 We're going to go ahead and get started here with the Santa Cruz Metro Board of Directors meeting for May 17th and We'll begin with a roll call, please Here. Dr. Kaufman Gomez present. Dr. Gonzales present. Dr. Leopold Dr. Lynn Dr. Myers Dr. Matthews Dr. McPherson Dr. Pegler here, Dr. Rothwell Dr. Rutkin Exefficio Director Northcutt Exefficio Director Preston Thank you Okay, we have Carlos Landeverry with us today for a Spanish interpretation Carlos if you can give us a brief little introduction that be appreciated Good morning directors Carlos Landeverry your interpreter Para las personas que hablan español pueden obtener un aparato de la mesa junto acá enfrente junto a mesa de interpretación Póngalo en el canal cero y asegúrese que el aparato esté frente a la pantalla. Muchas gracias. Thank you Thank you Carlos and today's meeting is being broadcast by community television of Santa Cruz by mr Our technician is Mr. Lynn Dutton and in Watsonville our technician today is Mindy Esquada. Okay, so thank you Any board of director comments? Yeah, I just like to make one that on May 25th and 26th the Mural existing mural at the Metro Center will the refurbishing will start on that day for the existing mural So that that's gonna be exciting to see that get refurbished That's good news. We've been talking about that for quite a while. So great glad we're moving forward on that Yes, last week the the clock tower at the station had no clocks, but now we have them and Considering we don't even have any clocks for clock towers in Watsonville. It's good to see them back Hopefully we'll get an accurate time more than two times in 24 hours So that everybody knows what's going on with the times and as a bus Activity happens in that section of town. Thank you Any other comments? Okay, we'll move on to oral communications to the board anybody that would like to address the board of directors on something That is not on the agenda. Please come up Welcome. Thank you Brian peoples with trail now executive director of trail now. We support Santa Cruz Metro We actually believe it's very important for our community We support it measure D. Actually, we didn't support it until they took the train funds and Reallocated it to Metro and then we supported it. So we're a big supporter of of Metro having said that we do not support Metro's objection or goal to keep the coastal corridor exclusive to government run transit There are three primary corridors for transportation in our community Highway 1 so Cal and the coastal corridor the coastal corridor From the study could have 800 people an hour use the corridor with it as a Transportation trail it's equivalent to a half of a single highway lane This will reduce traffic congestion and we'll open up the roads for Metro. The California transportation Train is saying the same thing. We're talking to them. They want to know why their tax dollars the money that was used to purchase the corridor and Is not being used for real transportation? It's being used for an excursion train CTC wants the plan of how you're going to use this property RTC has closed the corridor and the state wants to know why The debate has moved to the state level and that's not good for our community We should be working together as a benefiting making our Community better when we're going out there and talking at the state level in the federal level. They're questioning This these local agencies. How are you using our money? They want to know how you're spending our money We have the community support. We have the farmers. We have over 10,000 signatures Measurel showed that base Community supports using the corridor today for transportation One point six million dollars a year is being Taxpayers Santa Cruz taxpayers are being used to fund the excursion trains. That's equivalent to eight Articulating buses that's a waste of our tax dollars the California Transportation Commission wants to know they're actually actually Holding back threatening to hold back funding and that's not good for our community 15 million dollars this is being allocated To upgrade the tracks for excursion trains 15 million dollars of our tax dollars We ask you to open up the corridor Don't make it exclusive for government operated transit. We need to open that up today And we're hopeful that you start working with the community. Thank you. Thank you Anyone else like to address Directors Yeah, I'll hang up there Mayor Hurst you're not going to welcome us to Watsonville and I feel a little left out if Well, thank you very much for the invitation a little Hurst welcome to Watsonville You know, I think public transportation is extremely important and I think we should have more of it and rather than less of it I think we should have governmental funded transportation. We should have user Funded transportation as well and I don't object to tourists coming around either I think tourism is a very important part of the economy in our area And so whatever we can do to promote tourism is probably a good thing because that's going to make more money Available all over the place and so welcome to Watsonville. Thank you for being here today and thank you for your good work Thank you, sir Dr. Rock Remember the public alleges that we are in support of exclusive quote exclusive Transit use on the quarter is that the position of the transit district or are we in support of the Combine rail trail that we voted on earlier We have we have never said we think we should be exclusively on that quarter. Thank you Okay, anyone else from the public. We'll go ahead and close that move on to written communications from the Mac any Okay, it's time for a labor organizations communications anyone from labor like to speak to us today Seeing none. We'll move on additional documentation any additional documentation today. We have some here Press the wrong button. Sorry in addition to the news clips, which you get every meeting. You have a revised 914 we have one additional Mac member that resigned so we'll have two seats to fill Okay, great All right, that brings us to the consent agenda. These are items that are normally dealt with all in one vote Is there anyone on the board that would like to pull anything from the consent agenda? Is there anyone in the public that would like to address any item on the consent agenda? It's lunch and adi come on up Hi, my name is Rick Longinati. I'm with the campaign for sustainable transportation. Yeah We're not going to start your time yet. Okay until we get Perfect great. I thought we had a good morning everybody Oh, yeah, thank you. This will advance the slides Let's see great. Okay. So this is the message and request this morning is to ask the consultant for the bus on shoulder to consider options that don't assume Construction of auxiliary lanes. So this is a Map from the bus on shoulder feasibility study which was completed last year And it shows in the red that the potential sites for bus on the right shoulder and in the blue on the left Shoulder or the median there's lots of opportunity there and as you drive down the highway This is kind of what I do when I'm driving down the highway I look at all the width of the highway and see where a bus might fit The the current plan is to do bus on auxiliary lane or and that's Means you got to spend it approximately a hundred million dollars for the auxiliary lanes first and then the additional cost is eight million The study that was completed last year considered a bus on the right shoulder in a southbound direction Between Morrissey and Freedom Boulevard and that was 12 million. You don't have to have auxiliary lanes for that They didn't study money for the northbound lane because the assumption of that study was that he was Auxiliary lanes were built. So the reason they priced this out is they consider this an interim strategy We don't know either whether they're bus on medium Actually the metro has expressed a preference in some areas for the bus on the median But we don't know how much that would cost or do we know what the cost of new buses for express service might be so Auxiliary lanes won't reduce congestion We've heard from the highway one EIR that in the southbound corridor in the PM peak hour the auxiliary lane alternative was slightly worse in traffic Operations they're talking about the the next segment here. That's from so kill the 41st slightly worse in traffic operations We also know it won't improve safety This is also from the EIR total accident rates overall and by segment in 2035 under the TSM alternative would be the same as the accident rates for the no-build alternative So the disadvantages of a bus in auxiliary lane means that the bus will get stuck in that traffic that moves into the auxiliary lane It misses the opportunity for a median bus only lane It'd be be built piecemeal years of construction and it would end at State Park Drive only five miles from Morrissey Street Instead of going all the way to freedom Boulevard and beyond and it wastes precious local transportation dollars on ineffectual auxiliary lanes so This is the request to ask the consultant to consider options that don't assume Construction of auxiliary lanes. I want to mention since I have a moment left that so there's a lawsuit against Caltrans that Says that Caltrans EIR did not fulfill the requirements of sequel by examining alternatives They didn't they didn't in that EIR examined bus on shoulder They didn't examine transit on the rail corridor or best or better bus service on so cal freedom So we think a judge is likely a judge will say no you got to examine these alternatives and will invalidate that EIR Meaning more delay. So we'll go ahead and wrap up your thought Yeah, we're hopeful that the RTC will see the light that the auxiliary lanes don't benefit Watsonville aptos or anybody and we'll do The bus on shoulder. Thank you. Thank you for that presentation Anyone else like to speak on anything on the consent agenda? I'll bring it back for action. Yeah, Mr. Chair I just want to say thanks to the Regional Transportation Commission for its cooperative effort and looking at this bus on shoulder It's been a really good relationship That Might solve some big problems for us. I think and I just want to say thanks hats off to RTC and We'll just keep moving forward. I think we're all optimistic about the potential there Okay, with that is there an action Approval of a consent agenda a second motion by rocker. You want to make them other comment on the consent? Okay, motion by rock and second by Kaufman Gomez all in favor Opposed that motion carries unanimously You mentioned there are a couple of Resignations from Mac and my recollection is that we try to achieve some categories I know one of those is from the Cabrillo student can and aside from I know they're I believe they're not required to be But we're looking for some diversity. What's the other category or is there is it just an at-large? I'm sorry. I haven't evaluated that yet unless Gina knows that off the top of her head I think what we'll do is we'll prepare that for when we go to the ad hoc committee To talk about where the where the voids would be relative to your policy Yeah, and just let us know when you figure out. Yeah, generally what you're looking for absolutely That's it. Yeah, and the important point there, too For me is as much as possible if the board can help us find candidates that would be great Okay, okay. Good. Thank you All right, it takes us to our regular agenda and we're going to begin with longevity awards We have two to give out today Sierra I'm gonna ask you to come up to the Microphone and we're introduced. This is George Felder a bus operator been here for 35 years Mr. Felder here with us today Yes, you can tell us a little bit about mr. Felder then we'll turn the microphone over to him Absolutely before I start I would like to have Annemarie Guevara who's been his direct supervisor for a number of years to step up I'm sure she has quite a number of stories to tell about mr. Felder absolutely In 35 years, I hope there's some stories. I'm sure there's more than well, we won't go there. Anyway, I Want to introduce to you George Felder We are celebrating the decades of decades of service that George has provided to the community as a bus operator I believe he started in 1984 has operated a bus in a variety of routes throughout the community I guess from my own standpoint, I would just like to say that I've never had a concern about his attendance. He's always there every single day and More so on weekends and his days off He's been very committed Dedicated I received nothing but positive comments about his performance throughout and it is just a pleasure to have him reach a pinnacle in his career to the degree that he can now retire and Celebrating the number of years that he's had in service also so again Congratulations I Got a lot of great things to say about George But I'll try and keep it short. I've worked with George as a co-worker for 19 years He has always been the person to look up to Like Ciro said he comes to work Not just five days a week sometimes seven days a week Is he's a very dependable operator after 35 years you would think that people would come to work and just like okay? Let's get this over with George comes to work every morning with a smile on his face happy to be part of Metro and You know basically Serve the community as he has been for 35 years. He's he's really an amazing operator And we're happy to have had him for this long Step up step up that microphone and give us a few words. I didn't know you guys cared like that, but I appreciate it I like to thank the district for this opportunity to To have a career here Not that I'm at the sunset at that I've had a great time working with some great people and You know, it's not a whole really a whole lot of the other to say is that like I said I enjoy my work and I enjoy the people I work with and It's been fun And our next recipient is Freddie Rocha been here 15 years Freddie with us today Come on up Freddie Zero tell us a little bit about Freddie. Sure Freddie actually started his career kind of in a Inordinate way with Metro and that was actually working on the discovery charter buses during after the 1989 Loma Prieta earthquake. He was there in 98 and I guess it was during the period of time that we were chartering the buses for the highway 17 service over the hill He started his career here at Metro in 2004 And he started as a mechanic one. He later proceeded to promote to a lead mechanic then