Juneau: July 8, 2026 Assembly Finance Committee

I bring the July 8th, 2026 Assembly Finance Committee meeting to order. Miss Wendell, will you note the roll? Thank you, Chair Wall. We have all assembly members present in chambers besides Mayor Weldon, who is present on Zoom, and Assemblymembers Smith and Hughes-Skandijs, who are absent. Thank you.

That brings us to approval of minutes. You have the April 29th, 2026 minutes, um, in your packet. Anyone have changes to those minutes?

Seeing none, those are so moved. That brings us to agenda topics. Um, our first agenda item is budget process and outcome debriefing, which is just an opportunity as we, um, are post our budget process to reflect on anything we want to make sure we carry forward into this next year. Um, Manager Kester, Miss Flick, are there things that you would like feedback on or you know, particular things you'd like us to reflect on in this discussion? Nothing specific, Chair Wall.

Always happy to have feedback on how we can help you make the decisions you need to make.

Great. Great. Well, with that, I will just open it up to this group. If you have things both either on the process side or the outcome side, so where we landed with the budgets. I think we, we kind of know where we all are on that, but what you're thinking about moving forward, um, or changes you'd like to see to the process.

This was a unique year. We know next year will also be unique in that we are, you know, looking at a deficit budget and, and how to deal with it. So if there's something you'd like to say that will help staff have direction as we think about, um, Assembly's November budget retreat, now is a good time.

Go ahead.

Thank you, Madam Chair. Just one quick question about the foregone revenue side of things. You know, when we continue those discussions and if we make any decisions, is— would that all, you know, be for application in the next fiscal year, or can any of it get applied during the current fiscal year if we had made a decision?

Thank you for the question, Mr. Brooks. The answer, like for everything, is it depends. So when we talk about foregone revenue items related to property taxes, those would all have an impact on FY28 and beyond. Um, where changes are made to the sales tax, that can have an impact, um, within 30 days of the assembly's adoption of an ordinance. And we would want to include in the language, and we had in the drafts, to start those changes at the start of a quarter.

Um, just that's where most of our, our filers, um, live, is on a quarterly basis. So we would just want those sales tax changes to take effect at the beginning of a quarter, where some of those decisions have already been made, and we can come back, and I think we've already planned on bringing back kind of updates on how those revenues are looking. In some places we had estimates, in other places we had no idea, and so as we learn what those are, Um, you'll certainly get those updates, and if it seems appropriate to do a budget adjustment mid-year, then we'll do that as well.

Mr. Kelly, thank you. I think one positive note I would make about the process is I felt like there were a lot more opportunities for the public to weigh in before the last meeting, before we were making our final decision, and I think we want to continue that practice as much as possible. Thank you, Mr. Kelly. I'm seeing some head nods.

Mayor Weldon.

Thank you, and I'm not sure if I'll cut in and out. Apologize for that. Um, appreciate what Mr. Kelly said, so I would agree with that, but I just wanted to commend everybody. This is probably the most difficult budget season I've had in my tenure on the assembly, and I think we made it through. Um, not everybody was happy, I know.

Um, but we made it through and we're still a functioning assembly. So for that, I'll say kudos to the assembly and staff. Um, and then I'll gently chide the assembly members that when we give ourselves a goal at the retreat, we do need to stick to that goal. So hopefully, um, next time that we will. I understand that this was a very difficult budget season, saying that.

So I know it was difficult to make some dramatic cuts, but if we have to do that again, prepare yourselves now. But good process, appreciate you again, Chair Woll.

Any other comments?

Um, I will, um, just add my two cents. I, I think that, um, I, I agree with Mayor Weldon. I think it's helpful that we got through that process treating each other civilly and making, you know, it felt like the budget was about the budget and not about politics and personalities. And so I appreciate that. That's not always easy.

One thing that is on my mind, I think, moving forward is, you know, We're— you all will be meeting earlier than normal, starting in November to kick off the budget process this year, which I think is good. But I'm not— I actually think we shouldn't wait on some things. I know there's going to be ballot questions that could impact our budget, but I feel like right now we're looking at a significant deficit at the end of next year, and there are conversations we can start having now that are going to set us up for the future. You know, primarily I'm thinking about our recreational facilities. You know, we had conversations about what it would look like to, you know, develop public-private partnerships and take advantage of community organizations that could step in.

That, that's going to take a long time if we actually want to or those options, and we won't be able to do it kind of a year from now. Um, and so I know that that's on, um, Deputy Mayor Smith's mind as well. So I think we'll probably see something at a Committee of the Whole, and you all may disagree that that's a priority, but that's where I'm hoping we get to spend a little bit of time over the next few months starting to think about what that process would look like. Um, in advance.

All right, seeing no other comments, um, we will go to investment updates. Um, Miss Flick. Thank you, Chair Wall. Um, it's good to see you guys again after spending so many weeks together on a regular. I feel like it's been forever since I've seen you all.

Um, I also feel like the last several meetings you guys have got to do all the talking, and tonight I'm going to end up doing a lot of the talking. So, um, we will get started periodically. Um, we try to do this on a regular basis, bring you an investment update. Um, it's looked like different things over the years, and I'm so excited I'm getting hoarse. Um, so tonight we're going to take a little bit of a different tact, and, um, you know, I have multiple friends in the audience who are going to present various pieces of our kind of investment and cash process to you.

Um, I'm gonna just do kind of a brief overview, talk quickly about how this is and is not related to fund balance and accounting and budgeting. Talk quickly about our policy, investment policy statement, and then we'll have Jason and Tiarmo from Insight do a presentation. We've got Bill here from APCM, which is the financial advisor for the Alaska Municipal League Investment Pool, or AMLIP. And then we have Mike here in the room and we have Alex on Zoom to talk from 3Plus1 and some of the help that they give us with, and then I'll kind of wrap it up. I expect this to be kind of questions as we go along, so you don't have to save them till the end.

Really hard questions should go in the middle, the folks that are in suits, just saying. So let's just talk about what we are talking about tonight, cash and investments, and we're a public entity, so we have a stewardship responsibility. The two biggest pieces of that are Managing for safety and managing for liquidity. Safety can be easily summed up as don't lose taxpayer dollars ever. And so we want to build an investment strategy where we're not ever going to lose principal.

And so that's one of the biggest pillars around public investing. The second is liquidity, which is a fancy way to say have enough cash in your checking account so you can make payroll. That you can pay your vendors when you do an accounts payable run, when— that you can make your bond payments when they're due. And so managing to make sure that we've got the cash on hand to write checks, to do ACHs at the time that those things are due. And then once those two things have been properly cared for, knowing that there are restrictions and limitations, meeting those two requirements, earn the best yield that you can, make as much income as you can.

But that's different than someone might have as a personal investment where they're willing to take more risk and they're willing to put earning income over maybe the safety and managing liquidity a little bit differently than you would as a personal entity. So again, being a public entity, we've got that stewardship responsibility to our residents and to our city. So the other thing about CBJ And I'm sure you all know this, we have a central treasury model. So when I talk about CBJ, it's the, the capital C, it's all of the CBJ components. So it's the school district, it's all of the CBJ departments including Bartlett.

All of that runs through central treasury, and so the finance department through the treasury section manages those funds in the central treasury piece. When we talk about cash management, we're not talking about fund balance or budgeting. We just spent weeks and months talking about fund balances and budgeting. Related, yes, but not the same. We're also not talking about accounting, so we're not talking about the equity piece.

For those of you who had basic accounting, assets equals liabilities plus equity. We're not talking about that equity piece. Again, is it related? Yes. Yes, but it's not exactly the same.

And so tonight we're really focusing on cash and our investments.

The data I'm going to talk about, just kind of in bookending this conversation, is from our '25 audited financial statements, um, and you'll see why I want to do that. Um, at the end of FY '25, we had, um, almost $370 million in cash. So the first place all of our minds go is Who owns that cash? Which fund is it? Even though we just said it's not accounting and it's not fund balance, that's the first place our mind goes.

So let's just deal with that to start with. So our cash is divided up amongst all the funds. We do have to allocate cash and report on it that way. So 42% of our cash and investments are related to enterprise funds and their CIP funds. So again, you can think of docks and harbors or the airport or Bartlett.

Utilities. Those are all enterprise funds, and they have their own associated capital project fund that goes with their operating fund. We also have 26% of our cash investments related to non-enterprise capital fund areas where you've allocated cash to do various projects over time. 13% Of our cash is in the general fund. I will make just one note, when we have to— when we have a fund that goes negative and we have to pull from somewhere from an accounting basis, it comes out of the general fund.

It's just kind of how it all works, but the general fund makes up 13%. Internal services funds, those are like our fleet management, our fleet sinking fund, our facilities management, and are risk, um, are all internal service funds, and they account for about 6% of the cash. Um, special revenue funds— um, oh sorry, the Fleet Seeking Fund I broke out, um, it's 4%. Um, special revenue, uh, was about 3%. The school district had about 5% at the end of FY25.

The permanent fund is very specifically the Arboretum endowment. Just the Arboretum endowment is a special, um, fund type all of its own. So I know when we think about cash, we're thinking about the various funds and the departments they're associated with, and we have to tie it back to that. But again, tonight the focus of our conversation is going to be on our investments and our cash. Uh, so at the end of FY25, we had $11 million in our First National Bank of Alaska, um, bank account.

It's our day-to-day checking account. We do sweep it nightly and put it it into an account so it earns interest every night.

Addressing safety part of this, it is fully collateralized, which means that First National Bank of Alaska has to keep on deposit at another institution enough cash to cover our account so that if there was ever— we've seen bank failures in the last few years, so if there was ever a bank failure, we are protected. We have cash in another institution that covers our cash that we have in the bank. The Alaska Municipal League Investment Pool, AMLIIP, we have 3 accounts within that pool. It's actually broken up into 2 pools, and I don't want to steal Bill's thunder, so I'll let him talk about the 2 series. But essentially, Series 1 is where we take all of our cash that comes in in those big tranches.

So property taxes are due September 30th. We get a ton of cash in right around that time. End of quarters when a bunch of sales tax is paid and remitted. We put all of the cash in there so that then we can pull it out as we need to make payroll, pay bills, do bond payments. We had, um, $57 million at the end of the year, and then we had $6 million also in a Series 1 account, and those are our bond proceeds.

And we segregate that out for a lot of really important reporting and tracking and IRS arbitrage reasons, and if you want a really fun conversation offline, we can talk about arbitrage sometime. And then we also had $77 million in the Series 2 account, and that is more like a midterm investment. We can't get to that right away. There's gates to it, and again, I'll let Bill talk more about the series. Our midterm investment portfolio is managed by Insight, and it had $203 million at the end of the fiscal year last year.

And then we do have the Arboretum endowment, the 4 pieces of the library endowment, and then a little bit of general fund in a long-term mutual fund investment with Vanguard. And, and that's very specifically tracked kind of with a different purpose, you know, with the intent really never to draw that down as an endowment is intended to be. And then when we issue revenue bonds, we are required to keep a certain amount as a bond reserve. And so those are held by the bond trustee, BNY Bank of New York, and those are accounted for as part of our cash, even though we can't touch it until we're making our final bond payments. So when we look at our investments kind of broken out by short, long, midterm, you can see we've got—.

Director Flick? Yes. Do you mind if I ask a question on the previous slide?

Thinking about our restricted budget reserve, where does that cash sit? If that's a correctly worded question. That is a fine question, Chair Wall. So from a cash perspective, we view that as, you know, something that we are not intending to spend in the short term. Um, so we would, um, we would keep that, you know, and we don't earmark, you know, this little corner of the insight investment is the restricted budget reserve, but it falls more in line with like the Series 2 AMLEP and the insight funds that we, if we needed to pull, we could pull, but we don't really intend to.

So that's where those would live. Thank you for the question.

Mr. Kelly. Thank you. I was just kind of curious about, like, how the, how the fully collateralized works versus— obviously, I know FDIC insurance doesn't go up very high at all, but how, how, what's the difference in, like, the guarantee, guarantees for that? So I am not a lawyer and an expert, but the FDIC insurance is an insurance so that if that was how we were protecting our funds, we would have to go through a process through the FDIC to make a claim to gain cash if we did have a bank failure. Whereas the collateralized, we have— we are basically cosigners with First National Bank of Alaska with our trustee banker who holds that cash.

First National Bank of Alaska monitors that intensely because they earn very low returns on that because they have to keep it as cash in case we need it. And so if we needed to call on that, there's a process that we would just pull up in our documents and reach out to our custodian and basically claim that cash, whereas the FDIC is more like an insurance claim. Thank you.

Okay. So if we want to look at our investments and our cash, We keep about 20% in short-term, and that's really our First National Bank of Alaska bank account and the Series I funds in AMLEP. We've got midterm. I break out the bond reserves because they are restricted so differently from everything else. And then 2%, really, that Vanguard is long-term.

