We can't call this meeting to order just yet. Uh so we will go ahead and get started with the information item. Uh the 2026 quarterly procurement and MCUB spend uh is going to be the first thing. Rob Kerry, deputy chief procurement officer and Ashanti Payne, director of office civil rights and small business programs. Uh we'll get started with that. Thank you. I'll message I'll message Ashanti. >> Sure. I'm the first half so we can get started. >> Thank you. and committee members. My name is Rob Kerry, deputy chief procurement officer. I'll be joined shortly by by with Ashanti Payne, the director of office of civil rights and small business programs. >> Um, >> perfect timing. So, um, we're here today to present the 2026 quarter 2 procurement spend and MCU commitments. the the council spend metrics uh help us deliver meaningful data context and procurement trends. These trends illustrate how our collective work supports the business units operations and ultimately the entire region. As we continue reporting to the committee, we will emphasize that procurement data can inform decisions and drive transformational progress. This report will highlight our efforts to prepare solicitations for purchase orders for contracts of all sizes at a fair market value to meet business needs while providing essential regional services. This work supports compliance, transparency, and alignment with the council's core values. And we'll get into some of our data here. So um this slide represents all procurements in quarter 2. Uh we can see here both total spend commitments and transactional counts remain pretty consistent with quarterly trends over the past several years. Notably there is spend commitments increased significantly compared to the previous quarter. You can see here our total spend in Q2 was 789 million and year to date at 1 billion36 um showing a difference of about $500 million and later in the slides or presentation um we'll highlight some of the projects that contributed to that. So you can see here that we have the majority of our procurement transactions fall into the micro purchase category. Just as a reminder, this is anything from 0 to $10,000. And again, these percentages align with historical data that we've seen. This level of activity supports our ability to have some operational agility while maintaining compliance. And conversely, you'll see that on the other side of this that the the category of spend that uh contributes to the majority of that 7778 million is on projects that are greater than $500,000. And this pattern aligns with cradle's principles demonstrating that a small number of large procurements drive most of our outcomes for spend. And it highlights the importance of strong governance and internal controls. So quarterly demand we can see demand remains pretty steady. Um, we average 10,500 transactions a quarter and uh around $25 million of spend in this under 175 category. Q2 respectfully closed with 10,675 transactions and 28 million in spend. Again, consistent with historical data. By tracking this we ensure that we can anticipate any resource needs and maintain our adaptability. So this is really transactional volume and most of our transactions as mentioned occur under that $10,000 range. While individually small, the volume represents an area of operational risk in the sheer number of transactions that occur. And so looking at ensuring that we have appropriate operating procedures, policies that can govern that work in those transactions so that we can be both efficient but compliant is a key area that we focus on and look at. Oh, let me go back one. Um, when we examine the the comparison in what we call our small procurements under 175, we can create a distinction between two categories of spend, those that are the microurchase value and those that are up to 175. And you can see here that we're pretty consistent that we see a 6535 split here or 6436 and in Q1 we were at 66 and 34. So we are continuing again to kind of trend with historical data. This is good feedback for us to be able to know that what our intentions in programming and how we're spending are are accurately being reflected in the data and the reporting that's coming back to us. All right. Uh good news upward trends in this spend category for MCU commitments under 175. Um, this supports our small spend strategies, our partnership with OCRSB and comparing Q1 to Q2, we had a PO to MCUP commitment increase from 21% to 27%. So, a 6% increase. What these results demonstrate is progress towards reducing the barriers in advancing the council's equity. uh mission. This is this is done through a combination of partnership with OCRSB, our division, operational divisions and individual departments. It's through training, the expansion of programs, small business spend planning and a greater enterprise adoption all contribute to the momentum that we're seeing in the growing trend of MCUP commitments by PO. All right, we're looking at a comparison here. So, the metrics comparing Q1 and Q2 show steady and consistent feedback across all of our categories. And again, just as a reminder, we're we're at 10,500 as an average transaction per quarter and about $25 million in spend. So, moving on to contracts over $175,000. A total of 63 contracts were executed in Q2 that accounted for 99% of the total spent. So what we can see here in this chart is that contracts between 175 and 500,000 represent 28% of all of our transactions, but again only 1% of that spend. And those contracts of over 500,000 represent 72% of our transactions, but account for 99% of our spend. All right. We've got many tools in our toolbox. Um the way that we can solicit, we've continued to uh expand the cooperative purchasing venture programs and what we're seeing is that the uptick in the use of CPVs is actually decreased the number of soul sources. And so one of the ways that we can look at this is previously where there may have been a a single source uh that those areas of work are now being recognized as needing competition um needing small business expansion or business growth and then those vendors are entering into cooperative purchasing programs that we are able to utilize and so the use of that reduces those sources. Um, there's a I'd say pretty average blend of invitations for bids and requests for quotes. If you're wondering what the other is, it's an emergency declaration that was made. I think we had a pipe burst or something like that. Uh, and as you can see here, this totals $761 million. You can see here that the IFBs and RFB RFPs accounted for 98% of our spend. And so, yep, here we go. Um, this reinforces that the transparency and the integrity of council issued solicitations allow us to strengthen our internal controls and evaluate the category in which we are spending the the most amount of our commitments to um to ensure that we're getting the deliverables that we want to receive. A solicitation on behalf of the council allows us to customize that program of deliverables to meet our needs. So, combined spend commitments across Q1 and Q2. Um, the really the big thing