE TO, UH, UH, ACTUALLY AVOID $2.15 BILLION OVER TIME.

WE'RE ON TARGET TO DO THAT.

52% OF THE WORKFORCE CIVILIAN WORKFORCE TODAY, OUR TRA AND THE BALANCE 48% OUR TIER B.

SO WE'RE WORKING THROUGH THE GOAL.

WHAT HAS CHANGED HAS BEEN THE PRB EXPECTATIONS.

GREAT.

UM, SO THE SECOND QUESTION I HAVE THEN IS, UH, YOU HAVE UNDER YOUR RECOMMENDATIONS ON SLIDE 17 TO INCREASE EMPLOYEE CONTRIBUTION RATE TO A MAXIMUM OF 14%.

HOW DOES THAT COMPARE TO THE POLICE FIRE EMPLOYEE CONTRIBUTION? UM, AND I KNOW YOU WERE TALKING ABOUT SOME OF THE OTHER CITIES AND HOW THERE'S, THERE'S IS UM, GOING COMPARE, BUT IT SEEMS TO BE SORT OF SELECTED CITIES.

SO I'M WONDERING IF YOU CAN MAYBE JUST ANSWER HOW THAT COMPARES TO THE, THE POLICE FIRE.

OH, SURE.

NO.

SO FOR, I, I DON'T KNOW WHAT THE, UH, POLICE AND FIRE'S CONTRIBUTION

[00:40:01]

RATE IS.

UM, SO I DID NOT COMPARE OUR CONTRIBUTION RATE TO THEIRS.

WHAT WE'RE LOOKING AT IS CIVILIAN EMPLOYEES.

UM, AND, AND AT THIS POINT WHEN WE'RE LOOKING AT OUR RECOMMENDATION, UH, THE EMPLOYEES ARE, ARE, UM, GOING TO CONTRIBUTE AS WELL TOWARD THIS SOLUTION.

SO WE DID NOT DO ANY COMPARISON WITH ANY ORGANIZATION.

WE THOUGHT IT WAS MORE APPROPRIATE TO COMPARE TO OTHER CIVILIAN PLANS.

AND SO WHEN WE LOOKED AT OUR COMPARISON THAT WE, UH, PICKED UP ON PAGE 15, WHICH IS A COMPARABLE CONTRIBUTION RATES, THE REASON WE PICKED THESE CITIES WAS BECAUSE THEY WERE LARGE CITIES LIKE DALLAS AND WE WANTED TO PICK A GROUP THAT WAS A COMPARABLE SIZE.

SO WE FELT, UM, AUSTIN FORT WORTH HOUSTON WERE MORE COMPARABLE TO DALLAS THAN SOME SMALL, SMALLER, UH, CITY WITHIN TEXAS.

SO WE FELT THAT IT WAS MORE APPROPRIATE BECAUSE THE DIFFERENCE BETWEEN, UH, THE CIVILIAN EMPLOYEES AND THEIR SALARY AND TOTAL COMP IS VERY DIFFERENT THAN, UH, POLICE AND FIRE, UM, UH, TOTAL COMP AS WELL.

SO THAT'S WHY WE WANTED TO COMPARE APPLES TO APPLES, WHICH WAS CIVILIAN PLANS, TO OTHER CIVILIAN PLANS.

I I THANK YOU FOR THAT.

UM, BUT I DON'T THINK THE QUESTION WAS ACTUALLY ANSWERED.

PERHAPS, PERHAPS JACK COULD ANSWER IT.

EXCUSE ME.

SO THE, THE QUESTION THAT I HAD ASKED, UM, THEY SAID THEY WERE NOT PREPARED TO ANSWER, WHICH IS FINE.

IT'S NOT YOUR PLAN.

NO, I, I DON'T KNOW Y'ALL, I UNDERSTAND, BUT THE QUESTION I'M ASKING IS FOR THE ERF PLAN, THEY HAVE THE THIRD BULLET ON, UH, SLIDE NUMBER 17 SAYING TO INCREASE EMPLOYEE CONTRIBUTION RATE TO A MAXIMUM OF 14%.

AND MY QUESTION IS, HOW DOES THAT COMPARE TO THE POLICE FIRE PENSION PLAN? THESE ARE ALL OF OUR EMPLOYEES.

SO THE CURRENT CONTRIBUTION RATE FOR POLICE AND FIRE IS 13.5 FOR THE EMPLOYEES AND THEIR, UH, PRESENTATION DOES NOT PROPOSE ANY CHANGES TO THAT.

UH, OKAY.

THIS YOUR LAST QUESTION, BUT I'M, I'M JUST MAKING SURE I ANSWER, BUT, SO RIGHT NOW THE EMPLOYEES ARE PAYING 12, IS THAT RIGHT? 5%? NO, NO, NO.

THEY'RE PAYING 13.38 AND THEN WE GO TO 13.38.

OKAY, THANK YOU.

THANK YOU.

OKAY.

UH, I I'M TRYING TO MAKE A CLARITY RIGHT HERE.

UH, THE EMPLOYEES, UM, COMPARISON TO THEIR EMPLOYEES, THEY'RE TRYING TO COMPARE EMPLOYEES TO EMPLOYEES IN UNIFORM TRYING TO COMPARE UNIFORM UNIFORM.

IS THAT A FAIR STATEMENT? JACK? IT IT'S REALLY DIFFICULT TO COMPARE THE TWO CLASSES BECAUSE THE BENEFITS ARE DIFFERENT.

THE PAY, THE CURRENT PAY FOR ACTIVE EMPLOYEES ARE DIFFERENT.

POLICE AND FIRE RECEIVED A 5% PAY INCREASE THIS YEAR.

UH, CIVILIANS ONLY RECEIVED A 3%.

SO THERE'S NOT A TRUE COMPARISON ON ALL OF THE DIFFERENT ASPECTS OF THE COMPENSATION PACKAGE.

I DON'T WANNA PUT THAT OUT THERE, YOU KNOW, Y'ALL WAS NOT PREPARED FOR THAT.

I WANNA MAKE SURE THE PEOPLE WHO LISTEN THERE IS NOT A COMPARISON.

THEY ARE COMPLETELY SEPARATE.

UH, OTHER THING, LET'S GET BACK SINCE, UH, CHAIRMAN MEDICINE BROUGHT UP THE ELECTION, IT WAS NOT ELECTION FOR A BOND PACKET OR TRYING TO GET BENEFIT, IT'S SOMETHING THAT Y'ALL WERE TRYING TO GET A DEADLINE BECAUSE IF YOU DO NOT MAKE MEET THAT DEADLINE, THEY WILL SHRINK THAT WINNER FROM 30 YEARS TO 25.

SO THAT'S THE REASON WHY YOU'RE TRYING TO GET THE ELECTION.

IS THAT CORRECT? THAT IS CORRECT.

YOU WANNA REPEAT THAT AGAIN? SO EVERYBODY UNDERSTAND THE REASON BECAUSE YOU HAVE SOME ISSUE HOW TO MEET THAT DEADLINE? YEAH, AS CHERYL HAS STATED, WE HAVE, WE HAVE RECOMMENDED, AND FOR YOUR CONSIDERATION A VERY CONSERVATIVE APPROACH.

WE GO TO THE NEXT MAY, MAY, 2024, THAT GIVES US THE TIME TO GET THE APPROVAL FROM THE PENSION REVIEW BOARD, COMMUNICATE TO OUR EMPLOYEES, BUT ALSO CHANGE OVER OUR PENSION ACCOUNTING SYSTEM.

THOSE THREE THINGS WILL TAKE TIME.

AND SO WE'RE THINKING THAT IF WE CAN GET IT DONE SOONER RATHER THAN LATER, WE REDUCE OUR RISK.

IF WE DO NOT, IF WE MISS THAT DEADLINE, WHAT DO IT COST YOU? THE AMORTIZATION GOES FROM 30 YEARS TO 25 YEARS.

30 TO 25 YEARS.

SO IN DOLLARS CONTRIBUTION, YOU DON'T HAVE AN ANSWER NOW.

IF YOU CAN, WILL YOU GIVE US AN OUNCE BEFORE, YOU KNOW, NEXT WEEK SOMETIME FOR THE NEXT MEETING? WE CAN DEFINITELY COME BACK AND PROVIDE YOU THAT INFORMATION.

OKAY.

WITH THAT, UH, WE GOING GO WITH THE NEXT BRIEFING, UH, UNLESS, UH, HAMMOND YOU HAD ANY QUESTION? OKAY, LET'S GO TO THE NEXT BRIEFING.

AND NEXT ONE WOULD BE, UH, THE CITA DOUBT AD HOC COMMITTED BRIEFING WITH BILL QUINN, JOHN STEVEN AND ROD WALTER.

OKAY, GOOD AFTERNOON.

WHY DON'T WE BEGIN, UH,

[00:45:01]

LEMME TURN THIS OVER TO, UH, BILL QUIN WILL GET US STARTED AND I'LL SUPPLEMENT.

THANK YOU.

MIC'S ON.

ALL RIGHT.

NO, IT'S FINE NOW.

THERE IT IS.

UM, WE'LL GET STARTED.

UH, I'LL INTRODUCE OR UH, TURN OVER TO BILL QUINN AND LET HIM GET STARTED AND THEN I'LL HAVE A FEW SUPPLEMENTAL OBSERVATIONS ABOUT THE SPECIFIC RECOMMENDATIONS.

YEAH, ROB'S UH, HAVING A LITTLE PROBLEM RIGHT NOW WITH YOU NEED SOME WATER OR SOMETHING? OH, I'M GOOD, I'M GOOD.

YOU GOOD NOW? YEP.

OKAY, GREAT.

UH, THANK YOU FOR BEING HERE, CHAIRMAN, APPLICANTS OTHER CITY COUNCIL MEMBERS.

UM, WHEN I INITIALLY WAS ASKED TO BE THE CHAIR OF THE DPFP BILL, WILL YOU PUT YOUR MIC A LITTLE CLOSER TO YOU? A LITTLE BIT MORE? BACK IN 2017 BY MAYOR RAWLINGS, I, I ACCEPTED BECAUSE I COME FROM A FAMILY OF POLICE OFFICERS.

MY DAD WAS A POLICE OFFICER AND MY TWIN BROTHER WAS A POLICE OFFICER IN NEW YORK.

AND SO I KNEW HOW IMPORTANT PENSIONS WERE, SO WHATEVER I COULD DO, I WANTED TO DO.

BUT IT WASN'T LONG INTO THAT REVIEW DID WE REALIZE WHAT HAPPENED IN HOUSE BILL 31 58.

IT WAS JUST PUTTING A TOURNIQUET ON THE BLEEDING AND STOPPING THE BLEEDING, AND THAT DID, WE REALLY NEEDED A LONG-TERM SOLUTION.

SO WE STARTED, OR I STARTED THINKING ABOUT THOSE THINGS GOING BACK TO 2017, AND I'M GLAD THAT WE'RE HERE TODAY TO PRESENT SOME OF THOSE OPTIONS AS WELL AS TO, UH, SAY THAT WE, OUR ASSIGNMENTS SORT OF EVOLVED ALSO TO, UH, SORT OF HELP THE CITY DRAFT A PLAN THAT HAS TO GO TO THE PRB BY NEXT YEAR THAT WE THINK WILL BE A CREDIBLE PLAN.

WITH THAT, WE CAN GO TO THE FIRST SLIDE.

I'M NOT GONNA GO OVER A LOT OF THE DETAIL HERE.

YOU'VE SEEN THE SLIDE BEFORE.

I JUST WANTED TO POINT OUT A COUPLE OF QUICK HIGHLIGHTS ON THAT.

THE REAL ESTATE INVESTMENTS OF A BILLION DOLLARS WERE NOT THE ONLY ILLIQUID IN BAD INVESTMENTS.

WE HAD ABOUT A $600 MILLION IN PRIVATE EQUITY INVESTMENTS AS WELL.

UM, SINCE 2016 17, THE STAFF AT DPFP HAS DONE A GREAT JOB OF GETTING THAT DOWN.

AND WE'VE SOLD OVER A BILLION DOLLARS WORTH OF ASSETS SO THAT WE COULD PUT 'EM INTO LIQUID TYPES OF INVESTMENTS THAT WE WOULD GET NORMAL RETURNS.

UH, ONE OF THE REASONS OUR RETURNS ARE WHERE THEY ARE IS THAT WE HAD THIS BILLION SIX OF ASSETS EARNING NO RETURN OR NEGATIVE RETURNS DURING THE PERIOD.

WE ALSO, BECAUSE OF THE NEGATIVE CASH FLOW IN THE PLAN, HAD TO PUT SOME MONEY INTO ABOUT 120, $150 MILLION INTO THE LOW RISK, UH, LOWER INTEREST, VARYING FIXED INCOME INSTRUMENTS, WHICH IMPACTED THE RETURNS.

UH, SO I THINK WE'VE, YOU KNOW, GIVEN THE CIRCUMSTANCES WE'VE DONE VERY WELL, I DON'T THINK WE NEED TO TALK ABOUT DROP ANYMORE.

THAT'S, UH, WELL, WELL KNOWN AND, AND WELL VERSED ON, BUT THE LEGISLATION DIDN'T FULLY RESOLVE THE PROBLEM, AS I SAID, UH, AND, AND REALLY PUT US IN A SITUATION WHERE WE DID HAVE AN ONGOING NEGATIVE CASH FLOW OF ABOUT A HUNDRED TO $120 MILLION.

BUT THE PLAN THERE WAS TO GIVE CERTAINTY TO THE CITY ON CONTRIBUTIONS OVER THE NEXT SIX OR SEVEN YEARS.

AND IT WAS NOT, YOU KNOW, THE LEGISLATION WASN'T INTENDED TO BE A LONG-TERM SOLUTION, BUT NOW HERE WE ARE LOOKING AT HAVING TO COME UP WITH THAT LONG-TERM SOLUTION.

ON THE NEXT SLIDE, I'LL SEE IN THE STATE.

OKAY.

UH, PRB, THE RULE UNDER 31 58 IS THAT THE INDEPENDENT ACTUARY HAD TO BE HIRED BY DPFP AND ULTIMATELY CHIRON WAS SELECTED EARLY.

UH, WE WANTED TO GET THE PROCESS GOING FASTER AND, AND MOVE ON.

AND ACTUALLY YOU SAW THE PRELIMINARY RESULTS IN NOVEMBER.

THE FINAL WILL BE DONE IN FEBRUARY.

UM, AT THAT TIME, WE'LL HAVE A, A PRETTY GOOD THING.

I WON'T COMMENT ON THINGS THAT YOU SHOULD BE AWARE OF.

I MEAN, PROBABLY THE 2022 UH, VALUATION WILL BE A LOOK, UH, A LITTLE BIT, UH, BETTER.

OR ACTUALLY THE 2123 VALUATION WILL LOOK A LITTLE WORSE BECAUSE WE'VE HAD ANOTHER YEAR OF NEGATIVE CASH FLOW.

UH, BUT WHEN WE GO TO 1 1 24, UH, WE, I EXPECT THAT IT'LL BE A LOT BETTER BECAUSE WE'VE HAD A 17% RETURN ON OUR ASSETS OVER THE LAST, UH, 12 MONTHS.

SO IT'S, YOU KNOW, WE'RE ONE YEAR IN ARREARS ON VALUATIONS ALL THE TIME.

SO YOU ARE SORT OF WORKING WITH, UH, LOOKING IN A REAR VIEW MIRROR, BUT THINGS HAVE IMPROVED OVER THERE.

UM, ONE THING I FOUND INTERESTING THAT I DON'T KNOW THAT WE'VE TALKED ABOUT, BUT THE MANDATE UNDER 31 58 IS A MANDATE FOR THE TFP BOARD, NOT THE CITY.

HOWEVER, THERE'S NO WAY THAT THE DFP BOARD CAN COME UP WITH MONEY TO FUND THESE THINGS.

SO THE CITY AND AND THE BOARD HAVE TO WORK HAND IN HAND ON DOING THAT.

UM, AND SO I THINK THAT'S STILL AN ISSUE.

WE SORT OF GOTTA WORK AT THE BOARD WOULD PROBABLY WANT MORE MONEY SOONER THAN WE THINK IS A REASONABLE AT THIS POINT IN TIME, GIVEN EVERYTHING ELSE THAT'S GOING ON.

BUT WE REALLY DO THINK THAT'S GONNA

[00:50:01]

BE AN ISSUE.

UM, THE NEXT SLIDE, SLIDE FIVE.

UM, SINCE OUR LAST TIME, AGAIN, YOU'VE SEEN THIS SLIDE BEFORE, BUT AS I MENTIONED BEFORE, WE'VE SOLD 900 MILLION TO A BILLION DOLLARS IN ILLIQUID ASSETS AND HAVE PUT 'EM INTO MORE APPROPRIATE INVESTMENTS.

WE'VE GIVEN A LEVEL OF OUTFLOWS, WE DID MAINTAIN LOWER AN ALLOCATION TO LOWER INTEREST, LOWER RISK BONDS, AND, BUT WE HAVE NOW RESTRUCTURED THE PORTFOLIO TO WHERE 65% OF THE ASSETS THAT WERE IN PRIVATE MARKETS IS DOWN TO LESS THAN 10%.