on to a supervisor then on to an assistant fleet and Facilities manager and now he is the interim facility manager for Metro and very very proud of his success and Very reliable and a right hand for me I've been here 15 years. I've worked along many many great people of you know gathered some of their knowledge and I'm just so grateful to have Be part of this Metro family, which like I said over the years It's been you had you know pleasure working with many people there have left retired passed away. Sadly, you know But from all those people I've over the years I've you know gathered a bit of knowledge and Eventually hope one day to pass some of that knowledge to you know other people that I currently work with so Grateful to be part of the Metro family. Okay. We have one more recipient. We have a resolution of appreciation for retiree Justina O'Hagan Justina here today. Justina is not here today. Okay. I'll move approval of the resolution. However motion by Rodkin second by Kaufman Gomez and I have a comment and a comment I really feel strongly about making sure that we're Acknowledging them not only just here at the Dias with our particular meeting But let us know on the the website for the Metro perhaps a photo a bit of recognition Maybe a comment or so especially since it's a positive comment for what the Metro is doing with the staff and Especially in light of us trying to do recruitment these kind of testimonials and you know Appreciations and acknowledge and acknowledgements might be beneficial for the public that may have an interest or curiosity about working for the Metro So that they know and hear from Some of the positive experiences that our staff have we could do something like that. I think that would help Great to Justin. Thank you Any other comments with that all in favor I oppose that motion carries unanimously Take us to item 12 introduction of new fixed route and pair of cruise operators Henry Govea New people we love it Hi, my name is Chris Sullivan. I'm a supervisor at Metro pair of cruise. Good morning morning How are everybody? It's been my given my honor to introduce well for our here new pair of cruise operators one person is absent, but so total of five and Introduce them and welcome them to the Metro family. So I just wanted to mention Briefly that we were driving over here this morning And I was mentioning the positive aspects of working at pair of cruise and one of the things that came up was the positive Stuff we get from the our riders that everyone's very appreciative of the rides they get and how a lot of times they comment that if it wasn't for us they couldn't get to their doctor's appointment or go to Shopping or they have no family in the area when many people say they don't want to burden their family and so the service allows people to live their life in the most the best way they can and Hopefully five new operators will add to our success and our on-time performance And so as I said, we have four here one person had the day off her name's Jennifer court, right? so But I'll let these these four come up and introduce themselves and I'm proud to say we have five new operators on and Think fixed route has won. So yay pair of cruise Congratulations Anyway, so please step up I'm Sarah Hewitt and I'm a new hire been driving I think on my own about a month and I'm enjoying the Customer service aspects. I really do enjoy Driving I never thought I would be in this type of career and I have enjoyed learning about the company and Metro and I I do enjoy the the personal aspect with the clients and Taking them to appointments trying to get there on time and every day is a new day with pair of cruise and Thank you for you know hiring me and I hope to So I'm enjoying my new career Thanks for your service Good morning, my name is Juan Alberto Serrano. I'm a new hire started driving about a month But myself and I'm enjoying These kind of work better than anything I did before I want to thank you for the opportunity that you guys gave me and Doing my best tried to get there on time all the time and trying to make a bit Metro a better place for everybody Thank you Good morning. My name is Rodrigo Mojica. I I enjoy working for Metro. It's probably the best job I've ever had and You know, thank you guys for hiring us and we'll try to make it better for everyone to get to their appointments or Where they need to get to be thank you. Thank you Good morning, my name is Anthony Frye and I am happy to be with Metro. Thank you very much. I share Sarah's interest in providing the service for folks and Enjoy the recognition that that they offer when we're when we're providing the service So it's it's very rewarding to be able to do that. Thank you very much Thank you all. We're happy to have you on board. Good luck Yes, I'll tell please no go ahead I want to Acknowledge and applaud you all for joining a marvelous team and thank you for your interest and Potential with the company. I have worked with Cabrillo for about 19 years I'm in my 19th year and I used to work with students with disabilities and we relied heavily on Paracruz and I'm saying over the years. It has been such a Wonderful experience to see it becoming very Rider-friendly and I want to thank you for that I want to thank you in advance for the service that you're going to be providing to not just clients but students for Community members who are getting everywhere in this community that they need to be and so I thank you in advance for your service I thank you for the potential that you have to Touch the lives of many writers and people and make a difference in their life. Sometimes it's just a smile Sometimes it's a high and thank you for choosing us. And so I just want to remind you of that in advance Because I have relied with I have used Paracruz in my service to students And I just want to thank you for your dedication already to this work seeing you smile after a month Makes a difference Thank you Director Northcott. Thank you. Thank you very much Okay, that'll take us to item 13 our CEO report Mr. Clifford Like to start off by introducing a new director as the board knows and has shared with me our mutual Desired to have a marketing and communications function here at this agency and and it's been a struggle a number of years ago You approved a position But we were in a budgetary crisis and we couldn't fill it for a number of years and We finally had the opportunity to do that. Thanks to your support We haven't had that function here in many many years and and I really want to say kudos For all the good work that that our management and others have done through the years to provide some limited amount of marketing and communications so that we could communicate to the public and Share the good things that Metro is doing but now we have the opportunity to have a dedicated person here And I'm going to introduce Jamie Ackman and Jamie if you wouldn't mind standing up I'm going to read a little bit to the board about you Jamie joins Metro with more than 20 years of experience as a communications professional both on the Central Coast and throughout the Bay Area Jamie launched her career in television journalism working as a producer and reporter for KSBW before eventually transitioning from journalism to public relations after working in high-tech PR Jamie joined the San Mateo County Transit District as the public information officer and For its three agencies Sam trans CalTrain and the San Mateo County Transportation Authority in 2001 Seeking promotional opportunities. She later joined VTA as the communications manager responsible for managing the team and Handled electronic customer media Community community communications internal communications and outreach later. She rejoined Sam trans CalTrain and the And the TA becoming the director of marketing and customer service Most recently Jamie worked for an investor owned utility San Jose water company as the director of corporate communications Jamie has lived in Ben Lohman for nearly 15 years with her husband Dean a Retired San Jose police sergeant and their two daughters Cassie a sophomore at Southern Methodist University in Dallas and Zoe a freshman at San Lorenzo Valley High School in Felton, please join me in welcoming Jamie to the team Thank you for that warm welcome and thank you for making me part of the team I Love working in public transportation. I think that there's a Real joy in working in a service where you are directly interacting with your customers and seeing the real benefits of what you do every day So I'm proud to be here and I'm also proud to be working in an organization that serves the community that my neighbors my children And my family have benefited from over the years. So thank you for having me. Welcome Jackie. Thank you And mr. It's always a special welcome for me Having a fifth district San Lorenzo Valley person be a big part of Metro and I know that she has represented a bigger agency, but this is a step up I we really welcome you. I think you're gonna do a great job and we need your services Seriously other comments It was just a just a district five plug and that was good. Okay Mr. Sheriff, I might just continue on a couple of other items as usual. We like to welcome and new Hires and promotions. We have a new hire. We hired Rick Jimenez. He's our new purchasing assistant slash buyer We already introduced Jamie and then we had promotions. I'm happy to report I think this is a name, you know Michael Rios has promoted from transit supervisor to assistant training coordinator I think Michael's in the audience actually Michael congratulations And Anson Mayweather promoted from provisional employee to revenue account coordinator This is a position. We've kind of been Experimenting with ever since we did the merger of the reservationist and the customer service representatives and we've been sort of trying to reconstruct and rebuild that whole Customer service and ticket in fair media section of our organization and Anson has helped us as a temp employee And then a provisional employee as we developed his position further from what it used to be into its sort of new New day and then he became a provisional employee and now he is a permanent employee So we're happy to have Anson here. He's not in the audience today But we're glad that he's joining the team now as a permanent employee and then two other quick things You no doubt heard that the president met in a bipartisan way to talk about infrastructure Multi-billion-dollar program everybody's enthusiastic about an infrastructure program That would be nice. I'm equally as enthusiastic about it But the word on the street is that's probably not going to go anywhere because you got to figure out how you're going To pay for such a thing. So it's just the continued Jockeying going on in Washington We will continue to do our part as our Metro board member team did in Washington DC recently Talking about real programs and the need to find real funding to fund those programs So we'll keep promoting those concepts and then last but not least UCSC vote is this week. It is ongoing from the 15th through the 22nd And of course, this is a measure for the students to consider allocating additional dollars to their transit fee which includes the funds that pay for the The the ability for us to provide every student on campus The use of our system without paying for the fixed-route system and we hope that that will prevail I know that's important to the university In what they wish to do and what they wish to continue to fund in Metro services Any question for the CEO mr. Rockton I just wanted to report that I was able to get the unions that represent about 98% of the faculty at UCSC to make class Announcements this week about this vote and encourage their students They're not telling them how to vote, but they're going to know that there would be Cuts to the service if it's not voted for and that they need to vote the last election The majority pretty clear majority of people voted in favor of increasing the funds But they didn't reach the 25% minimum vote Quoted to be able to actually have it be an effective election So getting the students out to votes the real issue and hopefully these class announcements will help in that process Any other questions or comments? Okay, thank you for that report. We'll accept that Next will be a presentation understanding post-employment benefits Angela welcome Good morning So the next three presentations are kind of all tied together Okay I'll be pointing to the some documents that are within the budget presentation item number 15 on your Agenda Let me get to number 14 here. I'm going to point you to 15 c dot six eight Those are some of the numbers. They're going to be corresponding to what I'll be talking about on this presentation 14 a So for the next two presentations, we're kind of going back to school I am not here to tell you this is exactly what's going on The reason that we're putting these two presentations together is to try to start walking down the road of Education for the staff for the board members and for though all of us at Metro as to Understanding what our other post-employment benefits are and it's we everybody refers to it as OPED That's the acronym for it in addition to that We have what's called our other our net OPEB liability and I'll get into the explanation of what those are There's lots of information here Hoping that you can keep this as a reference document in the future so that if someone has questions You can hand them this presentation That's why there's so many words those are you to see my presentations before I usually don't have this many words But it really takes this much to tell you what this is all about. So This we have two things this presentation is only on the post-employment benefits the medical Piece of the retiree benefits. This is absolutely nothing to do with the pension piece. That's my second presentation So there's two separate things that we'll be talking about today So Santa Cruz Metro provides medical dental vision and life insurance coverage for those qualified retirees in Retirement and that's known as other post-employment benefits or OPEB and we refer to this in short also as retiree medical But it does include the dental vision and life insurance and I'll get into the definitions of when that's included and when it's not So today we do something called pay go or pay as you go So as the funds are incurred our expenses are incurred through CalPERS bills We pay those bills