got it of March 7th 2025 to order we got an agenda before us welcome all guests you all want to introduce yourself mik
hey okay hey Rick I think we got some folks on the phone don't don't we also yeah for the for the folks that are on the phone um we have Jonathan karna from
Sebert and I saw Tom Kai he's with Bank of America that's what I thought I just read all the proposals now they're all Blended in my head um and Frank Leto from JP Morgan and there is somebody dialing in from area code
954 if you could let me know who that is that's Broward County okay so whoever's on the phone in area9 954 if you could send me a note afterwards um then I can add you into the minutes to record that you were here and we have several people from the
school district I won't introduce all of them it's it's my team that are all on on the line I'm going to start here around oh [Music] sorry committee m Jack Warner Committee
Member Al Committee Member Michael coner Committee Member up here Richard pingi pfm Asset Management Leanne Evans Treasurer and for the group when you want to speak you
have to press the button and watch for the red ring to come on right around your mic that's how you know the mic is on because you may press it and it doesn't go live but that's the the trick to the microphones Laura how with pfm financial advisors Omar sharanu pfm financial
advisors Patricia Morales with the office of general counsel Kristen VAR Garcia Office of the general counsel thank you are you new down there at the end have we seen you before okay nice to meet
you all right so welcome to all we've got an agenda for approval motion for approval of the agenda so moved second second any opposed agenda is approved next item is the minutes of
December 6 is there a motion so moved second any opposed then we go quarterly investment reports Leanne okay good morning everyone and thank you all for being here it's great
having the full Comm all the committee members here um welcome back and we haven't met since December so happy New Year um we're going to go let um Richard penelli from pfm Asset Management kick us off with a market update and then roll right into the quarterly investment
report from pfm so Richard if you want I can get you to the right page if you tell me where you went to go and then you can drive from there all right I think we'll start with the sort of the summary and uh try and make sense of where we are uh with things um uh we you
know from the last uh meeting we knew that uh post election and going into the new uh Administration as they started implementing their policies we expected uh you know some some volatility this year and that's exactly what uh what we've gotten um uh you know
I think as a as a general matter uh the the current conditions uh look uh good uh continuing from uh 2024 at the beginning of the year here uh and really um uh from from where we are here going forward it's it's trying to assess what
the potential impacts are uh to the different policies as they get uh implemented so um you know looking at little tricky to navigate yeah so you know look looking at the two key metrics
that we've been you know hyperfocused on for the past two years um uh inflation uh and and the labor market Market inflation uh we made big gains uh at the initial part of the fed's fight to to to bring inflation down uh and over the
past uh year year and a half um it's generally been uh fairly sticky as the FED has been trying to get down to that uh two 2% Target uh here we show the November uh core PC at 2.8 the most recent reading uh was 2.6% for uh for
for January so uh they still have a little while while to go but uh you know based on their projections um they really didn't anticipate getting down to that 2% level until uh 2026 and maybe now uh more like 2027 so um really what
the FED is looking for is uh a general uh movement towards that level and that's uh what what we have seen um the uh the unemployment rate which is the other part of their mandate making sure that there's full employment uh uh that
that continues to look um you know to be on target uh here we're showing the November was 4.2% uh the most recent reading uh was four uh uh 4% for the unemployment rate um so they're pretty much at uh full
employment and uh their uh projections are that uh the unemployment rate will stay in uh in in this range um uh may maybe pick up a little bit uh higher maybe another tenth or a couple T of a percentage Point higher but generally uh
remain uh low and contained um so you know the big story is what's going to be the impact from uh the administration's policies in there's a little fine tune on this and then um there there's really four key things that we're looking at um you
know H how will taxes uh impact uh the economy uh tariffs uh immigration and and regulation um so following the election you know the markets generally uh took these four things in balance and said you know if I look at uh taxes and
deregulation uh that's going to be very positive and and potentially outweigh the uh you know negative impacts of uh potential tariffs uh and uh impacts to the labor market from uh a shift in in Immigration policy uh we saw a big uh
runup in uh in the stock Market um so you know now that the Administration has come in place and we're actually seeing these policies play out uh we're seeing more of a a fine-tuned uh reaction to to the different things um uh the Tariff
announcement uh the the the on again will they won't they uh tariff story as that's played out uh you've seen markets whip whipsawing around uh around the uncertainty on on on tariffs generally tariffs are expected to be uh to raise
uh prices uh you know potentially being uh inflationary to the extent they go in place um you know the the you know as we've seen even in the past week the tariffs have get announced
uh then uh we see a roll back uh so in the short term the view is that the tariffs really will be uh more of a negotiating tool um the way they've been laid out uh from here is that the current tariffs are about uh border uh
security uh the Administration has initiated a study uh to see you know what the uh uh tariff dispar disparities are among different Cur uh countries and then in April 2nd uh that report will be
delivered and at that point we'll have uh a potential um uh shift uh in uh the uh uh implement mentation the administration's implementation of of tariffs so we're really potentially just at the beginning of this story and we're
already seeing sort of the impact uh that that is having on uh on on the markets um uh on the deregulation front um you know Doge has been uh uh going through and uh sort of you know slashing
uh uh jobs and making a big uh big big impact um you know to to to to date um uh despite the um uh headlines around layoffs I mean the overall impact on the number of jobs uh you know that would
potentially be impacted uh directly at the federal government level um you know probably won't have the biggest impact on the uh you know unemployment numbers uh total federal Workforce a little over 1% of the overall labor labor market uh
so although the headlines we've seen a lot of headlines the actual numerical impact uh potentially is not big but secondary impacts you know uh as they work through the economy could be uh could be bigger um I think uh in January we had the the the biggest uh number of
layoffs 174,000 uh that we've seen since uh July of 2020 uh during the height of uh of of the covid layoffs so um but again the overall impact is not expected to be big
