All right, let's call this meeting to order. Thank you. Welcome, John, John and Jim. Thanks for joining in. Aaron's on Teams as well, on vacation still. So I think we've just got this to talk about. This should be what, the third and final before we send this out to the entire board, before we've had the last two meetings, kind of narrow things down. And if you guys want to take the lead, John, have at it. Thank you very much. Thanks. Thanks, everyone, for your time this morning. So this is our third meeting of this. And again, the intention here is this would be the draft. We do have a final edit based on today's discussion. If we, with respect to the mix, the view of us versus mix two, that based on the outcome of that, we may delete some slides from the appendix to kind of simplify the message. But John Furrow, again, if you're with us, he's out of our San Francisco office. He works on the capital markets group and then, of course, general finance. So we appreciate everyone's patience. This is one of the most important decisions you make as a trustee with respect to the overall allocation and the asset structure. So we're delighted to be nearing the end of the project. We think we made some great progress. And Jim O'Connor is going to help us advance the slides. Jim, if you want to touch the next slide. Okay. Let's see here. Okay. So, again, today we're going to do two tabs. One is the asset liability study. The executive summary, again, this is the overall. And then we have the asset allocation. And then Jim's going to spend a moment or two on a couple select slides from the liability portion to kind of explain that to tie it all together. And then with respect to the international equity structure study, we do have a little bit of discussion in terms of what the committee feels is the preferred approach. And then we'll highlight that while we make the presentation to the board. And let me open up to any questions. Again, whether you have a question now that we can get in advance or at any point in time during the presentation, please feel free to stop us and ask your questions. So with that, any questions? Okay. John Crum, take it away. Hey, thanks, John. Good morning, everybody. So we'll hit the asset liability study first. And so the key findings are summarized on page three. Okay. So where are y'all now? Right now y'all are actually over 70% funded. This is the end of last month. So what we did was we actually put in your current asset value. Actually, is it $1,015,000,000? Yes. Crack that $1,000,000,000 mark. So $1,015,000,000. That's on the asset side in there. So that's it. Over 70% funded right now. Just as a reminder, in terms of your current policy, we're projecting this going to return a little bit over 70% a year over the next 10 years. And just a reminder, too, when you look at kind of the actuarial side of things in terms of what the actuary is projecting we need to get, right, they're projecting 7%. So your current expected return is north of that. If we just focused on your current policy, remember you're about 73% funded right now. And so what we're doing when we project things is we look out over the next decade and essentially look kind of year by year and say, okay, we look up 20, 35, 10 years from now, what do we project the funded status is going to be? And so we project that from 73 you all go up to about 90% with the current policy over the next 10 years. And that's really a combination of two things, right, as you all are well aware. You guys are making material contributions to the fund, right, to make up that deficit over time. So that's obviously a key lever in terms of getting yourself to kind of 100% fully funded. And obviously the other piece of the equation is what we're focused on today in terms of investment policy, okay. And just a high level reminder from the past student meetings that in terms of accounts projections that we view, again, we're not looking in the reviewed mirror. We're trying to look forward over the next decade. That reminder that, you know, we think about fixed income expected returns that we think are much more favorable now going forward. And we've talked about that at some length in the previous two meetings that, you know, fixed income is your defense in the portfolio. That's kind of your anchor that controls the risk. Or if you have a period, remember, like, say, in 2008 where the equity market declines materially, right, that's going to be the piece of your portfolio that's going to protect you, right. So, again, we think fixed income is quite a favorable asset class right now. And as you all remember, that's reflected in kind of the recommendations in terms of, hey, you know, maybe we take a little bit of the equity off the table and diversify by adding in the fixed income, okay. And that's the bottom of the slide there, right, where we kind of left things off, you know, two or three weeks ago. I think the committee was on board to kind of migrating away from the current policy and adding a bit of fixed income. And I think what we'll kind of, the one kind of fork in the road we want to kind of put away, if you will, is how we actually want to do that. Do we want to increase the fixed income by taking it just from the international equity, which would mean the portfolio has a bit more of a tilt to U.S. equity in the