you're going to see here is a separation of about $500 million. And so, in Q2, we spent $217 million and in or sorry, in Q1 and in Q2, we spent $761 million. And again, this is in the category over 175. When you add it into our under 175 spend, we're at over a billion dollars in two quarters. MCUP commitments. So, uh we continue to exceed the requirements set. Um you can see here that we had requirements set at 7.7 million and the commitments exceeded them by 4.7 or $4.3 million. And and really what this demonstrates is that the MCUB program has developed a a strong partnership within the community of our primes and subs where they are partnering together to deliver the council the the best overall value. And whether or not that means that it's being performed by a prime or a sub, they want that work being done by that expert. and they're the primes are willing to exceed their commitment to an MCU if the service or the area of expertise is best housed to be performed by them by them. And you can see by comparison to quarter 1 that we had a significant increase in the area in which we exceeded with a also increase in dollar spend. So it's it's it's kind of aligned with the increased spend we would expect to see uh in increased excess in value. Okay. So some of the highlights that we have you may be wondering where the $500 million difference comes from. And um I want to highlight uh a couple of projects here and some other successes that we've had. So behind the numbers, there's people, there's partnerships and projects that reflect the shared values. And we're really looking to advance the goals and missions that are in Imagine 2050 principles. And in doing so, we were able to work strategically with MTS to we had previously staggered a lot of our work and our contracts. And we we had a strategy to align our contracts to term out uh in the at the same time allowing us to go out to the market uh with multiple service contracts for MTS to perform. And in doing so, we were able to award three MTS transit contracts for a combined total of $481 million. This represents about 61% of that Q2 spend. Additionally, there were 11 master contracts for interceptor and engineering services that were awarded for $68 million. This represents about $8.6 million of the Q2 spend. And so you're seeing here kind of how we're filling the gap. This accounts for roughly 70% of the spend in Q2 are from a combination of the projects that were just highlighted. Separately from our procurements, we'd like to highlight a uh a go live moment for a supplier portal. Um this is a secure portal where now our vendors are allowed to manage their own information and set up their supplier information. This will support um uh electronic a payments, other key factors that will allow us to have prompt payments not just to primes but their subcontractors. We're uh we're we're very happy to be able to um share that information with you. And then a another program that is part of some of the expansion uh that was done in the 2025 policy updates for procurement was uh a program called NMC or negotiated maintenance and construction. And we piloted the program for corrective work out at our Metro Empire plant. And we did so by developing a template. uh we did so in collaboration with both the division and our office of general counsel and this allowed us to help deliver a usable small construction template and quote form for projects under $250,000. This was a policy that we adopted um on a program that um was through midnight. And last uh we to support strong relationships and continuous improvement we conduct quarterly vendor surveys. We received 98 uh responses in Q2. As you can see the overall feedback is highly positive. Vendors feel that communication is clear, responsive and the requirements for solicitation and contracts educations are well understood. One opportunity not noted in here um that we'll be working with uh office of civil rights and small business is that 62% of the responding vendors indicated that they were not aware of the MPUB program. Um and so increasing the awareness of the MUP program is going to be an area of focus for us. With that I'll hand off to Ashanti. Thank you, Rob. Good afternoon, chair, council members. Ashanti Payne, director, office of civil rights and small business programs, and I am going to talk about our MCUB participation for Q2 20 uh Q2 2026. So, just as a reminder, we measure um two key data points commitments um tell us how we are doing. So the projects we executed during Q2, how well did we do in incorporating uh participation from small businesses in Cubs? And then payments. Um payments tell us are really a compliance tool. Tell us uh did uh what we commit to or what or what a prime vendor commit to did they follow through on those commitments? This includes uh projects that are procured through a competitive bid. When we talk about commitments uh or request for proposals or the potential uh to be competitively uh procured through uh request for proposal or bid and again uh contracts that were executed during Q2. So just historical uh trend data um historically we have done well in terms of this metric. Um however 2025 we had a drop and um that trend has uh continued in the first two quarters of 2026. So we did not achieve our goal in uh Q2 2026. uh we had 2 point uh 2.9%. Um this as I mentioned this is a continued uh downward trend. Um none of the five council divisions achieved that goal. Um the highest participation was from Metroit at 10.7%. Um and Metrotransit and MTS increased participation uh from Q1 to Q2. And then Caucasian women business owners had the highest participation in Q2 at 4.2 uh million and overall MCU vendor commitments are trending down. So why um I can tell you the things that have changed uh from previous years. Um, one, we are uh the when I say we, the office of civil rights and small business programs are uh touching less projects. So, we're setting goals on the less number of projects uh both by number of projects and dollar value. Um, I can also say that um regional administration who is who has historically been a leader in this area um has dropped. Um and then um I think the one the one focus area that I've really honed in on is uh direct opportunities. Uh normally we we would see um MUB primes, multiple MUB primes uh that we are directly contracting with. We only have one in Q2 of 2026. So those are the things that I that just jump out that are definitely different um in terms of our historical um commitment. And I think in terms of what our focus is, uh, one of the things too that that's that stood out as I was putting together a, uh, report for the legislature is both in uh, 2025 and 2026, our direct spend to uh, MCUs and small businesses exceeded our uh, subcontracting numbers. As Rob already covered, we do pretty well when we have when our MCUP program uh is is operating. We also learned that from the disparity study. We have a strong MCU program. Uh I would and from the disparity study, we know uh the council's MCUP program is the strongest um in terms of who participated in the uh disparity