just on uh on on the numbers um what about efficiency uh meaning the operations of government function right right well you know so it'll take some time to sort of
see that you know you know that that really play out um so a lot of these things have been hard to to model you know going back to the tariffs uh for example and you know a couple people from the FED have uh come out and said this uh you know you know a you know even if the tariffs do get implemented
on a particular country you don't know what the exporting company's going to do are they going to absorb the cost cost or pass it on what will the importing company do uh what will the retailer do um so it's really hard to model how a particular tariff flows through and then
you have to multiply that through you know multiple different companies and and uh and uh industry so a lot of these policies will really take time for us to see how they uh play out out next
slide um so uh you know so looking at the Outlook uh at least in in December um you know the Outlook was very different than what we'd seen going into the past uh I'd say two to three years where really the forecast was sort of
the same things look good right now but the second half we expect a recession right uh so going to 2025 we have a different Outlook which is uh uh good growth uh not as strong as 2024 um and really consistent throughout
the year uh that's probably moderated over the course of the uh over the course course of the quarter um where the uncertainty around uh particular the tariffs uh have pulled back uh the uh
potential spending from consumers uh and also business investment so um although we continue to expect that growth will be positive generally for the year uh it's expected to be slower than uh we were initially projecting for uh for for
the year next SL um I'll jump to sort of the fed's last forecast and and sort of contrast that with what the market is looking at now um in December when we got the last uh forecast from the FED uh it was
projecting that um it would have two cuts in 2025 uh another two cuts in 2026 for a full percentage point cut by the end of uh 2026 uh they'd also raised the expectation for the neutral rate um uh
which had sort of been increasing uh over the past year uh the last projections they thought the neutral rate would be somewhere around 3% up from 2 and a half uh percent so potentially uh a little bit hotter
economy uh o in in in the long run um the the markets right now uh had been in line if you look at fed funds Futures with that uh two Ray Cuts with the first cut coming sometime in
June um now uh that's increased uh over the past week and uh we're starting to see more uh leaning towards uh as much as three Cuts or 0.75% in rate Cuts in uh in in 2020 25 um so we expect again
some volatility around that expectation as we go through the year but uh the expectation for the ne next cut or the first cut for the year is is sometime in July or sorry sometime in June I mean you you were showing 2.8 the
January was actually about you know a lot higher than that you know on the ones and the next one the 12th coming out on March for February do you have an idea what February CPI is going to look
like um so so we showed so the last number was 2.6% for for CPI is that you're talking about core well I thought it was much higher in January than that thought it was like three for for CPI yeah yes yeah so idea
of what February may look like like what's the fed's going to do as the in inflation is it bottomed now it's coming back up so you got jobs slowing down and you've got inflation still around so can they do their rate
Cuts continue with their rate Cuts well I I think their expectation we're going to see some variability and volatility in the number and that and that's expected right but the the fed you know the FED thinks the neutral rate is 3%
if the uh overnight rate is at you know 4 and a qu to 4 and a half um they are constraining or view that they're constraining the economy um and that there will be these blips along the way uh but that they would you know continue to stay the course they lowered interest
rates by a percent last year it'll take some time for that to really take a hold and take effect um so they're probably not going to react immediately to uh you know even if we see another month of increase in inflation because they expect it's going to take some time for
it to work through um this pause is is sort of that time to sort of see how uh the inflation numbers play through before they they move so I don't think they would react to even if we did see another tick up in inflation that makes sense
tariffs due to tariffs that the inflation um potentially having an impact yes or even the expectation of about the of the tariffs having an impact um you know one of the uh things that we've uh or seen or expecting is
that uh as consumers are expecting uh tariffs to go in place that they're speeding up spending and doing more buying uh which would also put some pressure on inflation what about other countries besides US Canada
Mexico the potential China count uh for more tffs yeah well well when we get to April 2nd right that's when we're going to have the the full study and and uh the you know the the the tools necessary
to do uh more broad-based tariffs around the world um so the other um so so you know kind of moving into uh to Market so we' saw uh rates had been inverted for uh quite
some time and uh we started moveed towards uh uh being uninverted uh in uh the fourth quarter um on the longer end uh there again the expectation of uh of of the uh net policies being progrowth
and there being uh some inflation uh associated with it pushed up longer term rates uh also expected that the uh with tax cuts uh and and and potentially more spending uh that would also uh Drive increased deficits we did see longer
term uh treasury rates uh increase uh contributing to the uninversity we saw was a tightening in uh in credit spreads uh so you know corporate spreads uh you know asset back security spreads all uh tightened up uh
throughout the course of the year and the quarter uh which contributed to uh to returns um so you know where we are now uh given the uncertainty around what's going on with the policies and also the relative tightness in uh in in
spreads uh we're generally being very uh cautious uh in in the portfolios and very selective in uh the industries in part particular uh Securities and names that we're purchasing um you know to the extent we see an increase in uh in in
spreads then uh we you know will uh cautiously uh buy uh you know buy corporates into the uh into the portfolio but we're going to be uh you know slow or generally underweight uh relative to what our targets would be in those sectors
so government instead of corporate yes so you're going to see our you know Treasury and agency uh allocations higher um but for the fourth quarter and for the calendar year you know returns again were uh strong uh given that uh
tightening and the spreads in those sectors uh over the course of the year um so that I'll jump into uh the portfolio itself um I'll stop here uh portfolio
was you know in compliance um with h with your policy requirements um here we see the snapshot of the uh long-term portfolio um we're pretty much right on top of the Benchmark for the quarter if you look at
the effective duration 1.71 and 1.74 years for the for the benchmarks basically on top of it um and like I said as I mentioned you know we're going to be very selective in the names that we're buying in the uh