I also broke it out by actually the places, the bank accounts, if you will. Where they live. So you can kind of see what that looks like as another visual.

One of the things we do as part of our financial close is we have to report on all of our cash and investments. We come to that total, $369.4 million, but we also have to make sure that in our general ledger all of our cash accounts equal the same amount. And so you can see here on The left side are all of our funds and how they're broken out. That's the pie chart we saw earlier, and you can see that it stacks up to the bank accounts. Um, the order not necessarily important.

Like I said earlier, you can't say, oh, this little fund is this part of this investment, with the exception of our permanent fund. But you can just kind of see how, how those roll up together.

So at CBJ, we do not have a singular human whose sole function is to do investing on behalf of CBJ. We are not large enough. I don't, I don't see a future where we head that direction, although I understand in the past we did. So we rely on a strong group of advisors to help us manage our cash, to manage our investments, and you're going to hear from those today. So we use 3+1 to help us analyze our cash flow, to look at our investments overall.

Ensure we don't have idle cash that's not doing anything, look broadly at our returns. One of the things that I appreciate with the 3+1 model is that they're really in the data business. They don't really care who our bank is or where we're investing. They're, they're looking at just kind of this is the data and this is what you're doing. And we can see how other entities your size or in your, in your state are performing in what they're doing.

So they provide us a nice kind of a benchmark and way to look at, you know, just how we're doing compared to other groups. They're not interested in selling us any investments. They're not certified in that realm. They really focus just on the data of what we're doing. We focus very heavily on liquidity and what— when we are going to need cash and do we have that in the right kind of account so we can get to it.

Insight Investments manages our midterm portfolio. Our investment policy gives them the guardrails with which they make their decisions about investing those funds, again, protecting the safety and liquidity pillars and then trying to get the best interest earnings for us possible given those restrictions. Not for today, but probably for this fall, we want to bring the investment policy back to you for a more thorough review. And an official approval via resolution. This was done in November of '22, so it's not super old, but we don't want it to get stale.

And so this is— the investment policy fits nicely on 2 pages. Like I said, I'm not going to read it to you, but this is what we use to know what we can invest in and what we can't invest in.

So with that, I'm going to stop with the introduction unless there's more questions for me and ask Jason and Tiarmo to come on up and join us here. And I will stop sharing my screen and let you guys introduce yourself. And why is it stopping? There we go.

Is it on? Great. Thank you, Angie. Hello, everybody. My name is Tierno Sela.

I am a senior relationship manager at Insight Investments based in our New York office, and I'm here with my colleague Jason Slonte, and I'll let him introduce himself. Hello, my name is Jason Slonte. I have been managing fixed income portfolios on behalf of public sector clients for going on 27 years now. Focused on safety, liquidity, and yield objectives, as Angie has outlined, and I've been your portfolio manager since coming on board with you all in 2019.

So in terms of an agenda today, our goal, as Angie has set the stage, is really to help you all understand who Insight is as a firm and how we help you achieve those objectives of safety, liquidity, and yield. And to do that, I'll start by providing you an overview of Insight as a firm, and then I'll talk a little bit about the firm's investment philosophy and process before turning it to Jason, who's going to talk about market environment, the strategies, and how your portfolio is currently positioned.

Okay. So I'll start us on page 5, and this is a page to give you to put faces to the people who serve the portfolio. So, we have a team approach at Insight, and on the portfolio management side, you have Jason Celente, who leads the investment responsibilities for the City of Juneau, and then on the client solution group, you have myself and Caroline Cahill, and our job is really to focus on the service delivery and ensure that you all are getting what you hired us to do.

And then in terms of talking about the firm, I'll start really high level and then progressively zoom in into the details of public sector. So page 6 gives you an overview of Insight and BNY, and really here what I want to highlight is the fact that Insight is a subsidiary of BNY. Bank of New York is 240 years old, just about, a decade younger than the country. It's the largest custodian in the world, just under $60 trillion assets under management. And on the investment side, the bank oversees $2.1 trillion in assets.

And the reason I'm kind of giving these stats is really to give you a sense of the scale, the stability, and kind of all the resources that the bank can bring to bear. And the reason that's important for you all is because as your needs change and evolve, the bank has the capability to grow and evolve with you.

So now on page 7, I'll double-click a little bit on Insight. We think of ourselves as a specialist fixed income asset manager, and we are active in nature, and the portfolios that we design for clients are customized for their unique needs and objectives. And so here on page 7, you can see how the assets that we manage are broken out on the left side by investment solution type and on the right side by client type. The darkest green bar on the left side is our risk management solutions at $470 billion in assets. That segment really is really focused on our corporate pension clients.

So we really help our corporations with their pension investments and kind of when they reach a funded status, how do we help immunize the liability so that they can meet their benefit payments. The next slice, the, the light green bar is what we call multi-sector fixed income. And this area is the area that you can think of strategies that are managed against a benchmark. So you can think about the S&P 500 on the equity side is a benchmark. In fixed income, something like the Bloomberg Aggregate Index is a benchmark, or for you all, the 1- to 5-year Treasury Index is a benchmark.

So all the strategies managed to benchmarks will fall into that multi-sector platform. And that's a $300 billion platform at Insight. Again, big number kind of meaning resources and area that the firm really cares about and is supportive of. And then if you look over to the right side by client type, I'll also point you to the light green bar just to highlight our public and government client base. We're fortunate to be entrusted with just under $140 billion in assets from public entities like yourself.

And then zooming in a little bit further in, focusing specifically on public sector clients, page 8 shows you kind of our global public client, client base at 161 clients. In the US, we manage just under $40 billion in public sector client assets, and then specifically just under $12 billion for operating assets. So similar to the work that we do for you all on the term portfolio side. And the reason these stats are important is because it helps to demonstrate our expertise in kind of the objectives of the public sector, which are safety, liquidity, and yield, and making sure that we are experts in the state statutes and the guardrails and investment policies that drive those investments. And then kind of what else here?

There's a map here, kind of all the states that we cover are like where we have clients, and really What we're trying to show here is that we have perspective, right? By working with all these different states, it helps us have a bird's-eye view of all the trends and regulations of how different states do things, and that perspective helps us bring value to you all and advise you the best way that we can. And we attend conferences. I missed Angie at the GFOA conference, but we have a presence in kind of all of these local public sector events and activities.

So now that I've set the stage on the firm, who we are as Bank of New York, as Insight, we're gonna transition a little bit and talk about our investment philosophy and process. And this is what we overlay on your investment policy and your objectives to help build the portfolio that we run for you all today.

So on page 10, kind of, I'll summarize here, but precision plus diversification is what we believe to deliver a consistent performance in portfolios. And when we talk about precision, we're really talking about, are we hitting all of the objectives, the safety, the liquidity, the yield? Check, check, check. Okay, we got all of the key key things that our clients care about. And then on the diversification side, how are we utilizing our toolkit as a global active asset manager and kind of all the perspective that we're, that we're getting to bring to bear those, those ideas and those resources in a way that is precise and consistent for you all.

So using that philosophy, the process is kind of iterative in nature, which is why on page 11, it's outlined or shown in a circular kind of diagram, but the starting point is solution design. So what that means is that our belief is that every client situation is unique and different, so you can't apply a one-size-fits-all solution for everybody. So the way that we tackle that is that we partner with key stakeholders such as Angie and Ruth here. We are experts on your investment policy and on state statute, and we really get to understand what are your unique objectives when it comes to constraints like liquidity, how much cash you need to have on hand, kind of how do you want these assets to be managed, do you want it over a 1 to 3 year period, a 1 to 5 year period, and really incorporate all of those quantitative and qualitative factors to design a solution. And once we come up with that desired solution, then we can move to the implementation process, which Jason will talk about in more detail.

Great. Okay, so Tierno kind of set the stage in terms of the process around us designing and helping you design the investment portfolio and the support around that, delivering that safety and liquidity piece of it. Our job as portfolio managers on the investment team is then to say, okay, how do we go ahead and deliver that yield objective? And certainly to do so in a consistent way. So what you're seeing here on this page is a, I'll point you to just maybe just two main themes.

The left-hand side of the page, how do you go about designing an investment portfolio? What are the key risk factors that we're looking at in order to achieve that investment performance? And the three risk factors on the left-hand side of the page are Essentially, your duration or yield curve profile with how much, how long or what types of maturities are you buying? What types of fixed income securities are you buying and what maturities are they? And that's how to think about duration.

Then what types of sectors are we buying, whether it be a corporate bond or a Treasury security or an agency security? And then certainly within that, which securities are we purchasing? So the three risk factors on the left-hand side of the page is what we're focused on in terms of how we build your investment portfolio. How we then get to the best ideas and implement those best ideas on your behalf is really on the right-hand side of the page here. And for us, it's about leveraging the resources within our investment team at Insight to go ahead and as portfolio managers, understand what those, those specialist views are and take those best ideas and localize them on your behalf.

So as portfolio managers, our responsibility is to know your investment policy inside and out and to take the firm best views and implement those on your behalf. And how that begins to occur is what you see here on the page. There's these elements of top-down and bottom-up types of analyses. Top-down. What's the economy look like?

Where do we think interest rates are going to be 12 months forward, 2 years forward? Bottom-up, within the securities that we're buying, whether it be corporate bonds or U.S. Agency securities, how do we feel about each of those sectors? What are some of the risks and rewards around that? And that comes together in what's listed here as our fixed income strategy meeting, and that's As the investment team comes together, we are participating in and learning from our colleagues in terms of understanding how best to bring forward those ideas.

The other element on this page that we'll bring forward is this idea of risk management. We call it units of risk. It's an easy place to go when you say that you have short-term, high-quality portfolios, don't have a lot of risk. We take the other approach and say we want to know precisely how much risk we are taking on your behalf. And we do that through a process known as units of risk.

We're happy to get into the weeds on that if you'd like, but you know that we are paying a lot of attention around that precision element of that portfolio positioning. And then to give you a little bit more of a, of a view in just terms of the sector, and you look at the next page here, just on corporate bonds, right, where there's credit risk, whether it be an A-rated security or a BBB-rated security. Insight has 20 corporate bond analysts on our team as specialization. Some of the elements on this page include the fundamental research that we do on each corporate bond. So what are the, what are the inputs to that fundamental research?

The outputs being our own internal credit rating, our own outlook. The other element that's added to this whole process is a, what we call a relative value assessment, which is what is the yield on this particular investment relative to other similar investments. And our analysts will put what they'll call a performance rating on it with performance rating 1, you know, as you would imagine being their most highly convicted idea for performance and 4 being the worst. And obviously our jobs is going to try to skew the portfolio to those performance rating 1 securities.

I'm going to pass you for a question from the mayor. Thank you, Madam Chair, and I can wait for this question, but it seems pertinent to what he's talking about. I noticed in the appendix there's some of the corporations that we're investing in that are at a BBB rating, and I'm assuming that that's because when we invested in, they were like a AAA, and because the— it hasn't matured and it's dropped. Is that— am I guessing right on that? That is— that's why we've invested in some of the BBBs.

Thank you for the question, Mayor. Uh, your policy is giving us latitude to own and purchase BBB-rated securities. So BBB-rated, if you think about the rating scale, you go from AAA to AA to single A to BBB. Those are all considered investment-grade securities, and those are all considered to be very high quality in the corporate bond space. When you start getting below BBB, that's what they call below investment grade or high yield.

So that would be BB, BB, CCC. I think the takeaway that we'd want to leave you with, Mayor, is your allocation in BBB securities is quite consistent with high-quality portfolios. You have a 10% limit by investment policy, and I can give you an example of a particular bond that would fall into that category. Let's see, perhaps I think the Goldman Sachs has got a BBB rating on one side, which is certainly a well-known name and a high-quality issuer. So hopefully that answered your question.

Yes, it did. Thank you very much. Okay.

Any other questions on just how we think about investment process and how we start to build an investment portfolio for fixed income? Go ahead, Mr. Brooks. Thank you, Madam Chair. Just more so, how has the atmosphere been in the investment world with the volatility of the stock market over the last year or so? Has that drastically impacted the model that you guys are so used to, or have you adapted accordingly and things have been smooth?

Or how has that impacting what the work you guys do. Thank you for that question. Yeah, I think it's a natural segue to move to slide 15, and I had an interesting question from a client similar to that not that long ago when she asked, you know, things must be relatively easy now that we're past, you know, the COVID period, right? And My response to that is it's always a bit of a challenge on the investment side of things from the perspective of much like cash flow forecasting. One of the hardest things that we have to do in our jobs is predicting the future, the unknowns of what lies ahead.