study. Um, however, our direct spend in terms of dollars in both 24 2024 and 2025 exceeded subcontracting dollars. Um, and our direct spend is where we have where we did identify some disparities. So, what that tells us is that we have some opportunity in our direct uh to to be able to directly contract with impubs and small businesses. And that has to be our focus area. Um because also when we looked at it um in terms of in terms of equitable distribution of dollars, our direct um spend was more equitable across the board both from a uh racial and gender uh component and we'll see that when we look at the subcontracting dollars uh later in the presentation. So payment data that is our our second meta met metric. So this includes PECAR payments, PO payments for construction uh services or goods. Um and it represents ongoing payments for existing contracts or active contracts. Um and again it tells us how well we are doing in terms of uh our follow through. So direct payments to MCUs um we're seeing an upward trend so that's good news. Um and uh current achievement for 2026 is 6.4%. Um in terms of dollar value direct uh payments to MUPS was 8 million. Um by division Metro Transit had the highest amount of direct payments in Q2 at 4.8 million. Um and um regional administration was second in terms of payments uh in Q2. Uh by reported demographics, 3.7 million payments made to Caucasian women, 2.4 million made to black Americans. Those were the two uh top two in terms of demographic of direct payments. Pecard again this is has been trending up um since 2023. Um again these are have been focus areas. We have uh made some uh considerable efforts uh working with procurement to make it easier um both from a training and education uh standpoint internally and then also uh developing tools to make it easier to identify uh MUPS for those who have pecs or who have uh who can make micro purchases uh and the like. So, uh again, good news and uh uh good progress. So, this is where I talk about um our secondary payments. Uh these are primes to subs. Like I mentioned, as you see, um uh Caucasian women represent 90% of secondary payments, primes to sub. And as I mentioned before, when we are directly contracting with MCUBS, it's more equitable. That number drops down to around 60% and you see a more equitable distribution across um both gender and ethnicity. some of our our success. Um we continue to experience growth in our supplier diver uh supplier program. Um we had some significant legislation uh passed. Um we are um definitely continuing our supportive services program. We are we will be issuing a uh request for a proposal for folks to respond. We are going to first um work with procurement to do an MCUB select um we want to be and set the example as uh OCRSB um and uh and see if we can get success through uh uh MCU select. We've identified potentially about 20 MCUP firms that could uh bid or compete for that um for those services. Um I've just also included some quotes in terms of MCUBS that have participated um in the program and who have found value. Um we are continuing uh to collect data and incorporate that into the new RFP um and the new contract to provide additional services. um and also build on the strengths that were identified as well. With that, we can take any questions. Thank you. From questions, Mark. >> Thank you, Chair. Um I've got two different ones. I'm going to start with the I think it was like near slide two where we've got the 10,000 and under spend and it's 90ome% of the actual procurements. Do we know what percentage of that is just everyday recurring magazine subscriptions? Things that are just constant and how much of that may be and I will not use the term professionally but discretionary things that are variable shall we say? >> Mr. chair and committee member Jenkins. I think you're talking about >> that one. >> This one >> this one specifically, but yeah, the data was on the other one, too. >> Yes. Yeah. So, we we refer to the 0 to $10,000 category, keeping the lights on. And so, a lot of the spend is inventory, uh, parts. Uh these are some of our basic creature comfort or necessities that we use to keep an operating division active. Uh does that does that answer your question or did you have a a second piece of that? >> It was more curiosity on and and I'm I'm making this up so no one dropped anything out of this. Yeah. How much of it goes for extra pizzas for lunch and how much of it is keeping the lights on and and that's an embellishment. It could be, >> you know, a $5,000 project or something too. But >> yeah. Yeah. The these these procurements are separate from food and beverage or other and pecart data actually as well. So those are separations that we have or quick distinctions between that. >> Okay, that helps. That helps a lot. Thank you. >> Um the other one then to go to Ashante's presentation with um the performance in 2005 25 and early 2026. Obviously, the numbers in 2025 aren't impacted by this, but would the executive order in March have had an impact in some of these numbers in terms of projects that we either couldn't measure because of the executive order or uh potential contractors staying out because of the environment or the executive order. Yeah. Um, chair, council member, um, I would say we would have probably expected to see more of that impact um, in Q4 of 2025. uh only because we there was about uh month two months >> October to December >> October to December of 2025 where we were not um executing contracts due to the executive order. Um, however, where the executive order is having an impact on is on our federally funded projects. And what I am reporting on in our MCUB, I probably should have uh made this um is is on our local dollars and our local spend >> because federal dollars can still be used well, traditionally could have still been used with our MCO partners. Correct. Historically, >> historically, yes, because there are some MCUs that are also DB DBEs, >> but we do um I just want to make sure we do report on that in a separate we report on that separately. >> Okay. Okay. Thank you. >> Any other questions? I do have one. Um on one of the slides you put where the MCUP goals aren't met, we've had two this year, one in every quarter. is that weighed against that contract or that entity when they rebid the next time and there is MCUP goals saying that they didn't meet it the first time and that's weighed against them one way or another. Uh, chair, council members, no, we do not. Um, one of the things if if I I would just point out one, if they do not meet the goal, um, we do a good faith effort analysis to make sure that they u made a good faith effort to meet it. Um, if they did not, uh, well, if they do, then we move through with the ward. And if they don't, we move to the the next responsible bidder, responsive and responsible bidder. But we do not we do not hold that against uh the bidder um who did not meet the goal that first time. >> And m Mr. Chair, just to add to that, a a nonresponsive bid or proposal does not make a contractor or vendor ineligible to continue to make offers