you know corporate uh portion of the uh portfolio uh throughout the year uh returns were good for the uh for the calendar year um given there was a uh increase in uh treasury yields during the fourth
quarter um the uh uh absolute return levels were you know basically flat uh for the quarter uh you did outperform the uh Benchmark by you know 20 basis points and uh by 45 basis points for uh for the calendar
year um so I'll pause there questions any commentary good my turn y okay I will pull up the district's summary report and as you know it contains a lot of the same information that pfm just reviewed that
Richard just reviewed um but I have a bit of a summary um total portfolio is at 3.2 billion as of the end of December and that's really our high point bul of the property taxes come in in December um some in November but December is really our High Point and then cash goes
down from here until next December it's pretty cyclical um currently there's about there's very small amount in cash that's related to the schools the schools money is all in in um cash we have money markets in government local government investment pools and
securities so 51% in money markets 48% in Securities um we we spent a lot of time talking about how much to invest in Securities with the uncertainty and the um interest rates you know what is it going to be is it going to go up is it going to go down um when is Cash coming
in and um it was also tricky to get Securities you know there's there's not as many of them as we'd like so we're more in money markets and pools the returns there are really good um and as you know I'm still on the investment advisory committee for that local government investment pool that we have
some money in so I'm very involved in that and monitoring what they're investing in so I'm very comfortable with the with the breakout that we have right now went over the um core portfolio Richard already did that the investment earnings you know we started a new year so we're
at 53 million so far versus 41.2 um million for La the first six months last year um let's see it is um we had a little chart down here i' like to look at so the green line is is last year and the dotted line
we always use for the current year so the slope is a little slower so I'm curious to see I'm guessing that line may cross because interest rates have come down a little bit so I think our total interest earnings while it's higher right now by the end of the year I think it's going to be a little less
than it was last year we'll have to watch and see um how that plays out um sales tax collections I'm going to skip that because I've got the normal sheet at the end of this presentation that I'll go through um the portfolio returns um we just went through that the index
for the short term is at 4.59 and then you see Florida palm is at 4.66 Florida Prime is at 4.7 the short-term portfolio is at 4.35 and this is really why we wanted to talk about that new Benchmark that we talked about last time the next thing we're going to
look at is the logic behind that but this is really why I want to make that change this rate is an overnight rate and it works great when you're comparing it to pools and money markets it doesn't work well with the short-term portfolio because you still have that slightly inverted yield curve um once the yield
curve completely normalizes that's going to be great for us because we'll always beat it but I don't know that it's a good Benchmark I think we should have something that's more realistic for what we're investing in so that's why we want to add a third Benchmark and we'll go through that
next we have a we have a slide deck to explain what we did um let me do this um this is the same information that we saw that Richard did except this is looking at all of it together not looking at one port folio versus another
so it shows the cash that we have that 34 million most of that is in our schools the school's bank accounts we roll that up as part of our portfolio um and you can see the schools it's actually broken out 33 million of it is in school bank accounts um then money
markets and pools and securities this is looking strictly at the Investment Portfolio and this is the money that's at Bank of New York as our trustee for our debt issues so we're tracking all of it technically our Investment Portfolio does not need to include this um the
policy really focuses on our Investment Portfolio but it's still cash and it still needs to be tracked so I show it it's a good way for me to keep track of how what we're doing too um this is just another way of looking at what pfm presented so I'm
going to skip over that it it's what we've already done this is our projections of where we're at and I know that's a little it's it's hard to see the light orange is short-term Investments and you see as things mature that will that will shrink and just like
it did last year by September it was gone it brings up in in December and then by September it's probably going to be down to to nothing we spend those down we typically let those run till maturity and I'm not going to go through all the individual Securities but I'm
going to skip through these and bring up the sales tax um report this is as of December 31st so this is revenues that were collected through October and we were at 129% of
our projection um we've collected a billion 321 versus the billion 345 um I've already gone and updated the revenues through February and in February we did cross over and have
collected the full 1.34 five billion Palm Beach county is taking an item to the board of County commit to resend the sales tax um resolution which is what we expected we are going to Sunset it it will end a year early which is what we had forecast and the new sales tax that
was approved by the voters in November will pick up in 2026 so they'll dub tail um that does mean we'll have taxes collected Department of Revenue will only end a tax at the end of a calendar year um so it will run through the
through the current year and we will collect some more money which is really helpful because there are we have experienced cost escalation those construction projects with the tariffs we just I was at the construction oversight Review Committee they were talking about the tariffs as well what is that going to do to cost a
construction to purchase steel to purchase um conrete we experienced all kinds of shortfalls and price increases during covid we're going to see some of that not necessarily shortfalls but price increases with the tariffs if they're implemented if they're rolled
out so it's something they're paying a lot of intention to and so am I I want to make sure that we complete all the projects on that referendum list quick question we were only collecting a half cent from the county
tax right right we got a half penny of the full Penny now it's a full Penny it's a full Penny right now that's what it's always been we got a half penny the county got 02 and the cities got three so it was shared between the county the cities and the school district in 2026
it will switch to where it will just be a half penny so we'll go from a half penny for us because it's only us we're the only part participant in new sales tax yeah so we'll go down same yeah your your sales tax through the TW through the end of 2025 is going to be 7% it's
going to drop to six and a half in January 26 Mr coner I saw you had a question nope okay um so this is this this does go through it also shows the interest earnings interest earnings Nets of net