And market risk and volatility is always a feature of what it is that we're trying to manage on your behalf. So I think in the environment that we're in, you know, there's obviously a lot more risks that we haven't been contemplating, haven't been contemplating for some time, one of them being inflation. But I think the good news is that your portfolio and short-term high-quality portfolios in general are in a really good place. One of the reasons for that is if you look on slide— thank you— 15 here, is that the absolute level of yields are a lot higher than they have been for quite some time. Well, what you're seeing here on the dark green line is the yield curve at the end of May, and then the light green line is the yield curve at the end of May last year.

What you'll notice is that there's been some changes to the shapes of this yield curve, but from an absolute level perspective, We're looking at yields between 3.5% and 4.5% in today's environment for short-term, high-quality fixed income, which in an environment when inflation might be as high as 3%, perhaps even 4% briefly, you're still out-earning that inflation challenge that we have. That difference, that positive difference, we'll call a real rate of return. Where when you think about prior to the— or after the financial crisis in 2008, 2009, interest rates are really low. We were not making real returns versus inflation because you just weren't getting enough income.

One of the things that we wanted to bring forward for you all just in terms of the environment that we're in, and if we had to leave you with two economic slides, to think about your investment portfolio and how to budget for investment returns, this yield curve chart and then the, the next chart after that in terms of the federal funds rate are the key charts to think about. And you'll recall on that previous slide, and we don't necessarily have to go there again, but on that previous slide where the majority of the changes were occurring were in the front end of that yield curve. You saw last year the front end of the yield curve was a little bit higher by about 3/4 of a percent. Now it's a little bit lower by about 3/4 of a percent. And that change is precisely linked, or I should say more closely linked, to the changes in Federal Reserve interest rate policy.

The Federal Reserve is changing interest rates based on their view of inflation and growth and some of the risks around that. So when we start thinking about the macroeconomic environment and we start thinking about, well, how do we position your portfolio on that duration block that we had highlighted before on that process page, it's a thought process around where we think interest rates are going and how the yield curve is going to change in response to those interest rates. Our punchline for you all besides the fact that we think that short-term fixed income is in a pretty good place, is that we think that interest rates are going to probably stay here, maybe go a little bit lower over the next 12 to 18 months, which still leaves CBJ in a pretty good place. That's a little bit of a contradictory moment to where the market is currently being priced. The market— and you can see this here on the— with the dotted blue line.

The market is kind of thinking that, gee, interest rates might actually go a little bit higher. Our view is that there's some stresses in the economy right now that will allow the Federal Reserve to be patient and not necessarily raise rates to combat inflation at this point in time. I'll flip quickly through the next couple of pages because I want to be sensitive to time and our colleagues behind us. But some of the rationale has to do with the labor market. You can see here in absolute terms the number of jobs being added to the economy has come down quite significantly post-COVID.

Last year, the net effect of it was essentially zero. This year it's been a little bit more uneven and perhaps maybe more impactful. On the next page, when you think about the high inflation environment, what's occurring is in that bright green line where the percentage of disposable income that's available Or I should say it this way.

Yes, real disposable income that's available. Just this concept of the income that we're earning today is being outstripped by inflation, by gas prices. We were chatting earlier today, you know, you can set your watch to it. I'm coming to Alaska to see you all here in Juneau again. And there's an article in the Wall Street Journal talking about how gas getting to interior Alaska is at super high dollar prices because those people had to pay for that shipment while gas prices were high.

So even though gas is coming down, they're still paying, you know, the high spot prices and the premium on top of that in order to get it on barges and get it into the interior of Alaska. That's paying $9 a gallon for gas is eating into people's real disposable income. So there's Our point to all this, and you can see some of that, more of that on slide 16, when you start looking at the earnings power— where's that slide? 19, Thank you. You start looking at the earnings power for the, how shall we say, the lower quartile income earners in the country.

They're really under a lot of pressure. There's, you know, this is my favorite chart in the pack only because if you look at that experience in 20— from 2014 to generally right before COVID that bottom quartile of income earners was really making some gains relative to, you know, those that already had everything going for them. You know, manufacturing and construction jobs are growing at quite a good rate. They were having real positive earnings. And it was all happening in an environment when inflation was only at 2%.

This is where we, we hope that policymakers can get us back to.

So I have a few more slides in here. I'm not going to go through them at, in any real detail. The risk to our view obviously has to do with inflation on slide 21. The other risk also has to do with just The strength in financial markets, when you think of NVIDIA, when you think of SpaceX, everything is going great for those folks that have allocations there. That can have knock-on effects to inflation as well.

Slide 22 is a topical chart on just Social Security. It's going to be something that's going to be needed to be addressed here the next, like, 5 years or so by Congress. That could have implications to our view as well if you have to issue a lot more Treasury securities into the market. And then as I get to the punchline before— from just again, we're getting on slide 23, we're just going through like how we're consuming our outlook, how we're thinking about that top-down part of our process and thinking about portfolio construction. You can see some of our takeaways here where that top bar is the federal funds rate.

We think it stays steady this year and then perhaps marginally comes down. We do think inflation will be a problem this year but also come down. And I would note that growth, which is that thing that's going to anchor our view here, is going to be kind of subdued. So I know that that was a lot to Mr. Brooks's question.

And I do want to make sure that we spend a moment on your portfolio before turning over the floor, if that still works. Okay, so let's get into it then on slide 25.

This is how your portfolio has performed since we started working with CBJ in 2019, and there's a couple of takeaways for you here. I'll point your attention to the middle of the page, just that 1-year trailing performance of 4.07% versus 3.75%. So that's over the last 12 months. And that's how much your portfolio has grown. If you look to the next column over 3 years, that's how it's grown on an annualized basis.

Our— so on average, each of those last 3 years and so on as you get to 5 years and then, and then since inception. Our job as portfolio managers is to achieve returns in excess of that passive benchmark index that was referenced before. That's the index that's set in your investment policy statement. And our goal on your behalf is to achieve 25 basis points or 1/4 of 1% over those benchmark returns consistently over time. I'm pleased to say we've been able to do that.

So if you look at that 1-year number by way of example, 4.07% versus 3.75%, so that's 32 basis points of return in excess of the benchmark. If you flip to the next slide on slide 26, this is a decent snapshot on how we allocate your portfolio amongst the various sectors that I spoke about before. And this might be a good spot to tie back to the, to the mayor's question just in terms of portfolio allocation. When you look at the rows in this page, you're looking at mostly government agencies, government bonds, government-issued mortgage, provincial— excuse me, municipal provincial bonds. These are all U.S. government related.

The majority of the portfolio is in this high quality or in these high quality sectors. And then we have allocations to corporate bonds. And asset-backed securities. The asset-backed securities are rated AAA. The corporate bonds have that mix of, excuse me, single A to triple B.

Okay, this is also a place just to kind of give you, give you a sense of the health of the portfolio. When you look at the fair value, $208,830,000 in fair value, versus amortized cost, $209,697,000. So a little bit of an unrealized loss. I would emphasize unrealized loss. We don't have to sell because of the way your portfolio is structured in a way that you've got your safety and liquidity objectives met.

When the market is moving around a little bit and you have some of the investments that are, that maybe work against you, as long as you're not a forced seller, that unrealized loss turns into a matured bond, and that's what's protecting the principal is all about. A couple more slides, and then I promise we will turn it over. On, on slide 27, this brings forward just your maturity distribution and how the portfolio along that yield curve is, is allocated. You can see by the bars there, it almost kind of looks like a yield curve. And then on slide 28, I like to call this the total return summary chart.

When you think about tying back around budgeting, what can the investment portfolio earn over time? The first place that you can look to is your yield on the portfolio, that top left-hand box.

4.3%. If nothing changes between now and 12 months from now, the portfolio is expected to earn 4.3%. Now, obviously things do change, but that gives you a sense of what the, the return area is going to look like. The next important piece is going to be that effective duration of 2.7. So that is how sensitive your portfolio is to changes in interest rates.

So if you think about that 2.7 and interest rates go up by 1%, the portfolio in price is going to lose by 2.7%. So if you had a duration of 5 and you go up and interest rates go up by 1%, you're going to lose 5% in unrealized losses or in total return, as they say. It works the other way too. So if interest rates start going down, then the prices of your bonds are going to start going up. So I think those are the two sensitive things that you can think about just in terms of budgeting.

How much risk are we taking in the portfolio? What's the interest rate risk? What's the corporate bond and asset-backed risk that we have? And we're obviously working closely with Angie and staff. We meet quarterly.

Just to review the portfolio and highlight any challenges or concerns that, that arise. Like I said before, we think that the portfolio is in really good shape. There's nothing in there that we're concerned about at this point. And I guess with that, we're happy to answer any other questions that you may have.

Any questions for Mr. Salente and Mr. Brooks? Thank you, Madam Chair. Can you just touch briefly on the top issuers column there and give a little explanation on that, please?

Sure. Thank you for that question. So the top issuers you'll see are Freddie Mac, Federal Farm Credit Bank, Fannie Mae. Those are the U.S.

Government-sponsored agencies, as they're known, if you're familiar with those agencies. So those are all very, very high quality, important systemically, really to the health and well-being of our, of our country. When you think about what Freddie and Fannie are doing there in the housing finance business and helping people access mortgages for their homes. And Federal Farm Credit, similarly, they're providing loans for agricultural purposes. As you start moving further down, some of the names will be familiar to you, like Bank of America Corp. That'll be a corporate bond, or corporate— a number of corporate bonds, actually, in this case.

John Deere, another household name. Where in Ginnie Mae and Home Loan Bank or other agencies as well, where it may get a little bit more nuanced is when you see the next two. Constellation Energy is probably not a household name, but they— this is one of our— you think back to that, that slide where we had our— we're working with our corporate research team. This is one of our performance-rated ones, our PR, one of our PR ones in the portfolio. It is a Mid-Atlantic, think like Baltimore, D.C. area.

Energy and utility provider. And one of the things that makes it a PR1, so to speak, is that utilities are very much exposed to how friendly their regulators are. So this happens— you think of certain West Coast states that may not be so friendly to utilities and regulators. In this case here, on that part of Delaware, Maryland, Baltimore, Delmarva as they call it, is a friendly regulatory environment. And it is also in an environment where there is a lot of, you know, you can maybe take this both ways, of data center buildout, but that requires a big energy demand pull for Constellation.

So all those things wrap up into why that exposure is there. And then finally, Verizon Master Trust. This is an interesting one. So this is an asset-backed security. And if you're familiar with how asset-backed securities work, they are essentially bonds that, much like your bank deposit, are collateralized by receivables.

Many times that could be auto loans or credit card loans. That collateralization creates a AAA rating. In this particular instance, this is collateralized by Verizon cell phone payment plans. And I remember back in the financial crisis, people would rather drive their car or, you know, they're going to hold on, they're going to make the payment on their car and they lose their home because they can't make the payment on that. I'm pretty sure in this day and age people are going to be more willing to make the payment on their cell phone and prioritize that versus other you know, potential bills.

Do you agree with that? Yeah. Okay. So, so hopefully that, that— thank you. Thank you.

All right. Seeing no more questions, thank— oh, go ahead. See, thank you. And this would be on page 26, the unrealized loss. Um, just for a reference point, Where was that last year?

It was at a gain. Oh, okay. Yeah, it was at a gain last year. I won't have that exact number offhand. The number that sticks in my head is when we went through the inflation shock after COVID.

So, you know, the portfolio went from a $2 or $3 million unrealized gain to you know, geez, $7 or $8 million unrealized loss because you basically had interest rates go from 0 to 5% in short order. And I think the important piece of it for us is why we— while we are trying to maximize the return for you, we also understand the accounting implications that that means. When, for public sector entities, when you are just repositioning the portfolio in a way that monetizes those losses. So we talk to staff about this often. When we're in this unrealized loss position and we're looking to reposition the portfolio, we're very conscious of if you're going to sell a bond to reposition a portfolio, is it at a gain or a loss?

And, you know, what's the implication if you do actually take a small loss? Back when we were in that post-COVID inflation shock environment, we were not moving the portfolio around that much because of that. Okay. Thank you. Thank you.

Thank you guys so much for being here. We really appreciate it. Mr. Learman, we'll bring you up for the next presentation.

We are falling a little bit behind. Everyone's got great questions, so keep asking them, but just stay high level if you can.

Thank you, Madam Chair. I'll keep my comments to 10 minutes if I get the thumbs up. Thank you. My name is Bill Lerman. I'm with Alaska Permanent Capital Management.

Been there about 23 years, and my whole career has been associated with AMLEP, Alaska Municipal League Investment Pool. So I'm going to take my 10 minutes and I'm just going to go through what it is, what it's used for, how it fits in your guys' portfolio or your investment sleeve. We just heard a good presentation by Insights and how it's different and why there's money in the Alaska Municipal League Investment Pool versus Insights. And then Angela Flick talk about Series 1 and Series 2, and I just want to kind of give a quick brief overview what the differences are between Series 1 and Series 2.