every month and that's why it's referring you to 15c6 8 you can see where we have medical insurance dental insurance vision insurance and life insurance and we have some This is under the retiree employment benefit department 9005 and those benefits for 2019 we budgeted about three million In 20 we budgeted about three million three and in 20 we're budget budgeting three point five million dollars So those are the dollars that go with this one Let's see here these are for The costs that we're incurring today for retirees that we have today. These are not accumulating Towards the liability. This is what we are being charged today for the retirees that are retired today Contributions are not made for those that are Contributions are only made for retirees today only they are not for the retiree benefits for Future those are the unfunded pieces So prior to 19 or 2009 there was no standards. No one had a Set way of reporting this through either their audits or to their agencies Everyone reported it completely different or didn't report it at all So in 2009 something came through our government accounting standards board called Gadsby 45 This established some kind of standard It wasn't all the standards But at least it was starting down the road of putting standards in place on how agencies should report this unfunded liability For the fiscal year ending 2009 We implemented Gadsby 45 and we recorded the liability in our financial statements and this initial Initial required entry was the difference between what we actually calculated as the annual required contribution and the pay-go or pay-as-you-go contribution These did not require the actual Liability to be recorded. So the difference was not recorded. It's just what we were paying But Gadsby 45 here's some more detail about it We only did it every two years. It was not required every year And so that became an issue as people were trying to Get their arms around the liabilities that were out there because people were finding that their liabilities were much larger than they had anticipated each year until 2018 the Gadsby 45 we use that and we updated our liabilities on our financials Then in 2018 Gadsby 75 Replace Gadsby 45 and this is a whole bunch of accounting jungle But what it did is it put even more standards in place Streamlined a lot more things and now we do it every year. So starting in June 30th of 2018 the year ended June 2018 That was our fiscal year 18. We now Have the Gatsby 75 in place and we will be doing the actuals every year So as I was saying Gatsby 75 requires annual actual error evaluations instead of biannual Which 45 did they do not mandate pre-funding of the liabilities, which on one hand is good and the other hand it's not so good Some agencies have decided even though it's not required. They are pre-funding Their liabilities or trying to put more funding to towards their current liabilities So 75 cause extensive and significant changes to the accounting treatment and the terminology that we use in our financial reporting and It also has required disclosures in there that tells you exactly what we're doing and why and Those will be coming through on you would see that in our audits that we bring through every fall They can't see this online, but look on your your packets This is where I was saying Medical we call it retiree medical but at certain point the dental vision and life is included So just to kind of go through this a little bit on the first column is management second column. I apologize We need to change that to smart pair crews SCI you and smart fixed route Going on down the benefit type provided for retirees is medical and this medical is good until you are 65 When you reach the age of 65 Santa Cruz Metro's medical becomes secondary to Medicare thank you Everybody else knows that you're not old enough to know but Some of us we know exactly what I will get there. I'm sure so Santa Cruz medical Plan is primary until you reach that age and then it becomes secondary you Medicare takes over and then our medical comes in secondary This is for your lifetime. The benefit is for the lifetime for all four units This benefit becomes available to someone at Santa Cruz Metro after they have put in five years of service And again, this is medical only When you reach the age of 50 is when you can take advantage of this Benefit and retire from Santa Cruz Metro and it also has dependent coverage So it's not just for the employees for their tires of the the beneficiaries of the retiree also For the first two groups, it's paid in hundred percent and in SCI you and smart fixed route. It's paid at 95 This is negotiation. This has been negotiated through the years That hundred percent ninety five percent is based on the blue shield HMO plan so we have a Gonna call it a menu of medical plans that our employees and retirees have the options to choose from and Through the CalPERS resolution that we have the blue shield HMO plan is the Plan that this hundred percent and ninety five percent is based on Once you reach ten years of service and you retire and you are fifty That's when the dental vision and the basic life kick in in addition to the medical and the same pieces apply it is for all your dependents also and Santa Cruz Metro pays a hundred percent of those premiums But the difference here is that when you reach sixty five those three benefits go away Your medical doesn't go away. It becomes secondary, but the dental vision and the basic life are no longer a benefit Any questions on that? I know there's a lot of information You might want to clarify that Fifty is the minimum age at which you could retire. You're not required to retire at that point And we don't encourage it general. No, there's You could never retire. There is no requirement to retire from Santa Cruz Metro We have certain levels that you can retire. We have two at fifty We have two and a half at fifty five and we have two at sixty two So it just depends on when you started and how old you are and all the different factors that go into retirement on to this one So taking that information medical only not taking the dental vision and life into consideration in 2008 we saw that Those under sixty five who were retired. We paid one point four million dollars towards the medical costs for retirees only and those that are over sixty five even with the Supplemental piece we paid almost a million five and then there was about a hundred fifty thousand dollars worth of individual retirees That we don't know what their age was And it gives you a picture snapshot of how much this is bigger piece here And this is what we have been paying every year since 2008 towards the OPEB retirement medical piece so we In 2008 paid a million five Going all the way up to 2018. We've paid three million in 19 for our budget. We've budgeted three point one in 20 We've budgeted three point three and in 21 we budgeted three point five I just have a quick question about that We didn't we also see a large amount of retirements In the last four or five years I mean the part part part of our cost saving was trying was Encouraging retirements of some of our older employees and you can see that in 16 and 17 where those went up significantly more than 15 And then we came back down at 18. This is also based on you paid to say it the morbidity rate You know how long people live and so obviously in 2018 We had less people less retirees that we paid for then we did in 17 and 18 So it's a combination of how many we had retire and how many were no longer on the books Quick question here Angela, can you give us an idea of how many employees no longer working for Metro that this three million dollars is being paid towards our benefits? Nope, I'll have to get that number back to you. Okay. Thank you The Gatsby 75 is what we have to abide by now for the accounting rules and this is the one that Does the gap between and in the chart on the bottom we have the total op-ed liability Right now we're at about a hundred and seven million dollars is our liability and that includes Employees today that are going to retire and retirees and so what what what we should have been doing is putting money away Every year ever since the very first day someone started working at Metro and we did not do that And so we've been paying as we go as we incur the expenses We've been paying those bills out of our operating budget What should be happening is we should be putting we should have been putting money to the side and this was 25 years 30 years ago when we should have been doing this and Taking money out of that trust account not taking it out of our operating budget Because as you see it hits our operating budget by three million dollars that three million dollars should be coming out of this trust fund over here that We pay to CalPERS every month or once a year if possible and we incur interest on that so interest increases The money that we put to the side. So you compound you interest interest. Yes, that's the liability Begin when they're high in terms of what should be happening in your view Happening when they're hired or after they five years when they actually become vested in the system My opinion is day one Because you've made a commitment to an employee when they start when HR hands them the packet of here's your benefits Part of that benefit is here's your retirement that you're being offered when you when you start So from a fiscal responsibility perspective, we should have been putting money over here in I'm going to continue to say a trust account There's many options on the trust account for now and putting that money away and earning interest on it So that by the time that employee retires We have that money over in the trust account to pay the three million dollars or probably at that time Much much more out of that account versus our operating count We have a bigger a much better handle on our operating expenses since we don't have to worry about Retiree expenses coming through Yeah, I'd like to ask this another question It it was very common to do the pay go So we weren't out of at a step with other agencies in doing that How much money would we need to have in the trust fund to pay a three million dollar? annual Bill Well, our bill is a hundred and seven Three million dollars a year to pay right now. We we we literally take three million of our operating budget right now No, I understand our liability, but but it but if we have if what you're saying if we had a trust fund if if as you say being Physically responsible to have a trust fund. How much will we need in? That trust fund in order to pay out three million dollars a year. Well Because you have ebbs and flows so someone starts today as a new employee and three years from now They leave well, they've contributed or we've contributed for them into this trust account for Metro to eventually pay Retiree expenses, correct? So you look at this one hundred seven million dollars. I would not you know as I get through the presentation here That'll be my suggestion. We do not Fun that by a hundred seven million dollars you funded about 75 percent because of the people that don't make it all the way To entire I mean you just saw you got 30 year people 15 year people lots of our employees stay a long time And that's why that 75 percent may actually increase if you have more people that stay longer and that would You have certain points through someone's career where you would make some decisions and it'd be an actuarial report I mean, I am not an actuarial. So I am telling you the information I know from the information that Debbie and Christine and I have tried to put together over the last few years I don't have a direct answer for you So how much money I have to have in the bank to come up with a three million dollars worth of interest that it would Be able to pay every year, but I can tell you that we should be having about 75 percent of that hundred seven million dollars in there To be solvent and not have to worry about paying three million dollars out of our operating budget Does that? Yeah, I mean it just But the magnitude seems great when you have a annual budget That's in the 60 million and what you wrote you're proposing is another Annual budget that might have 60 million to get you the three million that you might need for it I mean I just it's a big job I'm not proposing a hundred and seven million dollars and seventy five percent of that as a budget What I am proposing is that we would later create a bucket a reserve bucket and we would start putting money towards that So we can get ahead of this This is kind of like we have a hundred and seven million dollar house loan out there But the problem is the house may appreciate but the loan also appreciates So you don't still have a hundred and seven million dollar loan you actually might end up with a bigger loan That makes sense Yeah, I mean I think there's We can have a longer discussion. I won't won't won't belabor it here I don't think it's exactly an apples to apples calling it like a mortgage. No, I was just I was just trying to point out that To have a trust fund to generate the kind of resources necessary Would be quite large And we'd be making a bunch of different trade-offs in order to make that work. Yes, we would and that's why I'm Hundred seven At one point it might be beneficial may not may not be in this particular meeting but this is still a world benefit with our employees and When when we have the discussion with the employee that says here's your wage. Here's your medical Here's what we're providing you with while you're employed with us This should also be an extra layer for them to know What we can anticipate that they're packaged to be because people think that their their wages are 1650 an hour When really this is on top of that with everything else going on beneficially so that when they're comparing apples to apples with Okay, I can make 1650 at Metro or I can make 1650 mid-management somewhere downtown That they need to know that this is this is a big chunk of what their overall benefits are and to find out You know at least a couple scenarios of somebody working 25 years retires at 55 Maybe somebody at 65 who's been here for 20 or five so that they know that What kind of investment we're making in them because like you said you don't know the number of employees We're looking to set aside three million dollars for Towards this hundred and six million dollar bill essentially and I think employees need to realize that it goes above and