of the fees that were associated with that line of credit that we had back then um is 59 million and we have used some of that for projects already um I still have some of it set aside it's going to be used to make sure we can finish all the projects on the referendum list um if we end up with
extra money at the end and I don't know if we will or not but if we do we would use it to make Debt Service payments on projects that were on the referendum list but that will bring that to ISO when to the sales tax oversight committee when that decision is ready to be
made okay so that's the end of that report are there any questions on the Investments okay then we're going to go on to talk about the new Benchmark and I'm going to let Richard walk through this when we talked about it I called him saying I think we need another
Benchmark I think we need to break out our short-term portfolio versus overnight um and have benchmarks that all with what we're investing and so I asked pfm to do an analysis to prove that I was right in my thoughts and it I
was um but it was I want to see the this is the analysis that the committee asked for at the last meeting so we're bringing this back to you um just go to the pass the summary to The Benchmark sort of History okay
oops is there some way we can get the the screen to be brighter or the lights to be be dimmed a bit it's very for old people it's difficult to read hang on the people that manage the lights and
everything are right behind us your examp don't stare at the lights some of those overhead lights okay is that better or does it needs more well more yeah do it do it can you do it some
more no a lot more they're saying a lot more is that better it's it's improved but not Optimum let's put it that way and then the lights are new and
they're very bright um there he did something with oh he got better than it got brighter again would be my son I guess I I just have to get a chair and sit up front we can we can see if we can rearrange
the room for future meetings this is a standard way either that or we can also bring back the laptop so you have it in front of you and can and scroll along yeah okay and since we're helping you with the formatting it is there a way we could
get each page so we could see the entire page on the screen yeah I'm trying to having the bottom cut off is disconcerting for me I don't have the imagination I guess necessary okay there we go right excellent thank you thank you very
much yeah so um you know I think uh Leanne sort of already described what we're look what we uh the you know trying to Target here um uh up until this point there were two benchmarks one uh Benchmark was in overnight Benchmark
the the standard and pors or S&P uh government pool index which is all overnight funds then we had a longer term Benchmark which was from one to three years um and then everything that was shortterm was benchmarked to that
overnight uh Benchmark um so you know in a normal upward sloping uh yiel curve environment when you look at the all of the short-term Investments together they look you know positive relative to The Benchmark but when you get into an
inverted curve uh uh environment it sort of starts to stick out that the longer term part of the portfolio between uh overnight and one year um is is is mismatched uh with that overnight Benchmark um so uh we went back and did
an analysis and say well what is that short-term portfolio's uh duration on average because that's going to determine uh what would be the appropriate Benchmark um and it uh you know varied between a little bit less than half a year and when it spent out
at times you know down to to zero but on average was about uh 3 months uh 0.25 years you know the actual calculation for this um a little over a 10year time period was uh 0. 23 um so when we look that exactly lines up with see I go to
the next page essentially lines up with the three-month treasury bill um and and and so that makes sense to be the appropriate Benchmark for that portion of the portfolio um so you'd have three benchmarks for your overnight funds the
overnight lgips uh the money market funds you would use the S&P Gip index as you do now the short-term portfolio which is laded uh fixed income uh uh Investments would be Benchmark against three-month T
Bill and then the longer part of the portfolio would continue to be Benchmark against the one the threeyear uh treasury index I mean this this stood out because of the inverted yield curve but in reality we've had an overnight yield curve that we've been using to measure
that what I call short-term portfolio which we always exceeded it it it it's a great it looks wonderful for my reports I it's great um and I didn't even think about it until it flip-flopped and realized that we really should have another Benchmark that really proxies
what we're investing in so um fixing it a little late I wish I'd fixed it a long time ago so we wouldn't have had the the mismatch when the inverted yield curve the yield curve is becoming more normalized or it looks like it's heading in that direction but it's still a better tool um when when we're looking
at it so I want a true good measure that we can use going forward so if the committee's okay with this this is what we the change that we proposed in the investment policy and I'm going to be taking that to the board we've got a process that the district is going
through to review all the policies um and I'm hoping to get that through this year but there really is a long list of policies going to the board so I'm probably going to start measuring against it but technically um I need to follow the old way until the board approves that policy but internally I'm
going to start laying things out because we're going to break it when we're tracking things we currently have two portfolios we have short-term and core I'm going to add an overnight portfolio and then shortterm and core and just make sure we have the right benchmarks this is the overnight no this is going
to be the short term the three-month T bill would be the short term typically in December tax revenues come in we're buying Securities and we buy them anywhere from four months out to a year and then we let them mature they're laded out we don't sell them we let them
lad out um let them mature so what this chart did was show you know how the average portfol folio and that average over any given year is you know it's it's .23 and that's the reason pfm and I asked them to do the analysis what is
the appropriate Benchmark so while in December we have things from four months to a year with an average of probably six or seven months um it rolls down as those as time goes on and it gets down to zero so that's where they're coming
up with an average of. 23 which is aligning with that three-month T bill that we'll use for these short-term Investments the overnight portfolio that's money markets and government um local government investment pools and what little we have in cash is going to
be measured against the S&P lgip 30-day index so I think we're going to have them all have the Investments matched up with the appropriate Benchmark going forward any questions on that we're
yeah yeah we're absolutely in agreement that's you know the the numers line up you know directly for us and given the size you know of that short-term portfolio it makes sense for it to have its own Benchmark got a lot of money that's a lot of