Am I— so what is it? And what the pool does is it commingles different entities' monies together, and we can think of it as a money market fund-like. And the difference between, it's a government money market, it has all governments, where this MLIP has credit exposure to it. So that's probably the number one difference. And I just want to kind of put down in the bottom and to understand liquidity and risk insights touched base on this in this first slide.

And if you have your operating cash, what you guys might call your day-to-day funds, we want to keep that in less risk, more liquid assets. And then as, you know, your bond proceeds, your reserve accounts, and also your longer-term funds that you might not access to, we want to risk— those assets can be risked up and put in different things. So when we look at, you know, your investment sleeve, Is it— oh, if we think about your investment sleeve and what it looks like, and what I put here is, you know, where does MLIP in your investment sleeve and bank account, you know, First National Bank, that's your day-to-day funds. And then the next sleeve, less liquidity, is your MLIP Series 1 account. And then the next risky, less liquid is your MLIP Series 2 account.

Then you go down the spectrum a little bit more, your short-term fixed income or your core fixed income. This would be kind of what Insightz is, a little bit more risky, a little less liquidity. And so we kind of think about the capital structure and where 3+1 comes in is now they look at these buckets of monies and how, you know, how much money in each one of these buckets is there. And that's what 3+1 will kind of talk about. But here I am, I'm just going to talk about that, those set, the series Series 1 and Series 2.

And, you know, what does, you know, the city use this for? And people across the state use it for reserve accounts, operating cash, bond proceeds, tax deposits, and building projects. And it's a way to separate— members always get the preservation of capital, a competitive rate of return. I'll kind of dive into that because we want to think about, you know, staff looking at what can they earn in their bank account versus what can they earn in a money market fund versus AMLEP? So, you know, it's always a thing to try to maximize yield without, you know, causing any decline in the preservation of capital.

And then the other thing is reporting with audit trails, and Ms. Flick touched on this, is because of arbitrage is sometimes in AMLEP, if they have reserve accounts or building projects, they can put it in a separate account because it can't be commingled with other funds. So this is one good opportunity to use AMLIP to be able to not commingle those funds and have separate audit trails for arbitrage calculations and things to that nature.

So looking at Series I and Series II, earlier we said Series I has been around the longest. It was established in 1992, and as time went on, Series II was established in 2023. We can think of Series I as a money market fund. With credit exposure. That's a little less risky.

You can get your same-day access to capital. Series 2 is a little less risky or a little bit more risky. There's more credit exposure in this that we can think of this as a cash enhancement pool. This was started, as I mentioned, in 2023, and one of the things I did was I spoke to a lot of entities across the state that were in Series 1 and asked them if they, if it would be advantageous to them to create a second series that was a little bit more risky. And what the feedback I received throughout the state was, they were willing to put their monies into a little cash enhancement pool if there was an additional yield.

And what it came back to, about 15 base, 15 to 25 basis points is what they were looking for in Series 2. So KeyBank manages this pool. We advise on this, and that's what this pool is about. Series 1 is the 7-day SEC yields about 3.56% because of— and the 30-day SEC of Series 2 is 3.55%. It's a very flat yield curve, but over time, we expect that Series 2 will outperform Series 1 over an interest rate cycle.

Those are the difference in the two pools. And if we're going to take and kind of look, and as I mentioned, Just kind of at a high level, Series 2 does have— this is that yellow bar. If we think about the portfolio composition, it has a lot more credit exposure into it because we're not expecting liquidity needs that much out of this pool. So the Series 2 has 44% credit versus Series 1 of 14% credit bonds. And so when we think about liquidity in the bottom chart, you know, it's a little bit longer in nature.

So just, you know, on the very right-hand side, when we think about securities 270 days and greater, Series II has 24% of the portfolio in securities greater than 270 versus Series I. So we would expect, you know, if we're taking more credit risk and more duration risk, we should have better performance over time. And when we kind of think about that in the next is, and that's what does happen over in an interest rate cycle. And when we think about the 1-year Series 2 has outperformed Series 1 by 4 basis points. And that next one, BNGXX, that is the Northern Institutional U.S. Government Portfolio.

That's just a money market, nothing special about it, but we just want to grab that as an emphasis that if you just went into a government money market fund, that would be 3.76%. So both Series 1 and Series 2, and I just want to pause on this for a second, when we think about over time, over a 1-year cycle and so forth, that if we're going to have a little bit more risk in our portfolio, we should outperform a money market fund. And that's what these performance numbers shows, that both AMLIIP Series I, Series II outperform governments. And we should also expect, because we're taking more risk in these portfolios, that they should outperform and yield more than what is at a bank deposit. So Ms. Flick had a great picture of the accounts and it had $11 million at the bank collateralized and so forth in Series 1, Series 2.

And as you— for you guys to look that the money's at Insight, they're taking more risk, should outperform Series 1, Series 2, and Series 1, Series 2 should outperform your deposits at the bank and over time. And the next page, this is just a yield graph that we put together showing Series 1 and Series 2. The green line is Series 2. And again, that started in 2023, so we can't go back in history. And, you know, there is some fluctuation, but over time that does have a higher yield, Series 2, than Series 1.

The orange, burnt orange line is the Fed funds times 60%. We think that's a good marker on where bank deposits would be paying across. And so we just use that to show that, you know, you can either hold your monies at the bank or use MLIP Series 1, Series 2 to increase yield by not giving up that much safety. So I think I'm at my 10. I just want to be— Madam Chair, trying to help out, but I just, you know, on the very last page, and I'll entertain any questions from the committee and through the Madam Chair is, you know, on slide 8, that AMLP is used across the state.

It's an investment, part of a lot of investment sleeves, very similar to you guys, and it's broadly used. Madam Chair. Thank you. Questions?

I'll ask one. The model of kind of including Alaska municipalities in a single pool, like, Are there other— is that common of like other states that they'll do it state by state? What's kind of the advantage of state by state? Yeah, thank you, Madam Chair. Very good.

I'm going to rough— I'm guessing there's probably 60 or 70 government investment pools out there. Almost every— I believe every state has one of some form or another. Some are done at the state level that are managed by the state level. This is sponsored by the AML, Alaska Municipal Municipal League, but every state has one used by counties and things to that nature.

All right, seeing no other questions, thank you so much for being here.

We'll keep rolling here and hear from 3PLUS1.

All right, thank you, Madam Chair. Thanks for having us here today. My name is Mike Abbott. I'm joined by my colleague Alex DeRosa, who I believe is online. Talk now.

So I work with many entities across Alaska. Alex works directly with Juneau, so we're going to kind of take a tag team approach to this and We'll try our best to stay within the 10 minutes as well. But so what we do, we work with the city with our Cashvest product, and essentially what that is, is we help public entities figure out how much cash they can invest and for how long. And also more broadly on the cash management side of things, we help make sure they're running as efficiently as possible, taking advantage of all the bank products that are available to them and optimizing where balances are sitting so you can make the most out of taxpayer dollars. So again, Alex is the one that has more detailed knowledge about the city and borough of Juneau, so I'll let him kind of start things off.

Thank you, Mike, and thank you everyone for giving us the opportunity to present this evening. I think Angie did a great job describing our service earlier when she mentioned data is really at the core of everything that we do. And the first data point I wanted to share with you is what we call our cash vest score. This is something that we provide to every public entity that we work with across the country on a quarterly basis. And it's a score out of 100 that measures your finance office's performance in terms of liquidity and investment management.

It's not just a measure of interest earnings. It takes a look at your investment policy, your account structure. How often you're using electronic payments versus paper checks, and really the overall efficiencies of your office. And you can see CBJ has a score of 96 currently. That's the highest of any municipality that we work with in Alaska.

And the progress over time has gone from an initial score of about 76 up to this 96. And just for reference, our average initial score is around a 55. So even from the beginning, CBJ has been a leader in this space, but certainly today through some of the changes that have been made, you all can confidently say that CBJ is a leader in the world of cash investment management, especially in Alaska. And just in the bottom right corner, you can see there the level of interest earnings generated over the past 12 months, over $10.5 million on a capped basis. Across all bank accounts, AMLIP accounts, and investment accounts.

So that's one reason why we put so much focus on this data and the processes in place. This is a major revenue source for CBJ, and we want to make sure that it can consistently stay that way. And we do that by providing data resources to Angie and her team to consistently maximize the value of cash. The next slide is going to show one of my favorite pieces of data to, to work with public entities on. This is a simple chart.

If you were to envision CBJ's balances in every account and every investment every day for the past 3 years, the green shows the most recent 12 months, the yellow shows the 12 months before that, and the purple 12 months before that. So it gives us very easy year-over-year comparisons and opportunities to have educated conversations with Angie and her staff and understand, you know, why a trend might be changing at a certain point in time. For example, currently our recent conversations have been about upcoming changes in sales tax revenues, which I understand would have gone into effect this spring, and we'll start to see some change in trend there, as well as increased project expenditures this year compared to prior years. We have quarterly conversations with the team to try to proactively plan for where CBJ can be placing their dollars between products like AMLIP, Series 1 and Series 2, the Insight portfolio, and, and any other tools that they may be interested in looking at. But at, at a core function, our goal is to get into the details of the CBJ's transaction data.

We get to see every transaction from every account. And we can break that down in a lot of different ways to have interesting conversations about what might be changing versus what we expect to stay the same and how we can strategically manage cash and banking relationships around that. I'm going to let Mike talk a little bit more about CBJ's relationship with FNBA and some of the work that we've done there over the past 3 years of our relationship. But this— one of the core pieces we always focus on as well is banking services and banking fees because we're an independent third party. We solely work with public entities, so we're collecting data on banking relationships and public entities across the country and want to share that with CBJ so you can consistently earn as much as you can from your providers there.

Okay, so on the next slide here, we have just a few stats I want to go through real quickly and I was actually meeting with the city of Kodiak last night, another entity we work with, and I really wanted to compare how they were doing to other entities in Alaska. And Alex put together this slide, and I, I thought it was really interesting to see the two differences. And for them, the conversation was they're doing a great job. Then you compare it to Juneau here, and Juneau is kind of the gold standard for what we see in the state of Alaska. And I think that third bullet there that you see is the most important.

The number of ACH payments or the dollar amount of ACH payments that were disbursed versus the number of checks. We're in a time of high check fraud. Nothing's going to change that. Electronic payments are super safe. It's a lot less time-consuming on the staff, and it's also a lot cheaper.

So seeing that large ratio, I think, is super important to just note. And it also highlights all the work that the finance staff puts into it. We can go on and on about how much money, you know, the staff is earning through investments or how much cash is invested. But I think what's really important is on a day-to-day basis, the work going in and everything that they have on their plate. And I think some of these stats here just really kind of highlight that.

If we go to the next slide. Just a few bullet points of some big wins and some things we've been working on with CBJ, mainly working with them and their bank to really make sure all balances are in the most advantageous place where they're going to earn the most interest, to put it simply. Number one job, of course, of a public finance official is safety, then liquidity, and then Third is yield, as it's been mentioned before, but that yield is still important. So making sure that within those parameters and making sure you have enough cash for your daily operations, moving that excess cash to investments, to AMWIP, great products that are available in the state of Alaska to earn as much as possible. And then that second bullet there, just showing that benefit of moving cash to those higher-yielding products versus letting it sit at the bank earning a lower yield to offset fees.

And just over the last 12 months, that one piece has generated over $35,000 in additional revenue for CBJ. Mike, if I could quickly add on that slide as well, I just want everyone to, to visualize the total balances that CBJ keeps with FNBA there. Just like Bill mentioned in his presentation, CBJ is earning more in any cash that you can move to AMLIP or to Insight for investment purposes. And on the previous slide, we showed you the number of transactions, the dollar, the amount of cash and dollars that flow through CBJ's operating checking accounts. Yet with that consistent diligent management, Angie and her team are keeping the balances routinely under $10 million.

Which says a lot when you have the amount of activity that flows through Juneau's finance office, and it shows that they're managing this cash truly more than on a weekly basis, which is not the standard for most public entities.

Okay, so another thing that I think is really important to highlight is fixed income. You know, we went through a long period of rising rates and a lot of entities that we worked with or begun working with kept a lot of their cash in liquid accounts. And it's really important to have that mix. The easy example I always give is COVID, you know, rates, of course, going to zero overnight. Earnings also went to zero overnight if you kept everything liquid.

So CBJ has done a great job using all those available products, having a mix. To really protect against that rate volatility. And no matter what the market is, you know you're going to have interest earnings coming through the door. And that's incredibly important, especially from a budget process. You know, if you have cash invested for even just 6 months or even up to 5 years, you know that you have interest earnings from those investments that are going to be coming through the door, even if rates go down to zero or go down a percent, whatever it may be.

So I just think it's really important to highlight that the CBJ has been doing very well in that aspect.