beyond the w2 Paycheck you're getting on their benefits. I think the employees are starting to see that We just did two total compensation studies one for management one for SCI you and so in that total compensation is all the benefits included into Just it used to be just the salary surveys that we did now it was total compensation So I think we've started down that road. I can not I can say that we have not presented to a new employee or any employee Here's what you receive as ex-employee for benefits as well as salary That might be something that we should consider but I do think that we have started down that road here There's I'm not encouraging anybody to retire But if have had met were not encouraged retirement in that 2000 we had the spikes in 16 and 17 what would that 18 be what it do you know how much more it would be if we wouldn't if That wouldn't have occurred Do you have any kind of a guess I Understand you wouldn't have a figure but the longer you stay the higher the pension That's that's the bottom line So if if they were not retired and they incurred more years then the higher their pension is there's a sliding scale of percentage You know if I take the two and a half at 55 you get to two and a half percent of your Salary at the age of 55 and so if you go longer, it's two and a half percent of your salary times the numbers It's a number of years of service So if you put that all together and the people that retired would have added more years of service Theoretically that number would have gone up Okay continue with your presentation Oh, I'm sorry. Go ahead Rick Rothwell so In terms of the drift of what you're saying here. Are you viewing this as purely informational for their our benefit? Or are you making a specific recommendation as to what we should do this one is informational? I do have some recommendations in here, but I'm not asking you to take any action today Okay, yeah on this presentation and the next one. It's purely informational Recommendations for you to think about no action Thanks for clarifying sure Okay, where were we? So yeah, I think I pretty much said everything that's on that slide any questions about this slide Moving on to the next one So in this chart it shows you the Gatsby 45 was from 2008 through 2016 That's why it's a two-year increments that we did because that's what was all all that was required for Gatsby 45 in 2018 fiscal year that ended June 30th of 2018 that's when the Gatsby 75 started and so we'll be doing that for 19 and 20 you'll be seeing Lines on here for every single year, but that's how we got to the hundred and seven that I was talking about There was some more information about how we got here There were no standards prior to 2009 people just did whatever they wanted if they reported out It was at very high level and if it wasn't a significant amount, which before I started here 15 years ago it wasn't considered a huge amount, but because of all the Baby boomers actually I think that was 1946 1964 areas where the baby boomers are considered to to be you add 15 years or you add 62 years and They they started ramping those those numbers up so Pays you go. I think I explained to that. There's no pre-funding You just pay whatever expense CalPERS bill was sent to you every month or As we'll be looking at the budget you pay it once a year and you might save some interest on that Gatsby 45 we did that from 2009 to 2018 and then Gatsby 67 we started doing that for fiscal year 18 and we'll be doing that every year going forward So again this I'm not asking for any action on this. These are some options that we can all consider So establishing An open liability reserve what this would do is it would put money over in a reserve account so that these kind of Expenses do not touch our operating budget on it on a yearly basis We could revise the reserve policy to include that new open liability reserve and Then these are ones that I know are not popular, but I felt it You're physically responsible for me to put it out there. We could work with purse we could come up with Our current medical plans and possibly make changes as I had said earlier We do have kind of a menu of medical plans That the employees have the option to take from as well as the retirees and we could talk to purrs about possibly changing that reducing it Whatever whatever we come up with Then the next to negotiate with employees first one is to negotiate with additional contributions from the employees for the monthly premiums As you saw before two groups are a hundred percent paid by metro two groups are ninety five percent paid by metro Then we could also negotiate with the employees about terminating the PEPCA agreement eliminating the retiree medical all together That's a hard one. We would have to go off and create our own Medical plans we'd have to go into a completely different group I don't know all the details to that But I do know it is a huge task and that it would probably take us Quite a while to go through that whole process Once you terminate with the PEPCA agreement once you terminate with Pal Calpers you cannot go back It is a once One decision if you decide that you know a long way to do it Then you you can't decide five years ten years fifteen years later that you want to go back We could go contract with the OPEB actually earlier, which I think this is probably something that we should be doing and Go through and find out. Where do we really stand again? Debbie and Christine and I we are not OPEB Actuarials we do the best we can with the information that we have but these guys They're pros at it and they do it for a living. There are so many Factors that have won factor changes if you change the Morality rate of Someone living to 90 to only living to 89 even by one year that will change all of the predictions by a pretty big scale You wouldn't think one year would do something that that but it does it changes it dramatically We could receive that report and then discuss options back at the board and with the employees with unions and see what we want to do Do we want to set up a trust? Do we want to set up some kind of other plan instead of having all this coming out of our operating budget every year? Putting out that trust we could earn potentially more interest than what we have the money in the bank today Setting that up if we did set up a trust I would recommend setting it up as a irrevocable trust because that is a Commitment that we've made to the employees and once you put that money in there. It can't be taken back for some other situation that Senators Metro may need it for we always need money for something and I think once once if you make this Commitment to making this irrevocable trust and that is a commitment going forward Obviously you could do nothing we could put our head in the sand and say well, we'll deal with it later That has never been something I've recommended to you guys, but it is an option Oh one more thing if you put money into the reserve account That doesn't get rid of your liability But if you put the money into the trust account that does bring your liability down Because it's an irrevocable trust and you can't take it back for something else You have to put that money towards the pension liability. So that's something that CalPERS is put together So out of all those options, I do have recommendations the right recommendations are not something I'm asking you to Take action on but these are some recommendations that I would put forward So approve the budget which I'll be going through here, but to prove that in June and as today it is offering up two million dollars to go into this reserve account again This is a reserve account. That's not the trust it takes us a little while to set up that trust But at least this was be a baby step towards bringing this hundred and seven million dollar deficit down Come back to the board with we do have a reserve policy today But the reserve policy does not include the OPEB reserve account. So come back with a reserve revised reserve policy and Then research the options reducing the cost those three options that I had up there about Negotiating with the unions about the benefits additional employee contribution and then third one talking to CalPERS about eliminating the agreement Definitely recommend contracting with the actuarial because there's no one on staff that knows this stuff as much as we need someone to know it And they can help us make some decisions Review the scenarios that they come back with they are going to have multiple scenarios for us to look at because as I said you change one factor It changes a lot of Changes the outcome dramatically and then establish that pre fund trust Keep the reserve account going but Make a conscious decision to put money into that trust or some other kind of mechanism that We put this money into so we have a higher retainer higher return on our assets as well as we are Making a conscious contribution to bringing that liability down and we're lowering our unfunded liability or NOL So this is the glossary to a lot of the terms I use today. This is again as as a reference document There's nothing in here that I'm saying that I want a decision on today But it's just a lot of information to think about and the recommendations kind of gives you where Alex and myself are thinking that we want to talk more about to the board Questions on this one question. Director Rodkin. There's questions first. I have a comment rather than questions The two questions first and we'll come back I've got a comment any questions I want to open it up to the public then we'll bring it back and discuss it. Okay Go ahead What would be the cost of the working with the The contract with an actual act here. I'm not I'm gonna try to say that word Let's say around 5,000 so it's not a huge amount, but you have to do it every year So it's and it's something that we would have we would budget for keep it in Any other questions? Let's go ahead and open up Mr. Clifford. Hi, Mr. Chair if I might just add a couple of things before you go to comment Ever since this began to be a requirement by Gatsby to be reported as Was pointed out different agencies have handled this in different ways Some agencies started as long ago as 10 years ago to start beginning to address this I've talked to a number of my colleagues across the industry nationwide on this topic and Some are now, you know 10 years later in a position where they're what you would call super funded They they now have this situation under control they have what Angela has described in place and They have relieved their operating fund of a great deal of burden And many others have been doing what we have done Which is the pay as you go and pay as you go when the liability was low and the impact on your operating fund was You know manageable Just became something that we accepted in our budget and we just moved on every year and adopted our budget But what you can see Clearly, hopefully from slide say 14 a 10 Look what has happened since 2008 You know from a 44 million dollar liability and some of that's related to Gatsby still Changing its requirements on how you capture that information every recorded But a hundred and seven million dollar liability is enormous for an agency this size Go to slide 14 a 8 and I know you had some concerns about whether or not our encouragement for Early retirement or taking advantage of retirement incentive a few years ago impacted this There's no doubt it did adjust the bars up take take a step back from the individual bars and look what has happened since 2008 the burden on our operating enterprise fund has gone from About a million five now to double that follow the curve. Don't worry about the little ups and downs that impact One year's bars follow that curve. It is an enormous slope on that curve. It is a scary Curve to to look at This is a topic we must address we are now past That time in which we can just say let's just keep paying as we go We'll handle the annual liability in our operating fund and we'll push the topic aside for another day kind of kick the can down the road strategy We cannot kick the can down the road any longer In this budget should you adopt this budget? You have a two million dollar commitment to beginning to address this for the first time So in addition to your pay-as-your-go strategy, which you must continue to do in the budget You have a two million dollar commitment to begin doing that The devil is in the detail on this and what what I will propose unless you Tell me today otherwise and say no, we don't want to talk about this right now We want to keep doing what we've been doing unless you tell me that What I will do is begin a series of discussions in the finance committee the board finance committee We have the UAL which you have yet to receive a presentation on the PERS unfunded liability and we have the OPEB the OPEB is the Decomplicated one much more complicated than the UAL is and we'll need to talk about the strategy on how to get there There is no quick fix. I want to make sure you understand the fix to the OPEB liability Should we get to a fix is a multi-year many year strategy? There is nothing that you can do today that will suddenly put three million back in our operating fund as We fix this problem. You will see the benefits over many years This is a long-term strategy for the survivability of this organization to make sure that we plan for 20 and 30 years out and it will take us many years to get there as I described some of my colleagues I've talked to it has taken them 10 years through two different approaches and everybody has a different strategy You can't say hey Clifford tell us what so-and-so agency did and let's just incorporate that you can't do that because everybody Has a different set of circumstances Depending on whether they are in PERS medical or not Impacts what they can do what their contract is five or ten years Impacts what they can do and we still have more research to do in that area on our own organization So it's a big thing. It'll take a long time But we must start that conversation and again as unless you tell me otherwise I'll begin feeding that through the board's finance committee so that we can start setting up What what is you know the evaluation of what the problem is the magnitude of it is and what are the options to begin to fix it But as Angela said we have no recommendation today We're not asking you to do anything that starts that journey other than when you Send the budget