to the council solicitations. Thank you. Go ahead. >> Mr. Chair, remember me at one point, I don't know where the slide is, but um you talked about the need to maybe reach reach some of these these vendors that they either they felt like they didn't have the information. Um have you worked with the other chambers of commerce or others? I when I come to these things and I' I've watched these things over the years, you do a great job and you actually articulate it well, but does it get beyond us? Let's get like get to the nonprofits where they're there, you know, in in in doing uh vendor uh work as there's also the supplier diversities from the corporate end. How are we comparing both the nonprofit and to the corporate end in in implementation of these programs? >> Take the first piece of >> Sure. Chair, council member PCO. Um so um in terms of the uh chambers, yes um the office of civil rights and small business programs, we do connect um with the the individual chambers um both in terms of outreach trying to identify additional businesses who we may not be aware of um and try to educate them about the opportunities uh with the council that exist. Um then I'm trying to remember the other part of your question. Um >> from the corporate side >> corporate side um I think it was 2020 23 um something that we took from the corporate side. Um in terms of the supplier diversity is we worked through two of our well we started with one of our major uh manufacturers and suppliers um and uh connected them with uh some MCU businesses and we developed some relationships and partnerships by where we now can get um uh those manufactured parts distributed and delivered through M cups. It is um convenient both for the uh manufacturer and for us cuz in some instances those parts uh in some cases that we regularly uh procure we can get quicker. um they know and um so it it has worked out and so we've expanded that um Gillig new flyier fastenol so we started with new flyier then we got to Gillig and then now with uh fasten all as well so that has been going well and it's just a concept that we borrowed from the private uh private entity they didn't have any obligation um uh to do that. So it was just our through uh working with procurement and relationships and using our our influence uh to uh get that participation. Thank you. Any other questions, comments? None. All right. Thank you very much, Rob Shanti. All right. Now that we do have a quorum, we will call the August 26, 2026 management committee meeting to order. Uh we have the Dakota land, Water and People acknowledgement. Um just acknowledging it. We we read it at our last committee meeting in September or we will read in our next committee meeting in September. Uh first thing we have is approval of the agenda. U members have seen it. No changes? None. All right. Uh approval of the August 12th, 2026 special management committee meeting minutes. Can I get a motion for approval? >> Some move. >> Second. >> Second. >> All right. All right. Any discussion? None. All right. All those in favor signify by I. >> I. I. >> All right. Any opposed? That motion carries. All right. And we'll start with uh on the non-consent agenda, we have business item 2026-124 JT, the 2026 third quarter budget amendment. I'll invite Stuart McMullen, director, uh, to come up. Thank you, Mr. Chair. Again, I'm Stuart McMullen. I'm the budget director here at the council and here to present 2026 124 JT, the 2026 third quarter budget amendment. This amendment makes changes to the 2026 operating budget in community development and transportation. Changes to the capital budget in community development and transportation was reviewed and passed by the community development committee on August 17th and the transportation committee this past Monday, August 24th. In community development, the amendment adds $2.25 25 million to the local housing incentives account for pass through grants. And in transportation, the amendment adds $13.2 million in pass through support from the regional transportation sales tax for grants to the suburban transit providers, consistent with the transit funding al allocation policy FM2-3 that was presented by Charles Carlson and amended by the council last fall. Turning to the capital budget in community development, the amendment adds $9.4 million in pass through funds for the city of St. Paul's Komo Zoo as appropriated by the legislature. And in transportation, the amendment adds $22.5 million in funding to the ACP for the Bronze Line project and 11 million for transit related technology technology capital enhancements. The individual projects and their changes are outlined in tables 9 and 11. And the motion is that the Metropolitan Council authorizes the 2026 unified budget as amended and in accordance with the attached table. That summary I might answer any questions the committee would have. Thank you. Any questions? >> All right. So the proposed action for business item 2026-124 joint in front of us today is that the Metropolitan Council authorizes the 2026 unified budget as amended and in accordance with the attached tables. Can I get a motion? >> So moved. >> Second. >> Second. >> All right. Any questions? None. All right. All those in favor signify by I. >> I. I. >> Any opposed? That motion carries. Thank you very much. Next, we have business item 2026-158, the 2026 non-represented plan ch changes. Got Becky Graham and Nathan Smith. >> Chair, members of the committee, thank you. If you don't mind, Cassandra Taber, chief human resources officer. I just wanted to take a moment and introduce Becky Grahams. She's been with the organization for eight years, but this is her first presentation to the management committee. Um, so I just wanted to take a moment and recognize her. She's our senior manager for human resources business partners and she oversees our brand new class and compensation team that I brought forward some time back. um nonrepresented plan changes. As you know, typically I bring these to you annually. As you might recall, this was something we advanced in 2024, bringing those in Q4 of every year, but we recently did a classification audit project and that was in partnership with a third party that we use and directed by our cabinet and that resulted in a need for an out of cycle update, which is new for all of you. Um and Becky will review those items with you today. We will still be bringing forward our Q4 annual um adjustments. So you'll see those. Keep your eyes peeled. So Becky, >> great. Thank you, Cassandra, and thank you, Taran. Members of the committee, as Cassandra shared, we will go through the proposed changes that we have for you as an out of cycle review. Specifically, we have five of those changes. Three of which are plan language changes and then two of which are housekeeping changes. So, the supplemental materials were provided and I will go through each of those, let you know what section they are in and the corresponding page number. The first housekeeping change is to the unclassified service compensation and benefits section. That is 14.3 and you will find that on page 