March-15-2021-Special-Board-Meeting-Text-1 [00:00:00] Because that we added another item to the agenda. We noticed it on Friday and it came before it had to do with a construction project and it's twins incident. And that we as a board prove it to be when wouldn't get to that agenda item. Um, I'll then because of the board on, on what they need in order to be able to proceed on that today, or we can push that agenda item to another day later this week still we've got some flexibility there, but if we were at all able to be prepared to handle it today, it has been properly noticed so that we, as a board could do that. All right. So beginning, um, we have, uh, as well as, um, Samuel's here with us and Brendan walk-ins too. Walk us through a presentation, reverse to pension obligation bonds. [00:01:00] And, um, I would just ask that when anybody is speaking on that I noticed just in the PowerPoint, there's a lot of acronyms. And to the extent that we're going over those for the first time, just to make sure that, um, those of us, you have a more late knowledge of financial matters, understand what that means. It indicates. All right. And then with that, I will turn this over to Dr. Hughes. Do you want to get us started? Yes. Um, good afternoon. Everyone is so nice seeing you all today. So we help Carol with Sam news and Brendan told us today so ghetto and Brendan, uh, a memo that I shared with you last week is a memo that I provide to our wall on this thing. So in that manner, we didn't focus on general information about the, [00:02:00] his story of your patient bone that Westlake doesn't view have housing for. And then you have and , and then the COVID Polaroid Um, in the bottom of that memo, I have a very minimal information about a patron Volvo workshops. You'll have flourless on watch second. So with that, we are really eager to learn more in detail with you. So you how to state, okay. Well, good afternoon, everybody. It's nice to see all of you again. I am going Curtis. I had the ability to share, right? Okay. So let me bring it up. Uh, can everybody see the PowerPoint? Excellent. [00:03:00] I'm just gonna interject real quickly too. Has you're going through this presentation who you see hots periodically so that if there are questions that we ask this. Okay, thank you. Absolutely. Um, and let me just emphasize that this is a complicated topic and it's also one that, uh, EI is unlike any other borrowing that the district has improved in to previously, other than your past pension fund. And I don't believe any of you were on the board back in 2004. Um, so what you need to understand on this journey, Is, this is not like your general obligation bonds or other smaller scale or wage jobs. So please do take [00:04:00] advantage when I pause there any questions you might have, and furthermore, if I haven't pause and you have a question don't hesitate to interrupt me. Cause I think the main, my main goal is that you have a pretty deep understanding of what this looks like, or you make a decision. So with that, Nick, there is a check check. I, we cannot start. So the question was, can we start with what my recommendation is? And. This may be a frustrating response. Um, but the truth is I don't get recommendations on this subject largely [00:05:00] because we stand to benefit financially from your participation or lack thereof. Um, and so I am here to present, uh, facts as I know them. And then we'll leave it to you to determine whether or not this actual data is comfortable enough to proceed. So we can come back to that. But, um, one thing I would say as I'm going through those, if someone, maybe Brandon could monitor the chat and let me know, this group is not super huge. So I would actually encourage you. People that are just speak up if you have close friends. Yes. So because, um, we do have a financial advisor, so, um, you know, after the presentation and I think without [00:06:00] question about her recommendation, we can handle on that, correct? Yeah. So if not possible, would you share a little bit about a financial advisor that, um, sent the information that we sent out a few days ago? Yes. Thanks. All right. Um, so what are patient bonds and why are we talking? Well, pension bonds also known as pension of the nation lunge or PO these are available to help. Potentially reduce the costs associated with, and for war pensions, the concept is to borrow at low interest rates, take the money, [00:07:00] send it to purs first we'll then invest it in a special Nunez as a side account. It's kind of like all of the savings, the second one. And if they earn over the course of approximately 20 years, more that you're borrowing at all costs, you save money. So I will note that there is a lot of noise. There are a lot of technical details now, ERs and about upper system and the different tiers. And they assumed your raid. Et cetera, et cetera. I would encourage you to focus on the simple soundbite that I'm just uttered because in effect, that's the main deal. If you can order over at a lower rate, then [00:08:00] it is invested and return. You will save. If you can't, if you borrow at whatever interest or you lock it and you're sending it to hers and they are less, then you stand in a position where you are more shaped, then we'll be, we'll go into more detail about that. Fundamentally, that's the deal. So, as I said, bond funds are deposited into this special side account. And he invested with the rest of the purse. Any earnings or losses are credited directly to the side account, which I've referred to here as S a, the side account is [00:09:00] amortized over approximately 20 years. Meaning that hers comes up with a lock down schedule over an extended period, and they take out a certain amount each year. And that amount is credited against your payroll rates. It's called eight rate credit, and it is used to reduce the payroll rate percentage that you would otherwise, because this is not a capital moral thing. Under federal tax law, you have to sell these bonds on a taxable basis. And the district has some experience for taxable. That's how we've done refinancings recently. Um, but what that means is that the interest [00:10:00] rate is somewhat higher than it otherwise would be if you could do it on a tax basis. So that's a factor in determining what the cost of cap. Yes. One other side note, I think you guys may have talked about making a deposit to wayside account. Last year when the state was running a special matching program called the lawyer sector fund, where they match up to 25%, as long as they let me. Um, the deposit made, not only is that money non existent and Stefan has been depleted, but one important note is that borrowed funds are not eligible for a statement that was only available for cash. [00:11:00] So let me pause there and see if there are any questions. Oh, um, about the side of Canada that Kara Jack nation with the 25%, uh, uh, last year, that's a weekend up or money side. I can't wait. Must have cash to do, um, in order to qualify for like a 25%. Well, I don't know if you need to roll a little bit before that. And Sydney last year, we did not make the distribution because we did not have any extra money, a piece of paper. So daft, um, all right. And then I'm also noticing that, um, board members had some wondering about, it sounds like the potential, um, [00:12:00] financial interests of paper and what that means. So somebody elaborate for us please on that. If there's a conflict of interest or how we would weigh the information we're receiving today. So, um, what I would suggest everyone, I'm happy to talk about that now, but I think it might be clear on when I get to how. This whole transaction might evolve to talk about what our role would be. Is it okay if I wait to address that in a bit? I really, I want to know before I'm considering the information you're giving me what your interest is you hatched on or representation. I want to know how much and whether it hurts her benefits, whether we take this action and to [00:13:00] what adoptive Hughes was saying, my understanding is that we have not done the site council, some of this information, I think we need to, to know that that doesn't apply to us. And so if I'm misunderstanding that, um, uh, someone correct me on that as well. Okay. Um, so what we are talking about here, Is the potential for the district to sell bonds, our proposal, uh, if you want to move forward is that you would retain Hyper-V to sell the bonds for as such. We stand to benefit. If you decide you want to move, because this is a fairly risky transaction, I do not feel [00:14:00] it is appropriate for me to make a recommendation as to whether you proceed or you don't proceed. Because I think there is a potential conflict that theoretically, I could make a recommendation that you proceed. And then I benefit from that. So, but the roar. I feel that, and I've been doing this for 20 plus years that because there is