portfolio, or do we want to do it in kind of a balanced fashion where we take equal amount, take proportion amounts from U.S. and international equity to fund the new fixed income. So that's kind of 30,000 feet. But let me pause there and see if we can take any kind of initial questions before we dig in a little bit. There's none here. Okay. Very good. And, yeah, we're just going to hit the main slide, because I know we did a lot of this stuff in the past. But just, let's just hit 10 real fast, just as a reminder of where you all are. Right. So, and in the, so I've updated, you see the table at the lower left. So I've updated that to reflect, again, your current market value, as well as the actual liability as of the end of last month. So that's where that 73% ratio is coming from. Again, the portfolio, those blues are your equity, right? So what we're talking about here is shaving that down on the margin and adding a bit more of the core fixed income, that green, right, which is kind of the defense in the portfolio. We got 11 real fast. Just a reminder, if you look at the fixed income in terms of core fixed income, and again, think of that as investment grade bonds, again, we're forecasting something pretty close to 5% over the next decade for them. That's why we think they're relatively attractive asset class right now. And if we look at the other two main things in your portfolio, right, the two kind of flavors of equity, if you will, that's immediately above it, that rose above it, right? So we've got the U.S. equity market and then the international equity market. And you can see when you look at those expected returns, we're projecting a marginally higher expected return for international equity versus U.S. equity. I mean, it's pretty similar at the end of the day, but you kind of lift it up, the onion or what, lift it under the hood of the car or whatever, you know, that it's really valuations that are driving the fact that our forecasts are international or slightly higher than the U.S. Basically, we're kind of giving a haircut to our U.S. forecast given where current valuations are, right? So then the key slide is page 13. So we've been looking at this one. This is kind of the third iteration of this slide. And as you all know, we've taken a long journey, right? We explored, you know, private credit number to connect the classes, right? And we ultimately settled on, hey, let's take our existing asset class and see if there's a way we can kind of rejigger them a little bit to get a better portfolio. And that's what you see represented on the table on 13, right? So you see shaded, that's our current. And I think, you know, kind of the crux of the discussion, I think, on the asset allocation, asset liability slide is, okay, I think we all agree we want to increase fixed income, but do we want to do it in a fashion, this kind of balanced fashion, which is mixed to or mixed to U.S. where, and let's just focus on mixed to U.S. All that's happening mixed to U.S. is we're taking, we're increasing fixed income, poor fixed income. You see we're increasing that 4%. We're going from 16 right now up to 20. So we're adding 4% to fixed income. And obviously, we've got to take money away from something to add money to fixed income. And in that mixed for U.S., you can see that all that 4% is being taken directly from international equity. You see how it's going down, or it's going down 4% from 23 down to 19, right? And when you look at in contrast mixed to, you can see it's got more balance in terms of those things taken away. And I think, let me pass it back just in terms of, have you all given some additional thought in terms of which kind of fork in the road you guys are thinking about right now? Yeah, we probably should have had more of a conversation on this, I guess, prior to now. But, you know, as of the last meeting, yeah, right. We, you know, there was some mindset of trying to be a little more aggressive and not even going with fixed income. I personally, this is Trey, by the way, I'm of the fan if we're going to make a move at all that it needs to be in more fixed income. Be it mixed to some form or fashion. I'm not opposed to the U.S. bias, you know, but from a return sake, I think Commissioner Hensley brought up before that, you know, our current doesn't seem to be so bad from a return perspective. And even after looking at, you know, our liability there, you know, in terms of volatility, I guess. Anyway, Commissioner Hensley, do you have anything to add? Yeah, I mean, I think that that was, you know, you all are bringing back to us a couple of little tweaks. The question for me is, do you think that they're necessary? I feel like we've done pretty well. I feel like we're on a good path. Are we tweaking for tweaks sake or are you feeling like we really need to make an adjustment here? Are we seeing some headwinds that you're getting a little nervous about? That we maybe need to go a little more fixed income? You know, what kind of, what is, is there a concern if we stay where we are? Yeah, so, but you're right. There's nothing broken right now. Like you said, the current policy has served you well. I think what we're proposing is, hey, you know, we've had a huge run in particular for U.S. equity over the past 15 years. And if we look at valuations, you know, P ratios or