One of my favorite stats that we looked at heading into this presentation as well was the amount of cash that CBJ has been able to keep in investments, you know, in lieu of those lower rate bank accounts. And compared to the first year working with 3+1, CBJ is now keeping about 35% less cash in FNBA accounts, which means even more cash in AMLEP and in Insights Investment Portfolio. So the goal is to keep proactive planning so that we can consistently have a plan to make sure that this cash is moving to higher-yielding places, but also coming back to FNBA when there are times like this year when there's increased project spending and potentially reduced revenues from changes in sales tax patterns.

The next slide shows just an easy-to-understand picture, another breakdown of a few different versions of the conversation we've had tonight, where the purple region represents cash that CDJ has in the Insight portfolio and AMLIP Series 2. So those are the products that, you know, aren't immediately available unless there was a very significant need for CBJ to pull out those funds. So I kind of consider those CBJ's longer-term or at least midterm investments. The blue is liquid cash that's earning a high rate, an investment-grade rate. That's your MLIP Series 1 accounts.

So you can see CBJ does an excellent job. As cash positions go up, more cash flows into those accounts. As the cash position comes down, that balance is adjusted. And the orange are, are your traditional bank accounts, the accounts that are not earning quite that investment-grade rate. But what I will highlight, even in that orange section, previous to working with 3+1, CBJ was using much of that cash to help offset banking fees.

Today, CBJ is using the majority, if not all of that cash, to earn interest and then use that interest earnings to pay banking fees. And there's a net benefit to doing that, and that's generated tens of thousands of dollars in additional revenue for CBJ in recent years because of your willingness to take that approach and truly focus on the net result rather than just trying to offset fees. So doing deeper dives into the data on banking fees in addition to bank services is part of what we work on with CBJ and one reason why we helped issue a request for information on banking services back in 2024 just to continually confirm that CBJ is comfortable and confident that they're receiving market competitive products and value from their banking partner. And that process certified that for Angie and the team at that point in time.

The last slide I really want to show you all tonight is just one last comparison. Something that Angie mentioned early on in the presentation was related to CBJ having a, a central treasury function. And in the world of liquidity management and investment management, that truly is a gold standard. At 3Plus1, we work with counties, cities, schools all over the country and review their banking and investment relationships. Time and time again, we see that those entities that have fewer bank accounts or consolidated centralized treasury functions that separate the banking and investing from the accounting world are able to do so much more in fixed income investing and LGIP investing like Juneau does.

So the, the far right column on this table shows you that the most important stat here, percentages of cash balances that are invested in fixed income. As the entity with the least amount of bank accounts here, Juneau at 16, or I should say bank and investment accounts combined, 16, you all are keeping the highest percentage of your cash invested so that that central treasury model that CBJ uses truly is the gold standard that we wish more public entities were able to do from an accounting and banking standpoint. So we really wanted to highlight that as a strength because it is something that I think a lot of entities take for granted when it's the norm for them, but it is not the norm across the country in any way. So one of many things that CVGA does very well compared to others around the country.

So with that, we'd love to take any questions that anyone has. And again, we'd just like to thank you for the opportunity to share a little bit more about how our data helps Angie and the team work with the partners that you saw tonight, continually maximize the value of taxpayer dollars.

Thank you so much. Questions from the assembly?

Seeing none. Thank you guys so much for being here. I been on the assembly for 6 years and I learned a lot tonight that I hadn't heard before, so I really appreciate it.

Um, Director Flick, do you have any last comments?

Sorry, thank you, Chair Wall, and I will, um, I'll be quick. Um, so, um, you know, we already talked and you've heard it a lot tonight. You know, we really focus on keeping taxpayer funds safe, ensuring we have cash when we need cash, and then earning as high of a yield or income as we can on, on the funds. Some of the things that we want you to know we're actively managing Um, with our central treasury, um, the school district and Bartlett do a lot of their own processing of payments.

In their processing of income coming in. And that requires us to just really, truly actively communicate with them and manage and understand what's in, in kind of their near radar. And, you know, those are relationships that we just continue to foster and work on.

As Mr. DeRosa mentioned, we work actively to keep our bank account balance as low as we can. With some level of comfort, because as you know, we are still very conservative. But that's, that's something that we, we are managing daily. We are making regular weekly transfers from our AMLEP series into our bank account, and we'll be making transfers the other way now as we near property tax season and all of those, those funds coming in. As you heard tonight, we meet quarterly with 3+1 and Insight to review our data and our performance.

Performances, and then Juneau is active on the AMLEP board. I'm on the board there, so very active in understanding what the AMLEP series are doing, how the portfolio is being managed. So it's not a set and forget. We do actively manage all of these transactions and these accounts. One of the questions that we often get is, how do you allocate interest amongst everything that's going on.

So just at a super high level, with the exception of the Vanguard account, which is really focused on the library endowment and the Arboretum endowment, um, all interest earnings flow into the general fund. And then we look at enterprise funds and special revenue funds and their average balances, and we distribute interest earnings out to them from the general fund. So as we've talked about over the last couple years, our, um, budgeted interest earnings are based on expectations. We have a regular conversation with Insight, um, I will say it's taken a couple of years for us to more fully embrace that advice instead of saying, oh yeah, sure, let's bring that back down. There's no way we're going to get those returns because they're accurate most of the time.

And so we've, we've been, you know, honing in our budgeting on what we think our investments are going to bring to us in a return. But then we also have to balance that out from a general fund perspective on where we think balances in those enterprise funds and special revenue funds are going to be. So it's, it's a combination of, of budgeting from a general fund perspective of where do we think the portfolio is going to perform and also how much of that interest are we going to have to allocate out to other places. And so that's, that's the balance game that we play internally as we're budgeting and, and trying to set expectations, but also ensure that if the market does take a turn that we're not putting our programs and, and budget at risk from a revenue perspective. And with that, I thank you for your patience tonight.

I thank you for our investment team and advisors that we work with on a regular basis for being here in person and online.

Any last questions on this topic from the assembly?

All right, seeing none, thank you for that great overview. That was very informative. For us, we're going to take a 10-minute break. So see you back at 7:13.

All right, I'm bringing this meeting back to order. That brings us to cost allocation updates. Director Flick.

Thank you. I can run through these presentations relatively quickly, um, and I will do my best speed talking for you. We'll give all of this its proper attention.

Um, cost allocation. So this is not something that an assembly or an elected body normally deals with, But we want you to be aware of some changes because CBJ has this governance structure with appointed people working, overseeing different departments. And I suspect that you may hear some things over the next few months, and certainly by the time we get to budget season. So we just want to make sure that you've got some information in your pocket about things that are going on with the cost allocation. Most importantly, we have a new vendor.

Talk about a little more, a little bit more about that in a minute. Because we do have a new vendor, we looked at our methodology. We've got some things that are changing, and you all as the assembly do hear about the cost allocation during the budget season. For instance, airport talked about it grouping in the full cost along with insurance costs. Together in a couple of the pages of their presentation this year.

Eagle Crest talked about the cost allocation and how it relates to their general fund subsidy. Docks and Harbors talked about the cost allocation and included that also with landscaping, building maintenance, insurance, fleet maintenance. And so it's definitely— it comes up throughout the budget process in various forms. So As I said, we want you to have an understanding of kind of what's going on and what's changing. So what is a cost allocation?

Oh, Mr. Steininger,. Sorry to interrupt your flow. Thank you. Just looking at the docks and harbors table because it gave that history graph, so it's kind of easier to see like which components were growing. And the others didn't.

Is the Docks and Harbors, that history, is that pretty representative of if, you know, we looked at Eagle Crest increases, are they roughly in line where it's an explosion in insurance and, you know, the others are kind of growing at a normal-ish rate? I think you could probably take this as a fair proxy for everyone across. So the bottom gray part is what they labeled as interdepartmental, and that's really the cost allocation piece that we're going to talk about tonight. Insurance exposure is going to change, you know, based on the various departments and the things that they've got going on and how much property they have and how many vehicles they have, things of that nature. But, you know, I think it's probably fair if all of them were to line their costs up this way, they'd probably see something similar inside.

Yeah. So what is a cost allocation? In the broadest of terms, it's taking all of the behind-the-scenes costs that's needed to run an organization and allocating it to— back to the organization. So it's the organizational leadership. So whether that's assembly cost or manager's office cost or clerk's cost, it's the legal services, law department, it's human resources.

Really from the people side. So not talking about insurance like we're set up, but like hiring people, working with employee relations, and then it's financial services, whether that be accounting or treasury or purchasing. It's all of those behind-the-scenes things that you need to have in order to have an operating, functioning government. And so those costs are gathered up and there's a plan that's set up and they're allocated to all departments and all funds. However, we only actually charge non-general funded sources, and we do that because all of these central behind the scenes, behind the scenes functions live in the general fund, and it doesn't make sense for the general fund to charge itself for the services that it's providing to itself.

So you see that come through in the budget presentations in the enterprise funds and the special revenue funds, and not necessarily in the general funds, although we do allocate that cost. We, we assign cost to all departments. We only charge those enterprise and special revenue funds. So you'll often hear people say, why doesn't everybody get allocated a cost? They do.

We, we know how much that cost goes around, but we only charge the non-general fund sources. So things that are not allocated through a plan are those discrete services that you can tie to an action. So like the easiest one to think of is we have a fleet services area, right? So you can take your, your city vehicle and fill it up with fuel. Well, we know that that city vehicle belongs to Department X, Y, or Z, and we know how much fuel they purchased.

And so they are charged directly for that. When we think about health benefits, the active employees generate a cost for those departments. And so where there's a very discrete service that you can tie to an active consumption, those things are charged directly and they're not included in this kind of central full-service cost allocation.

Mr. Brooks. Thank you, Madam Chair. So the, the things in this list wouldn't be under like the commodities and service line in any of the budget material. So the, the cost for that— do I mean, just look at my phone a friend. You will see these, these costs as departments themselves.

Which will have personnel and commodities and services and capital, but as they show up in various department budgets, you'll see it.

Thank you, Assemblymember Brooks. Departments are still charged for the list of costs that you see on this slide. They are not charged through the full cost allocation. So for example, risk management, we follow a separate rate setting calculation process, before every budget cycle to determine how we charge each department for their insurance costs. That's a completely separate process from the full cost allocation.

Where you would see that charge in department budgets is within the commodities and services line. However, the next line, employee benefits, you would see in their benefits personal services line.

So depending on the— so depending on the type of cost, it would fall in the appropriate grouping.

So cost allocations come under a lot of different names depending on your organization. So here at CBJ, we call it a full cost allocation. You might have heard it referred to as an indirect allocation. I will probably slip up tonight and call it a central service cost allocation because I did that for 20 years. Overhead, general and administrative services, those So those are all kind of names that these indirect or full cost allocations live under.

So allocating indirect cost is actually a best practice as defined by the Government Finance Officer Association, or GFOA. That is the leading national organization that we look to when we're trying to figure out how to do something financial, whether that be budgeting or purchasing or accounting, treasury items, investment, you know, some of the investment stuff that we work on, we pull from best practices and materials from GFOA. That's, that is our go-to industry standard. And so the GFOA recommends that governments allocate their indirect costs, and their best practice lays out a bunch of different points on how to do that. Um, what's important to understand about cost allocations and cost allocation plans is that they're not perfect.

But if we were to try to measure and track every minute and every dollar of every indirect service and discreetly charge it to specifically who got the service, we would need to double or triple our FTE count because we would need that kind of an army to track the work of the person doing the work. And so that's why we do these indirect allocations. We find a good proxy for the services being provided and use that as a metric with which to allocate cost for that work group that's providing the services.

The GFOA best practice talks about who does it, whether you do it internally or you contract it out, how often you should review your plan. Things to consider. A couple of big takeaways is that the methodology that is ultimately used should be fair. It should be rational, and it should be consistently applied with very few exceptions in our methodology. And so those are principles that, that we hold to.

And the basis of allocation for each indirect cost should have a reasonably approximate approximation to the proportion— proportional share of the cost of services. So we should make sure that however we're choosing to allocate out a cost makes sense and makes sense for the amount of effort. And I'll just give you an example. When I came on to CBJ as the treasurer, one of the first things that we needed to do was look at our cost allocation for the next year. And so when we were looking at how Treasury's costs were allocated At that time, they were— a portion of them were allocated by the fund balance held by the various funds.

And when we looked at that, like, it took the same amount of effort to manage $10 million as it did a dollar. Like, the dollar value really didn't approximate the work effort of doing the services. And so we looked deeper into what was generating the cost and where the benefit was. It was really more tied to the transactions that came through. So with that change, we recognized that we were probably overburdening high-dollar values and underburdening large transactions, which actually created the cost and created the work.

And so that was a change that we implemented once we kind of looked at why we were making allocations and if it made sense or not. Because you should always have access to the materials, um, the best practice on indirect cost allocation link is there.