risk here. I really think it is not my place to push you one direction or another. I think we have developed a trusting what I hope is a trusted, neutral role that you shouldn't show. Um, and I really feel that this is a decision that each board member leaves to make based on the [00:15:00] information that's provided now, as suddenly as indicated, we also think it's prudent for you to hire a store. Yes, sir. Who maybe in a better position to give you a actual month. I would just note too, for the board that a roll of paper in this is not too similar to the role of when we were contemplating on our 2018 bond and trying to receive that information on what our bonding capacity is or would be. And, you know, the lifetime of the bond, they were also the entity that receives those bonds, that, or a tool of the bond that allow know facility back process or bonding process. So just [00:16:00] it's a world where they played for us in the past. We've invented the back to help us understand this role here too. Yeah. So Piper Jackie's stands to receive potentially how many thousands or how much millions of dollars. Can you give me a range? I still haven't got an answer to my, I, I apologize. I'm not trying to Dodge how much we might make. Um, we have not identified what are, have an idea. I, yes, I have an idea, but it really depends on how much Oro and also we've got pool group and depending on how big it is, it may affect the overall pricing. Right now. We're stinking probably in the range of about half a percent of what [00:17:00] would be our fee, again that maybe plus or minus, depending on how long the might be. I'm wondering if we, if we go back to Dr. Hughes mentioned is that we do have a financial advisor. So if we consider this time to be purely a workshop to learn about how do pension bonds work and a review of how they function and think of this as a workshop, not a decision. Then we can have a meeting with our financial advisor around. You've had a workshop on pension bonds. Is there other, any other questions? Is this something you want to pursue as before? It's our obligation when interest rates are low and the district has, um, you as a board have to do sharing responsibilities that you're charged to by the community [00:18:00] that when opportunities like this come forward, we need to present them to you. Um, this workshop that you're hearing today was actually done for many years. The school districts and here I would read to do it just for us as an audience. Um, so that there'd be more interaction by board members. Um, so again, this, this can be purely workshop, no decision or action made at the end of this, and then direct staff. If you would like a meeting with our financial advisor for their process, what we've learned and see if this is something we're interested in pursuing as, okay. Jerry laudatory, do you want us to continue? Or I was just gonna say let's so why might you want, you can sit with [00:19:00] us? Well, right now, And you guys have seen variations of this graph before, when we were looking at your general obligation loans, but since then, interest rates have continued to decline. Although in the, as month they'd come up somewhat, but even so relative to where you were in 2004, right around here, when you borrow last, the inescapable conclusion is that interest rates, which is one very important side of the equation are at significantly lower levels than they have on average as of the past 25 years. So that's something to be aware of. Oregon has a lot of history with pension obligation bonds and including for [00:20:00] the district. Over a hundred Oregon entered obligation. Bonds were sold between 99 and 18 with a toning exceeding $6 billion interest rates ranged from a very low. This happened for one lucky borrower of 3.4, 3% back in 2015 to a high of seven, over 7% with an average of about five and a half percent and borrowing amounts range from a low of $3 million to the state of Oregon issuing $2 billion. Most school districts and community colleges have borrowed on a pool basis. And that's what you're here at well, where you enter into a pool borrowing. With [00:21:00] other school districts right now we have about 25 school districts are considering doing this simultaneously. And the way we equalize everybody in the pool is that each district enters into an agreement with ode whereby they intercept a sliver of your SSF appropriation each month and send the money directly to a trustee who holds it and makes the payment on behalf of all the districts that levels the playing field between you all borrowers. And you actually get a bond rating that is just one notch below the state of ordinance, which is higher than what West Linn and they'll work at on it. So, so it. Gives you a kind of use [00:22:00] of scale of borrowing all at the same time does reduce the cost of insurance, the wall, and it also activates the credit rating. So it's a win win for sale focuses. Good news that helps me sleep at night is that generally positive returns since we started working on these former ways means that most including Wessling Wilsonville ever realized savings, but it's also important to know that not everybody has to realize savings. We did do one pool to fall away in 2007, right before the market crash. And that group of each school just reps have not realized savings. In fact, they are still needed in the hole. And [00:23:00] barring a really strong set of returns over the next seven years, they were likely to continue to be under water. And they're noting, there were some questions on that degree, what those are. Okay. Yes. SSF is state school fund and I see what you were saying about not using acronyms. So let me pause there, see if there are any questions, your role. It sounds like, um, being in a pool has some advantages. You were talking about leveling the playing field and maybe getting a higher rating than going in alone. Are there any disadvantages to being in a pool or does it for do any risks? So that's a really good question, Kathy, [00:24:00] particularly since I think West Lydian has a sufficiently strong credit rating that you could go on your own, unlike some districts. So it's a choice and I don't want you guys to feel like you have to go to this direction. I do think the main downside to going in the pool is it's going to take a little bit long because we have to coordinate all of the districts, make sure they've all got the same documentation. There are boards, improve it, et cetera, et cetera. So if you guys were raring to go and you wanted to go with immediately, we might be able to do your issue faster. Nevertheless, and I am going to make a recommendation. Um, this one, um, I think you would benefit from being in the pool because you are likely to [00:25:00] get lower interest rates and more costs. So is it confidential information who is going out for a potential bond, the 25 school districts, knowing who they are? Uh, no. I am happy to share. Um, they are a pretty diverse group, uh, in the natural area. Um, Oregon city is on the list. Um, Portland public is thinking about it. Um, other districts of size Springfield, um, And then we've got North Marion and, uh, look Randy and several [00:26:00] community colleges, Mount hood, community college, Clackamas, community college and neck. And, uh, so it's a pretty broad range. The smallest issuer we're talking to is worth counter. They were at about $4 million. The largest students. Yes. Yeah. Okay. Move on. So, um, I've already said this multiple times and I'm going to say it again, um, in Houston, slightly different, or this is what's called an aura, the truck. In the world of municipal finance, the word arbitrage is generally a dirty word where one, because it's something that federal government tell us [00:27:00] in this case, what we're talking about doing is borrowing money and hoping gambling. If you want to call a spade, a spade that you can make money on your aura. So some people that's called the tribe when we profit off of one market, versus sometimes I've heard people refer to selling our pension bond as like refinancing debt. Or refinancing your mortgage. And I want to tell you here and now that it is absolutely nothing like refinancing your geo bonds, which we did last year. Why? Because when you read the answer, your jail, what you've [00:28:00] done is you've locked in a new interest rate and I can guarantee your savings in this case. It is true that you arguably have debt perks and Hermes is charging the assumed rate of seven or 8%, but that's really kind of backlash because let's assume you borrow. And we're right now is to me or borrowing, right? Three and a half percent, which is a ton lower than 7.2. No question. The thing is when you borrow it, it's three and a half. You're not hanging off your 7.2% obligation and then walking away from it, the way you would, if you were refinancing were more itch at 7.2 [00:29:00] and borrowing new, the