23 and the change is striking the language unclassified employees may be eligible for parking at the 390 Roberts Street location. This removal allows for the administration of parking to be handled outside of the plan. This is not a reduction nor a removal of parking eligibility, just a relocation of where and how parking is administered. Moving on to page 24, our second change is in the section annual leave for executives under section 15. And this plan change reflects that a new section is introduced 15.1 and that is added to define new salary grades eligible for executive benefits. With the change in salary grades that are going to be noted in appendix B, this section was necessary to define that executive benefits will apply to positions classified in salary grades O and above. This change will not impact any existing staff who are currently eligible for those benefits. This is not a loss in benefits, but a clarification to align with the new classification grading. Moving on within the same section 15 but looking at section annual leave for executives 15.4.1 still on page 24. This is another housekeeping change. This section required executives to use 80 hours of annual leave within each calendar year. This language is being removed because it is redundant and it is in place before the annual leave balance cap language which is subsequently following this section. So the recommendation is to remove that language. Moving on to change number four in appendix A on classified positions. You can find this starting on page 26. Our fourth change is to update that appendix. We have no new positions being added to this list, but there is one title change. As Cassandra noted previously, any changes to this appendix would be reviewed as part of our annual review coming in Q42 of each year, which will be coming in the coming months. And then our fifth and final change is to appendix B, the non-represented job classifications. You can find that starting on page 27. This appendix was updated to include new classifications and an updated salary grade. On page 36, you will see the salary grid pre previously reflected salary grades A through M with two categories for executives, E1 and E2. This new salary grade reflects salary grades A through U, adding in eight new salary grades N through U with the conversion of our E1 and E2 to letter grading. That is our summary of the five plan changes. And as mentioned before, you will be seeing our annual review of this coming to you again in Q4. And with that, we're happy to stand for any questions. >> Thank you, Vicki. Any questions? All right. Currently, the proposed action for business item 2026-158 in front of us today is that the Metropolitan Council approve the 2026 non-representative plan changes effective September 12th, 2026 incorporating the revisions as summarized in the summary of changes attached. Can I get a motion? >> So moved. >> Can I get a second? >> Second. >> All right. Any questions? None. All those in favor signify by saying I. I. >> Any opposed? Motion carries. Thank you very much. Uh we will be moving on to the next information. The next item presentation is the quarter second quarter 20.6 financial report. I'll invite Larry Phillips, controller. Heather Keiesel, director of CDMTS administration. Uh Christine Dwire, director of budget revenue. Yes. April Snider, accounting manager, Metro Transit. Good afternoon, chair and committee members. I'm Larry Phillips. I'm the controller here at the Metropolitan Council and I'm joined with our financial leaders from our divisions. Um, and I believe they'll introduce themselves as they go through their slides. So, uh, we're presenting the quarter 2 financial report to you today. It's an overview of our financial operations across the organization's primary funds and functional areas. Um, it presents a concise summary of revenues and expenses and comparisons to our annual budget expectations. The report is presented to leadership and then presented to this committee. Um we do issue this report three times a year. Q2, Q3, and Q4. So this is the first time this year you're seeing the report. Um when we present this information, we we put a concise slide deck together. There is a full report that's included in your packet that includes some more detail. It shows a a page for each division or fund. It also includes a narrative of what's happening with that that area's budget and a 5-year history. Uh we also include uh supplemental information such as our investment portfolio and bond spending. So if there's any questions on this presentation or the full report, please stop and we can address that. First slide is our operating reserves. So this slide gives us a snapshot of our funds. It provides the projected ending reserves, our policy reserve target amount and our policy target uh percent. One key takeaway from this slide is that reserve levels for all the funds are at or above the policy uh target um reserve reserve target policy. Um this slide is covering our general fund. So as a reminder, our general fund is like our financial home base for the organization. It houses financial activity for regional administration and community development. Revenue in the general fund comes from a combination of property taxes, interest, earnings, and other smaller sources. One note one noteworthy item in 2026. The general fund also has $3.3 million of federal federal funding uh for livable communities. The overall spend is expected to end the year at um 700 700,000 favorable to budget. On the expense side, uh Q2, we're at 42% spent, which is in line with past years. Um the regional administration component of the general fund is expected to end a year essentially on budget. Uh which means there will be no budget savings that would be passed along to divisions by way of the cost allocation. Um the community development portion of the general fund is expected to have some budget savings um from lower consulting and contracted services costs. Overall uh expenditures in the general fund are um are projected to end a year about 900,000 favorable to budget. The transfer line that we show is primarily funding coming into the general fund from the other divisions that covers the cost of the RA cost allocation. And since the budget in RA is expected to be fully spent in 2026, the transfer would it essentially be at budget expectations. The ending reserve um is projected to be at 32.3 million um which is above the reserve target of 16.2 million. And just a reminder in their general fund, we do have um we have a signed and committed balances of $8.4 million. That includes $2.5 million of of uh for self insurance, $5.9 million for compensated absence. That's acred vacation time that hasn't been paid out yet. And then $53,000 for uh regional water supply. That's funding dedicated to put regional water supply uh for regional water supply that environmental services cannot use directly. I'll pause here before passing it to Christine. Good afternoon everyone. Um, Chairman Morales, um, committee members, um, I'm Christine Dwire, director of, um, revenue, budget revenue