AND WE'VE GOT A SIGNIFICANT AMOUNT OF MONEY IN PUBLIC MARKETS THAT ARE DOING QUITE WELL.

UM, MATTER OF FACT, OVER THE LAST ONE, THREE, AND FIVE YEARS, AS WE LOOK AT THE INVESTMENT PERFORMANCE RELATIVE TO A HISTORICALLY STANDARD BENCHMARK OF 60 40, THE FUNDS HAVE ACTUALLY OUTPERFORMED IN EACH OF THE ONE, THREE AND FIVE YEAR PERIODS OF TIME.

UH, WE'RE STILL BURDENED BY THE, UH, BACK HISTORY OF, UH, ILLIQUID ASSETS AND AS, AS I SAID, THERE'S STILL OVER $500 MILLION IN, IN THOSE ASSETS.

THE NEXT SLIDE IS JUST AN ILLUSTRATION OF HOW THE ASSET ALLOCATION HAS SHIFTED AND YOU CAN SEE THE GLOBAL EQUITY, WHICH IS OUR BIGGEST ALLOCATION, WAS DOWN ALMOST AT UNDER 10% AND BACK IN 2017.

AND NOW WE'VE GOT IT BACK TO A MEANINGFUL, WE'RE STILL SHORT OF WHERE WE WANT TO BE.

WE NEED TO GET ANOTHER 10%, 15% INTO THOSE ASSETS, BUT WE'VE MADE GREAT PROGRESS IN DOING THAT.

NEXT SLIDE, UH, TALKS ABOUT THE FUNDING STATUS.

AS I SAID, IT'S 41% FUNDED AT AS OF JANUARY 1 22.

I THINK IT'LL BE A LITTLE WORSE IN 1 1 23 BEFORE GETTING BETTER.

UH, THE ACTUAL NUMBERS AS OF 1 1 22 ARE 5.2 BILLION IN LIABILITIES AND 1.8 BILLION IN ASSETS.

SO WE'VE GOT A 3.4 BILLION UNDERFUNDED SITUATION AT THE CURRENT CURRENT TIME.

NOW 70% OF THE LIABILITIES IS DUE TO RETIREES, NOT TO THE ACTIVES.

SO THAT'S THE BIG CHUNK THAT HAS TO BE AMORTIZED OVER TIME.

AND AS WAS JUST TALKED ABOUT, THE REGULAR UH, CONTRIBUTION FROM THE CITY IS 34.5% PLUS A $13 MILLION ANNUAL CONTRIBUTION ABOVE THAT PAYROLL NUMBER.

AND THE CITY'S EMPLOYEES ARE AT 13.5%.

AND ONCE AGAIN, WE HIGHLIGHT THAT, YOU KNOW, WE STILL ARE IN A NEGATIVE CASH FLOW, SO WE REALLY NEED SOME HELP.

THE NEXT CHART JUST SHOWS UNDER THE CURRENT PROJECTIONS WHEN WE WILL BE GET TO DIFFERENT FUNDING LEVELS.

UH, WE'RE GONNA BE OUT TO 2090 BASICALLY UNDER CURRENT ASSUMPTIONS AND THE CURRENT FUNDING PROJECTIONS BEFORE WE GET TO A HUNDRED PERCENT, WE STILL GET, GET OUT TO ABOUT 2070 OR 72 JUST TO GET TO THE 70% LEVEL.

SO IT UNDER THE CURRENT SITUATION IS JUST UNTENABLE.

THE NEXT CHART, I THINK IS A REALLY A KEY ONE.

IT SHOWS UNDER DIFFERENT LEVELS OF MAKING A ONE-TIME CONTRIBUTION, UH, FROM ASSETS OR FROM OTHER THINGS.

WHAT WOULD THAT DO TO BRINGING IN THE FUNDING LEVELS AT WHAT PERIODS OF TIME? SO WE COULD GET WITH A $500 MILLION CONTRIBUTION, WE'RE PROBABLY STILL GONNA BE OUT THERE QUITE A WAYS, BUT WE'D GET TO 70% IN AROUND 2067 WITH A BILLION.

WE GET A HUNDRED PERCENT FUNDED IN 2055 AND A BILLION, UH, 70% FUNDED IN 2043.

SO BY MAKING MAJOR CONTRIBUTIONS TO THE PLAN, IT'LL HAVE A MAJOR IMPACT, OBVIOUSLY ON THE FUNDING STATUS, BUT IT ALSO WILL MAKE A MAJOR IMPACT ON WHAT OUR CONTRIBUTIONS WILL BE GOING FORWARD.

WE'RE GONNA TALK A LITTLE BIT ABOUT, UH, ACTUARILY DETERMINED CONTRIBUTIONS AND HOW THEY FLUCTUATE AND WHAT A CONTRIBUTION WOULD DO TO THOSE.

WE ALSO, ON THE NEXT SLIDE, JUST AS A, AN OUTLINE OF THE MEETINGS TO DATE AND CHAIRMAN ATKINS WILL BE ADDING TO THIS AS WE GO FORWARD.

SO, UH, THERE'S NOT MUCH REALLY TO SAY HERE OTHER THAN WE'VE GOT, WE'VE MET ALL OF THESE DEADLINES AND WE'RE HERE TODAY WITH PRESENTATION OF OUR RECOMMENDATIONS.

ON THE NEXT SLIDE JUST OUTLINES THAT, I MEAN THE BULK OF THE WORK HAS BEEN DONE, UH, BY MYSELF, JOHN STEVENS AND ROB WALTERS HERE.

I'VE SPENDING AN AWFUL LOT OF TIME AND PART OF THAT IS BECAUSE NOT ONLY HAVE WE BEEN LOOKING AT FUNDING OPTIONS AND ASSETS, WE'VE GOTTEN INVOLVED IN THE CHIRON ANALYSIS BEYOND WHAT WE'VE INITIALLY HAD ANTICIPATED, AND WE'VE ALSO SPENT A LOT OF TIME WITH THE PLAN THAT WE'RE GONNA GO THROUGH WITH YOU NOW AS TO HOW WE SHOULD GO FORWARD WITH THE PRB AND WHAT OUR RECOMMENDATION

[00:55:01]

IS.

UM, AGAIN, THE TASK FORCE STARTED WORKING BACK IN 2020 2 23 AND, AND IT REALLY WAS A COLLABORATIVE APPROACH OF LOOKING, AS I SAID, THE BOARD AND MYSELF STARTED LOOKING AT HOW DO WE SOLVE THIS PROBLEM BACK AS EARLY AS 2017.

AND DURING THAT TIME, WE'VE SPENT A LOT OF TIME TALKING TO PENSION EXPERTS, TO INVESTMENT BANKS, TO DIFFERENT FOUNDATIONS THAT SPECIALIZE IN THAT, PARTICULARLY THE REASONS FOUNDATION IS A VERY, VERY GOOD ORGANIZATION WHO'S VERY INVOLVED IN PENSION FUNDING AND HAS WORKED WITH OTHER UNDERFUNDED PENSION PLANS TO COME UP WITH WAYS TO SOLVE THAT.

AND THE BEST THING IS THEY DO WITH PRO BONO, THEY'RE COVERED BY SOMEBODY ELSE.

SO IT'S CLEARLY A RESOURCE AS THE CITY GOES FORWARD.

THEY NEED TO BE LOOKING TO TAKE ADVANTAGE OF THAT AND GET A LOT OF, A LOT OF GOOD INFORMATION AND A LOT OF RESEARCH ON THAT.

UH, WE'VE ALSO TALKED TO, UH, AND RO ROB HAS BEEN THE, THE LION'S SHARE OF THAT, WORKING WITH THE POLICE AND FIRE ASSOCIATIONS, TALKING TO RETIREES, ET CETERA.

AND WE'VE ALL BEEN WORKING HEAVILY WITH CITY STAFF 'CAUSE WE'RE TRYING TO GET SOMETHING UP.

I MEAN, OUR GOAL HERE IS TO HAVE A PROPOSAL THAT'S ONE CREDIBLE MEETS THE GOALS, BUT ALSO ALIGNED WITH THE CITY AND WITH, UH, DPFP SO THAT IT'S GONNA BE, UH, SOMETHING THAT WE CAN ALL BE PROUD OF.

AND WE'VE DONE AN AWFUL LOT OF WORK ON THAT.

OUR GOALS ON THE NEXT SLIDE, CLEARLY NUMBER ONE IS TO MAKE SURE WE HAVE A CREDITABLE PLAN THAT WE CAN SUBMIT TO DPFP AND AND AND TO THE PRB THAT WILL BE VIEWED AS CREDIBLE AND ACCEPTED, AND TWO NUMBER TO ENSURE THAT THE POLICE AND FIRE PENSION PLAN IS APPROPRIATELY FUNDED SO THAT THOSE OFFICERS WHO ARE SERVING US EVERY DAY FEEL COMFORTABLE THAT THEY WILL HAVE A SECURE PENSION WHEN THEY GET TO THOSE DAYS.

I MEAN, THAT, THAT IS A REALLY AN ULTIMATE GOAL.

WE ALSO ARE TRYING TO WORK TO GIVE THE CITY OPTIONALITY IN FUNDING ITS PENSION OBLIGATIONS.

BUT CLEARLY, UH, WE'VE PROVIDED THE CITY WITH THESE RECOMMENDATIONS, IF ADOPTED, UH, HIGH, HIGHLY MOTIVATED INCENTIVES TO GO AHEAD AND MAKE A SIGNIFICANT CONTRIBUTIONS TO THE PLAN, UH, BETWEEN NOW AND THE NEXT TWO OR THREE YEARS.

I MEAN, THE SOONER THE BETTER, THE SOONER WE START DOING IT, THE SOONER WE'RE GONNA GET THE BENEFIT OF HAVING THE PLAN MORE APPROPRIATELY FUNDED.

I MEAN, IT'S TRYING TO FIND HOW TO GO THROUGH THIS NEEDLE, A NARROW GATE, BASICALLY IS HARD.

BUT I THINK WE'VE GOT A SOLUTION THAT WE ARE GOING TO RECOMMEND AT THIS TIME.

AND WITH THAT, ROB, YOU'RE GONNA SURE.

UM, AGAIN, THANK YOU ALL FOR HAVING US IN.

UM, WE VERY MUCH APPRECIATE THE OPPORTUNITY TO, UH, TO, UH, UH, SPEAK TO OUR RECOMMENDATIONS.

UM, LET ME UNDERSCORE, UM, A POINT THAT BILL HAS JUST MADE THAT IS REALLY, REALLY, I THINK, UH, IMPERATIVE AND SERVED AS OUR POINT OF DEPARTURE.

UM, WE HAVE TRIED VERY HARD TO LISTEN CAREFULLY TO THE RELEVANT STAKEHOLDERS.

WE'VE TRIED TO LISTEN VERY CAREFULLY TO POLICE AND FIRE AND POLICE AND FIRE LEADERSHIP ABOUT THEIR GOALS AND AMBITIONS.

WE'VE TRIED TO LISTEN VERY CAREFULLY TO THE PENSION FUND ITSELF, POLICE AND FIRE PENSION FUND, AND ITS LEADERSHIP.

AND WE'VE TRIED TO LISTEN VERY, VERY CAREFULLY TO THE CITY AND THE CITY'S NEEDS BECAUSE THE COULD, CITY, CITY HAS VIRTUALLY ENDLESS COMPETING, UM, DEMANDS FOR A FINITE UNIVERSE OF RESOURCES.

AND WHAT WE HAVE HEARD REALLY INFORMS OUR RECOMMENDATIONS AND OUR GOALS.

AND OUR GOALS ARE THREEFOLD, FOLD.

AND I WANNA BE CRYSTAL CLEAR ABOUT, UH, WHAT WE VIEW AS OUR GOALS.

FIRST AND FOREMOST, WE WANT POLICE AND FIRE TO NEVER HAVE TO THINK TWICE ABOUT THE SOLVENCY AND THE CAPACITY OF THIS FUND IN ORDER TO, UH, UH, FUND, UH, THE RETIREMENTS THAT THEY ARE, THAT THEY HAVE EARNED AND ARE ENTITLED TO, FIRST AND FOREMOST.

UM, SECONDLY, UH, WE WANNA MAKE SURE THAT WE AMPLY MEET THE STATUTORY REQUIREMENT THAT THE LEGISLATORS LEGISLATURE HAS SET OUT, AND TO OBTAIN THE IMP UH, IMPRIMATUR OF THE POLICE AND FIRE PENSION BOARD WHERE THEY HAVE SANCTIONED THIS AS A CREDIBLE PENSION, UH, PROGRAM GOING FORWARD.

AND THIRD, WE WANNA MAKE SURE THAT THE CITY HAS THE OPTIONALITY AND THE FLEXIBILITY TO BE ABLE TO PAY FOR THIS IN THE MOST ECONOMICALLY EFFICIENT WAY POSSIBLE, UH, SO THAT IT DOES NOT UNDULY IMPOSE ON ITS RESOURCES IN A WAY THAT COMPROMISES OTHER THINGS THAT ARE IMPORTANT THE CITY DOES.

AND SO WITH THOSE GOALS IN MIND, WE HAVE COME

[01:00:01]

UP WITH OUR RECOMMENDATION FOR, UH, WHAT THIS, UH, WE RECOMMEND THAT THE POLICE AND FIRE PENSION BOARD AND THE CITY IN TANDEM PROCEED WITH IN ORDER TO ADDRESS THIS LONGSTANDING PROTRACTED PROBLEM.

AND I THINK THE BEST WAY TO EXPLAIN OUR, UH, OUR RECOMMENDATIONS WOULD BE TO GO TO PAGE 18 OF THE DECK.

SO OUR RECOMMENDATIONS HAVE THREE COMPONENTS.

THE FIRST COMPONENT IS TO ALLOW THE CITY TO HAVE A, A CERTAIN AND PREDICTABLE PHASE IN PERIOD IN ORDER TO, UM, UH, IN ORDER TO ACHIEVE ADEQUATE FUNDING.

WHEN YOU LOOK AT THIS CHART, LET ME JUST EXPLAIN A COUPLE OF KEY COMPONENTS BECAUSE IT'S ALL SORT OF WRAPPED UP IN THIS.

AND IN A COUPLE FOLLOW ON CHARTS, THE BLACK BARS REPRESENT THE CITY'S EXISTING COMMITMENTS.

THAT IS 34.5% OF PR PAYROLL PLUS $13 MILLION.

SO THAT WOULD BE IN THE ABSENCE OF, UH, ANY, UH, UH, REQUIREMENT THAT THE CITY OR THAT, THAT THE FUND ACCELERATE ITS FUNDING FROM 41 YEARS TODAY TO 30 YEARS.

THAT WOULD BE THE FUNDING THAT THE CITY WOULD CONTEMPLATE OR ANTICIPATE BASED ON THE FACTS THAT WE KNOW THEM TODAY.

OBVIOUSLY, THOSE EVOLVE AND ADJUST OVER TIME BASED ON PAYROLL AND OTHER CONSIDERATIONS.

THE YELLOW PORTION IS WHAT IS THE INCREMENTAL FUNDING THAT IS NECESSARY TO GET US TO A 30 YEAR FUNDING REQUIREMENT? SO THAT IS, WE HAVE TO SOMEHOW SOME WAY COME UP WITH THAT INCREMENTAL AMOUNT IN ORDER TO MEET THE STATUTORY REQUIREMENT UNDER CHAPTER 8 0 2, UH, 8 0 2 OF THE, UH, THE, UH, UH, TEXAS GOVERNMENT CODE.

SO THOSE, THOSE THAT, THAT'S WHAT WE HAVE TO ACCOMPLISH.

HOW DO WE CAPTURE THE YELLOW BARS IN ORDER TO MEET THE FUNDING REQUIREMENTS? SO AGAIN, WE PROPOSE IN THREE COMPONENTS IN THE FIRST THREE YEARS, BEGINNING IN FISCAL YEAR 20 25, 20 26, FOR THE CITY.

WE RECOMMEND THAT THE CITY INCREASE ITS FUNDINGS BY AMOUNT CERTAIN FOR THOSE FIRST THREE YEARS.

AND WE RECOMMEND THAT THEY BE IN TRANCHES OF 20 AND 40 AND $60 MILLION.

NOW, WHY DO WE RECOMMEND THOSE AMOUNTS AND WHY DO WE RECOMMEND SPECIFIC AMOUNTS? WE RECOMMEND SPECIFIC AMOUNTS SO THAT THE CITY KNOWS EXACTLY THE COMMITMENT IT IT HAS MADE AND, AND CAN GO ABOUT THE BUSINESS, MAKING SURE IT'S FUNDED SO THAT JACK AND TEAM WILL KNOW THIS IS THE SUPPLEMENTAL AMOUNT WE HAVE TO COME IN, UH, UH, COME UP WITH, AND WE HAVE, AND WE KNOW THAT WE CAN FUND THOSE AMOUNTS.

AND SO THOSE ARE AMOUNT CERTAIN.

NOW, WHY ARE THEY AT 20, 40 AND 60? THEY ACTUALLY ARE REALLY MIRROR VERY CLOSELY, NOT EXACTLY, BUT VERY CLOSELY.