Um, just getting a little bit into the weeds, I don't want to dive too deep, but you should know there are multiple kinds of allocations. So at CBJ, we do a full cost allocation. We also have to prepare what's called an OMB cost allocation, and this is referencing to the federal OMB Circular on cost allocations for federal programs. It's slightly different. It requires that you exclude certain costs.

Um, really, from a CBJ perspective, the airport is the biggest one that uses the OMB rate as opposed to, or allocation as opposed to others because they are so heavily FAA regulated and funded. Federal indirect cost rates, which is something that we will be getting in place, and that again will impact any federal grant that we have, but we're going to flow it through the FAA for the airport. And then we also have here our marine passenger allocation, fee allocation, that is another type of cost allocation that we do. I'm gonna jump on the question. So do we use one consultant to give us 4 different cost allocations?

That is correct. And do— are they all just a percentage, or are they way more— are they all more complicated than that? Uh, they are all more complicated than that. Um, and so each of, each of the cost cost centers, if you will, and that, that could be pieces of a, of a department, pieces of a division, determines the most reasonable way to allocate their cost. And so the full cost allocation is its own separate plan and uses certain metrics.

The OMB cost allocation is very similar, but it has to exclude certain pieces. The federal indirect cost rate for grants, that's a whole other animal altogether. And then the marine passenger fee allocation has very specific requirements around it. So they're, they're similar in that they're all cost allocation plans. We're using the same consultant to do it, but they do have different requirements and different bases for allocation.

Little touch on history. We know at least 6 years ago, maybe longer, CBJ calculated all of our cost allocations in-house. When the CLIA settlement came into being, A consultant was brought on board to do that for lots of really good reasons, and we've used a consultant ever since. We, in last year, because it's good practice to go out and rebid services, make sure we're getting the best services for the best price, we did an RFP for this bundle of services, and in the end, a new consultant was selected. Since then, we've been reviewing allocation methods to make sure that they're explainable, they're attainable, things we can actually measure and work with, and that they make sense.

We've worked through the full, full cost allocation plan, and we'll be working next through the OMB plan, the marine passenger fee, and then the indirect cost rate for federal grants.

So it's important to understand what data is driving these cost allocation rates. And so when we talk about our full allocation, full cost allocation, and we talk about the FY28 budget that's coming up, we will use FY27's budgeted expenditures. So the budget that was just passed, plus any amendments, and we'll allocate it based on FY26 data metrics. So in the Treasury example I gave, we would be looking at the FY27 budgeted expenditures. And we would be looking at how many transactions were processed in '26 by department or fund source.

That's different than the cost allocation plan, the OMB cost allocation plan. So for, um, the '28 budget, it will look at audited expenses. So '25 will be the last audited expenses that we'll have available in the next few months using '25 data metrics. So it is on a serious lag The cost allocation is always on a lag, but the OMB plan is on a bigger lag, and that's primarily due to the requirement for it to be based on audited expenses rather than budgeted expenses. And truly, that only impacts the airport right now in our world.

One of the things you should know is that often one of the data metrics that we use to allocate costs are FTE. It's easy to measure. We know what's going on. Actually, as we work through this process, we have more complicated metrics that we use, and we looked at those and then we said, well, if we just use FTE, how close or different is it? And, you know, because we don't want to overly burden ourselves tracking things just to track them if there's another metric that we already have to track and know.

And so we did that just as a, as a reasonable reasonability test, and if it made sense to use FTEs rather than a different metric. We did that, but oftentimes the amount of service a department provides can often be tied to just how big, how many people are involved, things of that nature. And so of note, because in FY26 Eagle Crest had a big jump in their budgeted FTEs, we would expect next year their cost allocation to be a bit higher because their base is higher. And so I just want to throw that out there because we know that that's an organization that we've been talking about a bunch. Yes.

I'm glad you pointed this one out because it caught my eye because I was like, well, you know, that doesn't seem fair. They had a bunch of, you know, FTs in FY26, and so they're going to be charged in FY28 even though we've reduced a lot of those FTs. But you could also make the argument that in FY26 they were paying a much lower rate than they should have been if it, if it kind of caught up live. So it all kind of evens out. Is that, is that like a—.

That is correct. So a way to think about it. Yeah, indirect cost allocation plans are not perfect, but they do generally kind of wash themselves out over time. And so one of the things I, I don't know if it's on this next slide. Yeah, I'll go to the middle of this slide.

One of the things that we do internally is a 3-year smoothing so that nobody sees a huge spike up or spike down. So we'll figure out like what should this year be, but then we'll take a 3-year average and that's what's implemented. So where there's big increases or decreases, you don't realize that for a full 3 years because we don't want to shock anybody's system, especially when we're talking about non-general funds. There's an expectation that there's rate setting to bring in revenue to cover the cost of running that department, and so there needs to be time for an organization to adjust. Mr. Steininger, do you have a question?

That more or less answered it. I was, I was going to ask, you know, in the Eagle Crest example, if that ends up being just a, you know, 1-year blip, you know, kind of what's the best way to mitigate that? Is it making an exception to a rule, or is it a general fund appropriation to cover that portion, you know, shifting money around the budget? Some other way. You know, the 3-year smoothing though basically answers that.

It probably won't be a crazy spike for them, will it? That's correct. And, and going back to the best practice, like, we, we don't want to make exceptions in the methodology. So if for some reason it does feel like a bigger spike than maybe we would anticipate or feel comfortable with in this particular example, probably an additional one-time general fund allocation to offset would be an appropriate way, because we wouldn't want to go back and start just tinkering with the model to get a number that we want, right? Because we want that reliability, that consistent application.

So as we kind of look at what's next, we've done a thorough review of the methodology and adjustments with the departments, and we've looked at— we've worked with the departments providing the services to update the methodologies. CBJ management has reviewed it. We've done a cursory kind of look at what we think is going to happen for FY28 allocation. There are going to be some departments that see increases, some departments that see decreases. As with any change, we would expect that.

The other thing to know is that the base— the base cost that we're allocating, so that FY27 central departmental expenditure base has been increasing over the years. If you can think about, you know, MEBA contract increases, you can think about inflation over time. We've had some scope increases in general fund departments, in those central— sorry, not general fund departments, but in those central service-providing departments. So all of those will come together to have an overall increase. In the base that's being allocated.

And as I just mentioned, we do a smoothing so that nobody gets huge shock within the first year. There are a couple of significant changes that are increasing the base, and they're around property tax and sales tax. The prior consultant had recommended excluding those from the base. Looking at other governments and working with our, our new consultant, It's actually more common than not to include those functions and part of the base allocation. They're part of the, the general organization and functions of the city, and so those cost bases will be included as we work through next year's, for the FY28 budget process, where they haven't been included in the past.

So again, that's, that's a base change And then on top of that, there'll be the allocation metric change. So what we're doing is making sure that you're aware that changes are happening. I expect that, like I said, we will hear about this during the budget season, but you may hear about it before. We didn't want you to be caught flat-footed or without information. We're going to begin meeting with the receiving departments, so departments who are actually charged, to help them understand the changes that are coming.

What we anticipate that would look like for them and their department. And so we just want you to be prepared in case, particularly your empowered boards, reach out and want to have a conversation.

And that is cost allocation in a nutshell. Any questions?

Seeing none, let's keep moving.

For more information items, ERP and EDMS.

This I am so excited actually to talk to you about because this is like going to move CBJ into the current century, which is going to be so cool. It is going to be painful and it will be fabulous. We're talking about alphabet soup, ERP, EDMS. ERP is just the slang, super cool hip term for enterprise resource planning, which also are 3 words that don't necessarily mean a lot. But think about all of the systems that go on underneath and behind the scenes to make an organization function.

So similar to we just talked about the cost allocation, right? So we're talking about the systems that take care of human resources and accounting and billing and payroll and cash and budgeting and various taxes systems that we use. We use Infor Lawson and we use Harris Govern. And so those— and then we also use Yuna, which is a fairly new system that we're using for budget. That one's not changing, but the applications and processes that you see on this screen are supported for— through Infor Lawson and Harris Govern.

And we're looking to update those, and we'll talk a little bit about why in just a minute. But that's what the ERP stands for, and so we'll hear more about this as we go along. EDMS is the electronic document management system. It is an application, so it's a software that allows for document storage and organization, and they're set up by document type like invoices or position information or journal entries. And these document types are set up with indexes that get filled in so that you can easily search and retrieve pieces of data more efficiently.

Their security is set up by document type, so there'll be some document types that I can access completely, write to, you know, write them, save them. There are going to be certain documents that I can't access at all because it's not appropriate me for me to have access to them. It's an enterprise-wide system, so those who need to be able to access various document types would have access. A good EDMS cares for retention control, so there's certain lengths of time with which we have to keep certain documents, and it will help care for that. It will take care of workflow process and allow for like approvals, whether it's system access or invoice approvals, things like that.

It provides an audit trail. Who touched what? Who did approvals when? Um, what does that look like today? A lot of paper, a lot of file cabinets, a lot of desk drawers.

We've got some electronic stuff on shared drives, network drives, share— SharePoint drives. Um, but really we are looking to, um, get an application that will be robust enough to care for document management needs across the city. Our initial focus though is going to be on those document types that are related to our ERP system. So purchase orders, invoices, physician records, journal entries, employee records, things of those natures. And the reason why we're doing these together is that a modern ERP system will have integration with a modern EDMS system.

So if you're in looking at something and you're like, oh, there was a journal entry done. You hit a certain sequence of keys and it'll pull up that journal entry for you automatically with all the backup. And so in order to fully configure our ERP system to be efficient, we need to get this data management— this document management system up as well. So why are we doing this? It's not because we want to.

System implementations are necessary, but they aren't necessarily the very definition of fun. N4 Lawson is at end of life and we will lose all support of it on December of 2030. And so this is not because we want to, it's because we need to. And we have to go live and be operational before we lose our, our support on N4 Lawson. This is going to have an enterprise-wide impact.

It's, it's a high impact, therefore we're managing it as if it's high risk. We have another city within the state who did a very large implementation that didn't go very well and cost millions and millions and millions of dollars and was in the paper and consumed a lot of their assembly's time. We would prefer to give you cool updates periodically and let you know it's all going well. And so we are managing this project with that kind of high risk perspective. ERP systems are expensive, they just are.

And so there will also be some resource conversations that we will need to have with you as we're going. They're time-consuming. For some of our staff, it's going to be, hey, can you spend an hour testing this thing next week, and then we won't talk to you again for a couple months, and then we might ask you to spend a half an hour doing this thing. For other staff particularly subject matter experts, this is gonna be nearly full-time, if not full-time, for a period of time. And so we need to make sure that as we're getting towards implementation, we set ourselves up to not kill off our staff in the process of, of building this system.

And so we'll be figuring out what our staffing kind of supplement and needs need to be in order to implement this correctly and on time. And still have, um, staff that love to be employed by CBJ at the end. Um, the other thing is we have to reduce the amount of manual processes that exist. Um, it is crazy the number of things. It's like, can't we just— no, actually we can't, um, because we don't— our system doesn't do this.

You have to do these 25 steps to get half of the answer to your question, and then here's the other 30 steps to get the other half, and then Often Excel, you've got to marry those up and try to figure it out. And so we just, we have a very, very manual system. We function with it. We've, we've learned to deal with it, but we definitely need to have a system that has less opportunity for error by reducing the manual processes. Some things that we're going to do and some things that we're not going to do.

Let's start with the not. We are not out to get a gold-plated, coolest system with all the bells and whistles and the racing tires. We are not out to buy a system and then rewrite all the code to customize it to do things the way we do it today. So what we are going to do is get a system that we need that's going to meet our basic functions with an eye towards areas where we know industry may be changing or we may have to adapt to changing requirements. We are going to adjust our business processes.

We might have to talk to you about adjusting code. Before we— like our ordinances— before we go rewriting system code and customizing. The reason why you don't want to customize is it prohibits your ability to upgrade and manage security and do those things in the future. And so we really don't want to get a system that can't handle minor changes and upgrades over time to maximize the life of our investment. We're gonna, we're gonna work on processes, integrations, and procedures to really maximize the efficiencies that we're going to gain from a modern ERP.

So like I said, we're doing so many things manually. If we can, you know, just adapt and change, which it sounds so easy but is change management, it's going to be a thing. We're going to work through that and really just gain the efficiencies that a modern system has. To offer us. And then part of the way that we're managing our, our risk and managing the process is that we are working through requirements gathering.

We're going to, you know, again, that, that active management from an executive level as well as the project team level, looking at those requirements, the solicitation, and the implementation to make sure that, that we're just staying on time, staying on task, Managing scope creep and just really, you know, keeping focused on getting to the end goal. From a timeline perspective, we are kicking off next week. We have a project manager in place that is going to help us work through our requirements gathering, get us to a scope of work that we can include in an RFP, get that out, help us work through vendor selection and demos and all of the things that go along with that. We will do requirements gathering for both the ERP and EDMS and probably the RFP at the same time and start the implementation. But the document management system should implement much quicker than the full ERP system.