problem is at curse, your obligation doesn't go away. So let's assume you borrow it three and a half. And rather than earning 7.2, which is what the fund assumed you are two and a half, you're still responsible or the difference at ERs. So that's why I using terminology. Like this is a refinancing or. With an expectation that there's any guarantee is completely inappropriate. It's a bet. And it might be your really good bet in this market, but it's still a bit, and you have to be comfortable with the fact that you may not know for years and years, whether the bet. [00:30:00] So Carol, can I ask a question for a second? Yeah. Um, so this, this Christie Tom said, um, hi, would you also like, is leverage just another word for arbitrage? Would you use those two interchangeably? Um, meaning you borrow from a foreign money to invest in the stock market. Um, and these questions. So my husband's in finance. Right investments. So I had him, we spent couple, two, three hours and he just walked me through too. So I'm going to be honest and just say some of these questions come from just his finance knowledge, which is so much greater than mine. Um, he referred to this, he talked about leveraging, um, which he said is known kind of as risky of course, to charges too. So is there a reason we call this arbitrage and not leverage and is one less risky than the other? And maybe it doesn't matter, but I'm asking, but [00:31:00] so all really good questions. And to my mind, the word leverage just means borrowing away as arbitrage is a concept about profit off of two different markets. This is a leveraged all of the trash play. If you want to use. Finance, we can go. So arguably, if you had set up a site account with cash, that is also an arbitrage hope where you take that cash that might be sitting in a checking account somewhere earning less than half a percent and you send it to curves. So the arbitrage there would [00:32:00] be between if I can earn half a percent in the local government pool, but if I send it to pers, I might have 6%. That's another kind of arbitrage play if you will. But that arbitrage play is a little easier to not. Having anxiety about just because over time, hers has done much better on investing. Then the district has done this idea, introduces the concept of leverage, which is probably what your husband was talking about, where not only are you taking cash and giving it to purse, but in order to access that cash, you have to follow it. So then [00:33:00] you're baseline is not what you're investing at, but what you're battling. So rather than the cash in that investment arbitrage being between, well, I'm investing now in half a percent, what are the odds that I'm going to look pretty darn good. In this case? It's. I'm raising my benchmark two, if I borrow it three and a half, what are the odds on them? Okay. Thank you. And then my other question or another question, and you can certainly answer this later if that's better. Um, but one of my questions was going to be, do we know how her's invest this may? Um, how, like what, so we invested with them that they're, they're using some sort of, you know, what kind of transactions are they doing? Um, what, what, how are we investing in? So, [00:34:00] um, pers has as of last month, a portfolio valued at $80 billion, which makes it surprisingly one of them larger public pension funds in the country. So as you might expect. They are broadly diversified and they invest in stocks and commodities and fixed income bonds. They also have about a third of their portfolio in what's called special equity, which is kind of leverage buyouts and all kinds of exotic stuff. That's handled privately. That is not my area of expertise. And one of the things the district did do was sign up for an assessment that I'm [00:35:00] going to go over in a minute with ACO Northwest, you took a look at their asset allocation of what was in their overall portfolio to get a sense of whether the probability success was high. So if I think that's coming up on the next slide, Okay, thank you. Because I was going to ask about where who's echo Northwest and what, who are they like? Does this look perfect. Katie? Any other questions before we move on? Okay. So how do you judge, whether this is a good risk or a bad risk, as I said, I'm an expert in borrowing, and I can tell you that one side of this equation pretty good shape right now. What I can tell you [00:36:00] is the other side of the equation. That's just not where my expertise is. That said I do have some data to share. One thing you could look at is Pure's history of investments and purse has been a funds in sooner, the 19th. Um, and person itself is not responsible for investing the portfolio, Oregon investment council, which is run by the state treasurer with a large number of investment in fire service is responsible for managing the investment of the portfolio. And over the past 50 years, they have had a remarkably strong investment performance. So between 1970 and [00:37:00] 2019, the fund earned over 10%, um, side accounts since 2007, which includes that devastating 2008 year where the fund loss 27% of its portfolio. Despite that they've recovered quite nicely and are, have the age history are 7.6% and then the last year alone upon his earned over eight. So if history is a good guy that should give you some comfort. I remember when I went to business school while I was told that history is history. So comfort that this is a well-managed, but it is not full. [00:38:00] Okay. So the district entered into a contract with eco Northwest Regina is a well-regarded academic soldiering and ordered in Portland. And over the past 20 years, since we started working. On, um, pension bonds everywhere with lost has done this analysis each time. Um, and it's important to note again, that the district entered into this agreement with all the other districts at a very nominal, um, to have the Akron Northwest do a wholesale assessment of the probability of success. They have no conflict, they are not going to be compensated. If pension bonds end up [00:39:00] coming out of this and they are not connected with us, but this is the key slide out of their presentation, which is what is the probability that the PV, which stands for present value, meaning what it's worth in today's dollars. Is more than zero. What that means in English is what is the probability that this bat is going to pay off? We gave them three different borrowing rates. One in my world is called the tea ice or true interest cost. So that's equivalent to the internal rate of return or APR on a car loan. And I have a cold, so I am going to get it. [00:40:00] Um, and we gave them three different interest rates, two and a half percent, three and a half percent. The weren't a half percent when we gave this to them. This was about four months ago. We were pretty close to two and a half percent. The actual bordering route. We're now we're still South of three and a half, but as I noted on a previous slide, we've been assuming three-and-a-half okay. And we also gave them an outer limit of four and a half or so. And I have to say the probability has never been this long. Um, having a 95% probability or even an 90% probability is way stronger than we've seen [00:41:00] in the past. And even at 80%, I mean, does this sound sort of like my coronavirus vaccine test, all of these are most certainly, I don't want to say too good to be true, because that sounds like a judgment. They are solid, solid. Yeah. That's okay. Of course it is also true. You could look at this the opposite way that if you've got an 80% probability of success, it also means you have a 20% probability of failure. So that's not nothing. And that's why I think if you grew up down this path, you just really need to do it with rise so that there is a chance this can vote. And if that's not scary enough, it's also appropriate to note that there were other [00:42:00] risks, one of which wrestling has experienced. So we'll talk about that in a few slides, but one thing that's important to note is that the timing of earnings matters. So it's not just, Oh, if I borrow it three and a half, If I earn more, those ran a half over a 20 years. I'm golden. That's mostly true, except that if you borrow a three and a half and then next year, the fund loses a little like 27%. It's really hard to crawl out of early negative. So that's something to be mindful of. Um, it's also true that your credit against your pay roll rate is not going to [00:43:00] be consistent. It isn't going to be a flat line where you say, Oh, I'm going to get a 10% credit against my people percentage each year. Why? Right. Because there is going to be urban spirit. Some years, you're going to earn 70 some years. You're going to 12, some years you may lose money. And that is true to up every two years with the valuation that first 10 dogs. And it will show up in your pay more rates each time, and then maybe some of