THEY SORT OF ROUND THE NUMBERS THAT CHIRON ITSELF HAD RECOMMENDED, UH, UNDER ITS, UH, ACTUARILY DETERMINED CONTRIBUTIONS.

SO IF WE WENT BACK TO THE CHIRON REPORT, YOU WOULD SEE IN THOSE YEARS AMOUNTS THAT ARE VERY SIMILAR, THE DIFFERENCE IS THESE ARE SOME CERTAIN, SO THAT POLICE AND FIRE KNOW THEY'RE GONNA BE FUNDED, AND THE CITY KNOWS EXACTLY WHAT ITS, ITS OBLIGATION IS.

SO THAT'S COMPONENT ONE.

COMPONENT TWO IS AFTER THOSE FIRST THREE YEARS, WE RECOMMEND THAT THE CITY GO TO AN ACTUARILY DETERMINED CONTRIBUTION SCHEME.

NOW, WHY DO WE MAKE THAT RECOMMENDATION? 'CAUSE THERE ARE REALLY TWO WAYS TO DO THIS.

ONE IS, YOU COULD SAY, OKAY, THE CITY CAN CHANGE AT 34.5% TO 50% OR 53% IN ORDER TO DO THAT.

AND WHY NOT DO IT THAT WAY VERSUS ACTUARILY DETERMINE CONTRIBUTIONS.

WELL, THE BEST PRACTICE IN THE INDUSTRY, UH, AND WE HAVE STUDIED THIS EXTENSIVELY, IS TO DO IT ON THIS.

SO-CALLED A DC METHODOLOGY.

AND THE REASON IS, IS IT GIVES THE FUND, IT GIVES THE BENEFICIARIES OF THE PLAN GREATER CERTAINTY THAT YOU'RE GOING TO MEET YOUR OBJECTIVE IN IN 30 YEARS BECAUSE IT IS INFORMED BY THE VARIABLES THAT IMMEDIATELY PROCEED AT EACH YEAR.

WHAT IS YOUR PAYROLL? WHAT IS YOUR RETURN RATE OF RETURN BEEN? WHAT'S THE APPROPRIATE DISCOUNT RATE ON ALL THE VARIABLES THAT DRIVE, UH, UH, THAT CALCULATION SO THAT YOU HAVE THE ABILITY TO MODULATE AND EVOLVE IN A WAY THAT YOU KNOW YOU'RE GONNA GET THERE? UH, AND, AND IT'S LESS ARBITRARY THAN IF YOU JUST PICKED A PERCENTAGE.

IF YOU PICKED A PERCENTAGE, YOU COULD OVERPAY OR YOU COULD UNDERPAY IN THIS WAY, UH, YOU'RE MUCH MORE LIKELY TO, TO PAY ON AN ACCURATE AMOUNT.

SO WE HAVE EMBRACED THAT IS BEING, UH, REPRESENTATIVE OF SORT OF BEST PRACTICES IN THE INDUSTRY.

UM, NOW WHAT WE DO ALSO RECOMMEND, JUST SO THAT THE CITY HAS SOME CERTAINTY AROUND THIS, IS A SO-CALLED CORRIDOR, AND

[01:05:01]

ALL THAT IS, IS SORT OF A FANCY DESCRIPTION, UH, FOR A CAP.

AND WHAT THE, AND THE, THE CAP WE RECOMMEND WOULD BE, UH, IT WOULD GO UP NO MORE THAN 10% OF WHATEVER THE IMMEDIATELY PREVIOUS YEAR WAS.

SO IT DOESN'T HAVE TO GO UP 10%, IT CAN GO UP 2% OR 7% BASED ON THE A DC, BUT IT GIVES THE CITY THE ABILITY TO ADJUST SO THAT IT DOESN'T HAVE A REALLY, REALLY BAD SURPRISE FROM ONE YEAR TO THE NEXT.

BUT IT ALSO ALLOWS THE ENGINE OF THE A DC TO WORK ITS WAY OVER THE YEARS IN ORDER TO MEET, UH, FULL FUNDING.

AND, AND I, WE WOULD SAY THAT, UH, THIS CORRIDOR, UH, UH, OVERLAY ON AN ODC IS VERY COMMONPLACE AMONG, UH, PENSION, UH, FUND COMPARABLY, UH, SIMILARLY SITUATED PENSION FUNDS.

IF YOU LOOK AT, UH, TEXAS BASE POLICE AND FIRE PENSION FUNDS AND OTHER PENSION FUNDS THAT HAVE MIGRATED TO AN A DC, UH, THEY TEND TO EMBRACE A CORRIDOR TWO, WHICH GIVES THE THE FUNDER A LITTLE GREAT GREATER CERTAINTY.

AND THEN THE FINAL THING THAT WE RECOMMEND IS, IS, IS THAT THE CITY VIEW THIS AS AN, AS A REAL OPPORTUNITY TO POTENTIALLY MONETIZE ASSETS IN ORDER THAT IT COULD REDUCE THESE YELLOW BAR CHARTS OVER TIME AND IMPOSE LESS ON OTHER OBLIGATIONS THE CITY MIGHT HAVE OUT OF ITS GENERAL FUND.

WE'D LIKE TO THINK IT'S AN OPPORTUNITY.

WE, AND WE HAVE STUDIED THIS AT GREAT, GREAT LENGTH, AND WE THINK THAT THE BEST CITIES AND THE BEST PRACTICES IS TO LOOK FOR OPPORTUNITIES TO TAKE ASSETS THAT RESIDE ON A BALANCE SHEET AND GET 'EM ONTO THE INCOME STATEMENT.

NOW, IS THIS JUST A HOPE OR A PRAYER, OR IS THIS SOMETHING REAL? WE BELIEVE IT IS SOMETHING REAL.

UH, WE WOULDN'T BE RECOMMENDING THAT THE CITY LOOK AT THIS HARD OVER THE FIRST THREE YEARS AT LEAST, ALTHOUGH IT COULD DO IT AT ANY POINT, BUT IN PARTICULAR OVER THE FIRST THREE YEARS TO SEE IF THOSE OPPORTUNITIES EXIST.

AND THOSE OPPORTUNITIES EXIST IN A RANGE OF BUCKETS.

UH, THE CITY HAS LOTS OF, UH, REAL ESTATE ASSETS THAT IT COULD LOOK AT TO POTENTIALLY MONETIZE FOR THE BENEFIT OF, OF, UH, OF THIS FUND.

UH, AND I, AND I WANNA REPEAT THIS NOT ONLY FOR THE BENEFIT OF THIS FUNDS, BUT SO THAT IT CREATES LESS IMPOSITION, LESS BURDEN ON THE GENERAL FUND GOING FORWARD.

UM, THERE ARE PARKING AND POTENTIALLY WASTE LANDFILL ASSETS.

THERE ARE UNDERUTILIZED, UM, CITY FACILITIES.

UH, THE CITY OBVIOUSLY HAS BONDING CAPACITY THAT COULD CONTINUE TO LOOK AT.

IT'S NOT A GOOD TIME FOR THAT, AS WE TALKED ABOUT THE LAST TIME.

WE ALL KNOW THAT.

UH, BUT, UH, CIRCUMSTANCES CHANGE AND THE CITY CAN BE NIMBLE ON THAT.

UM, THERE ARE, UH, SALES TAX REVENUES THAT ARE DEDICATED TO DISCREET AND SPECIFIC PURPOSES.

THE CITY COULD EVALUATE THE PROPRIETY OF THOSE.

AND FINALLY, THERE ARE VARIOUS CITY AVIATION ASSETS THAT EXIST OUT THERE THAT COULD POTENTIALLY REPRESENT, UH, SOME REAL, UH, UH, SOME VERY SUBSTANTIAL CONTRIBUTIONS TO THIS ISSUE.

AND, AND WHAT WE WOULD RECOMMEND, AND THE CITY NEED NOT WAIT ON THIS, THE CITY TOMORROW COULD GET UNDER, GET UNDERWAY.

AND, UH, I GUESS SORT OF IN THE, UH, UH, IN THE INIMITABLE PHRASE OF RAHM EMANUEL AND OTHERS, LET'S, YOU KNOW, NOT LET A, A CRISIS GO WASTED HERE AND LOOK AT THIS AS AN OPPORTUNITY, UH, TO MONETIZE SOME ASSETS AND, UH, AND REDUCE THIS BURDEN.

NOW, HOW MUCH GOOD WOULD THAT DO FOR THE CITY? UH, WERE IT TO ACTUALLY DO THIS? AND IDEALLY, OUR RECOMMENDATION IS, IS FOR THE CITY TO TEAM WITH APPROPRIATE MEMBERS OF THE PRIVATE SECTOR IN WAYS TO REALLY MAXIMIZE THESE ASSETS ON ITS OWN SCHEDULE AND NOT ON ANYONE ELSE'S SCHEDULE.

SO IT TRULY COULD MAXIMIZE, IT WOULDN'T BE IN SORT OF A, IT WOULDN'T EVEN BE PERCEIVED AS SORT OF A FIRE SALE SITUATION VERY MUCH AS THE CONTRARY.

LET'S LOOK AT, UH, SLIDE 19.

SO ALL SLIDE 19 IS, IS EXACTLY WHAT SLIDE 18 WAS, JUST THE YELLOW BARS.

OKAY? SO ALL THIS SHOWS IS THESE ARE THE INCREMENTAL CONTRIBUTIONS THE CITY WOULD HAVE TO MAKE ABSENT ANY MONETIZATION.

AND YOU SEE THE WAY WE HAVE IT TIERED UP 20, 40, 60, AND AFTER THAT, IT JUMPS UP AND STAYS UP AND INCREASES OVER TIME.

UM, AND SO THAT THAT EFFECT, THAT PHASE IN EFFECT, GIVES THE CITY A REAL INCENTIVE TO GET BUSY ABOUT ASSESSING THE MONETIZATION OPPORTUNITIES.

NOW, WE'VE DONE IT IN THREE SCENARIOS.

WE'VE SAID, WHAT IF THE CITY MONETIZED $500 MILLION IN ASSETS? WHAT IF THE CITY MONETIZED A BILLION DOLLARS IN ASSETS? WHAT IF THE CITY MONETIZED A BILLION AND A HALF DOLLAR ASSETS AT THE

[01:10:01]

CONCLUSION OF A THREE YEAR PERIOD? AGAIN, THE CITY COULD DO IT WHENEVER IT WANTS, IT COULD DO IT IN 20 YEARS, UH, BUT IT MAKES IT'S FAR MORE ECONOMICALLY EFFICIENT IF THE CITY DOES IT SOONER RATHER THAN LATER.

SO LET'S SAY THE CITY TOOK ADVANTAGE OF THE NEXT 36 MONTHS AND ACTUALLY ACHIEVED SOME MONETIZATION, THE NEXT CHART.

SO IF IT WERE TO DO A 50, UH, A $500 MILLION CONTRIBUTION THREE YEARS OUT, YOU CAN SEE HOW IT SUBSTANTIALLY REDUCES THE AMOUNT OF INCREMENTAL CONTRIBUTIONS THE CITY WOULD HAVE WOULD MAKE YOU JUST WOULD COMPARE 19 TO 20.

NOW, LET'S SAY IT DID A BILLION DOLLARS, UM, WHICH SOUNDS LIKE A LOT OF MONEY, BUT THE CITY'S GOT A LOT OF ASSETS THAT ARE POTENTIALLY AVAILABLE FOR IT.

AND BY THE WAY, FOOTNOTE, ANY ENTERPRISE, PUBLIC OR PRIVATE, IN MY JUDGMENT, OUR COLLECTIVE JUDGMENT AND WHAT ALL THE EXPERTS ARE TELLING US OUGHT TO BE RIGOROUS IN ITS EVALUATION OF ASSETS.

IT ACQUIRES ASSETS THAT SOMETIMES THEY BECOME LESS RELEVANT OVER TIMES CONSUMER DEMAND CHANGES, CITIZEN DEMAND CHANGES.

AND SO IT OUGHT TO BE AN ONGOING PROCESS.

THIS IS REALLY JUST AN EXCUSE TO IN, TO IMPOSE THAT RIGOR ON AN ENTERPRISE AS LARGE AS A CITY.

BUT IF WE WERE TO DO A BILLION DOLLARS, THEN YOU GET DOWN TO, YOU CAN SEE THE PROFOUND EFFECT IT HAS ON THESE INCREMENTAL CONTRIBUTIONS.

YOU'RE NOW DOWN TO A RELATIVELY MODEST AND NEGLIGIBLE AMOUNT OF INCREMENTAL CONTRIBUTIONS.

AND WE'RE THE CITY TO BE FORTUNATE ENOUGH TO MONETIZE ASSETS OF A BILLION AND A HALF.

IF YOU'LL LOOK AT PAGE 22, THIS IS PRETTY REMARKABLE.

NOT ONLY DO YOU ELIMINATE ALL OF THE INCREMENTAL CONTRIBUTIONS, YOU ACTUALLY CAN REDUCE THE CITY'S EXISTING CONTRIBUTIONS TO THE PE UH, POLICE AND FIRE PENSION PUN, UH, FUND BY THOSE AMOUNTS THAT ARE BELOW THE BAR, UH, UP TO $20 MILLION REDUCTION ON WHAT THE CITY IS CONTRIBUTING, UH, TODAY, EACH AND EVERY YEAR.

HERE'S ANOTHER WAY OF GRAPHICALLY SHOWING THAT ON PAGE 23, ON DIFFERENT LEVELS OF CONTRIBUTIONS, AND C AND, AND IT WE'RE, THE CITY DEFINED A BILLION AND A HALF DOLLARS BY MONETIZING ONE OF ITS PRINCIPAL ASSETS IN THE NEXT THREE YEARS, YOU WOULD ACTUALLY FIND YOURSELF BELOW THE LINE WITH A POSITIVE CONTRIBUTION TO YOUR EXISTING CONTRIBU, UH, CONTRIBUTION LEVELS.

AND, UH, JUST IN THE INTEREST OF, UM, BOTH REDUNDANCY AND REPETITIVENESS, UH, WE HAVE ANOTHER GRAPHIC THAT SHOWS THE SAME THING, UM, WHICH IS, IF YOU WERE TO DO 500 MILLION, YOU REDUCE THE, THE CONTRIBUTIONS BY 42%, 1000000080%, AND 1.5 BILLION, YOU REDUCE IT BY 114%.

THAT IS 14% REDUCTION IN WHAT YOU'RE CURRENTLY PAYING TODAY.

SO IT'S JUST ANOTHER WAY TO UNDERSCORE A VERY SIMPLE BUT PROFOUNDLY IMPORTANT POINT IS THE CITY DOES HAVE OPPORTUNITIES BEFORE IT, WITH A LOT OF HARD WORK, WITH A LOT OF RIGOR AND DILIGENCE, AND WITH SOME LUCK TO ACTUALLY CONTROL ITS OWN DESTINY ON THE NECESSARY FUNDING TO ENSURE THAT WE HAVE A, UH, A, A CREDIBLE AND VIABLE, UH, PENSION PLAN.

AND PUT US IN A POSITION TO SAY, WITH WHAT I SAID AT THE OUTSET OF THIS, PUT US IN A POSITION WHERE POLICE AND FIRE PENSION NEVER HAVE TO, UH, UH, THINK TWICE ABOUT THIS.

AND THE CITY THEN ALSO HAS A POLICE AND FIRE PENSION FUND, SO IT CAN GO TO THE MARKETPLACE, RECRUIT THE NECESSARY, UH, UH, POLICE OFFICERS AND, AND, UH, AND, AND, AND FIRE, UH, OFFICIALS NECESSARY THAT IT CAN HAVE THE KIND OF PUBLIC SAFETY PROGRAM AND REGIME THAT IT WANTS AND NEEDS NECESSARY FOR THE KIND OF CITY IT WANTS TO BE.

SO THOSE ARE OUR RECOMMENDATIONS.

UM, AND THEN I'LL JUST SAY ONE LAST THING.

WE REALLY DO BELIEVE THAT THESE RECOMMENDATIONS REPRESENT THE INTERSECTION OF THE INTERESTS OF POLICE AND FIRE, THE CITY AND THE POLICE AND FIRE PENSION FUND.

WOULD THE POLICE AND FIRE MEMBERS LIKE MORE, OF COURSE THEY WOULD LIKE MORE, WOULD THE CITY LIKE TO DO LESS SO THAT IT HAS LESS OF A CHALLENGE AND LESS OF A BURDEN ON OTHER COMPETING DEMANDS? OF COURSE, IT WOULD LIKE TO, WOULD THE POLICE AND FIRE PENSION FUND WANT MORE MONEY UPFRONT OR WANT GREATER CONTRIBUTIONS, UH, TO ENHANCE? ITS, UH, ITS, UH, UM, UH, ITS, ITS RUN TO FULL FAULT SOLVENCY.

OF COURSE IT WOULD.

BUT WE BELIEVE THIS RE RECOMMENDATION REPRESENTS THE BEST POSSIBLE INTERSECTION OF ALL THOSE COMPETING DEMANDS AND ASPIRATIONS, AND THAT ULTIMATELY ENACTS IN THE BEST INTEREST OF OUR COMMUNITY WRIT

[01:15:01]

LARGE.

WITH THAT, THANK YOU.