for environmental services. So, I'll be walking you through our re our, uh, financials for environmental services. Um, as we review the performance for the first half of 2026, we're seeing a continuation of some of the same patterns that we saw last year. And as we project that out to um, the rest of the year, we do expect to be favorable. And as you recall from our quarter 4 review, we had a lot of favorability coming off of last year. Some of that's expected being that when we build our budget, we're doing it, you know, almost a full year in advance and we're building it on a base of a last year's budget. So, we're kind of seeing some of that in the same places, which is expected. So, we we expect um to have favorability in uh revenue by about $1.6 million and in expenses by about 5.6 million. to a total uh favorability of 7.2 million. As you see on the schedule in the far right column, we did expect to use some of our reserves about 4.5 million. Um however, as we're projecting now, we'll probably add to our reserve about $2.6 million. The favorability in revenue is the result of some strong industrial waste fees, which was building off of some higher volume that we experienced last year. Uh we also are expecting some higher investment income um which is also in line with last year as we have um continued inflation and and um continued higher interest rates. In expenses we're seeing favorability in salaries and wages and that is partially due to underestimating our vacancy rate and that's the result of um the the um turnover as well as ramping up new positions and the timing of how that occurs. Um we're seeing also favorability in utilities and that's also trending in line with last year and as you recall we saw um you know some really strong favorability last year in in utilities and um we're seeing not quite as strong but still in line with that. Um we did expect maybe that we would see not as much because of the higher higher um costs of energy but we are still seeing a favorability there. Um and uh we're seeing unfavorability in materials and supplies. Um and that's we have some additional costs that were incurred that was not in the budget for some network switches about a million dollars in a bone truck. We do have a central projects fund to help offset some of those costs as we anticipate. There are things that come up that we that we need to fund. So those um additional expenses will be offset. We're also seeing um uh some unfavorability in grant expenses. We saw a payment of about $1.5 million shift from the Q4 of last year into the Q1 of this year. So, um like I said, overall we we expect to be favorable and have a um net favorable a positive change in our results of 2.6 million, which will add to our reserve balance of 66 million to um projected year at 68.7 million compared to our target balance of about 20.9 million. If we look at our sewer access um charge units, so these are the um fees that are are our um that uh communities pay for new development to um pay for the u maintenance and development of um excess capacity in our um system. So we have seen the last year we saw the the um sack units decline about 4.5%. And that was really in um we saw a decline kind of in our residential. We saw that offset by some strong commercial and industrial um activity. This year we're seeing continuing um negative but less so. So we were down about 1% year to date. We are seeing stronger um units in residential mostly in multifamily and um uh combination commercial and housing commercial and residential. So that's good to see. although we we do see a decline in our commercial. So, we're watching that carefully and we'll continue to project that through the year, but we do see that leveling out um at at this point. So, we're projecting last year we were at um 16,248 and we're projecting to be about 16,100. So, if we look at our uh reserve balance for our sewer access charges, we still have a very healthy reserve balance. We're projecting at 109 million. So, and this is another area where, as we've talked about our our commitment to invest into our infrastructure. We'll see debt service, you know, increase. This is one of the accounts we use to help offset our debt service expense. So, it's important that we continue to replenish this and have, you know, strong units of sax. This is one of the area that we that we will really continue to to monitor closely. But at this point, we see that balance is still strong at 109 million. And with that, I'll turn it over to Heather. >> Mr. Chair, council members, I'm Heather Gizel. I'm the director of finance and administration for community development in Metropolitan Transportation Services. Uh H revenues are projected to be uh just under $300,000 unfavorable to budget. Uh the primary cause of that unfavorable variance is the lease up time for the bring it home program. Uh so you'll recall that in 2025 H was in shortfall uh due to continued inflation of subsidy payments outpacing the budget authority from HUD. Uh we were released from that shortfall in June of this year and recovering from that 12-month freeze and the process of getting approved voucher holders into units has taken time. Uh expenses are favorable to budget by $2.2 million. Uh this is driven by a reduction again in the budgeted housing expenses. Um with the delay in lease up from bringing it home uh as well as lower spending in salaries and benefits. We had approved seven additional FTEEs to staff the new bring it home program uh and bringing those folks on board has just taken more time um especially with the delays in that programming. Uh the projected reserve balance for HR is 16.6 million which is above the minimum reserve target balance of 10.3 million. Any questions? And otherwise I'll move on. Okay. Uh so moving on to uh special transportation services. So Metro Mobility and Metro move. Uh revenues are unfavorable to budget due to lower than budgeted fair revenue. Um however, this report does not incorporate the additional money that was appropriated in the last uh legislative session. So updating um based on our forecast work with MMB uh we will adjust that in the Q3 report. Uh it's approximately $9 million additional that we'll be getting. So we will end up being um favorable to budget by about $6 to7 million according to this uh report here. We'll see how it shakes out in Q3. Um expenses are favorable to budget by $10.4 million. That's driven uh mostly by uh $6.2 million in lower vehicle revenue hours. Um so we budget at our minimum productivity threshold. our contracts have been more productive, meaning that they're having uh more passengers or just as many passengers on the road uh with fewer vehicle revenue hours. Um so good story there. It's uh productivity is up slightly from last year uh but we budget to the minimum level to be conservative. Um in Metro Move, um we are overbudgeting contracted services and fuel due to higher vehicle revenue hours. Uh but that's being offset by these uh by the Metro Mobility savings. Uh it is a small percentage of the budget. Um but we're refining that as we have more data on Metro