this going on. Uh, it's also true continuing the gambling lingo, um, that side accounts cause kind of a doubling down of the investment performance. What do I mean by that? Well, when hers does poorly, [00:44:00] it's not just your site account that is losing money. It's the rest of the overall, which means. That your overall paywall Rick's real face upward pressure in an environment where the pers portfolio does poorly. That is exactly the same time that your credit on your side, your account, which is also losing money, is going to be going down. So at exactly the same time that your overall payroll percentage is going up, your credit is going down, which means that you're going to feel the effect twice. It is also the case that the [00:45:00] opposite is true in quick years, good investment years, the overall fund is going to be doing well, which is going to. Overall rates to go down and your side accounts just going to be doing well, which is going to wish the credit. So what do you do about that? Well, creating a reserve in Greek years is a really, really good idea. If you drove down. One thing that has been notable to muscling in particular is that if you have strong payroll growth stronger than what the bottle of students, which is three and a half percent, one year, it will change the timing of when you experience a [00:46:00] savings. And I'm gonna just say that and come back to that later, because I can show you how that affected you because you have over the course of the past. 15 years or so had payroll growth that exceeded the story and a half or something. And I'm seeing a lot of questions come in. So let me look at a shot. Okay. Yeah. This was, this slide was a lot to process. So maybe let's linger here for a little bit. Okay. Right. So the district does have a side account because you borrowed in 2004. So we're going to look at the performance of the half side account. So you get a sense, and this is a [00:47:00] proposal to potentially create a union. Yes. And they would be placed. In the purse portfolio. So ginger, it looks like you had another question. The socks felt placing, so let's just, let's not call it a sighted counter. If you've been using the, a third bond, if we get a first, another first bond, it con doubling down on investment performance in the state's bond. And that means what for us. Okay. So do you know what I think maybe I'm going to skip ahead and look at your experience because I think I'm a numbers person, so hopefully this doesn't turn people [00:48:00] off, but I, I think it will help you sort of absorb the points I'm trying to make here. Okay. Or ginger, you have your hand up again. Was there something else you wanted to say before I did this? Okay. All right. So, so there are a lot of numbers on here and I appreciate they maybe too small to see clearly. Um, but let's see if we can sort of talk about the broad overview. So that top box is going from the 2007 valuation. And we selected that intentionally because that was the last valuation when things were in really good shape. And it goes to the most recent valuation, 17, [00:49:00] 18, and 18, if they sound dated, but the 19 valuation is. Most recent inflammation, it was released in fall of 2020 is everything from pearls of legs. And it is a valuation that is setting your work rates a percentage. You paid a purse, but each paycheck starting this. Okay. Those payroll rates that start from wire 21 will run through June 30. Yeah. There is a system overall of the purse fund, which includes nearly all cities, counties, school [00:50:00] districts, community colleges, state agencies in the state of Oregon. And they have a total payroll today of about $11 billion. They also have a fund that consists of all the contributions that you should. These agencies have made that is valued at about 80 billion today. School districts are all in a pool together. So from poses perspective, you're all wanting, you all pay the same base rate, whether you're a teacher in West Linn or a custodian in Ontario, if you're tier one, every school district pays us same. [00:51:00] That is a tried and true insurance. Way of diversifying the risk from one district two or not, you all to gather, add a combined payroll of 3.7 billion, and you will also have something called a U a, which stands for unfunded actuarial liability, which is a lot of words that basically means the shortfall that you have as part of the speed district to the first. Well, it was a hundred percent funded as of today that there would be nearly $8 billion in [00:52:00] cash in the fund. You are then Nan saying this debt with furs at an assumed rate, which is the rate that's built into the pers model of 7.2% back before the recession, that shortfall that UAL was still large over a billion dollars, but was nowhere near as large as it's grown to today. Hey, everybody tracking so far. Let me just pause there. Cool. And then did you have a question? Yeah. This chart is making no sense to me. I think the farm for me is that. The [00:53:00] combined valuation payroll was kind of the starting point for this. And I don't have a clarity of what that is. Um, so the last three or four minutes I've just spent in kind of a border for me. Um, so I don't understand what we're building to and I was telling you, I'm not going to figure out if I forgot the last three or four minutes. Well, no, I, I appreciate that. And you're right. I am building up to something. So it's, let's go back. The payroll, arguably is extra noise that you don't need to understand. What you need to understand is this line, which is the URL. The URL, as I said before, is a shortfall that school districts, as a group have to the pers system, it's a debt that you have taken a loan out. At hers [00:54:00] and they're charging you 7.2% interest. Does that make sense? So is that a debt that we owe right now, or that we're going to go in the future? It is a debt you own now, and that you are already paying for. And let me show you how you're paying for it. So these are percentages of people that your district, they used to purse with every paycheck. There is a line item, tier one, tier two U a L rate. See that back in 2007, 9%, nearly 9% of the, every paycheck that was sent to purs was to pay for this billion dollar debt. It's [00:55:00] now absolutely cheap. That's not, um, that's literally a 6% of payroll increase that you are paying and your payroll right now, according to purs anyway is about $60 million. Yes. So, uh, yeah, the zip, the million acid payroll costs per year electric. And then, um, Kara, when you say, um, 7.8 billion here, and you're coming out through the placenta, It's like Miami of 1921. Do you want to rehab for people play 35% and then 21 for the [00:56:00] Dre is 2014 included, embedded in that. Right. Okay. So, um, well, new motor do remember when I shared with Judith Coburn, right at rehab for, by any of 1920, what do you want to get do? Um, we have So do you remember before when, um, asked about, um, how much it costs to pay on the audio pair of benefits? And my message is every single dollar wait staff phone or the salary. If Julie cost a victory, $1 65 cents. And if I, so when we have, when we J $1 to pay salary that big have to have one Dallas. If I sing one, Bella, go through salaries. If I sang [00:57:00] and then this benefits for the group you want to in, by any of 1921, you want to do full point 25 was saying that, go through support and pay off that pool, um, uh, benefits that they have. And then, uh, let's say for the victory net and another seven plus thankful. So social security and every all for benefits if 5%, um, now, but again, going to explain more, I did one, do you do. Do have a connection between the 14% about, so if these numbers mean that if our pay our payroll is $60 million, we're going to pay about $15 million a year towards the pers debt. [00:58:00] Yes. Yes, because now when I go to attract for last year, we have 16 million. So let's say I will sit the million in Cairo and I have to factor in or the panel benefits. And that what within does it define the same 14% voters year one, and give to put it in late April and then a nod to 1.9 plus with data opposite. And so practical level, what we're always wrestling with them is, you know, we get this money from this state and we think, Oh gosh, we can hire so many people, but we have to factor in increasing as now that we have to keep setting aside or paying into [00:59:00] hers, which lowers our ability to then hire more people. Um, so what, what do you, what do you do? You know, that's, that's the question? What can school districts do to get on top of this increasing hers percentage conundrum until, and the state is trying to right the ship a little bit. They realize that tier one and its bylaws created some of this exacerbated cost to your two came in with some new rules to try and mitigate. Uh, some of what was happening with tier one officer, which is now employees