I MEAN, WE, WHAT WE'RE TRYING TO MAKE SURE THAT AT THE END OF THE DAY THAT A UNIFORMED POLICE OFFICER THAT WHEN THEY RETIRE, THEIR BENEFIT IS PAID, UH, THEY CAN CASH THE CHECK.

UH, WHAT WE'RE TRYING TO DO, NUMBER ONE, WE ARE NOT TRYING TO RUSH AND TRYING TO KEEP THE CAN DOWN THE ROAD.

WE'RE TRYING TO RESOLVE IT NOW, UH, WHAT I'M HEARING, WHAT YOU SEND ROB IS NUMBER ONE, YOU KNOW, YEAR ONE, YEAR TWO, YEAR THREE, YOU KNOW, WE PAY SOME TYPE OF MONEY, JACK, WE, UH, PUT THIS IN OUR BUDGET APPROPRIATION THAT WE DO OUR BOND, YOU KNOW, WE SET ASIDE YEAR ONE, YEAR TWO, YEAR THREE, THEN WE TRY TO MONETIZE OUR ASSET, YOU KNOW, FIND OUT WHAT ASSET WE NEED, ALL THINGS IS ON THE TABLE, AVIATION BUILDINGS, WHATEVER'S ON THE TABLE.

THEN WE FIGURE THAT OUT AND WE COME WITH A LUMP SUM.

WE DO A LUMP SUM TO REDUCE THAT.

NOW, AT THE END OF THE DAY, THEN WE'D ALSO TALK ABOUT A COUPLE THINGS, THE COLA AND THE BENEFIT.

AND I KNOW A WHOLE LOT OF OFFICERS SAYING, WHAT ABOUT MY COLA? WHAT ABOUT MY BENEFIT? SO CAN YOU WALK ME THROUGH THE COLA AND THE BENEFIT, IF THEY WANT TO DO A COLA BEFORE THEY REACHED 70% FINANCE, WHAT DO THEY HAVE TO DO, WHAT WE HAVE TO DO OR BENEFITS? SO, SO OUR RECOMMENDATION ON THIS IS, UM, SOLVE THIS PROBLEM FIRST.

AND WE ARE VERY SYMPATHETIC.

WE UNDERSTAND THE ISSUES OF COLAS AND BENEFITS AND OVERALL PACKAGE OF COMPENSATION.

OUR, OUR RECOMMENDATION IS TO FOCUS LIKE A LASER ON SOLVING THIS PRO, UH, PROBLEM, GET A PROGRAM TO PRB THAT PREB CAN PUT ITS STAMP OF APPROVAL ON.

UH, AND THAT WE KNOW THAT THE, THE, THE PROGRAM AS IT EXISTS IS, IS WILL BE ON A PATH TO FULLY FUNDING.

SO OUR RECOMMENDATION IS AS TEMPTING AS IS, WOULD BE TO NOT GET INTO THE SUBJECT OF ADJUSTMENT OF BENEFITS THAT WE WOULD KEEP IT STATUS QUO UNTIL WE GET THIS PLAN APPROVED, POLICYMAKERS CAN ALWAYS AT A LATER DATE ASSESS THOSE THINGS.

NOW, AS WE ALSO UNDERSTAND IT, THAT, UM, THE BENEFITS CANNOT BE ADJUSTED ABSENT ACTION BY INDEPENDENT ACTION BY THE CITY, UM, UNTIL IT IS FULLY OR UNTIL IT IS FUNDED AT A 70% LEVEL.

I WOULD SAY THAT FOR THOSE, UH, ADVOCATES FOR THE IMPLEMENTATION OF ECOLA, UM, THE, THE QUICKER WE GET TO A 70% FUNDING, THE MORE AVAILABLE THAT IS AND WHAT'S THE BEST WAY TO GET TO A 70% FUNDING.

AND THE WAY THE, THE, UH, AN ADDITIONAL INCENTIVE FOR GETTING TO 70% FUNDING WOULD BE TO MONETIZE ASSETS, PAY IT DOWN SOONER RATHER THAN LATER.

SO THAT, THAT ISSUE THEN COMES INTO PLAY AT AN EARLIER DATE.

OKAY.

UH, MS. ALLEN, MS. ALLEN, JACK, UH, NUMBER ONE, YOU KNOW, HE DID KINDA MENTION BUDGET ITEM, UH, APPROPRIATION THAT WHEN WE DO PAY OUR BOND BONDS, WHEN WE SELL OUR BONDS, SO THEREFORE WHAT DO WE DO IF, IF WE SAID WE HAD TO CONTRIBUTE 20 MILLION, 40 MILLION, 60 MILLION AND YOU GOTTA COME TO THE COUNCIL, THAT PART OF OUR BUDGET.

SO WHAT TOOLS AND THE TOOL ABOUT THAT YOU WOULD TELL US HOW WE WOULD FUND THAT COUNCIL MEMBER ATKINS? UM, YES, WE WOULD BRING IT TO YOU AS PART OF A BUDGET RECOMMENDATION.

AND WITH THE DIRECTION OF THE CITY COUNCIL, IT WOULD BE A PRIORITY FOR US TO BRING TO THE CITY COUNCIL THE SAME AS WE ENSURE THAT WE FUND OUR DEBT SERVICE EVERY YEAR.

WE WOULD ENSURE THAT WE INCLUDED THIS IN OUR BUDGET AT THIS POINT IN TIME.

I CAN'T TELL YOU IF IT WOULD REQUIRE, UH, A REDUCTION OF SERVICE.

WE WOULD HOPE THAT IT WOULD BE FUNDED WITH NEW REVENUE.

AS YOU KNOW, THE, UH, NEW CONSTRUCTION ALONE HAS BROUGHT IN $20 MILLION A YEAR.

AND SO THAT TYPE OF REVENUE WOULD HELP US FUND, UH, THIS TYPE OF, UH, INCREASE.

IT MAY RESULT IN US NOT BEING ABLE TO, UH, DO SOME OF THE TYPES OF ENHANCEMENTS, WHETHER IT BE, UH, CRISIS INTERVENTION OR, UH, OFFENDER REENTRY OR THE DIFFERENT TYPES OF THINGS THAT WE'VE ADDED OVER THE LAST SEVERAL YEARS.

WE MAY NOT BE ABLE TO DO THOSE TYPES OF ENHANCEMENTS BECAUSE THIS WOULD BE A PRIORITY IN ENSURING WE FUND IT EACH YEAR IN THE BUDGET.

AND, AND SO, SO THEREFORE IT WOULD BE THE PRIORITY, LIKE ANYTHING WOULD BE THE PRIORITY.

SO THEREFORE, I'M TRY TO MAKE SURE THE PEOPLE IN UNIFORMS THERE JUST SAYING, HEY, THIS IS A PRIORITY THAT WE ARE THE CITY, WE FINANCIALLY ABLE TO, WHATEVER DECISION WE MAKE TODAY, THE RECOMMENDATION WE ARE FINANCIAL SOLID TO, TO GO THROUGH WITH THIS RECOMMENDATION, WHATEVER THE RECOMMENDATION MIGHT BE.

ONCE WE FIND THAT REAL NUMBER, WHEN, AND I THINK IN FEBRUARY WHEN, WHEN THEY COME BACK, WELL ACTUALLY COME BACK AND SAY, WHAT IS THE REAL NUMBER? WE DON'T KNOW THE REAL NUMBER TODAY, BUT WE KNOW THE FILE NUMBER SOMETIME IN FEBRUARY WHEN CHIRON COME BACK WITH THE FO NUMBER.

[01:20:01]

AND, AND I WILL ADD THAT WE, WE WORKED WITH, UH, THE TEAM HERE ON THE 20 MILLION, UH, THREE YEAR INCREASES.

WE FELT THAT THAT WAS A NUMBER THAT WOULD BE MANAGEABLE WITHIN THE BUDGET.

UH, AND WE ARE ABSOLUTELY COMMITTED TO BEING ABLE TO FUND THAT STAIR STEP UP THAT WE ULTIMATELY AGREE WITH WITH THE CITY COUNCIL.

OKAY.

I THINK IT'S IMPORTANT TO POINT OUT THAT, UH, TURN YOUR MIC ON YOUR MIC.

SO TURN OFF BY ITSELF, I GUESS AFTER A WHILE.

UM, IT'S IMPORTANT TO REMEMBER THAT THE, THE NUMBERS THAT ARE BEING PROPOSED ARE RIGHT IN LINE WITH CHIRONS, WHICH WAS LOWER THAN A NORMAL A DC, SO WE'RE IN SYNC.

SO IT, WE SHOULD BE VIEWED AS A CREDIBLE PLAN AS THEY GO FORWARD WITH THE PRB.

UH, SO IT'S SORT OF A MANDATE WE'RE GONNA HAVE TO PUT THAT MONEY IN ONE WAY OR THE OTHER AS WHETHER WE DO IT THIS FORMULA WITH THE, AND THEN MOVE UP OR WHATEVER.

BUT IT'S A REQUIREMENT IF WE'RE GONNA FUND THIS PLAN IN 30 YEARS OR LESS.

AND I LIKE THE ACCREDIT PLAN BECAUSE WHEN WE GO TO THE STATE, WE GOTTA HAVE A PLAN, WHICH GOTTA BE CREDIBLE.

AND ONE THING WE DO, WE GOT TO, TO BACKSIDE THE FOUNDATION TO COME UP WITH A CRITICAL PLAN.

YES, SIR.

OKAY.

WITH THAT CHAIRMAN BLACKMAN, THANK YOU.

AND, UH, THANKS FOR THE WORK.

UM, SO I HAVE A COUPLE OF, WE'RE DOING, STILL DOING THE TWO QUESTIONS, BUT I CAN DO STATEMENTS.

OKAY.

JUST UNDERSTAND SOUNDS LIKE THREE WORDS.

OKAY.

SO ON YOUR RECOMMENDATIONS, AND IF I'M FALSE, I'M NOT GONNA ASK IT IN A FORM OF A QUESTION, I'M JUST GONNA MAKE STATEMENTS IF I'M FALSE.

HOLD ON.

YOU HAD MENTIONED ON ONE OF THEM SALES TAX REVENUES DEDICATED UNDER UNDERTAKINGS.

I'M ASSUMING YOU'RE LOOKING AT THE DART PENNY.

AND AGAIN, UM, BUT WERE THERE NOT ANY CONSIDERATIONS OF CREATING ANOTHER FUND LIKE GOING TO THE LEGISLATURE AND ASKING FOR A QUARTER OF A PENNY INCREASE TO THEN ONLY USE? BECAUSE MY UNDERSTANDING IS THAT WE NEED A STEADY STREAM TO HELP OFFSET SOME THINGS THAT ARE GOING ON TO ASKING FOR A QUARTER OF A PENNY TO INCREASE.

THAT IS SPECIFICALLY FOR THIS.

AND WHEN YOU LOOK AT THESE OTHER, I MEAN, ODESSA FIRE IS AT 36.48, LONGVIEW IS AT 40.4, UH, ABILENE, 49.38.

YOU MAY, WE MAY HAVE SOME PARTNERS THAT MAY WANT TO DO THIS BECAUSE, AND WHILE, BECAUSE MY UNDERSTANDING ON THE DART PENNY, WE, IF WE DO GO THAT WAY, WE'RE NOT NECESSARILY GONNA GET THAT DAY ONE.

OKAY.

SO THE WAY I WAS GONNA SAY, I THINK WE WERE CONSIDERING BOTH OF THOSE AS PART OF THE OPTIONS.

AND THERE MAY BE SOME OTHER SOLUTIONS THAT PEOPLE THINK OUT OF THE BOX THAT COULD BE ADDED TO THIS, BUT THESE ARE THE ONES WE WERE ABLE TO IDENTIFY AND IT, IT WAS INCLUSIVE.

I'M GOING BACK TO THE LEGISLATION PROGRAM.

OKAY.

SO THAT, THAT THOUGHT IS IN THIS, IT IS, IT IS IN THIS, BUT I WANNA BE CLEAR ABOUT THIS TOO.

WE, WE, WE REALLY TRIED TO BE CONSERVATIVE HERE.

THERE ARE ANY NUMBER OF SOURCES IF WE ENDED UP WITH, UH, UH, GAMING AND IT BECOMES AN ADDITIONAL TAX REVENUE OR THERE'S SORTS OF THOSE POSSIBILITIES.

SO ANYTHING TO GROW THE PIE IN THAT SENSE OF REVENUE SOURCES IN ANY CITY ARE ALL ON THE TABLE.

SO THIS IS BY NO MEANS MEANT TO BE RESTRICTIVE.

WHAT THIS LIST REPRESENTS THOUGH, ARE THE ITEMS WHERE WE CONTROL OUR OWN DESTINY.

WE HAVE THESE ASSETS TODAY, AND WE HAVE THE ABILITY, IF WE CHOOSE AS A CITY TO MONETIZE THESE ASSETS.

AND SO WE DON'T HAVE TO RELY ON THE LEGISLATURE OR SOMEONE ELSE.

AND SO IN THAT SENSE, WE WERE ATTEMPTING TO BE CONSERVATIVE, BUT YOU DO ON THE SALES TAX 'CAUSE IT'S A DART, DART IS A STATE ENABLING LEGISLATION.

AND THAT FAIR ENOUGH.

OKAY, FAIR ENOUGH.

THAT WAS THE, THE, THE QUESTION ON THAT, THAT, SO THAT COULD BE AN OPTION, BUT IT'S NOT, IT'S, IT'S NOT EXPLICIT IN THIS ABSOLUTELY DISCUSSION.

OKAY.

THE SEC MY SECOND QUESTION IS, YOU'RE TALKING ABOUT A 500 AND A 1,000,000,001 500 MILLION AND 1 BILLION FUSION OF CAPITAL.

UM, DOES IT, AND I ASSUME THAT IT COULD COME IN TRANCHES.

IT ABSOLUTELY COULD COME IN TRA TRANCHES, IT COME IN D DRIBS AND DRABS AND IT DOESN'T HAVE TO HAPPEN OVER THE FIRST THREE YEARS.

THAT'S WHERE IT'S THE MOST ECONOMICALLY EFFICIENT FINANCIALLY THAT WOULD BE MOST ADVANTAGEOUS TO CITY.

IT CAN COME IN BITS AND PIECES OVER TIME.

EXACTLY RIGHT.

OKAY.

AND WITH REGARD, CAN YOU HEAR ME WITH REGARD TO THAT? YOU DO NOT WANT TO, I WOULD NOT SUGGEST WE ARE ADVISING TO PUT A SPECIFIC DATE ON IT.

OKAY.

BECAUSE THAT INTERRUPTS THE MAXIMIZATION OF VALUE PROCESS.

IF, IF YOU PUT A TIME LIMIT.

SO WE DID NOT DO THAT FOR THAT VERY PURPOSE.

SO IT COULD BE 750 MILLION.

IT COULD BE IN, IT COULD BE ON DIFFERENT TIMETABLE, COULD BE ANYTIME YOU, YOU NEVER WANT TO, YOU NEVER WOULD NEVER WANT SIGNAL TO A POTENTIAL BUYER THAT YOU'RE ON AN ARTIFICIAL SCHEDULE.

YOU'RE GONNA MAXIMIZE THE VALUE AND WITH THE RIGHT, UH, UH, ASSISTANCE BOTH WITH THE GREAT OFFICES THAT YOU HAVE AT THE CITY, BUT ALSO THERE'S A LOT OF VERY SOPHISTICATED PEOPLE ON THERE WHO KNOW HOW TO MAXIMIZE THESE, THESE VALUES.

WHICH ONE OF THESE GETS US

[01:25:01]

TO 70%, WHICH ONE OF THESE TRANCHES GET US TO 70%? THEY, ALL OF THOSE TRANCHES GET YOU TO 70%.

OKAY.

AT DIFFERENT TIMES, WHICH IS THE CLOSE, I GUESS ONE, ONE POINT.

SO IF WE DID, UH, THE, CAN YOU GIVE ME, WHAT WOULD IT BE AT 500 MILLION? 1 MILLION? SURE.

IF YOU LOOK AT PAGE NINE.

PAGE NINE, YEAH.

AH, SORRY.

IT'S, IT'S THERE.

AND IF YOU'LL LOOK AT THE 70% LINE, AH, YOU'RE RIGHT.

MY BAD.

AND THEN YOU RUN OVER 70% LINE AND YOU RUN ACROSS IT AND YOU COME DOWN TO THE YEAR, IT SHOWS YOU THE YEAR THAT YOU ACHIEVE THE 70%.

GOT IT.

BASED ON THOSE CONTRIBUTIONS AT AS OF 2025.

THANK YOU.

A BILLION DOLLARS IS ROUGHLY 2041.

YEP.

OKAY.

WE CAN DO THAT.

THANK YOU COUNCILMAN WILLIS.

SURE.

THANK YOU SO MUCH.

SO, UM, I KNOW WE KEEP REFERENCING THE CHIRON INTERIM REPORT, BUT I KNOW THAT, UM, OUR CONTRACTED PARTNER, DELOITTE HAD, UM, EVALUATED THAT AND AGREED WITH MANY POINTS IN IT, BUT THAT THERE WERE SOME QUESTIONS OR SOME FIGURES BEING PULLED FROM.