And so while we'll start those at the same time, our hope is to go live with the ERP in July of 2029, which would be fiscal year '30. That's our goal. That gives us a buffer for all things to go sideways on an implementation because they have a way of finding ways to have surprises that you couldn't possibly imagine. And also then care for our post-go-live support. So we're not done with this project when we go live.

There's always a punch list of things that have to happen afterwards. So again, the point of this presentation is just simply to make you aware, let you know what's happening. It's, it is in a lot of ways going to revolutionize some of those back office processes which aren't sexy or glamorous but are definitely necessary.

Ms. Atkinson, then Mr. Kelly. Thank you, Madam Chair. I have to ask just because this is great. I'm glad that we're going to have less paper and filing cabinets, which I'm sure will be easier. But when I hear words like modernize and less manual processes, I just have to ask as any of this implementation going to include AI?

Thank you for the question. And the answer is certainly there will be some AI built in there because your phone has AI, Microsoft Word has AI. So there will be elements that exist. What we are not looking to do is remove human thought realization, um, judgment from any process. But there are a lot of things that, um, through basic matching and logic, um, can certainly, um, optimize some system areas.

When I talk about modernizing, I am actually in a lot of ways talking about basic functions. We don't have APIs. There's a lot of things we can't even do because we can't rationally take in data or pull up. We have an Excel sheet that we type into to do our bank reconciliation and then download a statement and like do things. A modern ERP will be able to, through an API, pull in our bank information.

It'll do basic matching and say, hey, you know, these things don't match up. We spend your time solving these problems instead of building things to do the manual compare. So those are, yes, there will be some AI, but we're not like looking to AI the world out of this system.

I'll just make the comment then, because I understand that AI is in everything and I would love to have a turn off AI button on my devices and that does not unfortunately exist. But I would be really concerned if we started relying in any way upon it or using it too frequently, just even from a security standpoint, a lot of concerns, an accuracy standpoint. So glad to hear we're not planning on focusing on that. I just had to get my two cents in there. Thank you.

Mr. Kelly. Thank you. I think conceptually this sounds great that we would be— it sounds like we would be transitioning to a more efficient way of doing things.

Leading up to it, though, is going to— sounds like it's going to involve a lot of staff time and a lot of resources. I'm wondering if there's some way, if this wouldn't be too much of an extra burden on top of all of that, to kind of quantify that for the public and kind of give them an idea, like, this is how much time and resources we're going to be investing in this. But all the— we won't have these 50, or maybe it was a 20 plus 30, yeah, 50 processes to get to go through to answer a full question. And so it'll be— we'll be saving this much time and this much money in the future. If there's some way, I think, that we can quantify this and justify this for the public without causing too much additional burden on staff, I'd really like to see that.

Thank you for that comment, and, and I'll, I'll just take this opportunity to say, um, some of, some of the efficiencies that we're going to gain, we can probably quantify. There are a lot of efficiencies that, um, are, are some of those soft savings that you're— that are hard to quantify. Um, We have, um, we will be talking about this again, um, in, as I said, kind of multiple spots. Um, one of the things that we do not have is a budget to procure a solution. And so one of the things that I anticipate us having a conversation about is, here are the things that we're going to be looking for in a new system.

As if we can quantify, like, here's where we think we're going to, you know, see benefits. And obviously we're not We're not doing this project just for the benefits. We're doing it because we have to get off of what we have today. But we'll also be talking about cost and what we think that looks like on the other side. There will certainly be a lot of— there will be a fair amount of staff resources used over the next several months as we gather requirements.

But when we actually turn the corner in selecting a vendor or vendors and configuring the system and loading it with data and running tests, we're going to have, we're going to have some increased costs and increased staff time, likely increased staff that will then come back down on the other side. So, so we can try to frame some of that. I just, I do want to level set expectation that much of the efficiencies are going to be hard to quantify, but we will definitely keep that in mind as we, we bring solutions and progress reports up to you. I appreciate that. Thank you.

Um, Mr. Steininger, then Miss Hall. Um, thank you, and I want to say thank you for including in the CBJ will and will not section that we're not going to customize the system to match what we do and that we are flexible to changing because Having worked through the ERP change process at the state level and an ERP change process at a private company before that, that is the most important piece. And like, stay— you will have every, every person working for the city trying to get you to fold on that. Stay strong and ask us for what you need to stay strong. And you know how we have to change code or change process at our level.

Because that is huge to the success, having seen failure before. Um, yeah, this is a huge project, and thank you for even stepping into it. I might run scared if I were you. I, I thank you, Mr. Steininger. I, um, I also have the experience of a major ERP implementation at Maricopa County, and I will say one of the things that lent success to that was a no customization.

And you're right, it will be a fight on various levels, but in the end, it is the right thing to do for the city and for the organization. And so, yes, if, if we, we need help, we'll be back. And if we need to look at changing our ordinances, we'll be back. We'll have those conversations. And, and I appreciate that.

Thank you.

Ms. Hall. Yeah, thank you, Chairman Mullen. You know, this is off of Assemblymember Adkinson's comment a little bit. In addition to utilizing AI, I read an article recently how this is kind of the new world, you know, hacking really hones in on a lot of these systems, and they're, you know, so You know, maybe our old way is a little more impenetrable because it's so— but by the same token, I totally understand the need to modernize. You know, like I said earlier, when you walk into the entrance and the cash office, you know, checks and cash only, and I think, oh my gosh, you know, and the drop boxes.

I read an article about, you know, people fishing checks out of those and altering them. And so it is time that it It is kind of scary and knowing that, you know, what do we still maintain a backup system of some sort or how, what's the recommendation with that? Thank you. We recently at the GFOA conference that just occurred, our treasurer attended a session on security and fraud and things of that nature. One of the speakers talked about a major incident, a security breach that happened at their organization, and all of their applications that were hosted in the cloud, so not on-premises, were back up within 24 hours.

And all of their on-location software that they ran out of their own databases, it took months to get things back up and running.

And that's not necessarily to, to foretell where we're going. Most solutions today are not on-premises. They're, they're cloud-based solutions. There are good things about that. There are bad things about that.

We will have to keep a diligence on security. Our IT team already does a great job with that. But we will, you know, again, modern ERP systems have baked into them so much multi-factor authentication. You have to be, even though it's an on, on in the cloud solution, you have to be on your city's network in order to get to the tunnel to get to the in the cloud, like however that works in, in the IT world. But there, there are a lot of protections in place and we would expect to implement that.

I know something that we did at my— at Maricopa County, we would have disaster recovery drills once a year on our ERP system. What happens if your system goes down? How quickly can your backup data be available, and can you perform all the transactions you need to perform? And so I would expect us to move kind of in that direction as part of this this new system, a new process. Thank you.

Mr. Saninger. Thank you. And I'm looking at the project plan, so it's March of '27 roughly is when we'll, you know, ideally have the scope of work and RFP. So we probably won't have a good idea of, you know, rough order of price for a little while after that, I would assume. Or do you kind of have an idea now?

The follow-on to that is, should we expect the manager to start squirreling away money into a CIP in this next manager's budget to pay for this? Because I assume it's going to be really expensive. Thank you for that question, multiple, multiple questions. I cannot tell you today how much it's going to cost. You know, I think the, the first important step we're taking is our requirements gathering.

We have to figure out what what we need, and we are going to, um, work with our project manager consultant to put those requirements into the appropriate package and lean on their expertise to figure out ballpark the dollars that we need. So to your second question, absolutely, we're going to start squirreling away money into this capital project because we can't move forward until we have funding. I mean, we can, we can do a solicitation, but we don't even— we really shouldn't even start that until we have some sort of a budget squared away. Um, and so I would expect in January, February of this coming year us to start having those conversations in an Assembly Finance Committee about this is how we want to fund it, this is where we, you know, we're going to do these appropriations now, or we're going to include this in the budget. You know, all of those, all of those conversations will be happening.

I would just add that it has been presented to me in an order of magnitude that squirreling away might not be how we fund this, but rather a direct ask and prioritizing this over other, other projects. So I don't think we're going to find enough in like, you know, savings here and there, unfortunately.

Anything else? All right, how are people doing? We have 2 more items, um, of substance, none of which we have to get to, but, um, Do people want a break right now?

Or keep rolling and see how far we go?

Don't say that. I've said nothing tonight, so I'm fine.

I think we're fine to keep going. You know, I think these next two topics will take as long or as short as you all desire them to take. Yes, that's what I'm worried about.

So I had been asked to include a memo to provide some additional context on the senior hardship exemption. This is on page 118 of your packet.

And so I attempted to do that in the memo. I want to just— I need to do my fair disclaimer that, um, this ordinance was introduced on June 8th with the direction to set for public hearing in action on July 27th. So we can talk about this ordinance tonight, but you can't actually amend the ordinance here. If you want to make an amendment to the ordinance as was introduced on June 8th, Um, you can on the 27th refer it back to committee, and we can do work in a committee here. Um, you can tonight or sometime over the next couple weeks, um, reach out to City Attorney Wright and say, hey, can you help me draft an amendment to bring on the 27th?

Um, and do that at the meeting on the 27th. You have options. The only option you don't have is you can't change the ordinance tonight. Um, so with that as the groundwork, um, this—. I ask a quick additional clarifying question.

And we can't change the trajectory of it? We couldn't hold it in committee? It has to go for a public hearing, even though we could at the public hearing kick it back? That is my understanding, is you have to do the public hearing, and then your course of action could be to, um, rather than pass or fail it, to refer it back to committee. Um, so this senior hardship, this is actually senior or disabled veteran hardship.

It's on property taxes. So also, from a trajectory perspective, any changes that are made to this ordinance, we would want to have effective on January 1st, which means you do have some time to work with it because the property tax clock is January 1st. So if, if you decide in at the end of the month to kick it back to committee for some more work, you have time to have it still be directly impacted in the next budget cycle. So when we talk about property tax exemptions, the state requires us to provide a tax exemption on the first $150,000 of assessed value If someone is an Alaska resident 65 years of age or older, if they are a disabled veteran, or if they're a resident at least 60 years old who's the widow or widower of somebody who was a resident and 65 or older. So we don't have a choice.

That's required by the state. It is an unfunded mandate, or you can say also they don't compensate municipalities for needing to enact this. Exemptions, however you want to call that. So this particular ordinance, the subcommittee, you know, looked through all of the sales tax and property tax exemptions, and on this particular one, in the memo that you got on the April 22nd AFC meeting, the excerpt at the bottom there of 118 was, you know, hey, we should have a policy discussion about this. Here are some things to consider.

But then as part of the subcommittee's work, in order to, like, facilitate getting this in front of the body and getting work on it, we— the attorney was asked to write an ordinance using an alternate measure of hardship. And so given that direction, we kind of looked around and we said, you know, hey, right now hardship is based on the median family income, actually 120% of the median family income. But when we talk about hardship and we look in other places, it's more based on the federal poverty guidelines. And we already use the federal poverty guidelines when it comes to the sales tax hardship rebate. And we use 250% of the poverty guidelines.

And so, The poverty guidelines are also used when you're like trying to, or when you need like court-appointed counsel, or if you're applying for SNAP benefits. So it's a pretty common scale that's used in measuring hardship. So as this ordinance was drafted as a starting place for discussion, staff just said we should use the same scale and percentage that we're already using on the sales tax. Hardship rebate. And so that's how the 250% of the federal poverty guideline came to be.

On page 119, in the bottom section there, there's two charts, and I wanted to just kind of let you see side by side what we're using today is 120% of the median income and what that means for household size 1 through 4, and what 250% of the federal poverty guideline would be, and that's an annual income amount. So like, if you're looking at one person, it's— and this is for 2025— $115,000 annual income is what we're using now to call a hardship on the property tax. If we were to switch to the same that we're using for the sales tax rebate, the 250% of poverty guideline, it would be $48,000 for a single person. And there's a— the Health and Human Services has a whole chart for Alaska, and that's on page 124 of your packet.

And then I pulled the median income from our assessor application because it was the cleanest place I could find it. And we take— it's just math— 120% of that median income. And so those are there for you. And then the other change that the ordinance did in conversation with the subcommittee is the hardship, as it stands today, has no correlation to property value. And so in order to kind of put a tie to the property value, we talked about capping the exemption amount.

And so page 120 talks about that, and the— what the ordinance says is, um, if you apply— if, if you meet the, the income requirement, which is being proposed to be 250% of the federal poverty guideline, you can receive an exemption, but it'll be capped at the property tax liability of the median single-family home property tax amount. So as an example, in 2025, um, the median single-family home was at $496,000. With our FY26 mill rate of 10.24%, the property tax on that median family single-family home would be just over $5,000. So that would be the maximum tax exemption someone could get. And so on the chart at the bottom, you, um, we looked at last year's, um, 2025 exemptions, grouped them in how much property tax was exempted.