out for public comment that we we continue to include that initial commitment to beginning to address the problem I do have an answer to That question about how many retirees are in just the two So in comparison we have about 320 employees today Total retirees we have is about 274 of Which 86 are on the blue column and 188 are in the orange column that tells you what happens to our medical when everybody reaches 62 Thank you for that You know I'll go ahead Just a question for mr. Clifford you say we're not taking any actions But we later in this meeting you would be asking us to it to adopt the first draft for the budget which has the two million dollar Transfer to the OPEB liability reserve. So that is an action. It seems like in a separate report. Yes Yeah, well, I mean I mean but you're asking you to do I don't want to disconnect that those are It's directly related. Absolutely. Yeah, and I think Angela tried to set the stage for that because she indicated We have three parts to this sort of rolling presentation. There's the OPEB the UAL and in the budget They all kind of as you point out They do all kind of flow together and they're important to link together Hey, you won't be taking any action on the budget The only thing you'll be doing is adopting the resolution so that it may have public hearing a month from now So no adoption of the budget today either And so before I go go to the public I'm just trying to follow here We're I'm going to take this like I had in 14 a you just did the OPEBs and now I'm going to have to go ahead and do B which is the Pension and then at that point we'll open up the public on 14 for comments before we go to 15 even though your role in all Three so continue with 14 B then all right. All right. It's probably good idea since they all they are all related Okay, so what we just got done talking about was the medical portion of retirees now This is the pension portion and before I even get going. This is so much more complicated What you just got to see so I will do my best, but Not clear all right so the background here We have a CalPERS pension CalPERS pension today statewide has about 3,000 employers of those employers we have about 2 million members and meaning employees CalPERS is independent they are not Contingent upon any of the agencies they are an independent agency on their own similar to we are a special district from the county We're not contingent on the county They are the ones that administer the funds we do not get to tell them we're to invest their funds We just put our money in there and we trust that they are going to take care of our money and invest it Properly I guess So CalPERS is responsible for collecting money from the employer the employee and that's the contributions that come out of the employees Paychecks and the contributions that we give to CalPERS every month if you go to 15c2 in the budget That shows you right there that for 2019 we budgeted about five point six million dollars for this contribution for the employer side in 20 we are $6.2 million. So the main objective here is We put money into CalPERS the employee puts money into CalPERS CalPERS takes that money and they invest it Hoping to make money off of that to good investments similar to your own personal investments So that you can have money that lasts the lifetime of the employee. That's the that's the end game here the gap between the funds that we send them and the funds that they Need by agency is our unfunded accrued liability and that's called the UAL And again, this is pension only this came straight out of the CalPERS One of their publications. This is historical things that affected the funding that CalPERS had and Many of us remember what happened back when the dot-com crash happened back in the 2000 area We also remember what happened with the very very long recession. And so these are just bullet points of things that happened as before hundred and as base 616 I think that says That's when CalPERS in the state of California put in enhancements to the CalPERS programs so employers had options to Supplement their current CalPERS pensions with even Better or you have some agencies that have three and a half at 50 You have a lot of fire and police in there that have certain supplementals to the base pension that the entity has and Then one of the biggest things here is on the bottom here at discount rate Discount rate is basically how much? How much interest you're going to make so they took it from 8.25? And since 2004 going all the way to 2016-17 they've dropped that I'm going to call an interest rate But it is officially called the discount rate from 8.7 to 8.25 to 7% So that's that's not good. We're making less money on our money But how do we get here? CalPERS had significant investment losses Over multiple years and that's not just CalPERS. There are a lot of us agencies We personally do not bait missus, but I know the county does and there's other entities that do their own investing and A lot of people lost a lot of money We did our own kind of investing where we had 26 million dollars in our reserve account Which was not dedicated anything and we kept holding on and holding on and spending that reserve and keeping the service on the Street keeping the employees employed and it just went on too long for everybody including CalPERS So their CalPERS contribution policy They were slow just like a lot of other entities to recognize that their investments were losing more than they could handle and So they on top of that they had a 30 year amortization instead of a 20 or 15 year amortization So the longer your amortize something the longer You think you have time to pay things back. It smooths things out theoretically, but it does stretch out the pain This is what I alluded to before the enhanced benefit formulas those went into 2001 so that increased the Pull on that account and then the demographics I kind of alluded to that before we have more retirees going So if you if you say that the baby boomers from for 1946 and 1964 you add 50 years to that So someone retires at 50. That's a baby boomer. You'd be retiring between 1996 and 2014 If you waited until you were 65 You would start retiring in 2011 and then you would be retiring until 2029 that kind of gives you the the Time frame and the reason I pick baby boomers is they are still the biggest demographic of all of our employees. Oh going on to Developments that this is how CalPERS is Put in place to strengthen The accounts that they have today so for us It's bad for us, but it's good for the CalPERS account where they're lowering their discount rate and they're doing this over a three-year period of time And they're passing that increase off to the employers So instead of a seven point five percent interest rate that they had anticipated getting They're bringing that down to seven percent and we're expecting the employer to make up that point five percent difference Second thing that they're doing is they have reallocated their assets those of you that have investment accounts Whether it's your retirement account or any other account You may know something called balancing and so what they've done is they've rebalanced their accounts I believe they used to be much much higher on real estate That's why they kind of lost their shirts when the dot-com thing went the whole I don't know how much they lost, but I know it's a significant amount So now you see that real estate is only 13 percent global equity I Will tell you that the trend is global equity is the place that a lot of people are going it Spreads out Where you're investing instead of only in one or two things only in real estate only in utilities only in certain areas So they've they've spread it out between different things and then they keep only one percent liquid and that's Payments that they have to make you know they probably have that in CDs or money markers or things like that But the majority is in I'm going to say mid to low risk type of situations I In the brief Account that I looked at I didn't see a whole lot of high-risk stuff that they have the money invested in and Then the last thing that they're trying to do to shore up the accounts or all of our accounts is going from 30 years to 20 years Is the shorter amortization? This is going to take effect this year and it's going to speed up the amount of money that they get in from us Which means we are going to be paying substantially higher Payments to Cal FERS Is me answer a quick question Um, could I ask you a question on this particular slide when we're going from seven and a half to seven and you said the employer Contribution, is this something that's still negotiable between employment and the employees and their contract negotiations on who's gonna Just the employer or is this Could be combination of what's negotiated between employee and employer Help me on this one Can you can you do the mic please so that we can all hear you sorry This is not between. This is not the employee rate. It's not the employer rate What this is is their anticipated rate of return? Okay their investments They're on their investments. So they were thinking they were gonna get seven and a half and now they're reducing that so meaning this Taking it to the next step since we have to make up the the remainder remainder of this difference That remainder being negotiated between us paying it out of our budget and the employee paying it in terms of what their contract Share is I know that we're doing this with the city of the employee is contributing a bit more to help offset some of this Is that something in conversation as well? So That that is an option I suppose I can't tell you that we've had conversations about that today but yes, there's many options that can be put forward to Figure out how to pay for that extra point five percent, but we haven't gone down the road of that yet. Thank you Continue okay, so this is one of my favorite slides Christina put this in here on by the way This is all Christina and Debbie they they are the gurus of all of these slides putting this together so this one I think speaks to everybody everybody knows what a dollar bill was and it tells you how much That $1 how CalPERS is using that today. So Investment earnings they are getting about 62% of that dollar 25% of that is coming from the employers or 25 cents is coming from the employers and then 13 is coming from the members themselves and that's That's how our dollar bill is put together three different sources other Complicated but as simple as we could get it presentation here. So today CalPERS rate for our payroll They tell us that they our cost is nine point two percent of our payroll and So nine point two percent is about a million seven Additionally, we have the UAL which is three point six million dollars Put that together and you have on the bottom left there five point three million dollars Our budget that I have putting forward on 15c2 is where I get that five point six million dollars This is how it's put together so contributions of On the payroll and we're trying to buy down our Unfunded liability between the two it's five point six million dollars So if you take that information, you move it forward for the next six years starting in 2020 going through 2025 The percent of our payroll we think it's going to go up from nine point four all the way up to ten point one If you take that percentage on funded liability payments going to be four point one going to go up to five point nine And again, this is all coming out of our operating budget The projected payroll with that 9.4 or 10.1 percent is based on is 20 million to 23 million dollar and payroll expenses and so 30.2 percent is our percent of payroll and that's where you get your six point one all the way up to eight point two if we keep going The rate at the rate that we're going today Again, this is strictly a projection. This is not Anything that's been put out as this is what's going to happen So the history to our pension Back in 2009. It was 44 million dollars. That was manageable with what we had going on dip down in 2011 and now we're up to fifty six point five and this is for the 2018 It's always a year behind so it says 2017 up there. That's when we encourage it But we hit our books in 2018 so in 2018 our unfunded liability for our pension is 57 million dollars so you put this together with our open liability and we're about a hundred and sixty five million dollars It's what we need that bucket for so options We could prepay the UAO portion and that's actually an option that I do have in the budget We are looking to prepay it on July 1st the whole thing for the year instead of paying it one 12th every year or every month And we would save about 144 thousand dollars second option would be putting additional money towards the UAL so paying even more money to pay that down and the third one is we could Take out a loan basically and put a stake in the ground and start paying off towards that. I know some agencies have done that we do not have significant money to Put towards that right now That that would be a huge push to put money towards number three But number one and number two or something number two is something we can talk about number one We can absolutely do starting today number one is this is just the Schematic of how we're going to do that We're going to save about a hundred forty four thousand dollars if we pay four million dollars July 1st That every year of course that that helps us as we go second one Amos can be made in a dedicated amount into this account. It allows for us to be flexible at how we budget We can dedicate it out of one-time money. We don't want to have Something that Let me stop there. It's one we can dedicate it. It's one-time funding and we also use New revenue towards this The additional payments Obviously that brings our principal down, which means we pay less interest So this is just an example if we paid a million dollars Today to reduce the amount of interest would be down by about a million six over the over the life of the 30 years We're still doing 30 because it doesn't go down to 20 until this year If we paid a million dollars every year for the next five years We could reduce and save six point eight million dollars worth of interest over the next 30 years So every time you put more money in you pay less interest And then the third one is the foot fresh start you can either do all of it or a portion portion of it If you do all of it you have to pay Off the base is faster