SO I WANNA BE SURE THAT WE'RE THINKING ABOUT THAT WHEN WE LOOK AT THIS THREE YEAR PLAN OF THE 2040 AND 60 MILLION.

UM, 'CAUSE THAT'S $120 MILLION WE'RE TALKING ABOUT OVER THE NEXT THREE YEARS THAT, YOU KNOW, I HOPE OUR NEW CONSTRUCTION CON CONTINUES TO, UM, YOU KNOW, BE AGGRESSIVE.

UM, AND JUST SO TAXPAYERS KNOW, I MEAN OUR INVESTMENT, I THINK, UH, MR. IRELAND IN 2024 WILL BE A HUNDRED AND SIXTY EIGHT, EIGHT HUNDRED FIFTY $6 MILLION.

SO THE CITY OF DALLAS IS INVESTING AND IS A LARGE INVESTOR IN THIS FUND.

YES, MA'AM.

THAT'S CORRECT.

THAT'S THE AMOUNT THAT'S BUDGETED FOR THIS YEAR FOR THE MINIMUM CONTRIBUTION.

AND THEN THE NEXT YEAR IT GOES UP AS THE MINIMUM CONTRIBUTION WILL GO UP TO, UM, I BELIEVE IT GOES UP TO ABOUT 175 IF I REMEMBER CORRECTLY.

OKAY.

SO WHAT WE'RE TALKING ABOUT ON TOP OF THAT IS TAKING WHAT WE HAD PLANNED FOR MINIMUM CONTRIBUTIONS AND THEN ADDING 20 MILLION THE FIRST YEAR, 40 MILLION THE SECOND YEAR, 60 MILLION.

AND, UM, YOU CALLED OUT, IF YOU LOOK, IF YOU LOOK AT PAGE 18, UH, I'M SORRY, UH, PAGE 18 WILL SHOW YOU THOSE NUMBERS.

SO THE INCREMENTAL WILL BE THOSE YELLOW BONDS.

AND I'VE SEEN THAT.

I JUST KNOW THAT, UM, DELOITTE HAD A QUESTION ABOUT, UH, LIKE USING 2022 PAYROLL VERSUS 2023 AND JUST SOME OF THOSE FINER POINTS.

IT MAY NOT AMOUNT TO A LARGE AMOUNT, BUT I JUST WANNA BE SURE THAT WHEN WE'RE LOOKING AT THESE AS WE MOVE TOWARDS SOMETHING THAT'S A LITTLE MORE FINITE.

SO I WILL TELL YOU THAT, UH, BILL AND I SPENT A DELIGHTFUL, UM, THREE AND A HALF HOURS WITH THE, UH, DELOITTE TEAM ON EVERY JOT AND TITTLE OF THIS.

AND SO WE HAVE VETTED ALL THIS WITH, UH, JACK AND HIS TEAM WITH DELOITTE AS WELL.

OKAY.

AND I KNOW THEY'RE, BUT THEY'RE COMING BACK TO US WITH SOME, IF I COULD ADD THOUGH, UM, YOU KNOW, AS, AS YOU HEARD EARLY ON, UM, FROM BILL RESULTS FOR THIS YEAR AND THE, THE RETURNS THAT THEY'VE BEEN INVESTMENTS HAVE BEEN HIGHER THAN PROJECTED.

SO THESE NUMBERS WILL CHANGE FOR A VARIETY OF REASONS.

AND SO, UM, WHILE THESE ARE VERY CREDIBLE AND THEY WOULD BE SUPPORTED BY ALL PARTIES, THEY WILL BE TRUED UP IN THE NORMAL COURSE LIKE THEY WOULD FOR ANYBODY.

SO I JUST WANNA MAKE SURE YOU'RE CLEAR ON THAT THIS IS, THIS IS VERY REASONABLE AND TO BE SUPPORTED, BUT I AM SURE YOU IT WILL BE MODIFIED JUST BECAUSE OF ACTUAL EXPERIENCE DURING THE YEAR.

SO WE JUST NEED TO BE FOCUSED ON THAT FACT.

AND THAT'S A GREAT SEGUE INTO MY NEXT QUESTION, WHICH IS A REQUEST.

AND ACTUALLY THIS BRIDGE IS ACROSS BOTH FUNDS.

UM, YOU KNOW, WE HEAR DIFFERENT, UM, UH, FIGURES AROUND RETURNS AND THEN DIFFERENT TIME PERIODS AND THAT SORT OF THING.

SO WHAT WOULD BE HELPFUL TO ME AND I WOULD HOPE TO MY COLLEAGUES IS I WOULD LIKE TO WORK, UH, WITH OUR CFO ON A TEMPLATE THAT WOULD BE KIND APPLES TO APPLES ACROSS BOTH FUNDS SO WE CAN LOOK AT SOME COMPARISONS AND GET A SENSE BECAUSE, YOU KNOW, EVEN THE FORMATS OF THESE TWO PRESENTATIONS ARE DIFFERENT.

AND SO IT WOULD BE HELPFUL I THINK FROM OUR PANEL, IF WE COULD LOOK AT, UM, I WOULD SAY ONE, THREE AND FIVE YEAR RETURNS A COMPARISON OF THESE RETURNS AGAINST PEER PENSION FUNDS.

I KNOW YOU'VE CALLED OUT A FEW, UM, AROUND THE STATE AND THEN ALSO LOOKING NATIONALLY AT THIS.

I MEAN, I'M NOT SURE WHERE WE WOULD PULL FROM THERE, BUT SURELY THERE IS, UH, WE COULD COME THERE ARE UP WITH SOME.

NOW AGAIN, I WOULD JUST CAVEAT THAT WE'VE HAD SO MUCH ILLIQUID ASSETS WITH NEGATIVE RETURNS THAT WE'VE INHERITED FROM 2000 TO 2015 ROUGHLY.

SO YOU, IN LOOKING AT THOSE RETURNS, WE CLEARLY ARE NOT GONNA LOOK GOOD.

BUT YOU GOTTA CONSIDER THE WHAT'S GOING ON WITH THOSE ASSETS WHERE WE HAD DO, HAVE CONTROL.

AND I UNDERSTAND AND THAT'S AN OPPORTUNITY TO CALL OUT.

I'M NOT SURE WHAT THE TIMEFRAME IS FOR THAT 900 MILLION THAT WAS, UH, LIQUIDATED AND NOW I'M HEARING THE OTHER THREE ARE WORTH 500 MILLION RIGHT NOW.

AND SO THERE'S CERTAINLY A WAY TO ACCOUNT FOR THAT, I WOULD THINK ON THE TEMPLATE.

BUT I'D ALSO LOVE TO SEE A BREAKDOWN OF RETURNS BY ASSET CLASS, UH, IN THE SAME PEER COMPARISONS.

I'M JUST TRYING TO GET SOMETHING THAT IN A PAGE OR TWO WE CAN LOOK AT TO

[01:30:01]

COMPARE OUR TWO SUBSTANTIAL INVESTMENTS SIDE BY SIDE SO THAT WE'RE NOT LOOKING HERE FOR ONE THING AND HERE FOR ANOTHER.

SO YEAH, BUT MY ASSET CLASS IS CLEARLY THE WAY TO DO IT.

DEFINITELY.

OKAY, WELL THANK YOU SO MUCH.

AND BY THE WAY, AND UH, I APOLOGIZE FOR, WE APOLOGIZE THE PER THE, UH, PRESENTATION'S A LITTLE CRUDE, BUT THAT'S JUST ME ON MY LAPTOP.

SO YOU KIND OF GET WHAT YOU PAY FOR .

IT WAS NOT A PERSONAL JAB.

MR. WALTER , CHAIRMAN SISON, THANK YOU.

UM, WELL I JUST WANNA SAY FIRST OF ALL, THANK YOU FOR DOING KIND OF THE WORST VOLUNTEER JOB.

UM, I MEAN YOU'RE IN A REALLY DIFFICULT POSITION.

I JUST WANT YOU TO KNOW HOW MUCH I RESPECT AND APPRECIATE YOU.

UM, I COMPLETELY AGREE WITH GETTING TO THE ACTUARY.

I DETERMINE CONTRIBUTION.

AND SO JUMPING AHEAD, THAT PART WE COMPLETELY AGREE WITH.

I DO THINK SOME OF YOUR RECOMMENDATIONS ARE A LITTLE BIT PROBLEMATIC THOUGH.

SO I JUST WANNA START WITH THE CONTRIBUTION.

YOU KNOW, YOU'RE SAYING TO DO A FIXED CONTRIBUTION AND ADD IN THIS 20, 40 60 MILLION, BUT WHAT THAT ACTUALLY MEANS IS THAT WE'RE STILL NOT PAYING WHAT IT COSTS US AND WE'RE ADDING TO THIS UNFUNDED LIABILITY ALL OF THOSE YEARS.

SO FOR 2022, I PULLED THE NUMBERS UP AND SO YOU CAN TELL ME IF YOU LOOKED AT SOMETHING DIFFERENT.

THE ACTUALLY ACTUARILY DETERMINED CONTRIBUTION IN 2022 WAS $228 MILLION, BUT WE ONLY PAID IN 169.9 MILLION.

SO WE PAID IN 58.6 MILLION LESS THAN WHAT IT ACTUALLY COST US.

SO 58.6 MILLION LESS.

AND YOU'RE ONLY ASKING US TO PUT IN ANOTHER 20 MILLION AND THEN LATER ANOTHER 40 MILLION AND THEN LATER ANOTHER 60.

BUT OF COURSE, THAT'S A COUPLE YEARS DOWN THE ROAD AND THAT NUMBER WILL BE HIGHER BECAUSE WE WILL HAVE CONTINUED TO UNDERFUND IN THESE YEARS.

AND SO I DON'T UNDERSTAND WHEN OUR CITY MANAGEMENT HAS HAD SEVEN YEARS TO COME UP WITH A PLAN, WHICH I HAVEN'T SEEN.

I MEAN, YOU'RE DOING THE MAYOR'S TASK FORCE, BUT I HAVEN'T SEEN THE CITY'S PLAN FOR SEVEN YEARS.

IT'S NOT A MAYOR TASK FORCE.

IT'S A TASK FORCE.

OKAY, MS. WE CORRECT THAT.

IT'S A TASK FORCE.

WE HAVE NOT, I'M SORRY, THEY HAVE NOT BEEN THE TASK FORCE.

THEY HAVE NOT PRESENT THIS TASK FORCE TO THE CITY COUNCIL.

OKAY.

OKAY.

SO I THINK TO YOUR QUESTION, HE WAS A TASK.

OKAY, BUT I'M JUST SAYING THAT THIS IS THE REST OF MY QUESTION, BUT WHY WOULD WE DELAY IN ADOPTING AND ACTUALLY DETERMINE CONTRIBUTION? I MEAN, YEARS TO GET USED TO IT.

WE'VE ALREADY HAD SEVEN YEARS TO GET USED TO IT.

WE SHOULD BE IMMEDIATELY THIS NEXT BUDGET FULLY FUNDING WHAT IT TAKES IN ONE YEAR TO DO THIS AND PAY PART OF OUR UNFUNDED LIABILITIES, IN MY OPINION.

SO I'M TRYING TO UNDERSTAND HOW YOU CAME UP WITH THAT CON.

WE CAME UP, WELL WE CAME UP WITH THESE NUMBERS, UH, FOR A COUPLE DIFFERENT REASONS.

UH, ONE IS THIS IS IN, YOU KNOW, CHIRON, WHICH IS AN INDEPENDENT ACTUARY APPOINTED BY THE PRB UH, UH, BOARD AND IS BY ITS NATURE, IT'S NO CRITICISM.

IN FACT, TO THE CONTRARY IS REALLY AN ADVOCATE FOR PENSION FUNDS BECAUSE THAT'S WHAT THEY DO IS, UH, HAD RECOMMENDED THOSE AMOUNTS ACTUALLY EVEN A LITTLE BIT LESS THAN THOSE AMOUNTS IN ORDER FOR A PHASE IN PERIOD NUMBER ONE.

NUMBER TWO, THE, THE, AND I WAS ON THE BOARD FOR FOUR YEARS AND BILL WAS ON THE BOARD FOR SIX YEARS.

PART OF THE FUNDING ISSUE OF HOW IT COMES DOWN TO SORT OF THE HOCKEY, UH, UH, UH, UH, STICK EFFECT AND THEN COMES BACK UP HAS TO DO WITH A WHOLE RANGE OF CONSIDERATIONS, INCLUDING THE DEMOGRAPHICS OF THE FUNDING AND THE SIZE OF THE RETIREES AND ALL OF THAT NOW.

AND, AND, AND SO NOTWITHSTANDING THE FACT THAT IT GOES DOWN AND THEN COMES BACK UP IN TERMS OF PERCENTAGE FUNDING IN OUR JUDGMENT, NONE OF THAT PUTS IN JEOPARDY IN ANY WAY THE ABILITY OF THE FUND TO PAY ITS OBLIGATIONS.

NOW IF, IF WE HAVE A ARMAGEDDON EVENT THAT OCCURS IN THE ECONOMY, I MEAN THE CITY CAN ALWAYS COME BACK AND SAY, WE, WE WANT TO ADDRESS THAT.

BUT IT'S JUST, IT'S LIKE EVERYTHING ELSE IN LIFE, IT'S JUST GONNA BE A TRADE OFF.

I MEAN, YOU COULD PUT IN A COUPLE HUNDRED MILLION DOLLARS OUTTA THE GENERAL FUND TOMORROW AND THE FUND WOULD BE QUICKER ON ITS WAY TO FUNDING.

THAT'S GOTTA COME FROM SOMEWHERE, WHICH IS WHAT IS REALLY GALVANIZED AND MOTIVATE OUR PRINCIPAL RECOMMENDATION, WHICH IS THE CITY GET OUTSIDE OF ITS TRADITIONAL SOURCES OF FUNDING INTO THE GENERAL FUND AND GET BUSY ABOUT THE BUSINESS OF FINDING ASSETS AND MONETIZE THEM.

SO WE COULD ACHIEVE EXACTLY WHAT YOU'RE DESCRIBING, WHICH IS GET A BIG LUMP SUM EARLY ON AND THEN EVERYBODY IS HAPPY.

JACK, WILL YOU, KELSEY? IT WAS A DIFFERENT, I WANNA MAKE SURE YOU CORRECT THAT.

YES, SIR.

UH, JACK IRELAND, CHIEF FINANCIAL OFFICER,

[01:35:01]

AND I JUST WANTED TO ADDRESS THAT.

SEVEN YEARS AGO, THE STATE LEGISLATURE AND CITY LEADERSHIP AGREED ON A FIXED RATE, UH, NOT AN ACTUARILY DETERMINED RATE FOR CONTRIBUTION.

AND THAT IS WHAT WE HAVE LIVED BY FOR THE LAST SEVEN YEARS.

SO IT'S, WE CAN'T GO BACK AND CHANGE THAT.

UH, WE HAVE HAD OTHER PRIORITIES OVER THE LAST SEVEN YEARS.

YES, THERE COULD HAVE BEEN AN OPPORTUNITY WHERE WE COULD HAVE STARTED ADDRESSING THIS SOONER, BUT SOME COUNCIL MEMBERS HAVE HAD THE PRIORITY OF REDUCING THE TAX RATE FOR THE LAST EIGHT YEARS.

SOME COUNCIL MEMBERS HAVE HAD THE PRIORITY OF INCREASING HOMELESS SERVICES OR OTHER SERVICES THROUGHOUT THE CITY.

SO WE'VE TRIED TO MEET THE FIXED RATE CONTRIBUTION THAT WAS DETERMINED AND SET BY THE STATE LEGISLATURE AND CITY LEADERSHIP IN 2017, MEET THE CITY COUNCIL'S PRIORITIES FOR THE LAST SEVEN YEARS.

AND NOW WE ARE AT A POINT WHERE WE ARE AHEAD OF SCHEDULE TO SUBMIT THE PLAN BEFORE NEXT FALL THAT WILL FUND THIS PLAN WITHIN 30 YEARS.

AND WE'RE COMMITTED TO DOING THAT.

IT DOESN'T REQUIRE, THE STATE IS NOT REQUIRING US TO DO IT NEXT YEAR.

THEY'RE REQUIRING US TO PUT TOGETHER A PLAN THAT FULLY FUNDS OVER THE COURSE OF NEXT 30 YEARS.

AND THAT'S WHAT IS BEING RECOMMENDED.

I WOULD JUST ADD TO THAT, UH, THAT THE A DC OR THE ACTUARIALLY DETERMINED CONTRIBUTION HAS BEEN USED BY CORPORATIONS FOREVER, BUT MUNICIPALITIES AND STATES THAT REALLY HAVE NEVER BEEN ON THAT KIND OF A FORMULA.

AND IT'S BEING ADOPTED SLOWLY NOW AS PLANS HAVE BEEN LESS FUNDED.

AND IT WAS ONLY, I THINK TWO YEARS AGO THAT THE STATE PLAN, THE EMPLOYEE RETIREMENT SYSTEM ADOPTED IT.

SO IT IS SOMETHING THAT'S EVOLVING AND SHOULD BE ENFORCED AND PROBABLY WILL BE IF WE'RE LOOKING BACK FIVE YEARS FROM NOW.