however you want to measure them, I think they'll like it. The U.S. is expensive, right? And so it's, again, what's changed from when we did the state last time? Equities in particular, U.S. equities got more expensive. And in some sense, fixed income's got a lot more cheap, right? Because you're getting a lot more yield. Fixed income's got a lot more cheap, right? Because you're getting a lot more yield on fixed income right now, right? So, you know, you create a more diversified portfolio. It's hard, right? Because, I mean, to be honest, you know, like you said, the goal is, hey, how do I try to minimize my contributions over time, right? The reality is, at least on average, the answer is, hey, be as aggressive as you can be, right? Because on average, you're going to make the most money by being very aggressive, right? So the hard part is, okay, we know what's going to happen on average. But then when we get to a downside, right, we know that that downside's going to be much worse. The portfolio's got far more equity than fixed income. I mean, I go back, I think I mentioned earlier, like, you think about 2008, you know, you had the S&P 500. It went down 37% in one year, right? And so imagine what kind of hit on your funding ratio if you get something like a 2008. And I'm not saying we're going to, but certainly equity valuations are pretty elevated now, you know, like they were back then. So I guess what we're saying is, hey, here's an opportunity to maybe take our foot off the gas a little bit in terms of what the portfolio's expected return is going to be. You know, you see, it's only going down like a 10th of a percent in terms of that expectation, right? So in our mind, and again, we can't decide for you, but in my mind, our mind, that seems like a favorable trade-off, you know, to, hey, let's let Samara the tire, but then if things go south, you know, we're protected. But we can't tell you what the right answer is because I'm total candor. There is no right answer. It depends on what your risk tolerance is. Hey, John, I got a question. Yes, sir. With the market that's booming right now, and it looks like the, you know, the foot's on the gas right now and it's going to be robust for a little while or quite a while, but I just, how long do you think this is going to go? I mean, I don't know. I mean, yeah, just, you know, I clicked page 33 real fast. Yeah, I mean, you know, I mean, we're, this is, we're looking at the valuations over time here, right? And, you know, we're, we're kind of back to where we were, you know, before that big correction, 2022, right? You know, I mean, you got a variety of metrics on this page. I mean, I don't know. I guess, you know, we're not, we're not in the game of trying to create kind of a robust SL case is going to last over time, right? We're not in the game of like trying to time stuff. You know, we're, what we're doing is we're looking at that, looking at the situation and trying to make an informed bet based off kind of the odds of how we assess each thing happened. You know, I don't know if you want to jump in Jackson, but yeah, I guess I would just say at the end of the day, you know, the assumed rate of return for the fund is 7% and we're within that. Okay. So to accomplish that in the most efficient way possible, how do we arrive at that now? I mean, the reality is looking at a 7.12% rejected return versus a 7% or 7.01% return aren't really, you know, so significantly different than you can say, Hey, something has to be done. You're taking way too much risk. Right? And so the idea here is how do you arrive? The math is arriving at that 7% assumption in the most efficient way possible. You know, and the result is that you can get there by taking a little, little less risk. So, so going from 63% public equity down to 59 to 58. So that's kind of how we arrived. And that is, you know, our thoughts in terms of, okay, do you want to fight off a little bit more risk and, and no longer term that may reduce your contributions somewhat. But in the interim, you know, you think that the, I guess if we look at the last, just the last five years, the S&P 500 has generated a 16, 16.5% annualized return. Well, people back to 1926, it's, it's more like 10 and a half percent. So what we've experienced is a run up in the equity markets. And the question is, oh, the rationale for taking a little more risk than, than you could, if you just wanted to meet your actuarial assumption, that, that, that's how we arrived at the optimized portfolio or the, the alternative. And again, it's all about trade-offs, right? So you take a little bit more risk and longer term than you, you know, materially less, maybe less, but I'm not sure how, how much less that would be if you have a downturn in the market. So I've been pretty vocal about this through the last couple of meetings, but I'm obviously, this is straight, by the way, I'm in favor of, of taking a more fixed income approach. And again, I'm going to echo both Johns in that it's institutional investing. You know, it's not my, that I'm 30 years old and I want to be able to retire at 65. So I'm going to have to be inherent to a little bit more risk early on to meet that demand. This is, I just need this thing to survive and be solvent 125 years from now. And I, and again, if we project a 7% return and that's our