and you extinguish that Amarization schedule you create a brand new minimum payment, which would be much much higher But then you have significant long-term savings and once you do it you can't take it back. It's irrevocable Fresh start just doing portions of it. You can do Added pieces every year You can ensure you similar savings, but not as much if you paid the whole thing and It's not irrevocable. It is irrevocable So if you did a 20 years amortization, which is starting this year You could say twelve point seven million dollars if we did that if you did a 15 year amortization You could save thirty two million dollars, but the payments I think would be a little much for us as well questions Questions, okay I'm gonna I'm gonna have you take a break right there and to see if anybody from the public wants to weigh in on either the OPEBs or the pension liabilities come on up now Come on up. Yeah My name is my name is rich Gabriel. I retired. I am a retiree. I was hired in 1984 at that point I Was not given. Oh at that point a lot of us were recruited a Right out of high school right out of mechanical technologies right out of schools and right out of the middle milk Excuse me the military We were not able to pay into Medicare and About 1990 I'm estimating this is when Medicare started being taken out of further employees out of their pay now There's a gaggle of us That basically have nothing when they hit to 65 years old so as We're talking about the medical benefits these people are really going to be affected and they're all about my age which is mid-60s So I'd like to that to be taken into consideration some of them. I I understand that Nothing here was saying just dropped the whole thing. It was all other ways and that was very pleasing to me That's better. I want to make sure that those people don't get forgotten It's kind of when you get your thing from social security and it just says from 1984 to now is zero Makes you wonder. Thank you. Thanks for your comments Welcome morning board James Sandoval general chairperson of smart transportation local 23 I just want to pass on a message from our international rep Bonnie Moore. She was unable to stay and she had a run out of year We have been informed that this is not a recommendation, but only information Please understand that we are a pay-as-we-go agency our members pay their full share of the employer's Contribution unlike some cities that have run into problems with their employee pension process We are the transit district not the city. Thank you Thank you any other comments from the public on either these two presentations Okay, we'll bring it back to for Those are just presentations item 14 Comment. Oh go ahead Yeah, before you go into 15, right? Okay. Yeah If you follow the news nationally about pension issues and they apply also to Retiree medical although there's not that much discussion about it, but it's the same issue You might get a sense that we're an absolute complete freefall, you know, the social security systems bankrupt We're all gonna nobody will have a retirement or something and People are wrong to think, you know, there isn't a problem you could just forget it. It's oh, it's all gonna work out Don't there's not a problem. There is a problem with social security There is a problem with our pension system with CalPERS and with them and retiree medical On the other hand, nobody can afford. I don't think I'm amazed to hear some agency did something 10 years ago That fixed it for him. I don't know how they they must be a very wealthy place where that happened or something because This is a balancing act if you decide to totally try and fix this problem in the short run You're gonna take it. You wouldn't have a bus system I mean the only way you could pay for this John Leopold pointed this out earlier would be to stop all your operations You'd have enough money to cover the pension for the people that used to work here But you close down that day and when often Political pundits or political actors at the national level talk about, you know, we we we've got a like, you know We're X trillion dollars in debt and around, you know Social security these kinds of issues we need to pay this off This is a liability and they their argument is you should have the money in the bank or in a trust fund To pay as if everybody's we're gonna retire tomorrow afternoon. Well, we're not gonna retire Nobody's retiring tomorrow afternoon. This agency is gonna go on for a long time I think Alex Clifford understated the nature of the problem. It's not a many year It's a many decade problem to solve this issue for us. I think it's really really a serious one But I think it would be a mistake to ignore it or think well You know because it's not you don't have to pay everybody tomorrow afternoon Well, then it'll work out But if you look at the numbers that Angela just presented us you get a pretty pretty clear sense that it gets worse every year Not better and what we need to do at least to sort of have it level out and sort of have the problem So eat away at it slowly on some level and I think that's the responsible thing for us to be doing So when it comes to our budget decisions, for example putting aside the two million that's being proposed here It seems to me that That's a responsible thing to think about doing maybe when we're done with the budget process and look at all of our costs and stuff It won't be exactly two million. Maybe it'll be it's not like a magic number of two million, but it's for me It's in the right range It's not like we couldn't do five million a five million the only way we could do it would be to reduce our Employees wages or cut a third of our routes or something that would just be completely unacceptable or raise our Fairs that wouldn't even work because you raise the fairs enough to do this you'd lose all your riders So I think we're on the right track thinking about putting this money aside I think we're in the ballpark with the numbers that you're talking about in your they weren't exactly recommendations But your suggestions of our alternatives, but I think we need to Not feed the sort of national frenzy that somehow if we don't pay off this liability tomorrow afternoon, we're all You know, we're all we're all gonna you know be be Hell with it in the handbasket or something it it's not it's not it doesn't take that form It's not a crisis tomorrow afternoon. It's a slow-moving wreck and The way is you know, we have to somehow start to deal with it now And I think that's the responsible thing for us to be doing But more than that I think it's just Imperative that we not just ignore this I think we and I don't think we ignore this of the sense that we were just irresponsible about it for example, one of the charts showed that the The benefit plans themselves have been going up over time well when the state Decided to increase the benefit plans particularly for the prison guards is where this whole thing started many years ago Everybody else was forced to follow if you're in law enforcement You know you lost your possible police officers in your in your city Or if whatever the areas you were in when the state employees when the state starting to have this benefit plan That was so much better than everybody else's you couldn't keep your employees They would just you'd you'd train them and then they'd go to go to a state agency where they could get a much better benefit plan so local governments and transit agencies and water districts are all forced to increase the Retirement benefits for their employees in light of what the state did I don't think what the state was necessarily all that responsible to be honest at the time But we had no choice but the fire I wasn't thinking out of the city of Santa Cruz particularly We had no choice but to sort of follow the lead that they had forced us into if unless we wanted to lose all of our employees But I think now we're I think everybody's in recognition that maybe this point We can't be increasing these benefits at that level they somehow we have to hold the line on some of these benefits and We do have to balance how much we put aside with what we need to pay our employees decently and what and you know We've given them a reasonable salary to be even to be recruit them aside from what's just moral and just Just effectively you can't hire people if you don't pay them enough to come to work So this is the balancing act and I just want to say I support the general approach that Alan's Angel is laying out here Starting the process laying some stuff aside figuring out a way to do it that we can afford to do without Totally gutting our service or we're totally destroying our employees Any other comments? Dr. Leopold Thank You chair. Thank you for the presentation. I agree with My colleague director Rockin that it's we had we we would be Irresponsible if we didn't look at reducing this long-term liability And how we do it is is always is where The details will matter. I know at the county when we face this problem 2000 I think Supervisor McPherson might have been on the on the on the board. So maybe it was 2013 we We worked with our our constituent unions And thought about what the future would look like and managed to come up with a series of pieces That allowed us to reduce our OPEB by a hundred and twenty seven million dollars over 30 years So was it was an effective strategy? It really it really helped us out and so There is I think we should use this opportunity to engage with our employees to to better educate everyone about this and to look at strategies that are a win-win because what we did at the county was done in collaboration rather than confrontation and I think we can come up strategies to start bending the curve So we don't we're not looking at those increases, you know the the always the the first thing is You know, you want to stop digging the hole, right? and I think there's there's part of that that we can do and then work on the long-term strategy to To make it so it's less impactful long-term on us I think it's there and part of that discussion may happen in The finance committee part of it might happen in the HR personnel committee as well and part of it will happen in Negotiations and I think that though all those things become important to take on this this This problem, which wasn't created yesterday, which is not Necessarily a reflection of bad strategies the strategies that we use our common Strategies in which agencies have used for many years and now with changes in the way in which we must record them We want to make sure that we are actually Trying to figure out some way to manage these liabilities in a different way than we have in the past and I think this This board has shown that it's willing to do that But there are lots of different pieces, right? I mean we've we've heard about the 60 plus buses that we need We've heard about the in that now what it's less lower than number. We have a new number well We do have a Strategy to replace the the millions of dollars of buses. We know that there's a two hundred million dollar capital Need that we'll talk about we know that We heard at the last meeting about starting pay for drivers We you know, there's there's all these things are important and we're gonna have to find that balance For for what gets us into the future? And keep service on the street and meeting the needs of people in Santa Cruz County so I look forward to the conversation and I think it's important that we start it I Think I'll use that as a spur of you have a last comment I'm always curious about where we arrive at a particular statistic and maybe I missed it But where where did the two million dollars come from? I mean Angela's suggestion of what we might know but based on what why two million why not one point five million one point seven five? I think go ahead. Angela. You can answer that my budget Are we we're gonna get to the budget and she's gonna have dinner our next topic. Ah, I keep anticipating Okay, I'm trying to get us there director Northcut What to I want to acknowledge the good efforts and the good faith of working this out and trying to Find ways to deal with this what what could potentially become a crisis I work for one of the agencies that pushed the cost of retirement off to the employee and As a union representative at that time our biggest thing was if you are Charging me more to work here than what I'm getting in paycheck and our benefits as was pointed out benefits are a part of our our higher packet our paycheck kind of of of What you calculated is our earnings and so when you reduce those To us and we don't see anything in return Then it's not an agency people tend to want to work for and when we did have to go back into 2013 we pushed the benefit the CalPERS Portion off unto the employees we lost a significant amount of employees at the time it helped because We couldn't afford the staffing levels that we needed But it was great disservice to the college to do that because when the cost of living continues to increase But the paycheck remains the same and our decreases because we have to contribute more That's also a balancing act that's worth Recognizing on the employee side of the table So I appreciate you taking this time to even evaluate what those efforts and those effects look like Go ahead. Yeah, and it's not without the conversation with unions because unions have faced this elsewhere on what they've done to work with their employees for the negotiation and Keeping it an open mind for what their Suggestions or recommendations have been with with the other unions and what they've done to work Collaboratively with their employers on some of these solutions or some remedies to help this and you're right This is not going to be a hundred percent pay down zero balance We know that there will always be a revolving debt But we just need to make sure that we've got that's something that's realistic and that we can live with and manage So that we don't have a collapse I certainly don't want to see that happen because it doesn't help employers doesn't help the the community that needs these services and I think that everything is being balanced on probably the Head of a pin really when it comes down to where we're going to come up with the money and retain our employees and Do the right thing for this community Dr. Lynn and that first of all I appreciate all the work that's gone into this by your team because There's a lot of information a lot of options and the UAL is you