are hired under a whole nother retirement, kind of, for lack of a better set of conditions, um, makes it more manageable for employees, but we still have people in tier one and tier two that we have to take care of. So in the long view, the fewer tier one tier two employees you have [01:00:00] in the more officer does get employers to a better place where they can maybe think about how much goes towards salary, which goes towards retirement, but we're not there yet. We're still in quite a conundrum and buying these bonds has been a way that districts have taken the gamble. She used her as words to try and get some more cash flow, um, so that it doesn't come all out of your state school fund out of your budget. Yeah. And if, if I recall correctly, I'm not asking if this still holds true, but we'd been advised previously in years past that we can anticipate this, um, funded liability to continue to increase. And I thought it was through 2032 ish. Is that still the expectation or when do we [01:01:00] anticipate it? I think then it was supposed to plateau for a few years before it would go down. So the latest estimates I've seen or that is expected to potentially increase. So it is all based on the rate of return that the codes. And the reason it jumps so substantial there from 2007 to 2019, is exactly that when you lose 27%, instead of your assumption that you earned somewhere between seven and eight, obviously it takes like yet. So that causes the debt, the shortfall to grow last year. The last data [01:02:00] we had was as of September, 2020, when the actuary projected, and this is probably what you saw that because as of September, a market was still in bad shape last year that the UAL was going to continue to increase with the next couple of years. And then it was going to finally her. Won't go away until 2043, but at least it was expected not to eat. [00:00:00] Past three months. So between September and December, the fund actually made money and came in just lightly above the assumption. So my guess is when the actuary updates that information, we may see a platform rather than an increase, but a lot of the reason that this move through so durable, not ugly is because we lost. Ton of already in 2008 and then the legislature stepped in and kept delaying and delaying and delaying paying it back through various legislative efforts. And, you know, as with any dent, the longer you take to pay it back. So ginger, you have your hand up. [00:01:00] We have ORs bond right now, or 2004 we've only, Oh, seven more years on it. Well, we're still going to have her at the end of that Vaughn. So two separate things. When you did the 2004, our wing. So this is now, you know, years before 2007, you were borrowing against the liability that existed. Then this is exactly what I was saying before, though. You're never off the hook with hers. If their performance does not keep up with a model. So. By 2008, which I didn't show because I didn't want to overwhelm this, your share of the [00:02:00] liability bullet wound again, and as part of the overall system approach to delaying repaying, delaying, delaying, delaying your share of the liability has only two. So let's look here back in 2007. Your share and the way they allocate this is purely programs. So your, a role divided by the overall school pool determines what percentage of this number belongs to wrestler back in 2007, you had a UAL of about $15 million. But because you had been so successful with your 2004 or where you borrow [00:03:00] $42 million, we'll come back to this because you burned in 2004 and then 2005, six and seven, you had very strong return. You actually had a side account at the end of 2007, that was worth $8 million more than you had on three years or so. That's the kind of experience that makes you go. Yay. That's fantastic. Such that by 2007, this negative number means that you were actually in surplus. $35 million more in the fund and you needed based upon what the model was saying. That's a good thing because in 2008, you lost your life [00:04:00] such that by 2019, your share, even with a $27 million, I recount. Still after 16 years of drawing it down. So this is actually a very strong place to be. You have saved money, you still have a UAL. That's almost $110 million, and that is not related to the 2004 on that new debt that occurs system piled on. So you are currently paying on 137 million in additional debt that is made better because in 2004, you borrowed some money and you [00:05:00] deposited it and generally have done everything on a percentage of human. Basis. Okay. So this is all interesting, but how does it affect your day-to-day operations? Hers divides their percentage into completely normal costs. Rate is photo in pocket, where if everything went according to their very complicated model, where they. Feed it rates of return and rates of payroll growth and how many women they have and how many men they have and how many are likely to go out on disability and how many are going to pass all on Sarah and Sarah? It's very complicated. If this rate was [00:06:00] correct, you would never have to pay another guy. That's the forward walking more. Welcome. But then there's this UAL, which is backwards and it's arguably, uh, Oh, our normal cost was well because one or multiple assumptions that was built into the model was incorrect. Usually rate of return is where it shows up. So. There is an unfunded liability percentage. Officer is the new pension program that was started back in 2003. When tier one into two, as Kathy was saying, was identified to be overly expensive. They came up with a new system that they could have called tier three, but [00:07:00] for whatever reason, they called it off, sir. Back in 2007, it was in surplus. It now has a small liability, but it's small. And that leads to eight total school pool rate that is paid by all school district. What is nearly 14% for tier one to two? Um, Now it's more like 29% and that's largely because this number has gone up actually the normal costs. That's awesome. However, those districts that have a side account, get a credit against the payroll, right? Yours was 10% back [00:08:00] in 2007 and it has gone down over as you've drawn it down is a rate that is unique to wrestling Roseville. Although every school district that has a side account has its own. It's to an overall rate or a bunch of other components that are probably not worth wasting your time with today. Back in 2007, you were paying 4% roughly of your payroll. Now you're paying more. And the good news is that actually. This is the rate you're paying a eat is scheduled in July to go down. [00:09:00] So, yeah. Okay. I know I barrage you with a number. Um, should I keep going to show you how you've done with your bond or are there questions. So Carol, because this is a 20 year bond that can have variability, um, some good years, some bad years, the risk. Is it in the, it sounds like is in those worst years. Oh, they didn't have, cause I keep hearing that 27, the crash of. If you have such a turn in the market and a huge risk, right at the beginning, no matter how, how well you do pull it out of that, like the district horror stories you were talking about is [00:10:00] almost impossible because we had even three years of really good when we hit that same market, the bottom fell out of the market. Bye you guys were approaching the 20 year Mark. We're still coming out with a win, so to speak on the right side of finances, because number one 20 years is a long time to kind of write things though. We had some good years before that the market tanked. Yes. Um, that is. Generally a true statement, Kathy, that you are a head because you add multiple years prior to the crash. There is one caveat. However that I want to make sure we focus on and I'll come to in a minute, but [00:11:00] just to item eyes, what that looks like, as I said, You borrowed in 2004, about $42 million. You borrowed at a rate that was at that time, a very competitive rate, but it's about 2% higher than it would be today. You then immediately are earned 13% and 13%, then 15% in which trillions that by 2008. You had a balance of $50 million and that's not because you weren't plying it down your work, you were drawing down about on average three and a half a million a year, despite that your investment earnings were so strong that it more than offset. And then this happened. Yeah. Cause there's [00:12:00] that 2008 crash. There's a 12 million. Almost threat to rent. And we went down to $33 million pretty much. Nevertheless, despite that you had built such a strong balance that you have saved money every. Single year, in some cases, a lot of money, million, five, and a million time, except for one year. Okay. Two such that year to date. This is not a guest in it. This is actual how much you have reduced your pension costs relative to your debt service. You have saved a grand [00:13:00] total of 14 and a half million