money okay so I didn't bring it up but in the in board docs under this agenda item four for The Benchmark um I do have the investment policy that I brought to you back in December let me open that up real quick
and somewhere in here the chances of me quickly finding this um oops right up there nope those are comments but it does I've added a section in here on the on the on the
um on the new Benchmark this all the Securities sorry I know I went past it now you all have seen this for this before but I want to make sure okay I passed it no that's derivatives go
down sorry It's tricky to do this on the screen performance measures so we've added in the the original one in the bank accounts will be compared to the S&P GP index and then the short-term
funds would be the three-month t- Bill index and then we'd still have the investment performance for the core at with the Bank of America Mar Lynch one to threeyear government index so we'll have three indices for the three portfolios what do
that with can look at it what you do well this is the policy so this policy will go to the board to be approved what will happen in reality is we're going to go back to this report and at the beginning it it would show up in PM's report too but in this
report right at the beginning um I'm going to have currently we have a core portfolio and a short-term portfolio with a benchmark I'm going to add an overnight portfolio this Benchmark will be used for the overnights and then you'll see a new section that is for the short-term
portfolio and we'll be comparing that three-month T Bill rate to this short-term pfm portfolio so this page will change we have another box and then pfm will be using that index on their reports as well and you'll be comparing the performance of the portfolio to a
benchmark that aligns with the matur average maturity of the Securities I think it's holds us more accountable it it's a better Benchmark for what we're investing in sure yes quite with anybody else good yeah okay I'm going to take that as a
unanimous approval okay thank you um so the next thing we want to go to if I can find it um well I'm going to bring up board docs um I wanted to give you some updates on contracts um at the last meeting in the
discussion section of the meeting I mentioned that we were getting ready to negotiate new contracts with our bond attorney and disclosure Council and we were doing an it in for under writers and we were in December and I said that it was going to go out in the street in January it did um we um got proposals in
and we've scored them and we have selected a new team of Underwriters um this is the results of that report um we are shrinking the pool from 11 to 6 which is better it's more
appropriate for the number of transactions and the size of the transactions we're doing um the senior manager are Bank of America and Raymond James and then the other co-managers and these are I'm just going to go down the
list um Jeff JP Morgan Morgan Stanley and RBC so we'd have a six a team of six Underwriters um this is we are lining this up to go to the school board at the April meeting I think that's a a good group of
Underwriters it's they're a great team some of them are here some of them are on the phone we are pleased with the results of the ITN we did change that ITN a little bit as I mentioned I went back and listened to the last meeting to make sure I was saying this correctly but we we went through and added some
targeted questions in to make sure we were getting Underwriters that had experience dealing with Florida cops which is our primary function our that's how we borrow money so if you have and there are great Underwriters out there uh great firms that do geo bonds but they don't deal with cops and cops are a
unique animal it's a least purchase AG agreement it's not the same as a bond and it's different investors it's it's got a different rating than our normal rating we have an underlying rating and then we have a cops rating so there's some different things with them so we we tried to tailor and we worked with pfm
financial advisors Laura helped with that to tailor the language so that we would end up with a team of Underwriters that really have experience with the transactions we do and Mr Moore you talked about that specifically at the last meeting and we took that to heart um and that this is the result of that
underwriter selection process can I just ask you a question sure we have six six managers now two Co two co- senior managers and and four co-managers these other we've got the the other people other firms were not selected so they're
not part of the team fine fine well I commend you frankly for for reducing it to a group of people who have a really some skin in the game as it were I mean let's let's face it we need to we need to have people who are focused on
serving our needs rather than uh satisfying and if we determine that we need to do a tan again we're not we didn't do one this year and I don't know if we'll do one next year or not um but when we do things like Tans and some of the other transactions not cops or or
cops refundings um those go out in any bank can participate in those if they're competitive sales we don't limit them so other firms that want to Underwriters but they didn't make that team could participate in some of those other transactions and that has happened in the past um and we're going to talk more
about Underwriters and how we're going to rotate between them in a couple minutes um Laura's got that in a presentation but I just wanted to cover the award of the contracts first um so that's the underwriters the um attorneys we did negotiate with them I worked with
Kristen um who's at the end of the table she helped us with the uh attorney's contracts we negotiated directly with Greenberg Tri and neighbors Giblin Nickerson Greenberg Tri is serving as our bond Council and neighbors Giblin Nickerson is the disclosure Council so they work with us on the offering
statements and the legal documents resolutions and so forth for any debt issues so that's going that's going to the board next week it's going in March the underwriters are going to the board in April and in the case of the underwriters is the books rotated
between the managers or senior managers yeah we're going to show you that in just a minute we've got some other slides that's the next thing on the agenda is to walk you through that because I want you to see it I'm just curious yep um any questions on the the contracts and if you're interested and
you want to go look um we've actually I've attached the invitation to negotiate um the sample contract for the underwriters because we're still doing the final negotiations on the contracts I think about half of the firms have signed the contracts and there's a couple more that we're still working with um so the contracts are not we've
got a standard contract some of them have small issues um that that we're working through legally and with the underwriters in truth the the contract they care most about is when we do the certificate purchase contract and the offering statement this is really a
contract that deals with the fact that we have pre-selected them as as Underwriters so there'll be separate contracts for each individual transaction that that will come before the board and then the contract s for the attorneys are also attached so if you're interested in digging into those I
wasn't planning to bring those up and go through contracts today but they're there if you want to see them okay so I do want to be able to tell the board that you all have have approved this election of Underwriters and attorneys is that do I see nods yes so