SO IT, IT, IT IS A THING TO SHOOT FOR, BUT WE JUST THOUGHT A GRADUAL INCREASE WOULD, AS A MINIMUM, WE, WE WOULD NOT OBJECT TO A BIGGER CONTRIBUTION IF THAT'S WHAT THE COUNCIL DECIDED.

THANK YOU.

SO MY SECOND QUESTION IS REALLY, I'M JUST GONNA PUSH BACK ON THIS COLA IDEA.

UM, NUMBER ONE, YOU KNOW, IT WAS INTERESTING KYRON PUT IT IN THERE, RIGHT, IN THEIR RECOMMENDATIONS.

AND THEY DID THAT OF COURSE BECAUSE TO MEET THE OBLIGATIONS, I'M SORRY, I'M GONNA SAY THAT DIFFERENTLY, TO MEET THEIR HIRING GOALS, RIGHT? YOU HAVE TO BE ABLE TO ATTRACT AND RETAIN STAFF AND WITHOUT A COLA, I DON'T THINK WE'RE GONNA DO THAT.

WE'RE ALREADY STRUGGLING MIGHTILY WITH OUR RECRUITING AND THIS IS A VERY BIG ISSUE.

THE SECOND PART OF IT IS THE MORAL ISSUE.

THE BENEFITS THAT OUR, UM, SWORN OFFICERS THAT ARE RETIRED ARE RECEIVING, ARE ERODING AND THEIR VOTING EVERY SINGLE YEAR THAT THERE'S NO PENSION, THEY DON'T HAVE SOCIAL SECURITY.

MEANWHILE, WE HAVE A PARODY SITUATION.

'CAUSE ERF IS GETTING 5% EVERY YEAR.

AND I'LL TELL YOU WHAT, EVERY SINGLE PERSON THAT WORKS IN THIS BUILDING, NOT ELECTEDS ALL OF OUR STAFF, THEY'RE PART OF ERF.

AND IF YOU PUT THAT PARODY TOGETHER, I THINK THERE'S GONNA BE A LOT OF URGENCY TO COME UP WITH THE CAPITAL FROM SELLING ASSETS FROM OTHER REVENUE STREAMS IN A WAY THAT NOTHING ELSE WILL MOVE THIS BUILDING.

SO IF YOU TIE THOSE TWO TOGETHER AND YOU SAY ERF, YOU DON'T GET ANY KIND OF, UM, ANY KIND OF COLA UNTIL PENSION, UNTIL THE POLICE FIRE DUE, I BET WE'LL SEE ENORMOUS MOVEMENT IN, UM, CONTRIBUTIONS SO THAT WE GET TO THAT 70% LEVEL VERY, VERY QUICKLY.

AND I WOULD SAY TWO QUICK THINGS.

WE HAVE NO CONSTITUTIONAL OBJECTION TO A COLE.

IN FACT, WE'RE, UH, NOW I, WE COULD HAVE A, A CONVERSATION ABOUT THAT.

I COULD MAKE A CASE.

WELL, OF COURSE THEY DON'T GET SOCIAL SECURITY.

THEY DON'T PAY INTO SOCIAL SECURITY.

THEY ALSO HAVE HIGHER BENEFITS IN SOCIAL SECURITY RE RECIPIENTS FOR CONTRA CONTRIBUTIONS ON THE FRONT END.

AND IT'S REDUCED.

IT'S A LITTLE BIT OF APPLES AND ORANGES ON A COMPARISON.

AND YEAH, I THINK YOU HAVE TO COMPARE THE WHOLE THING.

I ALSO THINK, AND THIS IS WHERE I THINK WE PART ACCOMPANY A LITTLE BIT WITH CHIRON, WHAT CHIRON WAS SAYING IS, WELL, WITHOUT A COLA THEN YOU, UH, MIGHT NOT GET THE PAYROLL 'CAUSE YOU'RE NOT ABLE TO RECRUIT THE POLICE AND FIRE NECESSARY.

AND SO WITH A COLA, WE'LL ENSURE THAT WE HAVE THE PAYROLL NECESSARY TO KEEP THAT ON ONGOING CONTRIBUTIONS.

YOU KNOW, MAYBE YES, MAYBE NO ON THAT.

I THINK WE ALL KNOW THAT WHAT PEOPLE EVALUATE WHEN THEY DECIDE TO BECOME EMPLOYED OR NOT IS THE OVERALL COMPENSATION PACKAGE, WHICH IS CURRENT COMP, UH, UH, CONTRIBUTION, I MEAN CURRENT COMPENSATION, UH, YOU KNOW, WORK CONDITIONS, ALL OF THOSE THINGS.

OBVIOUSLY IF THE CITY CAN'T HIRE POLICE AND FIRE, IT CAN MAKE ADJUSTMENTS, IT CAN PAY MORE ON THE FRONT END.

IT COULD INSTITUTE A COLA.

OUR, OUR RECOMMENDATION IS REALLY A MODEST ONE, WHICH WAS WE DON'T VIEW IT AS CRITICAL PATH TO ADJUST, UH, BENEFITS AT THIS

[01:40:01]

JUNCTURE BECAUSE YOU CAN OPEN UP PANDORA'S BOX ON THAT DISCUSSION.

WE THINK THE, THE BETTER WAY TO PROCEED IS TO STAY STATUS QUO SHORT TERM.

OKAY? GET THIS THING APPROVED AND THEN POLICY MAKERS, ELECTED POLICY MAKERS CAN MAKE THOSE INCENTIVES.

AND I DO AGREE WITH YOU, UH, COUNCILWOMAN MENDELSSOHN, THAT THE PROSPECT AND THE SPECTER OF INCREASED BENEFITS, INCLUDING COLA, OUGHT TO PROVIDE THE CITY WITH THE INCENTIVE TO MONETIZE EFFICIENTLY IN A WAY THAT THEY CAN PAY FOR IT.

I, I APPRECIATE THAT.

WE HAVE ALREADY HAD THIS DEBATE.

MM-HMM, .

UM, SO I'VE, I'M NOT GONNA BELABOR THAT LONGER.

UM, BUT WHAT YOU MAY OR MAY NOT BE, UH, WELL AWARE OF IS THAT WE ARE NOT HIRING THE POLICE AND FIRE OFFICERS THAT WE NEED TODAY.

WE'RE ALREADY AT RISK.

I WAS AT THE PRESENTATION THIS MORNING FOR, UH, THE PENSION FUND AND THEY WERE SHOWING OVER TIME WE HAVE HAD ACTUALLY A SMALL DECREASE IN THE NUMBER OF HIRES.

OKAY.

SO ALL OF THAT TO SAY THIS IS AN EXTREMELY IMPORTANT ELEMENT IN THE RECRUITING AND RETENTION PLUS THE QUALITY OF LIFE FOR OUR RETIRED SERVICE OFFICERS.

THANK YOU.

THANK YOU CHAIRMAN STEWART.

OKAY.

UH, BACK ON THE, THE PHASING IN, AND I'M NOT SURE WHO ANSWERS THIS QUESTION.

IT MAY BE MR. IRELAND, DO WE NEED TO PHASE IN OUR PAYMENTS, THE INCREASE IN OUR PAYMENTS? SORRY, DO WE NEED TO PHASE IN THE INCREASE IN OUR CONTRIBUTIONS WE WERE DISCUSSING PHASING IN AND YOU MY YEP.

SORRY ABOUT THAT.

YES MA'AM.

WE DO RECOMMEND PHASING IN THE INCREASES IN THE CONTRIBUTION.

THE OTHER CHOICE IS TO GO STRAIGHT TO THE ACTUARILY DETERMINED CONTRIBUTION RATE, WHICH IS GOING TO BE QUITE SUBSTANTIAL AND MORE DECISIONS WILL HAVE TO BE MADE ABOUT HOW WE FUND THAT.

WHETHER THAT IS FUNDED THROUGH, UH, SERVICE CUTS, TAX INCREASES, UH, WHATEVER THE REVENUE INCREASES, WHATEVER THE SOURCE IS.

I MEAN, TO COME UP WITH THE MONEY, WE WOULD HAVE TO DO IT SOME WAY.

I THINK PHASING IT IN IS AN APPROPRIATE APPROACH THAT STILL ALLOWS US TO FULLY FUND IN THE 30 YEARS THAT'S ALLOWED, I BELIEVE THE NUMBERS WERE ROUGHLY, IT'S 20 MILLION HERE.

I THINK WE'D HAVE TO PUT IN 70 MILLION INCREMENTAL IF WE WERE GONNA GO IMMEDIATELY TO AN A DC.

SO IT'S A BIG INCREASE.

OKAY.

UM, I HAD A THOUGHT, I HAD A QUESTION.

SORRY, .

UM, AT THE END OF THE THREE YEARS, WHEN WE MAKE IT, WHEN WE GO TO THE ACTUAL ACTUARIAL DETERMINED AMOUNT, IS THAT GONNA BE A DIFFICULT YEAR? IS THAT GONNA BE A, A STRETCH? SO AT THIS POINT I DO NOT THINK SO BECAUSE, UH, WHAT'S BEING SUGGESTED IS GUARDRAILS THAT WOULD ALLOW US TO HAVE SOME CONTROL.

UH, AND WE MAY TALK ABOUT HOW WE, UH, SMOOTH ANYTIME THAT'S, THAT'S OVER THAT AND FIGURE OUT WAYS SO THAT WE DON'T HAVE ANOTHER PROBLEM ON THE BACK END, BUT THAT, UH, WE CAN MANAGE THOSE ON AN ANNUAL BASIS.

BUT, BUT I WOULD SAY YOU, THAT IF YOU LOOK ON THE SCHEDULES THAT WERE PROVIDED, IT GETS UP NEAR A HUNDRED MILLION DOLLARS A YEAR FAIRLY QUICKLY.

RIGHT? SO IF YOU THINK ABOUT THAT FROM A BUDGET PERSPECTIVE, THAT'S A CHALLENGE TO MANAGE WITHOUT ADDITIONAL REVENUE STREAMS. YES.

AND, AND THE INCENTIVE THAT IS BEING PROPOSED WAS OBVIOUSLY TO MONETIZE IN SUCH A WAY THAT ACTUALLY LOWERS THOSE CONTRIBUTIONS IN FUTURE YEARS.

SO, UH, WE COULD SUSTAIN IT BY GROWING INCREMENTALLY AND THEN DOING THE A DC, BUT IF AT ANY POINT YOU MONETIZE AND MAKE THOSE CASH, UH, INFUSIONS INTO THE FUND, YOU LOWER THOSE FUTURE CONTRIBUTIONS, WHICH IS A GREAT OPPORTUNITY THEN FOR THE CITY.

OKAY.

I JUST, I DO REMEMBER SOME ADVICE.

I BELIEVE IT WAS FROM, UM, ONE OF THE KYRON, UM, PRESENTERS WAS THAT TO STICK WITH THAT CONTRIBUTION TO GET TO THAT POINT AND STICK WITH IT AND, YOU KNOW, IF, IF OUTSIDE FACTORS START, DON'T LET OUTSIDE FACTORS INFLUENCE THAT, GET THE GET TO THAT NUMBER, STAY COMMITTED TO THAT NUMBER.

AND I JUST WANNA MAKE SURE WE GET THERE AS QUICKLY AS POSSIBLE AND THAT WE STAY, AND I KNOW WE HAVE THESE GUARDRAILS OF NOT INCREASING BY MORE THAN 10%.

I DON'T HAVE A SENSE OF IS THAT, UM, UM, IS IT RARE FOR IT TO INCREASE MORE THAN 10% YEAR OVER YEAR OR, 'CAUSE I, I, I DON'T WANNA, SO THAT, THAT'S AN EXCELLENT QUESTION AND WE, WE HAVE REALLY, UM, SCOURED THAT WITH DELOITTE AND WITH OTHERS, AND THE ANSWER IS, IT'S, IT'S A, THAT THAT'S A, A, A REALLY FAIR CAP TO PUT ON IT AND IT REALLY SHOULDN'T BE PROBLEMATIC.

WHAT JACK MENTIONED EARLIER THOUGH IS REALLY IMPORTANT IS THAT LET'S SAY IN A YEAR YOU, IF YOU DIDN'T HAVE THE CAP, YOU WOULD EXCEED IT BY THE CAP BY $5 MILLION OR WHATEVER IT IS.

SO THAT YOU DON'T GET BEHIND

[01:45:01]

THE SMOOTHING EFFECT WOULD BE TO TAKE THAT WHATEVER IT EXCEEDED AND THEN PUT IT INTO THE NEXT YEAR, UM, WHERE YOU'RE NOT REACHING THE CAP SO THAT YOU DON'T GET BEHIND AND THAT YOU SMOOTH IT IN A WAY THAT YOU REALLY ARE FUNDING IT ON THE, ON THE, THE, UH, THE SCHEDULE THAT YOU ANTICIPATED.

RIGHT.

AND TO THAT POINT, THE COUNCIL WOULD ALWAYS HAVE THE FLEXIBILITY TO MAKE ADDITIONAL CONTRIBUTIONS.

THIS IS A GUIDELINE, RIGHT? FOR A COMMITMENT TO WORK WITH THE STATE.

SO THERE'S ALWAYS THAT FLEXIBILITY.

NO ONE'S LIMITING ANYTHING.

AND THAT'S NOT OUR RULE ANYWAY.

, YES.

AND, BUT GETTING EVERYONE TO AGREE TO THAT.

SO I, I WOULD JUST WANT THIS TO A MAYBE IF WE COULD PUT THAT IN OUR PLAN, WHAT HAPPENS IF THE CONTRIBUTION GOES UP MORE THAN 10%, WHAT WOULD OUR, OUR PLAN BE? WHAT'S OUR, OUR PLAN BE FOR THAT SITUATION? AND SO WE HAVE A, A STARTING STRUCTURE NOW AND YES, PUT MORE MEAT AROUND IT, , UH, FOR SURE TO MAKE SURE THAT WE HAVE ALL THE GUARDRAILS AND PROTECTIONS IN PLACE FOR BOTH THE CITY AND THE FUND.

'CAUSE WE WANT TO ENSURE WE GET THERE AND WITHIN THE 30 YEAR TIMEFRAME.

ABSOLUTELY.

THANK YOU.

UH, I WITH, UH, CHAIRMAN STILL QUESTION TALKING ABOUT THE CHIRON, YOU KNOW, THEIR PLAN, YOU KNOW, THE FUNDING, YOU KNOW, WHAT THEY SUGGEST, UH, IS NOT COMPLETE AS OF TODAY.

YOU KNOW, THEY PLANS IS NOT COMPLETE, BUT WE ALSO HAD DELOITTE TO LOOK AT IT ALSO.

SO COULD WE REVISIT THAT AND KIND OF LOOK AT THAT BECAUSE WE DO NOT HAVE A FULL REPORT OF , WE DON'T HAVE A FULL REPORT, SO WE JUST GOT FITS AND PIECES UNTIL I GET THAT FULL REPORT, I WANNA KINDA ADDRESS THAT AND KIND OF LOOK AT THAT ISSUE.

THEY'LL ISSUE THEIR FINAL REPORT, I BELIEVE IN FEBRUARY, FEBRUARY 8TH, I THINK IT IS.

YEAH.

NOW I WOULD, I WOULD SAY THIS, AND WE, NOBODY WANTS TO JINX THIS, BUT WE THINK BASED ON THE EARLY RETURNS, WE'LL KNOW FOR SURE IN A FEW MONTHS IS THAT, UM, ORDER OF MAGNITUDE.

THE NUMBERS OUGHT TO BE AT LEAST IN THE SAME BALLPARK.

IT COULD BE THAT WE GO UP FROM THREE FOUR TO THREE FIVE IN A DEFICIT.

I WOULD SAY THE YEAR AFTER THAT THOUGH, WITH OUR RETURNS 17% PLUS THIS YEAR, IT OUGHT TO SWING BACK THE OTHER WAY.

BUT WE WON'T KNOW THOSE NUMBERS FOR SURE FOR A FEW MONTHS.

AND I WOULD POINT OUT THE CORRIDOR IS SORT OF AN UNUSUAL THING AND I DON'T THINK THE PRB HAS SEEN VERY MUCH OF THAT.

'CAUSE WITHIN THE ACTUARIAL PROCESS, THERE'S A LOT OF SMOOTHING ANYWAY TO TRY TO MITIGATE ANY REALLY BIG JUMPS.

SO I MEAN, THAT COULD STILL BE AN ISSUE WITH THE PRB AS TO WHETHER THAT'S AN ACCEPTABLE, UH, FORM PART OF THE FORMULA.

CHAIRMAN MORENO, THANK YOU MR. CHAIR.

UH, THANK YOU ALL FOR THE PRESENTATION.

I VALUE YOUR, UM, EXPERTISE AND YOUR RECOMMENDATIONS.

UM, AND ROB, I THINK YOU ADDRESSED THIS EARLIER.