assumption, then it makes sense. As long as we're diligently making that or trying to make that in the safest way possible. That's what makes sense to me and safe and my name generally don't go hand in hand. So I'm thinking that, I mean, you know, just personally, I'm, I'm a mixed two person, one or the other. I think there could be case made for both, you know, possibly a slighter upside to the U S bias, I guess, in terms of return, but you know, it's, I don't know. I'm, I'm firmly in that we need to, if we're making a change, then it needs to be in the fixed income arena. I'm also not opposed to stay where we are. So that's the whole deal. Anyway, that's, that's Trey's take on it. And yeah. Anybody? Well, I, you know, I've always been one that, you know, I want to be safe and I want to make sure that my great, great grandkids, which I'm never going to have, but are taken care of, you know? But I think I like the, the, we're going to do the change. I'm like Trey. I think I like the mix too, but the U S equity, you know, keep it, keep it there because it's, you know, it's, it's done a lot of good over the years. What do we actually decided today? Which one of these mixes present room in three? Yeah, that's a good question. Are we, are we really just trying to narrow this down to a single pick today? Or we, you know, we're just trying to make this draft where we take it back to the entire board. Is that correct? Yeah. Do you want to narrow it down? I'd like to narrow it down today. Personally. Yeah. I guess our thing was, you know, the committee in terms of how do you want to present it to the board? Do you want to present a solution? Say, Hey, we, we, we've gone through these mixes. We've been extended. We think of the, in our minds, this would be the recommendation. Recommendation. Recommended. I have a lot of occasions where the, the committee comes back and says, okay, we haven't gotten to two and this is the frozen kind of the beach and, and let the board decide. So this, this is really where, you know, we all have the opportunity to kind of fashion the argument to your, or the recommendation to your board, whether it's a single alternative or, or one of two or one of two. So are we presenting our current and then an option to change? If that's what we want to do. Okay. Okay. Excuse me. Ethan has to step out for just a moment. Yeah, I guess we see the current as an option, right? We, again, we don't, we don't see it as a, something must change, but we're looking at this thing. Okay. Let's look at it through the lens of a more attractive fixed income. Environment then that we had five years ago, whether or not, you know, current is listed there as an alternative because staying with the current is a selection. Our expected rate of return five years ago when we did this, John, was it still, was it at seven or was it at seven and a half? You know, where are we trying to hit? Had we dropped it then? Do you know? I apologize. I can't, I can't remember. It was, uh, Ms. Hensley, we dropped it. Uh, our last experience study, we dropped it. Uh, was it seven? It was either seven and a half or seven and a quarter and we took it to seven. Uh, seven and a half to seven and a quarter to seven. Yeah. So I've been here eight years and I've seen it move now twice. So yeah, down both times, unfortunately for you. Um, well, I just can't remember if, if, when we set these current, we were trying to hit seven and a quarter or seven and a half versus seven. I mean, we were just moving, which again, I'm just making the statement. I'm not advocating that we don't move more fixed income. I'm not opposed to moving more fixed income. These are incremental adjustments that I don't think are going to topple the boat. We have a giant fund and these are little tiny tweets. So, you know, don't, don't hear what I'm not saying. I'm not opposed to just moving slightly, um, a little more conservative because usually I am conservative. That is synonymous with my name. So, um, you know, normally that is not, that is not, um, an argument that I'm against. Um, but I, I do want to make sure that when we're, we're looking at the current allocation, that we understand that when we set that up, we were aiming for, if we were aiming for seven or seven and a quarter or even seven and a half, like where we were, where we were shooting for, because I do think it's important to know, you know, we set that bogey, you know, we set that, um, expected rate of return based on our actuarial assumptions. You know,  we've moved that a couple of times based on the market returns and where we thought we could be, um, and trying to be a little more conservative in that thinking, you know, we just can't go up forever, which I think is, is realistic. So, um, yeah, again, if my memory serves me correctly, five years ago is when we dropped it and we did it 7.5. And then a couple of years later, we get to 7.2 and then we came back down to the seven. I think it was just kind of a, uh, a stair step down. If I remember correctly, I have a note from 22, December 22 about seven. Yeah. So, yeah. So, yeah. I can go back and look at my notes when I'm in the office, but I don't have those. Right. And, and I'm not here to push this off on somebody else's subcommittee or the board or whatever. I think there is, well, as you know, commissioner, there's