moved you if you moved it okay very good so the next item is going to be the um we're going to talk about Underwriters we're also going to talk about a proposed cops issue and I'm going to let Laura get started with a market update I
think she's got a couple of slides and I'm going to ask Jonathan to come do his magic to make that work better on look better on the screen again sorry one of these days you'll have to show me exactly how to do that okay perfect thank you good morning
so as lean said I'm just going to do a really quick market update for you um you know this is kind of in line with what Richard was saying but this is off B Val which is what we priced the district's Bond transactions off of um that we watch and the graphic on the
left um the blue bars or the range over the past 10 years um with the yellow up at the top is where we currently are and the average is the orange diamonds um towards the below so while rates have increased slightly um we're still within those 10year averages
and the chart on the right um you'll see the dotted yellow line was where we were a year ago um and the blue solid line which is kind of hidden under the orange dash line is where we currently are so you know as Richard had mentioned that inversion has been moving out um and so
we are kind of seeing the typical curve that we've seen in the past that we're accustomed to um and I did just want to mention as well the the rate spreads you know while rates have slightly increased sum the spreads have tightened um so when you
actually go to price the credit spreads off of those the B valve rate um has decreased some so rates are still very attractive for municipal issuers at the current moment um so as Leanne had said we are going to talk about the underwriting team um that was led through a
procurement process um and as she had said the two seniors are Bank of America and Raymond James with the co- managers being Morgan Stanley JP Morgan RBC Capital markets and Jeff um and we talked about the
utilization of this um and kind of wrote out General guidelines of what we'll be using when we select the underwriters who will serve on negotiated deals as lean had said if we do a tan which is your competitive that's open to anyone in the market if there's a bank loan
opportunity again that's something that we would help bid out to a whole plethora of banks out there and so this is just specifically for negotiated financings for the district um so regularly planned financings which would be new money um restructuring
straightforward refundings um we would utilize one senior manager so either Bank of America or Raymond James um and then the co co-managers would rotate through the list starting with the highest ranked and moving through um so just to go back
we did list these in order of ranking of the firms so that you have a sense of this so B OFA was one down to Jeff was number six so that is an order of the actual ranking at that point um if you're not a senior manager at this deal
you become a co-manager that's correct no so it's going to rotate between the two top firms so on this upcoming transaction um Bank of America would lead and the co-managers would come in
on the next transaction and James would lead um Bank of America would sit out and the co-managers would participate does that sense candidly I don't no I don't think so I I can't if you've got two senior
managers you you want one of them senior other be a CO yeah when we've done this before usually the SE the two seniors just rotate back and forth and then we rotate the
co-managers back and forth so um the if you all if that's what you practic well is that sensible what do you think pfm well if it's a preference of the committee I mean we can definitely do where the senior that's not running the books would serve as a co-manager on the
team um and then we would rotate through the other co-managers as well and what we have on the bottom of this is kind of the general guidelines based on size how big the team would be um so you know between 100 50 to 300 million for example there would be a total of four
firms so one senior who runs the books and then three co-managers and so we definitely can adjust so that a co-manager is uh the senior that's not running the books could serve as a co-manager on the deal if that's a preference what do you all
think well I certainly think the the co-senior manager should be a co-manager if he's not running if he he's not out of the loop he not running the book why penalize him for being a manager yeah exactly yeah I mean he came in second so
you know what the hell you know we we will make that adjustment um in general though we did kind of set up based on the size of the team how many um firms would participate in it to make sure that the um allotments and
liabilities you know that the participation is still strong for each of those um you know we don't want to dilute the team so much that co-managers aren't motivated to to serve on a transaction you want to reduce I agree with that for sure but I mean it seems to me that that you picked a management
team out of continue top guys okay perfect we will make that adjustment um and we did just want to mention as well potential adjustments moving forward um you know
the district would continue to reward senior and co-managers that develop new new financings um so if there's something that's out of the norm of a new money or a current refunding that's coming into the market um that they could come you know a potential forward refunding in the public market if swaps
were ever back up there with any you know we want to reward firms for being Innovative um and their structurings that would differentiate them um and that's also to say as well if a firm is underperforming for some reason they could rotate out of that senior spot a
co-manager could rotate in to be a senior um if Staffing changes occur within the firms that could also result in there being a rotation of the firms out there who makes that decision um that's going to be a recommendation from pfm and then the decision would be made by
me and it would go through the school board every time we do a transaction the board is approving that and we do bring those transactions every one of them comes to the finance committee as well but if you think about it in the last contract um City ran a deal and did a great job and then they left the market
and they were a senior manager I wouldn't want City running a deal right now they're out of the market so we need to have that flexibility to adjust and adapt there's lots of movement with Underwriters um it has been for years so we want the flexibility to be able to adjust and adapt well I think I think
you got a different you got a much stronger team here now because these people all the all at least for What Little I know about it n none of these people are going to get out of the business anytime soon so it would be unlikely while they were in the past we
had a lot we we in the past not only here but elsewhere you see there are a lot of uh you know two guys in a pencil uh showing up as a as a co-manager and getting a check and that was about
it here we've got people who actually participate the market and we did look as well when we were going through the procurement process as as firms who were increasing their Staffing where we've seen a lot of firms maybe decreasing their Staffing and support coverage in