And so you can see, um, it was a total of $794,000. If we did just this cap change, it would drop it by about $50,000 to $749,000. And I've grayed out in that last column, um, the groupings that would have a change. So that was just some information that I was asked to provide. I'm happy to answer questions.

I'm really— what you decide to do with the ordinance becomes a policy call. I have Madam Mayor and then Mr. Kelly. Go ahead, Madam Mayor. Uh, thank you, Madam Chair. And just to give people a heads up, since we— I was going to hold this in committee, but it doesn't sound like we can do that tonight because I have some questions.

I'm not against the idea, I just have some questions. And the first one, I've already talked to Ms. Fleck on, so she'll have to spend some time doing this. And the question would be, if we went to the $250,000 or 250% poverty guideline, how much would we earn, save, how much would we make for— how much is that worth us, I guess, in revenue? So that's my first question. And I have another one, but we'll wait for Mr. Kelly to ask his.

Thank you, Madam Mayor. Um, you are correct, that will require some research. Basically what we'll need to do is look at all the applications from last year and look at the income with that new criteria and see how many of those folks would actually be eligible or not. And so that'll be, um, 315 applications that we'll need to review and, um, and look against that criteria in order to answer that question.

Mr. Kelly.

Thank you. I had to read this memo a few times to, to make sure I understood it, and I, I just want to make sure that I've simplified it correctly in my own head, that basically the state requirements are that we have this exemption on the first $150,000 for Alaska residents, basically these first, you know, in this paragraph here. So Alaska residents 65 or older or disabled veteran or you're over 60 and a widow or widower. But it sounds like there is a kind of fourth criteria, which is it's subject to what our definition as an individual municipality of a hardship is, and that is what one of the two things that we're looking at changing. Is that a correct simplified understanding of what we're doing here?

Thank you, Mr. Kelly. That is very close. So I think you have to separate the $150,000 exemption has nothing to do with hardship. That is basically just using the median family home from 2025. It was if, if I'm a senior and I own that exact house and it's valued at $496,000 because I'm an Alaska resident and a senior, my property tax would be based on $496,000 minus $150,000.

So $346,000. Doing math in my head late at night, it's dangerous. So my property tax would be based on that lower value because basically we subtract $150,000 from the value of your property and then calculate the property tax. Separate and apart from that is the hardship exemption. So to qualify for the hardship exemption, first you have to qualify for the senior disabled exemption that's required by the state.

So that's eligibility 1 for the hardship, and then eligibility 2 is you have this income threshold that you have to be under. And right now we're using the median— 120% of the median family income.

I think I get it now. Thank you. Yeah, absolutely.

Miss Hall, did you have your hand up? Yeah, go ahead. Then I have Mr. Steininger and back to Mayor Weldon. Okay, thank you. And how is the income calculated?

What or what documents do they submit? And does that include investment income?

That is a great question, and I brought the application in case I was asked such a hard question. So give me just a half second here.

Okay, the— it's based on your gross household income with an asterisk that Gross household income means total annual compensation earned and unearned, taxable and non-taxable, from all sources of all members of the household for the calendar year prior to the year of application. Losses are not considered income for purposes of this exemption. So that to me would speak to yes, investment income should count.

And do they submit like a tax return? How do— how's that quantified?

Or, um, that also is a great question. They do have to provide, um, proof of their income. A lot of the applicants have, um, their tax accountant help them prepare it.

Um, I— it is not screaming at me what they have to provide, but I do believe they're required to provide their income.

Mr. Steininger.

Thank you. Um, looking at the proposed maximum exemption portion I was curious, since the individuals already are getting the $150,000 mandated by the state, are we— when we're thinking about a, you know, median household of roughly $500,000, then effectively their maximum benefit would be both the $150,000 plus the $500,000, so $650,000 in property value. Does that— Question makes sense. Like, how are we factoring in the $150,000 to the $500,000? That's a great question.

I will get confirmation for you, but I believe that is accurate. So they qualify for the $150,000 and then their remaining tax bill is the hardship exemption piece. So yes, that exemption In this case, we would limit it to $5,000. So yes, I think your logic makes sense. Somebody could have a $650,000 house.

They get the $150,000 required by the state. So now it's a $500,000 house and they qualify for the full exemption. They would have a zero property tax liability in the simplest of math and form.

Beth Weldon.

Mr. Steininger just asked my question.

I'll ask one then.

Um, you know, the proposed maximum exemption, um, I think the, you know, $45,000 is a meaningful amount of money in our current climate and, um, and not a meaningful amount of money if this makes anything more complicated. Does, does the proposed maximum exemption alter our process in any way that would make that kind of a pain, or is it just kind of an easy, easy change that would net us $45,000 a year. Thank you for the question. It would be a, a change in process, but it is an easy change. We know what the median family income is, we know what the mill rate is, so just knowing that when you—.

Because the exemption has to be manually applied to the parcel, we can just ensure the exemption is no more than whatever that calculated amount is.

Any other questions?

Um, okay, well, given we can't, um, make any changes, I would suggest we, um, move on, knowing that this will be on the agenda on— at our next regular assembly meeting.

And that brings us to the ARFF appropriating ordinance.

Director Flick, is this yours? Sure. Um, the, the airport has requested, um, a reimbursement, if you will, for the cost of leasing an ARFF truck until their until their second truck is online and in service in October. The purchase of the ARFF truck is reimbursable through their FAA programming dollars. Leasing is not.

Included in your packet is the minutes from their meeting back in March. And starting in Section D, which is on page 129, is a conversation about, you know, their request to obtain sales tax dollars to offset the cost of the lease.

And so that request was was made, and we are presenting it to you here at the ASC meeting as a draft ordinance and some backup documentation.

Um, and I can answer some questions about that. Um, I think, Chair Wall, you're the liaison, you may be able to answer some questions better.

Questions, Mr. Steininger? Um, sure. Uh, so you said that leasing, leasing of an ARFF truck is not allowable under the federal grant from the FAA, but it is allowable to be charged back to the ratepayers at the airport, the tenants, and so on. So that is, it's allowable to be charged. It's not that general fund is the only option.

It's just the federal funds are not an option. Is that correct? That's correct. So where they would, and I don't want to speak too much out of turn, I think they can use PFC dollars. The passenger fee dollars to buy an ARFF truck, they can't use the passenger fee allocations for the lease.

But absolutely, it's an allowable cost. It's a cost of doing business. So it would be something that they could include in their rate setting and, and recoup costs that way. It's allowable just from an expense perspective.

Mayor Weldon.

Out of curiosity, how much does the airport have as a fund balance?

Uh, thank you, Mayor Weldon. Give me just half a second. We have recently revised their fund balance as we've worked through, as the minutes alluded to, the North Terminal CIP. Which, uh, allowed us to free up some of their debt reserve, um, restricted funds, and also return some funds to, um, to their fund balance. So we are pulling that— I'm stalling while we're pulling that up.

At the end of FY27, um, they are projected to have, uh, $1,574,100 in their fund balance,.

And that includes this expense already. That— I would expect that they would have included this expense in their budget.

Yes, Miss Atkinson. Thank you, Madam Chair. Uh, and I might be remembering incorrectly, but I just want to check. A couple years ago, they had a grant from the FAA for an ARFF truck that I believe something went wrong with, and they did not get that grant. How sure are we they're going to get the grant this time?

That is a fantastic question. Um, and you are remembering correctly that they had a particular grant And the purchase was deemed ineligible for the grant. I don't think that that was through the PFC dollars. And so I do believe that this new truck would be eligible for the PFC dollars. And I am really pulling from memory here, but they ended up needing to use their fund balance to buy the original ARFF truck.

That was no longer eligible via the grant. But I, I do think that was a slightly different funding source than what they can use, for the new ARFF truck.

I'm just gonna provide it as liaison, a, a tiny bit more context on the conversation, which is kind of in the minutes here. But, you know, I think this request came less from the airport not being able to pay for this and more from the— they had had sales tax dollars that had been put forward to the voters associated with the northern terminal project that ended up being fully funded by other sources. And so that sales tax money that had been originally appropriated to the airport came back to the city. And so I think they were, um, you know, in making their argument would be that, um, those funds, you know, some portion of that fund should still go to the airport, and maybe this would be a good project to meet the bill. So just so I can speak to what the rationale and the room was.

Any other questions?

Mr. Kelly, will you get us started with a motion?

I move that the Finance Committee introduce Ordinance 2026-01 lowercase b uppercase A at the July 27th assembly meeting.

Miss Atkinson, I'm going to object to that. I, uh, sounds to me like they have ways of paying for this not coming from fund balance. We are not in a terribly strong position with our current fund balance, and I don't think the rationale of at one point A project for the airport was given sales tax dollars and they did not need it means that the airport is owed city sales tax dollars for a project. I'm glad to hear that the actual ARFF truck will hopefully be covered by federal funds, but I don't think we're in a position to be doing this right now. Mayor Weldon.

I object. I don't need to talk to it.

All right, um, anyone else on this motion? I'll just speak briefly, um, in opposition as well. I, I think, um, Miss Atkins spoke to my, to my point, but you know, we, we— it's always a bit of a dance trying to figure out how to keep our empowered boards, um, uh, truly empowered and, um, financially independent. And so when we start trading costs back and forth, you know, we aren't perfect at it, but, you know, this is something under their management purview. So, so I think they, um, it should come out of their budget as a result.

Mr. Kelly. Thank you. Um, since I am not necessarily in favor of this myself, I was just moving us to get this along at the risk of having an all no vote. I move to withdraw my motion.

Um, motion withdrawn. Anyone want to make another motion?

We don't have to make a motion. Um, maybe for clarity for the— I mean, I, I guess I'll just make sure when I go back to the airport board that this action represents not not paying for it as opposed to not letting this sit into the future. I'm seeing head nods. Okay, I will bring that message back.

Okay, that brings us to item number 8, information only.

Thank you, Chair Woll. In your packet, you will see our most recent delinquent sales tax publication. It is there for your reading pleasure and information. It's also another avenue in which we have to make the information available to the public. And so it is there for you if there are specific questions, because these are all unique and, and following their own path.

We probably ought to take those types of questions offline and we can work with sales tax and law to figure out how much we can answer on any particular case.

Mayor Walden. I'll keep my question generic, but we are often asked why are some of these businesses that owe us lots of sales tax still in business? And I know I've talked to Director Fleek about this offline, but I want the public to hear your answer.

Thank you, Mayor Weldon. We do not have anything in place which would allow us to close a business due to lack of reporting and collecting and remitting sales tax. We do actively engage all of our legal methods progressively.

To try to get compliance, and sometimes that involves simple letters and nudging and reminding, and sometimes that takes civil or criminal charges being filed. And so we don't, we don't have the authority to simply close a business because of a sales tax issue, but we do use all of the, the tools in our toolkit to gain compliance, with those who are not.

Mr. Brooks, then Mr. Steininger.

Thank you, Madam Chair. Do, uh, does the municipality have capabilities to impose levies and liens on businesses' properties? Thank you for the question. That is a tool in our toolbox, and we do, um, apply liens Where it's appropriate and lawful, yes.

Do we exercise levies at all?

Thank you for that question. I'm not sure that we— I mean, if that's in our toolbox, we do, and I don't know the answer to that specifically. I would have to check with Attorney Wright.

Mr. Steininger. Thank you. For the list of non-filers, those that, you know, have gotten a business license but never actually filed or registered, it's my understanding from talking to some business owners, some of these are likely like business licenses they've never operated under. Is there a process that they can go through to reach out to you to ensure that, you know, a name, a business name or something is not showing up on this list and can be cleared because it's never been operated, never will be operated, or something like that. The most fantastic thing they can do is reach out to the Sales Tax Office and let them know that they are the rightful business owner and/or license owner and work with them to provide whatever is necessary to close that account.

We do have a process administratively. It's just It's long and manual to try to figure out, is this entity really in business and can we contact anybody? And so really, if there's a business owner who's like, ah, that's me and I never really put that business into motion, if they can reach out to the sales tax office and work with them to do that, having the merchant close their own account is the best way to do that.

Ms. Hall. Thank you. And would implementing our ERP and EDMS systems help expedite this process and keeping track? And. Thank you for that question.

Sales tax is one of the functions that we would hope to include in our ERP system. I will say not many municipalities have their own sales tax that they're managing. And so while I feel confident there's lots of vendors that can help us with accounting or human resources or payroll, the sales tax is one that we are— we're going to work through the process and see if— see what solutions are out there for that particular one. But absolutely, the system that we use today still has a lot of we will call them features that we must learn to work around and recognize and manually handle. And so we would love to get into a system that is a little less full of those.

All right, seeing no other questions, that brings us to the next meeting date, which will be September 2nd because we have a break for August. And with that, we are adjourned.