know It's the one that seems the easiest that we can we can do that now and and anything we can do to To make a savings without really Stretching us too thin is you know no brainer. I think on that If I had not seen the real irrevocable trust option and that's that's a new option I wasn't real clear it is it something that you can put a small amount and and I mean there seems to be some some Maybe dangers of being committed and then getting into a crisis like we were just a few years ago. We're you know We were in the red so Um, it sounds like there's some danger there There's pros and cons to it And so when we go through and have the act where I'll do their review and then our staff does Their review and the recommendations We would definitely bring the pros and cons back to you about the different options if you choose this option This is the pros of it. This is cons of it and so on and so forth And something maybe we can do in a very small Measure at first you know a cautious measure. I guess at first maybe you know to know those options We'll give you the minimum limits. I'm sure there's something like that in there, too But um, we'll bring that back to you when we present our recommendations. Thank you Okay, I'm going to go ahead and move on just a quick comment I I think what the intent of having these on the agenda today was awareness And I think that's where we're all sitting right now Okay, we're keenly aware that we have a dilemma here in Metro that a lot of us share in the counties and cities that we all participate in Uh, and I look forward to the recommendations and the work of the finance committee because I'm sure that's where this is going to be Heady to come back with some some great dialogue and and how we can move forward So, uh, with that I'm going to go ahead and move on to item 15 Which is the the budget which is where you're going to share a little bit more of the details about What you have planned for us. So go ahead with that presentation Glasses adjourned for the last hour and a half. Now we go on to the budget Um, so I have not gone through the detail of the budget before Um, seeing as the time frame and I know we have some other issues that you want to go over today Do you want me to go through the detail? You just want me to go through the presentation because I can hit highlights And go from there. It's up to you. I'm going to I can make the assumption that you've all read I think we're going to have a fairly large I think we have a large Closest so if you can give the synopsis of the cliff notes and get us through that I think but pay attention to the details I know there were some questions about the specific funding that you had and so include those but otherwise go through it Okay, so um in march we presented to you our foy 2021 operating budget and our foy 20 capital budget Um, that was given to you in detail And today we're going to be going over our five-year budget plan, which is also our forecast We do a two-year revolving budget in a three-year forecast I'm going to show you the revenues operating budget operating expenses and the transfers We're also be looking at the revenue percent change On revenue expense percent change versus the cpi percent change I'll show you the operating budget changes since march the operating reserve balances That we're projecting and then going through some risks and then some additional information and then lastly our capital budget On to the five-year budget plan or their five-year forecast The red line shows you our revenues. This is our revenue. I'm sorry our expenses. The red line is our expenses So 52 million dollars in expenses. We always want that line to be below how much revenue we think is coming in So for f y 20 we are anticipating 56 almost 57 million dollars in revenue The different colors shows you the different kind of revenue that we're expecting You can go to page 15 b1 if you want to see the detail to these revenue different colored lines This is uh projections for the next five year the type of revenue that we anticipate coming in Of course, our biggest one is our two sales taxes. Uh, that is 47 of our operating budget Second largest one is our passenger fares passenger fares is not made up of just the fare box It's also made up of our three contracts the cabriol contract the ucse contract and the highway 17 contract that we have for that And then the third largest one is our tda money that we receive Going on to our expense side This is in my view a very pretty picture because we have our expenses Below the revenue, uh the revenues our revenues as you guys show up there We're anticipating about 57 million dollars going up to 63 million dollars at our expenses in every single year We'll be below the revenues that we're bringing in and you can look at the detail of that on 15 b1 also This is our operating expenses projected over the next five years where we think we're going to be spending our money 35 percent of it will be spent on the fixed route bus operator space 40 percent will be paid on our support personnel, which is the sciu and the management personnel and then non-personnel expenses our utilities Parts for our revenue and non revenue vehicles and our fuel And then our smallest pieces are paratransit labor and fringe On the transfer side You can go to 15 c6 for the details on this Our capital reserve fund, uh, that's where we're going to be putting um the Revenues that we have above and beyond the expenses that we have coming in The blue lines down here that 2.4 million dollars That's the percentage of our operating money that we are moving for the buses or there our equipment replacement And then we have over here transferred operating and capital reserve fund the calpers ua Ua l and opem 34 percent is the green one there That's the 2 million dollars that we are recommending that we take From the operating budget of the revenues that are above our expenses that we plan on incurring and putting that into a brand new reserve bucket This might be a good time to explain where you came up with the 2 y 2 million question that was asked earlier So go to page 15 c6 Back it On 15 c6 This is our transfer page And what this shows you is that um We have to have a zero budget And so we are going to transfer 5.1 million dollars in our 2020 budget Into all these reserve buckets. So transfer to capital budget. This is a 2.3 million dollars or the of the 2.3 million dollars of the 3 million dollar commitment that the board has made to put money towards buses 2.3 million dollars is operating money and the rest of it is a capital money And then the rest of it is uh 300 000 dollars going as the fuel tax credit That's the one that we never know is coming in so we never budget for it We always anticipate throwing it into the reserve if it actually comes through yay We have money in the reserve if it doesn't it doesn't affect our operating budget and something doesn't get funded I'm going to skip down to line 5 operating capital reserve fund $470 000 that is the capital fund where we have But um Projects that we think we're going to be doing that's where that money comes from as well as our 20 percent or whatever percent we're putting towards grants that we're applying for That's the bucket that that money would come out of and then lastly We've chosen 2 million as the number The board has every right to Tell me a different number if you don't like that one as to how much you would like to be putting into a new reserve Bucket called CalPERS UA and OPEP. That's how we came up to the 2 million if you flip back one page You will see bottom line operating expenses For that same year is 51.5 million dollars and our Revenues on page 15c 1 Our 56.6 the difference between those is the 5 million one Of 56 million dollars in revenue 51 52 million expenses That's how you come up with 50 with 5 million dollars able to go into the reserve accounts including the 3 million The 2.3 million dollars for the buses so in keeping with the balanced budget There was that surplus correct 5 million dollars And then you made the allocations to what we'd already committed to And that left the delta of the 2 million dollars that you could put into the fund if we if we so choose if you so choose That is correct That clear, okay pretty So total revenue expense per cent change All right lost track of my stuff here. All right Can I ask a question now that maybe someone has to do some research on while you're still while you're still talking Could you give us some idea of what the increase has been The pie chart that shows a pair transit costs The 8% I think Um, how is how has that changed over time? Is that gone? Is that going up steadily? Is it sort of leveled out? I have no idea it goes up But at some point maybe someone would give us a better sense of how you know At one point it was when we first started doing pair transit. It was really steep We started with a small service and got bigger and bigger You on history of the department itself or a history of Personnel expenses No, just what the what does it cost us to run the pair transit system as a Percentage of our budget and is it going up? Is it taking a bigger chunk of that pie of our total operation operating budget? All right? I can't tell you how far we're going to go back Sometimes before you're done, maybe someone can tell us that or something you can bring that pretty next time Okay, that'll be fine or I can email it to you whichever you'd like What would you like me to email it to you? No, I can wait till the next meeting. Okay Alrighty, so this is the budget Revenue expense versus the cpi change So one of the biggest things that you see here is is in 2018 The total revenue change was 10.3 and that was when measure d and sb s sta sta and sp1 came through So we budgeted that much Look at that same line going forward to actual and actually came through at 14 So we got more on the revenues than we anticipated But I'm going to flip back here real quick. Look at the cpi cpi staying pretty stable with the red line And then on the actual cpi the red line again still pretty stable Going back again to budget on the expense the orange line So in 2019 is when we really tried to Pull things together actually we started in 2018 and then we kept things budget wise in a tight Circle around the cpi and if you go forward to the actual We did pretty good in 17. We actually Had less expense than we had budgeted and now for 2018 The actual that came in came right in around cpi From a budget in actual perspective you want to stay around your cpi increases or whatever cpi is Kind of gives you a good indication of where you are how you're doing as an agency But these spikes up and down they're every single one of them are explainable We know why we went down. We know why we went up on the expense as well as the Revenues and so there's nothing on this chart even though it looks schizophrenic that It's not explainable and we know why we are where we are today And we're actually in a really good place as of 18 and I think 19 is going to look pretty good too So the changes between the march presentation and the may presentation We are adding revenues. Yay So we're adding about 138 thousand dollars and 20 and 131 thousand and 21 We do have puts and takes there. We had some not so good news from cabrillo. They are We're unable to meet the obligation for this fiscal year, but I'm hearing that we've had some negotiations over a longer term I think we got that under control, but for 2020 and 2021 We're going to be reducing the contract the revenue contract for cabrillo down by 200 thousand dollars We did get two vendors down the pacific station so that rental income is going to go up from what we thought We got some new numbers on a tda And we also got new numbers that brought us down on the fta and the stick as well as tda Numbers we got no numbers on that in january or in march and those went up significantly So the net result of all those puts and takes 138 more in 20 and 131 and 21 On the expense side, uh, we actually brought our expenses down by 126 thousand and 44 thousand in 20 and 21 Again, there's ups and downs on this on the unfortunate side We do have to reduce our fte's for our fixed route bunch operators by two We are not laying anybody off. We actually have 12 vacancies right now on the fixed route operator side So this affects no employee today. So we are unfunding two fte's going forward into the 2020 budget We did add a provisional position for admin specialists in the purchasing area And then we had some savings in the retirement area Because we're going to make that one-time payment in july and so we'll be savings about 144 thousand dollars On the non-personnel side, um, we have some increased costs there for security and service and graphic services Uh, casual liability insurance. We sent debbie to cal tip and she came back with new numbers So that increased 120 thousand and 20 and 120 thousand and 21 I will say that because we have a brand new manager that just started I'm sure she's going to have some ideas of what she wants to do in the next year So you're probably seen some change not significant But some change into the june budget in the marketing area That would be the only one that i'm aware of today And then the transfers because of all those puts and takes between the expenses and their revenues we have to make it zero so we have Increased going into our transfers 265 and 20 and 175 and 21 And so those are the buckets that we anticipate putting that money into Here's our lovely bucket screen. This is the one that As a 5 10 of 2019 everything is fully funded. I haven't had many will say that for quite some time So that's that's quite an accomplishment for all of us And then we had the bottom right that we Intentionally do not have a minimum balance on this is where we used to have the 26 million and we have 2.3 in there right now Hopefully we can start putting more money into that and start bringing that up so that when The downturn comes again because we all know what's going to come again one of these days We will have some money to sustain ourselves I'm not showing the uh ua bucket on here because that's not something that We're putting forward yet We would mess up our blue screen. It would hit all the blue. I don't want any red on there Yes So non-controllable operating risks. This is something that Things that are out there that Could possibly happen and we feel that there are risks that we want to make sure that all of you know about passenger