Florida that was a consideration that we were looking at is who are those that are investing you know sort of that showing that they're willing to commit um into you know what they're producing for their teams in Florida so that was part of the discussion as well listen you all know more about it than any of
us do so we we certainly value your observations but I do think that you know letting the uh the other co-senior manager and we can make that change the the way the procurement was done it gives us we we pick the firms but then
we have a lot of flexibility in how we use them it's a good idea to have our game plan and writing so that all the underwriters know how that's going to work I agree um and then if we need to change it we'll we'll change it and we'll probably bring it back to the committee if we're making a change in
the underwriters it's significant but we'll bring last for the last contract we were juggling 11 firms and keeping track of who was on which deal this will be a lot easier this would this one will be a lot easier but we'll still have a list of
who which firms are on which deals right okay so if there's any more questions on that we'll move on to the refunding opportunities okay but I think I I did mention this the last meeting we had a lot of bonds issued in 2015 and it's 10 years later so it's time to look
to see if they're eligible refund to be if it makes sense to refinance them and it does um so we're currently looking at three different series they all have a call date of August 1st of this year um for any maturities outstanding after
August um 2026 are eligible to refunded this August um so this just shows original par amount for each of these on the series 2015 b c and d um and the current amount outstanding and what would be currently callable so um in the
2015 B's There's 71.1 7 million that's callable and the 2015 C's There's 62.9 7 million that's callable and the 2015 DS is 159.000 7 million that's colable um so this will be um a very significant
refinancing the final maturities on each of these I did want to point out um in the 2015 BS is 2031 and the 2015 C's and D's are 2032 and those would remain the same we wouldn't be extending any maturities on this um um and so this slide just shows
you you know what we're looking at as a potential closing date which would be in May the Redemption occurring in August um with current market rates where we're sort of seeing that true interest cost assumptions that went into this which are still conservative um but overall
it's 6.8% Net Present Value savings um or 21.2 million but we did break this out by Series so that you can see that there's healthy savings which in with in each of these refundings um but we would aggregate this and just issue it as the
2025a certificates of participation to take out each of these three series for the eligible part that's refundable any thoughts on that one series for all three one take out for all three yeah we usually combine them and we've we've done that before we we
roll them all together um the folks in my office it get it gets cumbersome because our trustee still tracks them back the original ground lease so pfm usually gives us a chart that breaks it down by individual deals so we can figure out where to put which account
everything goes into but this one will be the largest deal that Palm Beach Schools has ever done it's been pointed out by several of the under writers how big is it going to be excuse me how big um 293 million is the amount to be
refunded I think the the last I saw the par was about 272 million but that will depend on market conditions and what kind of Premium we have right sounds good so I'm looking at that 2022 million or the savings and figuring
out how we're going to use that um our construction Department already has their eye on it and things they'd like to add into the capital plan so um we'll be we'll be adding that in this this transaction will be going to the school board you can go on it'll be going to the board um on April 23rd at same
meeting the underwriters will be going to we'll be approving them all at the same time that's really cool 22 million out of thin air y basically yep M um this might shift a little bit we are still going to go to the board on the 23rd print and post the POS on the
24th of April the pricing may be adjusted depending on what's going on in the market the FED is meeting the first week of May so we're taking all of that into consideration but the plan is to then close in May at some point so price end of April or early May um to lock in
the savings and just be flexible with the timing on that obviously you know since we are trying to capture savings time it as best as possible um and this does have a recommendation that we would like from the committee as well um to consider moving forward with the
current refunding of the series 2015b 2015 C and 2015d um the parameters would be a minimum Net Present Value Savings of at least 3% and that the final maturities are not extended beyond the current final
maturity good excellent yes yeah you're looking for a motion yes pleas I'll I'll move approval of that proposal as described second I any comment issue motion passes okay so we are
already draft working on the preliminary offering statement um we've um already received that from disclosure Council we've been working on it um in my office we'll be sharing it with other departments within the school district for review um shortly um I'm supposed to
have a final well a final first draft um ready Sometime Late next week so um we're we're moving ahead with that um that that does take some time to make sure we have all that information ready we'll be talking with rating agencies we'll do be doing um we get to approve
that finally before it goes this is your approval for the transaction this is it it'll be going to the school board in April we have any minimums here that we well we have the minimum present value Savings of at least 3% which yeah so and currently all of
these individually are well above the 3% but we would be looking at that by Series so say the 2015b which is at 5.67 if the market moved significantly away then you know that would be a conversation if if it dropped but these it's really up to that dollar figure up
to the total dollar figure depending on the interest rates in the different Series right I mean and um this this information I looked at this and then I looked at numbers that I got yesterday they're slightly different they're going to change every day they change middle of the day so that timing
of what's going on in the market avoiding the week the FED is meeting is is I mean sometimes I mean that that's pfm has got a team of people that are running a desk all the time and talking to in this case the senior underwriter is going to be Bank of America they're already syncing up um even though their
contract hasn't approved we're already working on it um because we expect the board would approve the recommendation they very seldom I I actually I've never seen them change something that's been gone through an ITN they have to have some very strong reason to to change
that so I have full expectation that it'll be approved so we're already running with that getting ready but nothing will actually happen until after the board approves the transaction it's just behind the scenes work thank you well so this committee is finally flexing its muscles I think youall have done a