Move and the and the program ages a couple of of years. Um fuel costs are $2.8 million below budget where our average price right now we're seeing is $3 a gallon. Uh we had budgeted at 355. uh and fuel usage is on target. Uh also seeing lower salary and admin expenses. Um some unfilled uh vacancies in Metro Mobility are being offset by uh salaries moving over to uh Metro move as we have more fleets and operational means in Memo. People have been charging their time to different areas. Uh reserves are at 8.1 million which is above the target of uh just under seven. Any questions or I'll transfer to or back to back to Larry. >> Mr. Chair and council members, the next few slides cover some important funding sources we get um for motor vehicle uh sales tax and regional sales tax. So the first two slides are on motor vehicle sales tax. Uh this show shows our revenue and compares it to the February 2026 state forecast uh which is the solid blue line versus the actual receipts. That's the light blue columns that we see. The slide also includes a comparison from 2025, which is the dotted red line. Um, as a reminder, we budget 95% of the state forecast. Anything that we receive beyond that would go into reserves for future years operations. In 2026, we received 192 million of of our Mvevest, which is 97.9% of the state's 2026 forecast. Um, I do want to mention though when we put this report together, we we received data from the Department of Public Safety that indicates what our monthly payments are going to be. That report showed that we'd be getting 34.4 million in June. When the actual payment came in early last week, it was about $4 million less than that. The state is well aware of the discrepancy. They have indicated we're going to get made whole um to this amount. uh we and we are working closely with them but just for sake of transparency want to mention that that money isn't here yet but we are expecting to receive it. This slide is showing the reserve balance for MBEST. Um we ended Q2 with just over 25.4 million in reserves. Next two slides cover regional sales and use tax. Um this slide shows our regional sales tax um and use tax showing the February 2026 state forecast which is the solid blue line versus the actual receipts which is light blue columns. The slide also includes a comparison from 2025 which is the red dotted line. Um as a reminder we received this revenue three months in a rears. So this is why the report is only updated through April here. Um, in 2026 so far, we've received just under 129 million of the sales tax and which is 99.7% of the February 2026 state forecast. U, this is our reserve slide for our regional sales and use tax. At the end of Q2, um, we have just over 177 million in reserves. I'll pause here before passing it to April. >> Good afternoon, um, Mr. Chair and committee members. My name is April Snyder, accounting manager for Metro Transit, and I'm going to present Metroransit Bus and Metroransit light rail. Um, for Metroit bus, um, revenues were unfavorable to budget by 7.8 8 million due to lower passenger fairs than budgeted and lower than ex uh expected federal revenues due to the transition of the subreients to MTS. Um the expenses were favorable uh 8 uh 89.1 million uh due to vacant positions with labor and benefits. Um services were projected to be 10.8 million below budget. Um fuel savings projected 5.3 million under budget due to service levels and price per gallon. Um and then other expenses under budget by 13.6. The ending reserve balance is projected to be 121.5 million which is above the reserve but we're still wait uh well we will still be going into our reserve for light rail actually. Chair committee members any questions on bus before I go on? Okay. Thank you. Labor. Um total revenues were unfavorable to budget by 3.4 million due to the lower passenger fair revenues. Um for expenses, they're favorable to budget by 49 million um due to the vacant positions with labor and budget. um primarily due to um hi hiring staff related to the green line extension which will open next year. Services are expected to be 6.3 million below budget. Uh util okay and then all others were favorable to budget. Um projected reserve balance is uh 49.8 million which is with a in reserve balance of 17.1 billion. I will open it up for questions. Chair, thank you. Any members? >> Any questions? >> Thank you. >> All right, no additional questions. Thank you very much for your presentation. Uh we will move on to our third and last information item, presentation on medical and dental insurance rates for 2027. I'll invite the following staff to come up to present. Ned Smith, chief financial officer, and Michelle Murray, senior manager of benefits. Good afternoon, uh, Mr. Chair and members of Penny. My name is Ned Smith. I'm the chief financial officer and I'm joined by >> Michelle Murray, senior manager benefit >> and we are going to walk through our proposed dental rates for 2027 and medical. Um just the spoiler alert uh we work with a consulting company that helps us project out what our actuarial values are in charges for the future of our healthcare based on our expected enrollment as well as anticipated charges in medical trend. Um so right now we are projecting out 126.6 million for 2027 and if we froze our premiums we'd be at 119.9. So um that translates into a 5.6% 6% increase, which is really great news. Um, most of the medical community is used to seeing double-digit increases. You can see even on our 7-year average, we've been at 7.3% and this is going to be 5.6%. Across the whole system, >> our medical plans for next year will remain the same. So, we have the three medical plans. There's no major plan design changes. So premiums, co-pays will remain the same for 2027. >> We use three primary principles in setting our rates. Uh the first one is that total premiums must ensure that risk is shared by those roles with the same plan choices. What does that mean? That means that some of our employees particularly ATU have access to all three plans. Um nonATU employees only have access to two which is distinctions and HRA. So we try to build our rate setting and our principles around understanding that not everybody can move everywhere. So we try to isolate some of the risk pools to make sure that we're covering the needs for that group. So uh rate setting two basically says we need to price it based on what the projections say. Um and if one is particularly out of balance with the rest of the plans then we need to account for that to make sure that that plan uh is fully funded which leads us to this breakout. So we talked about a 5.6% across all three plans, but if you break it out and look at how each individual plan is actuarily valued. Um it's a little bit switched where open access and distinctions can go up only 3.6%. HA is underfunded and has been for a couple of years. So we are working to slowly uh boost that rate just a little bit compared to the other div uh other plans to get it funded up to 100% of the actuarial value. So when you look at the rates for 2027 compared to 2026, this will show you