fares, paratransit fares, fluctuation and ridership. We never know What's going to happen with our ridership? We hope it stays pretty stable But we have seen trends up and trends down Special transit fares. We did have that situation with the caprio contract. We're trying to Kind of stabilize that and with the ucse contract. Yay We're moving forward on that one depends on the student vote Well, that's today, right? We're supposed to know by today or monday. So crossing our fingers on that one Uh sales tax consumer spending consumer spending may stall I keep hearing about a whole bunch of other things that are flying out there. You have the national situation going on so That could change anytime right now We have four percent in our budget for an increase in sales tax year over year crossing my fingers that that continues Federal always subject to appropriation and reauthorization if those individuals don't want to play nice then we have to wait for our money and if Things don't go the way that we want them to do We may not get the money that we think we're supposed to be getting in all those buckets Alternate fuel tax that kind of alluded to that. We never know if that thing's coming through or not every time It gets delayed It has a better opportunity of never showing up So I think the last one took nine months to show up for that fiscal year So that's why we always put it in the reserves if it comes great if it doesn't it doesn't impact our day-to-day operations Some of the people we visited in dc suggested it should go away. So that's a real risk there. Oh, well, there you go That's right. It wasn't everybody but that was voice, which was scary Moving on expenses on the cng and diesel engine failures. Those are always something that we have out there You know is mechanical will break unfortunately Fuel cost volatility even though we have contracts in place. We do have that risk workers comp insurance. That's always You never know what's going to happen with that. We have gone been very fortunate for many years where we have not had Significant workers comp claims, but we do have workers comp claims. That's the nature of the some of the work medical insurance We just saw something out of calpers the other day. There was a news announcement And the the prices were crazy and we never know what they're going to be for sure in january What i've heard is that the board is meeting like the 16th of june or something to adopt those rates So i may have better information for you, but it won't be in time to change this budget We have a five percent increase right now. Yeah five percent increase right now for the medical medical costs in our budget aging fleet The longer we keep these buses the more maintenance there and higher cost maintenance. We are diligently Trying to replace these buses, but even those buses that are being replaced. They're going to have to be maintained And then changes and unfunded mandates We never know when there's going to be something coming through that says you have to do this and there's not a dime to go with it Official information These are things that the board in the past has said they want to support And so instead of sending you six different staff reports We put it here if there's something on here that You believe that we should not be doing anymore. Please let me know and we will bring it to you in a separate staff report So you can discuss it that they are recommended by the finance committee They are recommended by the finance committee. That is correct Memberships this is kind of small administration they have the bulk of the memberships because Admin does the memberships for the agency not just for our department Finance and customer service. That's where we do memberships for our individual department employees same for hr risk purchasing and fleet maintenance fleet maintenance actually does um Fleet and facility type stuff. So we have those two together Board member travel these are uh Anticipated conferences that we expect and anticipate that the board members to go to they do not always go to these Sometimes there are other meetings. That's why we say additional travel on the bottom And so this is just a overall So the public knows that these are the conferences that we anticipate our boards can be going to Top two are for national and the middle two are for the state Employee center programs We have some things and admin as well as operations and customer service and we have one immersed management Moving on to the capital budget Ed Over here. Oh, I'm sorry. Go ahead Do you want questions now or at the end of this presentation if you've ever now go ahead. Yeah On the memberships. I just wanted to raise a question. We are members of the chamber and I think that's really valuable Alex comes to those meetings I just wonder also about considering the business council, which Is a Also very important countywide business organization. They've been so supportive on transportation and housing issues So I just throw that out for suggestion. I don't even know what their membership fees are But maybe at the maybe at the next Finance who is finance meeting before our next meeting or not? I think We just had a meeting but we're in 14th Yeah, so maybe at the finance committee if you give us a place to bring that out Yeah, I think on the scale of things. It's a trivial amount, but in terms of Networking and policy support could be really important Out there if you guys see information would be helpful. Yeah, that'd be great at the finance meeting Okay, go ahead. All right So moving on to capital capital budget. You've got a page 15 e dot 14 2 I guess it is 20 cap. This is the projects for 21.4 million dollars 17.5 of it is going to be for our revenue vehicles. That's 82 percent of our capital budget And then construction related projects are listed there also. That's 9.8 percent of our capital budget The funding sources that go along with those projects Um page 15 e3 Um transfers to the operating budget for measure d. That's four million dollars. It's 19 percent Our federal grants are over there at 32 percent And to go along with the uh capital budget you also have your unfunded capital budget For five years if you go to page 15 f1, we have a five year summary there We have about 45 million dollars of unfunded capital projects out there And then we also have 10 years out there $210 million of unfunded capital projects and the detail can be found on 15 f dash 2 through 7 Yeah Dr. Northcutt, I want to make a couple of comments. Um in regards to the cabrillo slides So it's has nothing to do with rather or not. We want to Continue the contract. We have been looking at the needs of our college with a decline in enrollment And with the changes to our summer registration Numbers of students and not getting the same level of services as our full, you know our fall and our spring And so aligned with that and the need to um have metro Reduce some of the drivers because they were unfun, you know unstaffed Barrow and I were able to work at barrel I and michael were able to work on what we thought was a reasonable consideration And so I wanted to applaud barrel for his efforts in meeting both the metro needs and the cabrillo needs And in um responsive that I also want to acknowledge that our ridership for cabrillo has um increased over a About four month period of time and so our students are wholly um Becoming more reliant on the metro system and as the the more we push it the more They see the value in it and so we are going towards that place where metro will be a part of our Ways of getting to campus, but at this time we do have to address what our summer Looks like what reduced enrollment looks like for us and I um respect and appreciate the collaboration that barrel And cabrillo has had um in in addressing all those concerns with both metros Staffing needs and cabrillo's ridership. So I just wanted to acknowledge that we're moving in the right direction Yeah, great Any other questions? All right, I'll open it up to the pub. Oh So my ask is that we adopt a resolution setting for a public hearing on june 28th, and we're not adopting the budget today Okay, great I'll go ahead and open up to the public. Anybody wants to weigh in on this year's proposed budget being none The approval of the staff recommendation to set the uh meeting for our formal budget hearing Well second june 28th and motion by rodkentekman by koffman gomez Any other discussion? Dr. Matthews. Yeah, I um on the capital budget. I see 2.1 million for construction. I'm assuming that would Be related to um, I know we have a number of capital construction projects, but pacific station would be That would be uh where that would fall. Is that correct? Yes Yeah That is on page 15 e 1 and 2 Yeah, I was looking at 15 a 26. I'm looking at the pie chart, but whatever I just want to make sure that we acknowledge the direction given and That there's a urgency about moving on that Certainly from the city's part on reaching a decision Well on metro's point point part also reaching a decision So I just want to make sure that we're we're covering the initial stage of that I think that piece of pie is a good faith gesture Okay, I I can't help but raise it. No, no, I'm I'm acknowledging that I believe that's what its intent is there to show the good faith That we're moving in that direction. So would that be accurate? Yes, okay. Thank you Hang on director Myers Yeah I guess the other we we had this conversation the finance also but with the unfunded The unfunded capital obviously is is quite significant and I think we just discussed at the at the finance committee that Sort of looking digging deeper into that unfunded capital with some more specificity and of course Pacific station being one thing that will we we all hope and believe will come and come to fruition Possibly in the next few years, especially with the available funding as it is But we did discuss sort of a digging maybe doing a little more deeper dive on our unfunded So we could look at the conflicts between the facilities needs and other other Other objectives such as replacement of buses and things like that. I don't know Alex if you want to add a little more to that or absolutely. It was an excellent con Point to bring up which is Capital is not all about buses There's there's other things that we own that we have to maintain And so as a result of that comment I think what we want to do is start bringing to the capital board capital committee additional discussions about those other things As you know, we have completed the transit act asset management plan for the federal government Which was a really good exercise to go through and evaluate every single asset we own And look at what needs to be done to them and when And so that comes into play how that integrates with the unfunded 200 million dollars needs to be discussed Now the unfunded 200 million dollars Includes things like the buses that we have talked about that's a large portion of that and as we presented to the board last month We think we're going to get that resolved about the year 2024 Maybe sooner if we get some good grants from the federal and state government. So that'll help But there's things in there like we envision a South county division like we once had where we could roll buses out from the watsonville area That's a vision. It's it's in there. It contributes to the 200 million may never happen But we wanted to make sure that it was part of the vision As is an expansion of our maintenance facility But there are many other things that are much more urgent Now part of that whole discussion too is to make sure that we Avoid deferred maintenance wherever as possible wherever possible and that means budgeting in the operating fund as we do A sufficient amount of money to maintain the things that we own So they don't get to a place where we have to make major investments or Completely replace them Your most current example is pacific station Look at the look at the study we just completed that says To get this thing back into good condition or decent condition. You need to spend 5.6 million dollars We shouldn't put ourselves in that position. We need to avoid that at all cost At one final point I would make and this is more for the public education When you look at 20 million 21 million dollars capital I want to make clear that we're not we're not budgeting 21 million dollars this year for the capital program We're not budgeting 50 percent of our what we use for operating for the capital program. This is a Continuum if you will of prior funding that has yet to be spent down So for example in prior years, we got the money for the five gillig cng buses As you know, you just don't go to the bus lot and pick out a bus and bring it home, right? It takes time to order it and build it and get it to us This uh july august we'll start receiving those gilligs and that pot will begin to shrink There's 3.8 million dollars in federal lono funding sitting in there That is still on credit for us to use. We're just waiting for another Manufacture to come into the over-the-road coach market and we'll hopefully place an order and draw down that 3.8 million So the 21 million comes down down next year Our pro-terras begin arriving our pro-terra electric buses and the pot will come down and down Then if we get another grant it'll go back up again. So it's elastic that way rather than a single year contribution director robton I just wanted to say for the public in response to synthia's question about the pacific station that the board did authorize our CEO to begin negotiations with the city on this issue And so that I believe those are underway and hopefully we're going to Have some resolution that works for both the city and the transit district and our all of our patrons and customers Any other questions or comments with that? We have a motion on the floor all in favor. Hi Opposed motion carries unanimously. So we'll schedule that public hearing on june 28 thank you All right Let's see Bring on Brings us to a review of items to be discussed in closed session Thanks, chair. Uh, we just have our one labor negotiation update. There will not be any reportable action Great. So with that, uh, we'll make an announcement for a next metro meeting We'll be friday june 28th at 9 a.m. At the santa cruz city council chambers And with that we'll recess to closed sessions Anybody would like to speak to us on an item in closed session before we go Seeing none, we'll uh adjourn in the closed session