I'M HAVING TROUBLE UNDERSTANDING ONE, I WANNA MAKE IT CLEAR THAT I BELIEVE THIS COUNCIL'S PRIORITY IS TO COME UP WITH SOME SOLUTIONS TO, UH, SOLVING OUR, OUR PENSION AND WHAT CAN WE DO TO, OR CAN WE OBLIGATE OR CAN WE, UM, ADOPT A POLICY OR NUMBERS THAT FUTURE COUNCIL MEMBERS 15 YEARS DOWN THE ROAD, 30 YEARS DOWN THE ROAD, WE'RE GONNA HAVE DIFFERENT PEOPLE SITTING BEHIND THESE, UH, THIS HORSESHOE.

AND THERE MIGHT ALSO BE DIFFERENT SCENARIOS.

WE DON'T KNOW WHAT THE MARKET'S GONNA BE LIKE.

SO I HEARD THAT THERE'S JUST, IS THERE A MINIMUM THAT, THAT IT'S, UH, REQUIRED? YES.

SO, UM, I, AND I REALLY DEFER TO THE CITY ATTORNEY'S OFFICE AND TO JACK ON THIS ULTIMATELY.

BUT MY UNDERSTANDING IS, IS THE WAY TO THINK ABOUT THIS IS THE CITY IS MAKING A DECISION NOW ON A PLAN AND A PROGRAM NOT THIS SECOND, BUT IT WILL BE AND, AND IT WILL BE IRREVOCABLY COMMITTING THE CITY TO THIS FUNDING PLAN.

IT'S SORT OF, I THINK, AKIN TO IF YOU GO OUT AND BORROW MONEY, UM, YOU ARE COMMITTING TO PAYING IT BACK.

AND A, A FUTURE COUNCIL CAN'T SAY, YOU KNOW WHAT, WE'RE THINKING BETTER OF THAT.

SO I BELIEVE THAT'S THE WAY WE SHOULD BE THINKING ABOUT IT.

BUT AGAIN, I DEFER TO THE CITY ATTORNEY'S OFFICE AND UH, UH, CITY, UH, THE CFO'S OFFICE FOR THE FINAL WORD ON THAT SUBJECT.

I, I BELIEVE THAT WE BROUGHT IT UP.

I THINK, UH, JACK, UH, I THINK WE HAD A DISCUSSION ABOUT THAT.

IT'S ALMOST LIKE A DEBT ON OUR BOND DEAL.

WE OBLIGATED TO PAY THAT DEBT IF WE DON'T, WE IN DEFAULT.

SO I THINK THAT VERY, I GUESS WE HAD TAMMY, ONE OF OUR ATTORNEYS TO OKAY, YOU HANDLE THAT JACK, WHICH WE'RE, WHICH WE'RE NOT GONNA DEFAULT ON OUR DEBT AND WE WOULDN'T DEFAULT ON THIS AGREEMENT EITHER.

WE'RE FULLY COMMITTED TO IT.

UH, BUT TAMMY, IF SHE WANTS TO ADDRESS, UH, COMMITMENT OF FUTURE COUNSEL'S, THANK YOU VERY MUCH FOR THE QUESTIONS.

SO THERE ARE TWO THINGS THAT ARE BEING REQUIRED OF, OF PENSION, UM, BOARD AND OR THE CITY FIRST.

AND THIS IS THE ONE THAT THE GENTLEMAN ARE SPEAKING IS SPEAK, THEY'RE SPEAKING TO NOW, WHICH IS THE INDEPENDENT

[01:50:01]

ACTUARY ANALYSIS WHERE THE BOARD HAS TO ADOPT A PLAN AND SUBMIT IT TO THE, UH, PRB.

THIS IS VERY, UH, UNIQUE TO JUST THE POLICE AND FIRE PENSION.

THEY, UH, IT WAS A CHECK-IN, UM, BY THE LEGISLATURE, UM, IN 2017.

THEY WANTED A CHECK-IN HOWEVER, UM, UNDER 8 0 2 OF THE GOVERNMENT CODE BECAUSE THE POLICE AND FIRE PENSION HAS BEEN OUTSIDE OF THE FUNDING FOR THREE CONSECUTIVE YEARS, THE 30 YEAR FUNDING, THEY'RE NOW REQUIRED TO DO A FUNDING SAUNA RESTORATION PLAN.

AND THAT HAS TO BE SUBMITTED TO THE PRB BY NINE ONE OF 25.

AND THAT WILL REQUIRE THE CITY AND THE PENSION BOARD TO AGREE TO A PLAN TO SUBMIT TO PRB.

IT'S A PLAN.

UM, AND SO AS WE ALL KNOW, EVERY YEAR YOU HAVE TO APPROPRIATE AND SO YOU'RE GOING TO HAVE TO APPROPRIATE EVERY YEAR.

BUT WHAT YOU'RE SUBMITTING TO THE PENSION REVIEW BOARD IS A PLAN.

DOES THAT HELP? THANK YOU.

UM, AND, AND JUST WITH THAT, YOU KNOW, SO, SO I AM IN SUPPORT OF, OF HAVING AN INFUSION ON THE FRONT END.

UM, I WANT TO GO BACK TO OUR, UH, MONETIZING AND MAXIMIZING OUR, OUR PROPERTIES AND OUR ASSETS.

DID YOU GUYS TAKE A LOOK AT AN ACTUAL LAND SALE VERSUS A GROUND LEASE AND A NEW REVENUE THAT, THAT WOULD BRING WITH SALES TAX AND PROPERTY TAX ON, UH, GROUND LEASE OPPORTUNITIES? YEAH, I THINK ALL, UM, AVENUES ARE OPEN FOR CONSIDERATION AND, UM, WHAT I THINK THE SPECIFICS ON ANY INDIVIDUAL ITEM, CLEARLY ALL OF THOSE TYPES OF APPROACHES HAVE BEEN DISCUSSED, NOT ONLY TO MAXIMIZE VALUE, BUT ALSO MAXIMIZE FLEXIBILITY IN CASE LAND NEEDS TO BE USED IN FUTURE, YOU KNOW, COULD HAVE FUTURE PURPOSE, UM, FOR THE CITY.

SO ALL OF THOSE THINGS ARE BEING CONSIDERED THAT NEW REVENUE THAT WOULD COME FROM A POTENTIAL CITY ASSET, WOULD THAT BE ABLE TO RETAIN IN, IN A, IN A POT THAT WOULD GO DIRECTLY TO THE PENSION OR WOULD ALL THAT HAVE TO GO BACK INTO THE GENERAL BUDGET? THAT WOULD BE, UH, JACK COURSE NOT THEM.

ARE YOU TALKING ABOUT BUDGET? I, I, I THINK I CAN ANSWER THAT.

SO, UH, RIGHT NOW, AS WE TALKED ABOUT YESTERDAY, OWN, UH, THE SALE OF ONE PARTICULAR PROPERTY, RIGHT NOW WE HAVE A RESOLUTION FROM 1977 THAT SAYS THAT WE USE THE PROCEEDS FROM THE SALE OF A SURPLUS PROPERTY FOR, UH, MAJOR MAINTENANCE CAPITAL IMPROVEMENTS.

WE WOULD JUST NEED DIRECTION FROM THE CITY COUNCIL ON HOW WE WANTED TO DEAL WITH THAT.

UH, MAYBE ANY END ASSET UNDER, YOU KNOW, A CERTAIN AMOUNT STILL GOES TO CAPITAL CONSTRUCTION AND MAJOR MAINTENANCE AND, UH, THIS PROCEEDS, UH, ABOVE A CERTAIN AMOUNT.

WHAT, WHAT DO WE DO WITH THAT? WHERE DO WE DEPOSIT IT? WHEN DO WE TRANSFER IT? IT WOULD BE UP TO THE CITY COUNCIL AND WE WOULD RECOMMEND THE POLICY FOR THAT.

BUT YOU'RE THE POLICY MAKERS THAT WOULD, WOULD APPROVE THAT.

AND THANK YOU FOR THAT.

UH, I'M ALSO, I'M ALSO REFERRING TO SALES TAX, THE DALLAS SHARE AND PROPERTY TAX ON A, ON A CITY ASSET.

SO, UM, THE CONSIDERATION RIGHT NOW IS MONETIZING AN ASSET AND THE, UH, PROCEEDS THAT WOULD RESULT FROM SALES TAX OR PROPERTY TAX ARE NOT PART OF THIS CONSIDERATION.

WE COULD HAVE THAT CONVERSATION RIGHT NOW.

UH, MY EXPECTATION WOULD BE THAT THOSE WOULD COME INTO THE GENERAL FUND LIKE ALL OTHER SALES TAX OR PROPERTY TAX.

BUT OF COURSE WE WOULD WORK WITH COUNSEL TO FIGURE OUT IF Y'ALL HAD A DIFFERENT DIRECTION THAN THAT.

THANK YOU.

THANK YOU.

COUNCILMAN BLACKBURN? YOU GOT ANOTHER QUESTION? OH, EZ, YOU HAD A QUESTION? NO, GO AHEAD.

OKAY, THANK YOU.

WELL, THERE WAS A STATEMENT THAT BASICALLY SAID THAT FOR SEVEN YEARS WE HAVEN'T BEEN WORKING ON THIS.

BUT TELL ME, I MEAN, WHEN YOU LOOK AT THE, AS THE CITY ATTORNEY OUTLINED, IT'S NOT NECESSARILY I, I'M TRYING TO FIGURE OUT WHO IS RESPONSIBLE FOR DOING WHAT AND WHEN IS THAT RESPONSIBILITY DUE? AND I, IF YOU NEED MY CHEAT SHEET? YES, MA'AM.

SO THE, THE RESPONSIBILITY THAT WE HAD AS A CITY WAS TO FOLLOW THE LEGISLATION AND THE LEGISLATION OUTLINED A FIXED CONTRIBUTION RATE AND A MINIMUM CONTRIBUTION IF THE CALCULATION DID NOT COME UP TO A CERTAIN FLOOR.

WE HAVE MET THAT EVERY YEAR FOR THE SEVEN YEARS.

UH, THE LEGISLATION REQUIRES OF THE CITY TO, UH, HAVE IT WORK WITH THE, THE FUND AND HAVE A PLAN IN PLACE SUBMITTED TO THE PRB BY NEXT FALL.

WE'RE ON COURSE TO DO THAT.

SO THE CITY HAS COM COMMITTED TO AND FULLY, UH, FULFILLED ALL OF THE, UH, REQUIREMENTS OF THE LEGISLATION THAT WAS PUT IN PLACE BY THE STATE

[01:55:01]

LEGISLATURE AND AGREED TO BY THE PREVIOUS CITY ADMINISTRATION.

AND THERE ARE DATES IN THIS YES MA'AM.

THERE ARE DATES SPECIFIC, BUT WHO IS SUPPOSED TO FILE THE PLAN? THE, GO AHEAD ROB.

I WAS GOING THE PLAN HAS TO BE FILED BY D PFPS BOARD.

OKAY.

THAT'S WHO'S LEGALLY, BUT AT THE SAME TIME, AS WE'VE SAID ALL ALONG, THEIR, THEIR PLAN HAS TO BE ALIGNED WITH THE CITY BECAUSE THERE'S NO SENSE THEN PUTTING IN A PLAN THAT'S GONNA SAY, WE WANT TO PUT IN $3 BILLION IF THE CITY'S NOT BEHIND IT.

THAT'S WHY WE'RE TRYING TO WORK TO GET EVERYBODY TO WORK HAND AND GLOVE ON, ON THE SOLUTION.

OKAY.

I JUST WANNA GET THE DATES AND THE RESPONSIBILITIES IRONED OUT SO THAT WAY WE ALL KNOW WHO'S RESPONSIBLE FOR WHAT AND WHEN.

THAT, THAT'S IN ONE OF THE SLIDES HERE.

I KNOW, I, I KNOW BILL , WELL, LET ME JUST SAY, FOR THE INDEPENDENT ACTUARY ANALYSIS, WHICH WE ARE DOING RIGHT NOW, THAT'S DUE, UM, NOT LATER THAN 11 ONE OF 24, THE POLICE AND FIRE PENSION HAS TO ADOPT A PLAN, CORRECT? RIGHT.

BUT THEN THERE'S THAT SECOND STEP, THE FUNDING SOUND RESTORATION PLAN, THAT WILL BE A JOINT EXERCISE BY THE CITY AND THE PENSION.

AND THAT, UM, HAS TO BE DONE AND FILED BY NINE ONE OF 25.

THANK YOU COUNCILWOMAN WILLIS.

I JUST, I WANNA GO BACK TO THE TASK.

AND THE CITY ATTORNEY JUST REFERENCED THIS, AND THAT IS THE FSRP, THE FUNDING SOUNDNESS RESTORATION PLAN.

BECAUSE WHILE A LUMP SUM WOULD CURE MANY ILLS AND, UM, YOU KNOW, CERTAINLY MAKE A LOT OF PEOPLE FEEL BETTER, I DO WORRY ABOUT, I MEAN, IT'S BROUGHT UP AS A MORAL ISSUE OR A DANGEROUS ISSUE FOR THE TAXPAYER.

I MEAN, IT WOULD BE GREAT TO JUST SOLVE THAT.

BUT WHAT WE'RE BEING TASKED WITH IS A FUNDING SOUNDNESS RESTORATION PLAN.

AND WHEN I LOOK AT THOSE WORDS ON YOUR SLIDES, TWO WORDS COME DOWN FROM THAT TO ME.

AND THAT IS A SOUND PLAN.

AND SO THIS IS ALMOST A KITCHEN TABLE DISCUSSION AS YOU SIT AROUND AND YOU LOOK AT YOUR FINANCIAL OBLIGATIONS.

OKAY, WHAT'S MY MORTGAGE? YOU KNOW, WHAT DO I SPEND ON GROCERIES? I MEAN THAT WE CAN LIKEN TO, UH, OUR CITY DEBT AND OUR SERVICES THAT OUR TAXPAYERS WANT EACH YEAR.

BUT YOU ALSO LOOK AT THINGS LIKE, WHEN DOES THAT, WHEN DO I PAY OFF A CREDIT CARD BILL? OR WHEN DOES MY CAR NOTE COME TO AN END? AND THEN YOU LOOK AHEAD AND, YOU KNOW, WHEN YOU'RE GOING TO HAVE FUNDS FREED UP.

SO THIS IS ON A MUCH MORE GRAND SCALE.

I, I REALIZE.

BUT THAT IS A WAY TO RELATE IT TO, UH, OUR TAXPAYERS.

AND SO WHEN WE LOOK AT A PLAN, IT MAY START WITH THE ONE TO THREE YEARS, THE INCREMENTAL, UM, UM, CONTRIBUTION OVER AND ABOVE THE MINIMUM REQUIRED CONTRIBUTION.

AND THEN AS WE LOOK AT FOUR TO SIX YEARS, I MEAN, THIS IS WHERE WE'RE GOING TO HAVE A GREATER SENSE, AND I'M JUST USING THESE TIMEFRAMES, UM, JUST, UH, THESE ARE NOT LOCKED IN.

WE'LL KNOW WHAT THE VALUE OF OUR REAL ESTATE PORTFOLIO IS.

WE'LL HAVE A GREATER SENSE OF ASSET MONETIZATION, UH, MONETIZATION.

WE MAY HAVE THESE THINGS SOONER, BUT WHAT'S THE REALITY OF ACTIVATING THEM IN THE MARKETPLACE? UM, THE MARKET DYNAMICS MAY CHANGE, HOPEFULLY WILL CHANGE TO WHERE PENSION OBLIGATION BONDS ALLOW US TO GET AT THAT BIG NUMBER THAT, UM, IS, YOU KNOW, WE CAN TELL, YOU CAN SEE ON THE, THE CHARTS THAT YOU'VE OUTLINED, WHAT A 500 MILLION, $1,000,000,001.5 BILLION CONTRIBUTION WOULD DO TO HELP US START BRINGING, UH, THE CITY'S CONTRIBUTION DOWN ON AN ANNUAL BASIS.

UM, IN SEVEN TO 10 YEARS, WE MAY HAVE A BETTER SENSE ABOUT THE SALES TAX REALLOCATION.

UM, UH, I THINK SOMEONE EVEN BROUGHT UP GAMING.

I MEAN, THAT'S SOMETHING THAT OUR LEGISLATURE MAY, UH, MAKE A DECISION ON IN, UH, 2025 OR MAYBE ONTO 2027.

WE DON'T KNOW.

AND SO THERE'S SOME, THERE ARE A LOT OF FACTORS HERE THAT WE COULD CONSIDER, BUT WHAT WE'RE LOOKING FOR IS A PLAN.

AND SO WHEN I, WE HEAR ABOUT A LUMP SUM, THAT COULD BE AN OPTION.

BUT WHAT WE ARE TRYING TO GET TO IS A SOUND PLAN.

AND I, YOU ALL HAVE OUTLINED SOME OF THE OPTIONS.

I THINK THERE ARE A FEW MORE OUT THERE THAT WE HAVE TALKED ABOUT.

WE JUST DON'T KNOW AS MUCH ABOUT THEM TODAY.

UH, MAYBE WE WILL IN FEBRUARY.

UM, BUT I JUST WANNA BE SURE THAT WE'RE CLEAR ON THAT IS WHAT OUR TASK IS.

AND UH, THAT'S WHAT OUR GOAL IS THAT WE CAN DELIVER ON.

OKAY.

WE AGREE ENTIRELY.