dollars. Now in the world of finance, it's, you know, this is an accurate number, but you also want to know what it's worth to two day in what's called the present value, which takes into account the time. Um, and in that case, You've still saved a ton of money about 10 and a half million on a present value basis. And some of you may remember that when we were looking at refinancing your geo bonds, we talked about the state having eight test that used to be in effect, but that they weren't healed for a variety of administrative reasons called them. 3% task where you wanted your present [00:14:00] value savings to be at least the 3% of the American all road in order to achieve there's savings on that basis. You're at close to 25% of the savings, which. If you were only at 3% savings under no circumstances, would you do this? Because in JIDO bond, refinancing is that guaranteed deal. This is not guaranteed, but based upon those metrics, this has been a very healthy refinancing that has saved the district money that you have used in your classroom. So there is however, another chapter that is less positive [00:15:00] that we haven't really seen elsewhere, um, but reflects something else. And that it's important for you to understand. And I want to go back a slide to talk about. So when hers assigns your rent, your rate credit on this line, what they are doing every valuation and they do a valuation every two years. And then that sets the rates into the future for the biennium. Then they did the 2019 evaluation that they did is they looked at your side account and they said, Oh, we have a certain amount of money in the side account. And our goal is [00:16:00] to come up with a drawdown over the next seven years. That means that we're going to end up with zero at the end. So. They come up with a drawdown and that drawdown use, it uses too variables two and only two. It's not their main, incredibly complicated model. This is actually a pretty simple, the two variables they use is that they use assume that each and every year from now on that fund is going to earn 7.2%. That's it? 7.2% every year. The second durable they use is that your payroll is going to grow at three and a half percent each and every year, they then assign you a credit percentage, 6.6, [00:17:00] 8%. Is there a current estimate that in those two variables ended up being true that. You were in 7.2% through 2027 and then your payroll grew at three and a half was through 2027. You would end up with a zero in your locale. However, when they are calculating, how much is actually withdrawn from your site account, they are not using a. You're radical. They are using your actual, so let's look at what happened to your actual payroll, particularly in the last five years, actually, since 2008, your overall [00:18:00] weight of the payroll has been substantially faster. And I lived the system as a whole or than school districts elsewhere. So what does that mean? It means that you more, I think role is higher than the model assume. And when they are figuring out how much to draw down from your side account, they take that percentage credit. In this case, again, 6.6, 8%. And they multiply at times your actual panel, not this Phantom model payroll. So every time you grow faster, let's just talk about it in 2016, when you grew it 11%, [00:19:00] that means that your site account was being drawn down. Faster than what they were expected, which means that when they did their valuation and you can see this trend line here each time, your side account credit went down. That's because at the end of the day, when they looked at the amount in your side account, they said, Oh, we have less money in there. We were expecting. So in order to make sure it lasts till 2027, they've been reducing it and reducing it and reducing it. So what that means is that since you have been logged on your side account faster, you've actually been taking [00:20:00] savings earlier. Then the models suggested should have, which means when we project forward. And so these are the next seven years, eight, you'll see that all of a sudden it's negative. So we project that your credit. Real abuse less, then your debt service over the next seven and a half years. This is this whole year out. It's December of 27. Then the cost of your depth service that does not mean you haven't saved money. You have saved money. It's just that. And this is the starkest example I've seen so [00:21:00] far. It just means that you saved more money. You are arguably eating into your seat for a little bit at the Flaman faster than you should have, and barring a Raider return higher than seven 20. We anticipate that your savings overall will go down. So about 11 and a half million overall and nine and a half million on a present value, which is still hugely positive, but reinforces what I was saying earlier about volatility that this can introduce into your game. [00:22:00] So let me pause. That was a lot, and I have no idea how I'm doing on time. You guys, so that's really good questions. And, um, that leads me that, yeah, so, uh, uh, We this here. Okay. So thinking you did answer, answer my question about the, um, what did we learn from 2008 in terms of temperament? So how do we learn today? We kind of. Huge federal tax. That's only going to increase, um, [00:23:00] in the learn from that to understand, um, the risk. Uh, so, um, actually in order to talk about lessons, um, I'd actually how much time do I have? Am I way over my time? We have until two o'clock. Um, we've got, I mean, maybe 20 more minutes for this and that. I have to revisit this learning. Okay. You guys, I love these questions because I think you more starting to really absorb why this is. Not any easy decision. Um, but ginger, if you would bear with me, I want to back up and talk about, [00:24:00] uh, and some that it should tell me, is that still the big, the bigger version? Yes. Good. Okay. I'm going to pack up and talk about the examples that are skipped. Um, which were some of the lessons were from three other districts that have gone through this and I have not identified them one, for sure. I'm sure you can figure it. Um, but we have school districts, a, B and C, um, all of whom participated in a pension fund. At some point school district day is my favorite case. Um, they issued twice once in 2002, and once in 2003 at a rate of [00:25:00] 5.6 and 5.73. So again, about 200 basis points either where we are right now, already nearly half a billion dollars. And after 2002, we went through a period where we had five strong years of the terms. Both of them. We led the cliff of 2008. So that was their experience. School district B also issued twice at much more interest rates. They actually, the first time you shouldn't eat your, after you did. And in 2015, they got really solid rate at that point. They borrowed in 42 million. They've also done well, but not quite as well as these guys and then their school districts. See, uh, the fact that they still talk to me, you know, I take as a really positive thing. Um, they borrowed in October, [00:26:00] 2007. I don't know how well you remember 2008. A lot of us locked it out, but within a matter of three months, They had lost nearly half of their deposit. So that was fun. Now let's look at their school district day, again, 491 million. These were their interest rates in 2019, same valuation. We were just looking at. They actually had a site account that was valued after nearly 20 years of drawdowns and more than they've deposited originally such that their savings to date. And they did not have as strong payroll growth. And as you did, as I said before, I have not seen a case where you are positive, but [00:27:00] you've got vacuums of negatives. Due to such strong payroll growth. Um, but today they've saved $283 million and we project, if they continue to earn on average seven 20, that are going to save your link to letter B. 142 million and they still have a hundred million in their side account. They haven't saved as much percentage wise, but they're still in strong case. And then there's ordered in 2007, their side account is worth about 50% of what they deposited and to date, not only have they lost 2.4 million. Well, we project them. They're going to continue to lose money. This was also a fast enroll growth disbar so they made [00:28:00] their situation worse. I blind their side account faster and we projected overall that they will have lost $10 million on last is longer than seven. So what lessons do I take away from that, Ralph? First of all, you're definitely gonna deal with more volatility than it is. Volatility is not necessarily a good indication of whether you're head or behind, but it may put you in squeaky cashflow issues. So. If you've gone down this path, it's a really good idea to set up a reserve and at least in the good years. And what I would say specifically, you guys, in terms of lessons learned [00:29:00] is if you