commendable job congratulations good thank you nice going well lean your super dupers fin yes you have the committee's approval but from Curiosity from the market perspective will this be ho home
or will this be a big deal or there are always much larger deals this is big for us but it's not the biggest threat the market yeah and we've been seeing lately with Florida schools in general even new money needs um just because of construction costs you know 300 million
is a larger transaction but it's not unheard of um from what we've seen so it's on the larger side but um with the structuring of this and the different block sizes of the maturities you know the underwriters will go out and easily find investors um that are attracted we were
just in the market earlier this week with a different school district and there was well over um half a billion of orders that had been put in for a much smaller deal to the investor appetites out there um and so I think that you know that's part of the flexibility of
when we actually price to make sure that the market is as favorable as possible as well good y thank you and when we actually price the transaction you know we get all kinds of reports on numbers and sometimes I send those out if y'all are interested and I know Mr Dumars has
seen those many times and Mr Miller M Mar you've all seen those happy to send those out and share the results um when it's done um that day I've got a team of people that are sitting around watching the computers to see the sales coming in to see how if it's over subscribed which
ones are short so it's it's a busy day um when when we do that Sal it's a lot busier for the underwriters and the the teams on the street that are selling the bonds but we're certainly paying attention to it when it happens and happy to share that result but going to the size um the most recent High School
in the state that was built is now over $200 million to build a high school so the construction cost have gone up significantly and then we're having to borrow more so a $300 million deal is a high school and a middle school two schools we used to be able to do 100
million and build six schools so it's it's changed a lot in the time I've been here exactly they're getting much nicer schools too yeah well we the the last school we we opened the last high school we opened
um Garcia um Dr W Keen Garcia high school if you haven't had a chance to see that it is a beautiful facility um you know years ago we took the committee out and we had a meeting we did a field trip and took you to see a school that
was ready that was going to be open and it wasn't quite done um we went to see Johnny lonard high school was under construction and that was a long time ago um if that's something you all are interested and want to see one of the recently built schools I can arrange for that to happen maybe if we if we manage to have a meeting that's happening on a
day that we're open but schools are closed for a teacher workday or something we can make arrangements to say we're going to meet here have our meeting and then everybody can take their car and give you directions to see the school happy to do that or there's been a couple of videos on some of the high schools but actually going there
and and being there and that that high school has a very much a college feel um it's one of the most beautiful schools I've seen you all for that it's interesting to see what they do do yeah um and we can set that up
there's going to be the the school Under Construction that we've got two schools under under construction right now Windbrook we're replacing Windbrook right now that's going to open in August and we're also building the new school that's out in near the Arden Community it it just got named saddle View
Elementary um and that that is Way Out West it's near Lion Country Safari uh that school is going to be opening in August too so um it's easy they'll they'll be doing tours um I'll take my staff out to see the new ardan school when it opens my I've got a team in my office that are actually reviewing all
the bills related to construction so I investment debt and the capital budget so we take them out and we go I want to see the switch gears and the generators and the things that cost so much that nobody else gets to see and I walked in and said I want to see the switch gear and they said you can't go in the room
it's electrical and you can't touch it I I just look at the door I want to see what it looks like and it's your um breaker box at your house but at a school it's a wall it's a big giant electric panel U but costs a lot of money and it has to be ordered a year in advance to make sure it's here in time
that's one of the long lead items so I wanted to see what it looked like only lean that would that's that's me um but you know we pay the bills I wanted to see what those things look like so you can let me know if you'd rather see a high the high school or see the school that's going to open because we can
arrange for either one it's easier get into into the school that hasn't opened yet because we don't they're going to be there there'll be construction Crews there um on my understanding it's going to be they're going to have substantial completion in May
so at our meeting over the summer um we can certainly arrange to go take a look at that one I think I'd prefer a high school I don't know about you all when the high school is open and done and yeah that high school has a blue football field um and it's artificial
turf it's Carolina blue we had to get we had to get permission from the University of North Carolina because they had trademarked the color fantastic we can make arrangements for you to see it it it is a beautiful facility nice okay I think that is the end of our
meeting I do want to bring up the agenda again if I can grab the right document um on that second page it does have the next meeting dates the next meeting is May 23rd and then August 22nd the August meeting is right after school starts oh there is one there is one more thing on
the agenda I just skipped right over it um the last thing is we do need to elect a chair and vice chair of the committee we haven't done that yet um and one of I did go to the school board and got permission for there is there are chair limits for the for the there
are limit term limits for the chair supposed to be no more than four years um this committee has in the past said we would like to have the option to pick anybody so I already went to the board and got permission so you can select anybody in the committee to serve as chair and vice chair for the coming
year consensus well we actually have to have a vote for this it can't be consensus so if somebody can make a motion and second and I can say some if I I saw a motion from Mr Elmore and a second from Mr Warner all in favor I I any oppos none
okay so Vice chair Mr jumar is currently the vice chair he was elected when he wasn't here but you're here today ask for a motion I'd ask for a motion for vice chair you okay that Mr
war no sorry no I'm not I've been in so much since I okay so can I get a motion for somebody else to serve as Vice chair or if somebody wants to volunteer Mr Warner Warner move so will
again okay second second second yeah all in favor any opposed okay so Mr Warner will be Vice chair so thank you very much um I appreciate that and that does bring us to the end of the meeting love you there boy that does bring us to the
end of the meeting so do you want to call and adjourn yes Noe thank you very much for everything okay thank you all very much have a great day and a great weekend