AND SO WE WANNA BE CRYSTAL CLEAR ABOUT THIS, IS THAT IF FOR WHATEVER REASON, AND WE THINK IT WOULD BE A, UH, MASSIVE MISTAKE BY THE CITY, NOT TO AVAIL ITSELF OF MONETIZATION OPPORTUNITIES, BUT IF THE CITY SO CHOSE, THIS IS A PLAN, AND THIS IS A PLAN THAT VERY CLOSELY MIRROR, UH, MIRRORS WHAT CHIRON WAS PROPOSING.

THERE ARE DIFFERENCES, UM, BUT, BUT IT'S CLOSE THAT IMPOSES FUNDING OBLIGATIONS BY AN ENTITY THAT IS CAPABLE OF MAKING THEM.

THE CITY MIGHT REQUIRE SOME TRADE-OFFS ON OTHER EXPENDITURES, UH, WITHIN THE STATUTORY PERIOD.

SO THIS IS A PLAN.

AND THAT IN, I THINK OUR COLLECTIVE JUDGMENT, AND WE WOULD NOT HAVE PROPOSED IT IF WE DIDN'T THINK IT WAS A CREDIBLE PLAN THAT WE'LL RECEIVE THE, THE, UH, PRB SANCTION, UH, WHAT WE'RE SUGGESTING BEYOND THAT.

THAT IS THERE ARE BETTER WAYS TO DO THIS.

UH, MUCH MORE ECONOMICALLY

[02:00:01]

EFFICIENT WAYS TO DO THIS.

WERE THE CITY TO AVAIL ITSELF OF MONETIZATION OPPORTUNITIES.

CHAIRMAN MEDICINE.

THANK YOU.

UM, SO I'M JUST GONNA PICK UP WITH THIS FUNDING SOUNDNESS IDEA AND SORT OF THE OVERALL TENURE OF THE DISCUSSION OF POOR, POOR CITY OF DALLAS.

WHERE WILL WE FIND THE MONEY? BECAUSE THE REALITY IS OVER THE LAST FIVE BUDGETS FROM FISCAL YEAR 19 TO FISCAL YEAR 24, WE HAVE INCREASED ANNUAL REVENUE BY A BILLION DOLLARS.

AND WE NEVER ALLOCATED A SINGLE PENNY OF THIS TO DEAL WITH THIS ISSUE.

SO WE DID WHAT WAS STATUTORILY REQUIRED.

ABSOLUTELY WE DID, BUT WE ALSO KNEW THIS DAY WAS COMING AND WE ALSO KNEW WE'VE PAID THE FLOOR AT LEAST THE LAST TWO YEARS, MEANING WE KNEW WE WERE NOT MEETING THE ASSUMPTIONS, AND YET THE INCREASE IN UNFUNDED LIABILITIES HAS JUST GONE UP ASTRONOMICALLY.

AND IF WE WENT WITH YOUR PLAN, IT WOULD CONTINUE TO ACCELERATE BECAUSE WE ARE STILL NOT PAYING THE ACTUARIALLY DETERMINED CONTRIBUTION AND WE HAVE THE DOLLARS, WE'VE JUST CHOSEN TO SPEND IT SOMEWHERE ELSE.

SO YOU MADE A STATEMENT, ROB, THAT, UM, WE DON'T HAVE A WAY TO ADJUST BENEFITS.

THERE WAS SOME COMMENT MADE ABOUT THAT, BUT, UM, BECAUSE ONCE THE PLAN IS SET, THERE'S NO WAY TO ADJUST IT.

BUT MY QUESTION TO YOU IS THIS, I THINK WITH THE LAWSUIT THAT JUST WRAPPED UP, WELL, WE'RE NOT GONNA TALK ABOUT LAWSUITS.

OKAY.

IT WASN'T OUR LAWSUIT.

OKAY.

WHEN I WENT OUT AND LET, LET'S GET, THIS IS A QUESTION ABOUT THE FUNDING OF THE PLAN QUESTION.

YEAH, NO LAWSUIT.

SO THE QUESTION IS, ISN'T THE COLA ACTUALLY A WAY TO ADJUST BENEFITS? BECAUSE IF WE PUT THAT COLA IN AND SOMETHING CATASTROPHIC HAPPENED, WE COULD ACTUALLY REDUCE THAT OR VICE VERSA.

IF WE HAD ADDITIONAL FUNDING, WE COULD INCREASE IT.

SO THAT REALLY DOES ACT AS A ACT AS A MECHANISM TO MAKE ADJUSTMENTS TO BENEFITS.

IT, IT'S ENTIRELY A JUDGMENT.

UM, AND OUR JUDGMENT WAS IS IT INTRODUCES MOVING PARTS AND MAKES IT MORE DIFFICULT TO GET TO THE GOAL LINE, WHICH IS A CREDIBLE PLAN.

YES.

THE CITY COUNCIL COULD, COULD MAKE THOSE DETERMINATIONS.

MY EXPERIENCE AND OBSERVATION HAS BEEN THAT GATE SWINGS A LITTLE BIT ONE WAY.

IT'S, IT'S HARD TO SORT OF INTRODUCE A BENEFIT AND THEN PULL A BENEFIT BACK.

BUT AGAIN, IT'S, IT'S REALLY ABOVE OUR PAY GRADE.

UM, THAT'S WHY YOU GUYS GET THE BIG BUCKS AND HAVE TO MAKE THOSE DETERMINATIONS.

UM, OUR, OUR JUDGMENT THOUGH IS, IS THE, THE STRAIGHTEST AND MOST PREDICTABLE LINE TO THE, THE SECURING AND APP, THE, THE PRBS APPROVAL OF A CREDIBLE PLAN AND GET THIS FUNDING UNDERWAY, WOULD BE TO KEEP THE STATUS QUO ON BENEFITS AND THEN ADDRESS THAT AS PART OF THE LARGER QUESTION OF WHAT'S NECESSARY TO DRAW THE, THE PEOPLE NECESSARY TO HAVE THE PUBLIC SAFETY SCHEME THAT YOU'D LIKE.

OKAY.

SO MY, YOU GOT ANOTHER QUESTION? I DO.

YOU SAID TWO, RIGHT? TWO AGAIN.

OKAY.

SO MY SECOND ONE, UM, BILL, YOU WERE HITTING ON THIS A LITTLE BIT, BUT PERHAPS TAMMY, YOU'RE THE RIGHT PERSON TO ANSWER.

I'M NOT SURE.

UM, AT THE END OF THE DAY, WHO IS DETERMINING WHAT THE APPROPRIATE CITY CONTRIBUTION IS? WHO, I MEAN I THINK THAT THE CITY COUNCIL, I THINK IT WAS YOU.

WELL, I DON'T KNOW.

IS THAT TRUE? IS THAT THE DETENTION BOARD? IS THAT THE STATE ALLEGED? IS THAT US? I, I, TAMMY, I BELIEVE THAT WE ARE THE POLICY MAKER.

IT IS A BUDGET ITEM.

I THINK JACK SAID IT'D BE THE BUDGET, IT'D BE UP TO THE COUNCIL BECAUSE WE APPROVE THE BUDGET.

IT'D BE A RECOMMENDATION OF THE BUDGET.

I THINK.

I MIGHT BE WRONG, BUT I THINK IT WOULD BE THE COUNCIL DECISION ON THE BUDGET, IF I'M MISTAKEN.

CORRECT ME.

SO, UM, YES SIR.

IT WOULD BE AT THE DISCRETION OF THE CITY COUNCIL TO APPROVE THE BUDGET, WHICH WOULD INCLUDE THE CONTRIBUTIONS.

HOWEVER, I WILL ALSO SAY THAT, UM, DETERMINING THE A DC AS WE GO FORWARD, WHO'S GOING TO DETERMINE THE A DC? I'M SORRY, THAT WASN'T MY QUESTION.

MY QUESTION.

I'M SORRY.

WHO DETERMINES WHAT AMOUNT THE CITY MUST PAY TO THE PENSION? WHO DETERMINES THAT? WHO RECOMMEND? WELL, THAT'S WHO RECOMMEND THAT THE TOTAL AMOUNT IS GONNA BE BASED ON BEING FULLY FUNDED IN 30 YEARS.

SO I'M NOT SURE I UNDERSTAND THE QUESTION.

I'M SORRY.

I MEAN, I THINK WHAT YOU'RE SAYING IS IF THE CITY SUBMITS A PLAN, THEY'RE COMMITTING TO THAT PLAN AND THEY HAVE TO FUND THAT, THOSE LEVELS.

IF, IF DON'T WE SAY THE ACTUARILY DETERMINED STARTING IN YEAR FOUR OR FIVE, THE CITY'S COMMITTED TO THAT IN THE FIRST THREE YEARS.

IT'S WHAT WE'VE PROPOSED.

WHAT'S BEING PROPOSED THEN.

IS IT THE CITY'S PLAN THAT'S BEING SUBMITTED? IS IT THE PENSION'S PLAN? THERE'S TWO.

THERE'S TWO.

OR IS IT THE LEGISLATOR'S? THERE'S A TWO STEP PROCESS.

AND SO RIGHT NOW WE'RE IN THE INDEPENDENT ACTUARY ANALYSIS WHERE THE BOARD

[02:05:01]

HAS TO ADOPT A PLAN THAT COMPLIES WITH, UM, 8 0 2, WHICH IS THE, THE PARAMETERS AROUND THE FUNDING SOUND RESTORATION PLAN.

BUT SO THAT'S MY QUESTION.

LET LET, IS IT THE BOARD FINISH TWO STEP PROCESS? THAT'S, IT'S AS I THINK THESE GENTLEMEN HAVE STATED THAT, YOU KNOW, THE BEST WAY TO APPROACH THIS IS TO, IS FOR THE CITY AND THE BOARD TO BE IN LOCKSTEP BECAUSE BY NINE ONE OF 25, THE CITY COUNCIL AND THE BOARD HAVE TO JOINTLY ADOPT THE FUNDING SOUNDNESS RESTORATION PLAN.

AND FROM MY UNDERSTANDING OF THIS EXERCISE IS IT WILL PROBABLY BE ALMOST EXACTLY THE SAME AS WHAT IS BEING SUBMITTED IN THIS INDEPENDENT ACTUARY ANALYSIS REQUIREMENT OF THE BOARD.

SO IT'S, YOU KNOW, EVENTUALLY IT'S THE CITY COUNCIL WHO WILL ADOPT, JOINTLY ADOPT THE PLAN.

RIGHT.

THAT GOES TO THE PRB.

RIGHT.

OKAY.

OKAY.

ASK THE QUESTION.

UM, CHAIRMAN.

OKAY.

I DON'T, I DON'T THINK THAT WAS THE ANSWER TO THE QUESTION ANSWER.

IT MIGHT BE AN ANSWER.

HE DIDN'T WANT IT, BUT I THINK THEY ANSWERED THE BEST THEY COULD.

SO, UM, CHAIRMAN STEWART, I GO, SOMEBODY FINISH, I'LL GO.

I COME BACK TO YOU CHAIRMAN STEWART MARINO MARINO.

OKAY.

ANYONE ON THIS END? OKAY, LAST QUESTION.

IT'S THE SAME QUESTION.

SO IF THE PENSION BOARD DECIDED SOMETHING COMPLETELY DIFFERENT, THEN WHAT THE STATUTE UNDER THE FUNDING STATUS RESTORATION PLAN REQUIRES THAT WE JOINTLY FORMULATE THE PLAN AND THAT WE EACH VOTE ON IT, MEANING THE, THE CITY AND THE BOARD.

IT HAS TO BE A JOINT PLAN.

I UNDERSTAND, BUT THAT'S NOT THE ANSWER.

THAT'S NOT THE OH, OKAY.

ANSWER TO THE QUESTION.

THE QUESTION IS, WHAT IF THE PENSION BOARD HAS A COMPLETELY DIFFERENT PLAN? HOW DOES, WHAT HAPPENED WITH THAT? OKAY, LET ME TRY AND ANSWER THIS.

I THINK THAT WE HAVE A REAL PROBLEM WITH THE DEADLINE BECAUSE THEN YOU GO BACK TO THE, YOU HAVE TO FULLY FUND IN 25 YEARS.

I, AND THIS, WELL, OKAY.

OKAY.

HOLD ON.

I THINK IT, OKAY.

I THINK THE SIMPLE QUESTION WHO MAKE THE FINAL DECISION? THANK YOU.

THAT'S WHAT I'M ASKING.

WHO MAKE THE FINAL DECISION? I THINK IT'S NOT, IT'S A JOINT DECISION.

I THINK WE BOTH GOTTA AGREE ON A DECISION.

IS THAT CORRECT? FROM THE PENSION BOARD? GIVE IT US.

WE GOTTA AGREE ON THAT.

AND, AND THE, AND THE, AND THE PENSION BOARD SAID, DO Y'ALL AGREE ON THE PLAN? AND THAT'S THE PLAN.

WE BOTH GOTTA AGREE IT CAN'T BE ONE OR THE OTHER.

IT CAN'T BE THE ACTUARY, IT CAN'T BE THE PENSION, IT CAN'T BE THE CITY.

WE BOTH GOTTA AGREE TO THE PLAN.

NOW THAT'S WHAT I, MY UNDERSTANDING IS I I WOULD LEAVE THIS TO THE CITY.

UM, I, I THINK THE, THE WAY IT WORKS, YOU PRESENT A PLAN.

THE, THE, THE PENSION BOARD DIDN'T HAVE THE RIGHT ABILITY TO REWRITE THE PLAN.

THEY APPROVE OR DISAPPROVE.

IF THEY APPROVE IT AND THE CITY HAS ACTED THROUGH ITS COUNCIL TO COMMIT ITSELF TO IT, THEN IT HAS DUTY BOUND TO MAKE THAT CONTRIBUTION.

NOW, EACH YEAR THERE COULD BE DEBATE ABOUT WHAT SHOULD THAT CONTRIBUTION BE BASED ON, UH, THE ACTUAL, THE A DC, WHICH SHOULD BE 131 MILLION OR 137 MILLION.

UM, PRESUMABLY THE CITY WOULD GET THOSE NUMBERS FROM PROFESSIONAL ADVICE LIKE DELOITTE THAT WOULD TELL YOU WHAT THOSE NUMBERS ARE.

OKAY.

WELL, I, I THANK, UH, THANK YOU JACK AND, AND ALL THE COUNCIL MEMBERS.

THANK YOU ROB.

YOU KNOW, JOHN AND BILL, YOU KNOW, YOU KNOW, I JUST EXPRESSED, YOU KNOW, THE EXPERTISE, WHAT WE ARE TRYING TO DO, VERY SIMPLE UNIFORM EMPLOYEES, WHEN YOU RETIRE, YOU WILL GET PAID.

SIMPLE AS THAT.

WE ARE FOUND FINANCIALLY IN THE CITY OF DALLAS.

WE, WE HAVE A PLAN.

WE ARE GONNA DO A ONE YEAR, TWO YEAR, THREE YEARS IN THE FOURTH OR FIFTH YEAR, GIVE A TIME TO MONETIZE ALL OUR ASSET TO COME UP WITH A LUMP SUM IN A YEAR FOUR OR FIVE OR SIX.

WE'RE GONNA DO THAT, BUT IT, WE CAN'T DO IT TODAY.

AND WE ARE NOT GONNA SAY THAT WE GOT $1.5 BILLION A DAY OR $1 BILLION A DAY OR HALF A BILLION DOLLARS.

BUT WE GIVE YOU THE LATITUDE OF WHAT IT WOULD TAKE TO GET THERE IN ORDER TO TAKE, TO GET THERE.

WE NOT BE ABLE TO SELL THE ASSET IN ONE YEAR OR TWO YEARS.

IT GONNA TAKE SOME TIME.

SO AGAIN, THANK EVERYONE AND THANK THIS COMMITTEE AND THANK THE GREAT COURSE.

EVERYBODY HAD A GOOD QUESTION.

BUT ANY OTHER QUESTION YOU NEED TO DO, BE SURE YOU GIVE 'EM TO TAMMY AND GIVE 'EM TO JACK AND MAKE SURE WE DO.

BUT AGAIN, UH, ROB, BILL AND JOHN, THANK YOU AGAIN.

YOU KNOW, 'CAUSE Y'ALL VOLUNTEER, BUT Y'ALL THE EXPERT.

Y I'VE BEEN ON THE BOARD BEFORE.

Y'ALL DO UNDERSTAND WHAT'S GOING TO, I WAS ON THE BOARD BEFORE SO I DO UNDERSTAND IT'S NOT AN EASY TASK, BUT I WANNA MAKE SURE AGAIN, UNIFORM EMPLOYEES, YOU ARE SAFE WORKING FOR CITY OF DALLAS BECAUSE WE GONNA DO EVERYTHING IN OUR POWER TO MAKE SURE THAT WHEN YOU DO RETIRE, YOU WILL GET YOUR MONEY.

WE UNDERSTAND BENEFIT INCREASE, WE DO KNOW COST OF LIVING GO UP, WE GONNA DO EVERYTHING TO MAKE SURE DALLAS IS A BEST PLACE TO WORK.

THE CITY OF DALLAS.

WITH THAT, IT'S FIVE 15.

NOW THE AD HOC COMMITTEE IS ADJOURNED.