expect this kind of payroll growth to continue it, at least in the short term, it would be better to build your debt around actual. Expected, meaning Flint load the decks. So that not only are you borrowing at a cheaper rate, because the more you pay earlier, the better off you will be, but it will be a better match for your actual rate cable works. So we will be working with each district that decides to go ahead. Particularly given the SIA and other funds that are available to actually look at specific payroll missions, rather than just assuming that everybody's going to come out with. [00:30:00] And in the few minutes I have left. I want to show you. Uh, three different scenarios. We ran for a new potential issue. So maybe not surprisingly, we looked at three issues to, with and by the way, you don't have to borrow for the full amount. You could use something less, but case one is the model of case, what Corrs uses in their demographics. Where you borrow and yours is 7.2% each and every year. What are the results when that happens? Well, if you assume a borrowing rate a three and a half percent, I don't even need to do that. If I borrow at three and a half and earn seven 20 every year, I'm like printing money. Um, and in fact, [00:31:00] then net rate credit, they really use that. Or the gross rate credit is about. And somebody I think has a fair amount of background noise. So I don't know if it's possible for people that commute that might help. And Christie, do you want to ask you a question now? Or should I finish this thought? Um, you can finish your thought. Yeah. And sorry. That was me. Although I don't feel like having background were nice, but I haven't forgotten, so I apologize. No worries. If I've learned to anything for me here, zoom meetings it's to be a little worse than all. Good. Anyway, your red credit would be about 12.8% and it would be the same every year, because we're assuming that you were at seven 20 every year. Your [00:32:00] debt cost. Would be about nine and three quarters percent, which means net net, you would be saving three percentage points of your payroll. So that's 3% of $60 million. Overall savings would be about $51 million on a present value basis, $6 million, and the percentage savings that 40% of tasks. We've been 10 guys that, okay. So we know that that's not, what's going to happen. So let's do two other. What if scenarios, the second one or scenario is the scenario that school district a experienced for immediately after issuing in 2002, they are in 22% that 13, et cetera, et cetera. Five good years. And then [00:33:00] lost a ton of money five years later. How you doing well, not surprisingly good in school. District's A's performance you're actually doing, even then you would save 5% net net of your payroll or $88 million overall again, do I think that's going to happen? No, not thing that is on this painful. Is exactly what you are going to experience, but to give you the range of what if scenarios that seem reasonable. We also ran what to date has been our worst case. Is this the very worst case? No, I could throw in all kinds of terrible assumptions about worker performance that will make this, that we're being way worse. But this [00:34:00] is the one. If I borrow and immediately three months from now, I lose 27% and then I'd have exactly the same ritual that she brought in 2007 did well, shockingly. And I've been doing this for a long time. This has never been the case, even then you're saving on average one. I don't know. Now I have a legitimate question would be well, how is it? The school district C is never climbing out of their hole. A fundamental difference is that school districts see or road at five, six, 7%. Where as right now, even if you had those circles, You're looking at walking in or oral language [00:35:00] that is substantial. Okay. Christie, I've made you wait for an extended period, so go for it. No, that is fine. And, um, again, I'm going to be talking out of my husband's mouth. So, um, you know, these are just the kind of things that he throws out. So. Like, you know, we see that it's a good time to borrow that it's 3.5% that that's a good interest rate. Um, the question is, is it, is it a good time to be, um, going through arbitrage or investing in a stock market and his mind where he says he feels like the stock market is hitting an all time high and that some of that is because of the 2.5 trillion in stimulus that is important into the market. Again, those are his words, not mine. That has been brought into the market in the last 12 months. And so the question is, okay, well we know we feel good about this interest for it, but what about the fact that the [00:36:00] market is at the top and what we might expect now, again, I understand it keep going up her, you know, so I guess what I'd like you to do is speak to that. Of course, knowing that we never know, um, and then also speak to, would it make sense that it looked like some school districts had done this. Do you do half now and half at some point in the future, just based on that fact that maybe right now is a little bit more risky because of where we see the market. Uh, so all good questions you should tell your husband. Thank you. Um, learning with them. He loves this stuff twice. He was so excited. That's awesome. I would be. Almost having to talk directly with him. Um, so I think that's the key question. I don't know if we're at the top of the stuff and look at this is [00:37:00] why getting back to what ginger was asking earlier. I don't give recommendations because I don't know that is not my area of expertise. What I can tell you is that interest rates are at all times. What I can tell you is that echo Northwestern assessment and came to the conclusion that Acton used interest rates, your probability of success was I even if the stock market is at all time and what I can also tell you is that if you lose 27%, so let's say it is at all time highs and we go through a wall. Usually what has happened historically is that the market then recovered pretty fast. Um, if that's the trajectory even so you're saving money now, could it [00:38:00] be a very anxiety producing period? If we lose 27% lately, I lived through it once it gives me. Heartburn, just to think about it. Do I think that's likely to happen? I kinda doubt it. You know, I think the stimulus package is propping up markets. I think it will likely continue to do so or a year or so after that, I don't know, but certainly the last recession was the absolute worst. That we hadn't had since 1929. So what are the odds that it's going to happen again? That way? Not in our exponent. See this Wallington all right. We have about seven minutes and then we'll start to back this up. [00:39:00] Ginger. I see you picked out a question. I was just going to say Dylan had a question. I see Ginger's questions. So not hearing anything from Dylan, uh, ginger, you asked about the credit rating. Also, you guys ask really awful questions. Um, actually, what we did you have been seen from the rating agencies is they continue, they consider this hundred and $13 million street, your debt, and they have been looking more hateful towards those who have side accounts, where it has worked out. Well, [00:40:00] I just, so that's, you know, kind of the $64,000 question, right. You know, or if you have a side account that doesn't work out well, and the rating agencies are looking at your overall debt. Um, but for those that have done well, it is actually been a credit positive. And for those who have done nothing. It's been credit neutral because they look at this debt as you debt, whether from the answer or do you finance it through the banker close? So I don't think I have much else. This is the detail that shows you seven 20, which asks you or rate credit. That's the same every year. This is the detail that shows you the strong rate of return. And, uh, one thing I want to share [00:41:00] is, wow, look at the variability. This is the detail that shows you the not so great. And then variability, I will know today, there are two years that are vegan, but they're practically breakeven. Um, Finally, if you want to do this, some ways should notify us and the bond attorney, if you want a resolution by next Monday, you also get to specify the maximum borrowing rate that you're comfortable with. So, yeah, comfortable at two and a half, but that is. Chances are we're not going to be doing it because I don't anticipate the luggage is going to go back there. Um, you can put in three and a half, what the numbers are. Most districts we're [00:42:00] working with are putting in something above three and a half or something. We're putting four, some we're putting four and a half, but it's completely up to you. Um, we ask for you to adopt the resolution in April. But do know too that you are not obligated to go forward until rightful for the bond sale, which we anticipate again. So you've got lots of off