the direct comparison which shows both open access and distinctions going up in total rate by 3.6 and the H plan going up 7.1. Again, the rates for each union differ based on the union contract language. >> All right. out. The third principle is around mis risk mitigation. Uh we do have reserves in place so that we can cash flow changes between uh uh premiums and claims. This particularly happens with some of our high use individuals that are experiencing a significant medical event that's causing considerable uh charges. So we keep that in to balance to make sure that we've got cash on hand basically to pay the bills as they come in. We also use uh a stop gap uh stop-loss coverage on for 750,000. So if an individual uh racks up incurs um extreme uh expenses up to 750,000 we will pay that out of our own pocket out of the council pocket. After 750,000 the insurance kicks in um to to reduce the risk and exposure of the council. So that makes uh leads us to principle three which is that we're going to keep a minimum risk. Um it's to again to mitigate risk of unanticipated gaps. So if there's a big spike we can cover it. um as people move back and forth between plans. Our pricing that we set it right now is assuming uh doesn't really assume it, but there's no way to know where people are going to move. So, we do the best we can with thinking where they're going to be. And this would be if people uh shifted significantly, we could still cover it through the reserve. Um it can be used for uh year-over-year premium fluctuations if there's a large fluctuation. I don't like to do that much because then what are you going to do the next year? because unless rates are going to drop um you still need to cover that when you're going to run out of reserve. Um and then anything else if there's a one-time uh priority uh to mitigate future claims cost. So if we have a significant claim come in uh we can use that on a onetime basis. >> This shows the medical trend since 2019 and you can see that the blue line is the actual projected rate increase uh based on national studies. So 9.7 is the projected trend nationally which is an historic high rate. Um there's many different factors that are building into that. Um but our projected rate increases are lower than that. Obviously you can see last year our high rate increase of 18.5 which was much higher than the trend. So we're happy to report that we're below trend for this year. This slide shows the enrollment by plan over the last four years. Um you can see the gray line is what the current enrollment is in 2026 for the three plans. Um one thing I will note is that the enrollment in the distinctions plan has been declining and the enrollment in the HR and the open access plan are increasing. Uh one of the big shifts we saw last year was a movement from distinctions to open access for some of the ATU members because the pricing between the two plans has become very similar. So, in terms of maintaining our reserves, we do have a reserve target which is 35% of the projected expenses. Um, we were getting a little close there on on uh in 2024. Made me a little nervous. Uh, but in 2025, it jumped up quite a bit. And then in 26, we're also projecting about a $2 million surplus. Uh, so we're seeing some good trends for 26. Um, we're actually running under our budget, so we do expect a little surplus there. And then the goal for 27 is to set it flat. So we try to set the rate to match the expenses. Um so the question is what will you do if this continues to grow? In the past we have uh sat down with our labor partners and come up with one-time uses uh for excess reserves. Sometimes that's a work a workout facility at a location um and it can be other uh health based grants. Similar trend in dental. um we are still seeing a a a somewhat uh generous not generous but uh a healthy reserve level. I will point out these are smaller numbers. So the fact that the bar looks so much taller, it really isn't that much taller. It's two three million. Um and this is a similar situation where we are seeing actually seeing our medical expenses increasing. Um so we are uh trying to anticipate that and we'll have that reserve available if that exceeds our premiums which actually we're already seeing for 26. Uh we're already spending more than our premiums in 26. >> Right. Our dental loss ratio is currently at 103% which means that we're spending more than the premiums that we're collecting and and are budgeted for. So therefore based on that we are um increasing the rates for 2027 uh by 7.1%. Um so the resulting total rates are listed here. Last year we had an increase of 5%. >> And I will point out these uh rate dollars that we're showing actually let me make sure I've got this right. This is what the employee pays. This is the total. >> That's the total. Y >> um and usually the what the employee pays depends on the union and depends on the whether it's family or single but it is the employee plays between 10 and 20% of these numbers >> for that stand for any questions. >> Thank you very much. Any questions? >> I'm just >> Go ahead. >> Thank you Mr. Chair. Um, I appreciate the hard work that you've done to look at the rates and to forecast and to go forward. This is very complicated and I think everybody can appreciate that to to try and figure it out both from a business point of view, both from a personal point of view when you're paying your, you know, rates and your insurance, plus when there's an emergency or a medical issue, the out of pocket you have to pay, it can be very complicated for everybody. So, you know, by increasing by what did you say 5.6% 6%. I mean, yes, we're going up as is everybody, but um given what's happening in the world, um I think that's you've done a really excellent job and and trying to keep steady what's what's happening. So, I think I appreciate that um for all the staff and everybody. Um so, thank you. So, I think it's a lot of hard work. >> Just want to echo Gail's comments, too. It's being a self-managed health insurance plan and to only be going up 5.6% when the national average is 9.7 or a lot higher than that just goes to show the amount of work and care that is being put in by staff. To not pass the burden on to the employees and everybody else that is working dayto day. It doesn't go unnoticed. It's greatly appreciated. Thank you. >> Thank you. >> Anybody else? All right. Uh we do have no more business items. Any updates from council members? >> Well, we had a great event this morning with the groundbreaking of the in fourth incinerator at the metro wastewater treatment plant. Water resource recovery. Yes. >> And that was well attended and a lovely day and it was great to kick that off. >> Thank you, Council Member Cedarberg. Anybody else? None. All right. Uh we will see each other at our next meeting September 9th and this meeting is adjourned. >> Thank you. >> Thank you. >> I've been on time. The bus took me a long time. >> He would have been on time if it wasn't for the bus. >> It was the bus. >> We knew I said I think it's because of the fair. Oh, >> yeah. >> I know, but everybody's