opportunity for us to lighten that burden. Should we not meet it? I think for me personally is right now we're looking at this and it's more not, it's more of a safe play over a longer period of time. Um, and I know that doesn't, you know, work well with you, but like you said, you know, I mean, there's inherent. We're not meeting. If we don't meet the mark, um, it puts more liability on, on the city on your all's in to make the contribution, but also don't want to think that we're in a situation where we can't make that. And also that the, that our rate of return didn't do as well because we inherently took more risk at a time when we didn't necessarily have to, if that makes sense. Well, I think there is benefit in insulating the fund from, um, some of that, that risk that we now exist, uh, in the equity markets that we kind of see coming in much the same way that we said, we can't keep going up forever. We don't, we don't think that we can sustain seven and a half percent in perpetuity. You know, if we're seeing that the equity markets are a little over, inflated and we're going to need to make some adjustments and insulate against that a little bit, you know, not, not we, but you know, our experts that we hired to tell us these things are, are seeing that and telling us we need to pay attention to that and just take a little bit more precaution though, then we, um, you know, are currently in, you know, still have expected rate of return. I'm not opposed to, to maybe not directly. Yeah. To answer your question, um, Aaron, do you have, you know, what was, what was the assumed rate of return at the last time that we had conducted the study in 2021? It was, it was seven and a half percent. And the, you know, at that point in time, we wouldn't have been saying, okay, what do we need to get seven and a half percent? Because that would have been back up the track and, and load up on the equities and take a materially, uh, risky posture. So, um, so the actual, so the expected return, I think with respect to the risk that we had, was in the area of like five, 96%. So it was short of your, uh, assumed rate of return to get there. Now, the horizon, the seven and a half was about 30 years, right? And we're looking at a 10 year forecast saying, okay, we're, we're trying to be, uh, first off conservative in our approach, but, uh, a different time horizon coming into play here where we think, thought that over 30 years, you know, seven and a half percent as a reach, we're looking at the last 10 years in terms of functionally, how can we structure portfolio? That, uh, within our career path and extend your, you might expect to see, see what the markets are going to give you. So while it's, you know, not necessarily tied to the assumed rate of return, it's more along the lines of, okay, now you're in a environment where fixed income is more attractive than almost back then. You have, have the luxury of, uh, being with an expected return that coincides with that actual return and wind up on the equity list. Got it. Okay. Um, well, Tommy, go ahead. If you, well, we were, you know, in the background here, we were discussing, obviously, you know, the, the, the, the, the, the, the, I think so far, at least me and Trey are either mixed to mix to a U S or or stay the current. And my feelings are I would like to go with the next two U S, but I don't know what the rest of the boards would think of us doing in. In essentially, that's what we're looking for now. It was, we need to, we just narrowing it down. And so, um, I think what Tommy's trying not to say is that if we could just carry over, we could whip a vote here, um, for both the mix twos and the current to take back to the board. Uh, I'm open to that and open to hearing that. I don't, yeah, and I'm looking at Ethan now. Um, you know, especially whenever I look back again, and I look back on page three and the bottom bullet of page three is, uh, essentially increased fixed income exposure, right. By adopting one of the mix twos. I mean, I, you know, this is coming on some advice. I think it would be helpful to, you know, to have a discussion about, you know, how we can, you know, I mean, I, you know, this is coming on some advice. I think it falls within our, our purview. We're not undershooting our 7%. So I feel like we're holding a fiduciary there. And I don't think we're exposing ourselves too far by using mix three. So if we're going to narrow it down and take this back to the full board, and we can have a conversation to, so to lobby, so to speak, get everybody's opinion. I think we take both the mix twos and the current, put those in front of the board and, uh, make a decision then. Does that sound okay to everybody, Aaron? Great. She gave a thumbs up. There we go. Back to COVID. We're giving the thumbs up again. Yeah. There's one kind of key side. I want y'all to hit. It might, might help a little bit. It's page 25. So, and this is actually linked to, to Aaron's point, right? We've got a super tank and we're talking about, you know, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we, how do we , how do we , how do we , how do we , how do we , how do we how do we , how do we , how do we how do we , how do we how do we . So we'll look at those things and see how those things play out. 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