ramps. If you decide you don't want to do this, um, I would say that by your April board meeting, You should be pretty sure you do want to do this while I'm not going to force anybody to go forward. If they're uncomfortable, you're going to put your staff through a fair amount of work. And if you really think you don't want to do this, and [00:43:00] it's probably that or not to adopt the resolution rather than adopt the resolution say, well, I'll see how it grows. And I'll back out at the last, um, There is a small cost. You have to request an analysis from Bruce at a cost of about 1,250 bucks. And I will note, I think I said this pursuit, but maybe not. Um, if you wanted to do a portion, that is absolutely your point, sir. That's enough. And now I'm going to shut up because I keep all of your time and give a final rundown for questions that are just like contact information. If you think of something good. Thank you so much. Um, especially [00:44:00] the density of this image, along with the specificity and financial specificity of these types of transactions, um, I, I just, I appreciate you and your ability to make it really understandable. And when we don't understand to slow down, go back and help us. Thank you, Dr. My next question is more for you as well. How we as a board, I mean, I don't believe right now in this moment, necessarily we as a board have time to awesome this in the next 10 minutes and find out our next steps. So what would be. Or what do you even advise as the best method restaurant? Well, we've got a short run way. If you decide you want to alert, kind of proceed on there to begin the process. We have to alert them by March 22nd, we have this week is working week, [00:45:00] um, to get anybody else into a meeting for you. If you'd like to now talk to our. Financial consultant. We can arrange that and you can have the special session with them. And I'm, I'm sorry to interrupt, just to take some of the pressure off. Yeah. What we need to know by next Monday is whether or not you want a resolution for your April or may we do not need a decision. Until April or may. So if you wanted to engage your municipal advisor to come and talk to you, it absolutely does not have to happen. So what, what, what sentence do you need to hear from us by March 22nd? It needs to sound like what it needs to sound like. We are willing to take it [00:46:00] to the next step of having formal boards. And Sarah ration, and we need a recipe and you can choose not to adopt the resolution or to vote it down at that time. And our April 5th meeting. Okay. That's okay. That I was, when you say we need a resolution by March 22nd, I thought you meant you need the board to produce the resolution. No. The hub mean it, it will expect India going forward. Then I will walk with the road home, uh, on a resolution and we'll attack them sometime. So you on April 3rd and you say, yes, we want resolution. I think maybe, maybe more prior to that. Correct. So if you want or [00:47:00] resolution. For your April 5th, then you need to let us know by March 22nd, but there's no obligation to say by March 22nd. I'm no, I want to do this. We just need, as suddenly was saying, we just need some time to prepare the list. Okay. Well, what does it mean in your steps to find it is, it says by April 23rd adopter mission. So. The working assumption was that we would give districts. Since we had a workshop at the beginning of college, we would give till the end of March, March 22nd, since spring break is happening, um, to talk about the issue, start the education process, and then we would give you your April board meeting to make a decision. Oh, [00:48:00] so this was just general not knowing when school boards have board meetings. This is the January time. It's not specific to us, or we have a work session on April 19th. We didn't actually do our resolution on the 19th. You could. Okay. Got it. Okay. All right. So. Okay. I think there's two things that needs to happen a little bit is one. Our districts has, if I recall correctly at our last meeting or work session. So in the last two meetings, um, there was a recommendation that we consider up hers. Ability bond or purse bond, and that we would, and the board said, well, we'd like there. So today is part, part of that learning opportunity. I think the next part, the board meet [00:49:00] is what it's, you know, what is the district recommendations as far as, um, are we still on moving forward, uh, with interest in his barn? What is the amount of the bone? What is the percentage rate that we would accept? Uh, on the bond that the district would re recommend to us, as well as I think, um, probably a little bit of information on our districts, um, around, um, employment, moreover and potentially how, okay. I'm seeing nods of heads is like saying these in how would that affect and sorry to interrupt again. Where am in growth stuff is something that we would work on much closer to the pond sale itself. We don't need a decision from the board. The primary thing is that in your April meetings, either the fifth or the 19th, if you want to proceed with this group [00:50:00] through old financing, we need an adoption level resolution. And in order for us to prepare the resolution, it's actually the bond attorney who prepares it. We needed to know. Right. You learn that you want to remove, we skip to that just by a broad consensus, the board just kind of gauging who has interest in having a resolution prepared. I've seen ginger and Christina. Yes, Dylan. Yes. And I'm also okay. So at this point, that position has been made, I believe sufficient Dr. Ludwig to direct our district to, um, that resolution prepared. And then we will continue to work through between now and at least our April 19th work session. Um, what it is the board needs to best process that solution. Yes. Okay. [00:51:00] So how did wait to hear from you? Maybe we can query the board if you'd like opportunities to speak to our financial advisor. Okay. apart. Okay, perfect. We'll work on that. So then I know Chrissy, if them leave us here at probably at two o'clock, um, I made a motion. Uh, yes, I move that the board passed resolution 20, 20 dash 20. Is there a second. I will second, very good move to the second end and discussion. And in a nutshell, can you please tell us what the great part about this, the rights bond is? Yeah. So, um, you rate the short version is you rates a federal program that was instituted. Um, 15 plus years ago [00:52:00] that was designed for helping schools get online. Um, it's evolved over the years. Um, but at the end of the day, what the big, the big selling point of the rain is that, uh, we either get used prices and or rebates on purchases that we run through the great program. Um, and our, in this case, it's a 40% rebate that we're standing. We stand to be eligible for. So, um, whenever we spend, um, in a few months when we can serve in the project is complete, we'll get a check for 40% of that back. Um, and there is a little bit of a timeline involved. If it was mine, we'd have to try to get this on the agenda today or this week. Uh, so that's, that's the short version. I can answer any additional questions, any further questions or concerns? All right. Seeing then Kelly, could you please call us, heard about it? Read, [00:53:00] read a non-sworn. Yes. Ginger itch. Yes, Dylan. Hi. Hi, Christy Tom said hi. What is their resolution passes in Q2 and Q4? Yeah, things weren't so much flexible and they have long this. And it's timeframe. And the only thing I want to add is I mentioned in a public input prior to the start of this meeting, and I just want to confirm for the record that we actually did not receive any public input, but, um, for the meeting today with that, thank you everyone for giving us this time in the middle of your Workday and Carol, do you have one more comment? I have one more time. The comment that suddenly asked me to vape earlier, and I completely forgot, um, Financial advisor. The, I, I think having a financial advisor is an excellent idea to take your life for this potential. Again, um, [00:54:00] the program, uh, may have a, uh, a line on the near shoulder, sir, long story short. Um, You can hire whoever you want. Um, one of them, the participants in the pool, but land volunteered to get in touch with a financial advisor to see if he could get a program fee that would be less expensive than each district hiring. Now he got a fee quote. From a financial advisor who very well regarded, but he's not the same financial advisor that you have worked with in the past. Again, I am neutral on this subject. I think they're both good. Um, but that's a [00:55:00] decision you will reach, make that's. All right. Thank you. And thank you. Yes. Thank you. This has a special meeting and board. If you could just hang on for a quick second, I seeing all of you. Let me know. Or do you have any up questions? Thank you, Karen. Brendan. You're welcome.