001Test test test. You're good. I'm good. Why am I Can you hear it? Okay. Good afternoon. My name is Kathleen Brown, chair of the Virginia Beach School Board, and I call this informal administrative and workshop session to order. We will start with schoolboard administrative matters and reports. I have a signup sheet for the 2026 VSBA spring networking forum. That is April 23rd at 5:00 p.m. at Norview High School in Norfick, Virginia. If you would like to attend, the schoolboard clerk will take care of the registration. So, I'm going to pass that down for anybody that's interested in attending that. Or do any board members have anything to report, Miss Rogers? Yes. I just wanted to call the Oh, thank you. Present in the school board chamber are Chair Brown, Vice Chair Williams, Mr. Bowensteel, Mr.
002Ken, Mr. Co Pepper, Mr. Cummings, Miss Felton, Dr. Green, and Miss Rogers. Thank you, Miss Rogers. Okay. Thanks. I would like to take the opportunity to acknowledge the following recogn recognitions and celebrations within our community. In the month of February, the community will recognize the following. American Heart Month, a nationwide observance by the American Heart Association and Center for Disease Control to raise awareness about cardiovascular disease, which is the leading cause of death in America. The this month encourages Americans to focus on heart health through lifestyle changes, CPR training and supports initiatives like the national wear red day on the first day of f the first Friday of the month to promote heart health and uh to promote heart health especially in women. Ethnic equality month is dedicated to recognizing the importance of diversity, foster
003inclusion and promote equal rights for all individuals regardless of their race or ethnic background. It raises awareness, challenges prejudices, and highlights the necessity of social equality and justice. It encourages reflection of existing social biases and celebrates cultural differences and promotes actions towards creating more equitable world. This month is also Black History Month, which honors the contributions, struggles, and culture of black Americans. It was initiated as Negro History Week by Carter G. Woodson in 1926 to coincide with the birthday of Frederick Douglas and Abraham Lincoln who were deeply influential to the emancipation of enslaved people. This uh the week was extended to a month-long nationally recognized celebration in 1976 during the United States bsentennial. President George, I'm sorry, Gerald Ford urged Americans to seize the opportunity to honor the two often neglected accomplishments of black Americans
004in every area of endeavor throughout our history. On February 1st, the community celebrated National Freedom Day, which commemorates President Abraham Lincoln's signing of the resolution for the 13th Amendment on February 1st, 1865, which abolished slavery in the United States. Today, February 10th, is safer internet day, which is an international education awareness raise uh awareness raising effort led by connect safely in the United States. Today brings communities together to discuss challenging challenges families face navigating the digital world and empowers them to use technology responsibly, respectfully, critically, and creatively. Today, students also celebrated the 100th day of school in Virginia Beach, which they celebrated by bringing in a 100 items or wearing a 100 items or dressing as a hundred-year-old. On February 14th, the communities celebrate Valentine's Day, which is a global holiday dedicated to celebrating love
005and affection through cards, flowers, chocolates, and gifts. On February 17th, there are several celebrations within the community. First, the community will celebrate Marty GR, also known as Fat Tuesday, rooted in European traditions as a vibrant festival of parades, balls, and masquerades that serve as a final indulgent celebration before the fasting season of Lent. The community will also celebrate the Chinese New Year, also known as spring festival. It will mark the beginning of a new year on the traditional lun luna solar Chinese calendar, and it will begin the year of the horse and specifically the fire horse. Families will celebrate prosperity, longevity, and good fortune for the upcoming year. The community will also be celebrating Ramadan on the evening of February 17th. Ramadan is the beginning of the Muslim holiday, Muslim holy month, beginning with the
006sighting of the crescent moon. It is commemorated with daily fasting and ending in the celebration of Eid of Fitter. And finally, on January 18th, the community will recognize Ash Wednesday, which is the day of fasting in many Western Christian denominations. It evolved from ancient early practices of public penance using ashes to symbolize morality, mourning, and repentance. It became formally observed in the 11th century and is still practiced today. Thank you, Miss Felton. Thank you, Chair Brown. Uh, I would like to address my colleagues and the community members and the community at large. I would like to take this opportunity to recognize and to bring awareness to Black History Month. Officially recognized by the United States federal government, Black History Month was further established in 1976 when President George Gerald Ford urged citizens to honor the
007two often neglected accomplishments of black Americans in every field of endeavors throughout our history. I invite you to join me in reflecting on these significant contributions and celebration in celebrating this important month. The 2026 National Black History Month theme announced by the Association for the Study of African-American Life and History is a century of Black History um commemoration. This theme celebrates the 100th anniversary of the first Negro History Week initiated in 1926 by Dr. C uh Cara G. Winson. During my tenure as a commissioner for the Virginia Beach Historic Preservation from 2008 to 2025, I have been given the significant progress made in recognizing the contribution and services of black Americans in our region. The comm the commission has successfully honored these influential individuals, location and events through the through the installation of historical road
008markers throughout the city of Virginia Beach. I would like to highlight two significant historical installation that document the lives of prominent figures from our local history. The first mark marker honors Sergeant Miles James 1826 and around 187571 born into slavery in Princess Anne County. James escaped to Portsouth in 1863 to enlist in the 36 US color troops during the battle of New Market Heights on September 29, 1864. Corporal James demonstrated extraordinary histomism despite a severe wound that required the immediate amputation of his arm. He returned to the field to lead his men within 30 yards of enemy lines. For his action, he was awarded the Medal of Honor. Following the war, he was promoted to sergeant and returned to Northfor where he passed away in 1871. His historical market is located at the municipal center
009on Princess Anne Road near Law North Landing Road. The second installation funded by the commission commemorates Willis Augustus Hodgees 1815 1819. Born a free person of color in this area, Hodgees was a tallest ammunitionist. He frequently traveled to New York to advocate for the end of slavery. In 1847, he co-founded the anti-slavery newspaper, The Rams Horns, and maintained the correspondent with figures such as Frederick Douglas and John Brown. In 1867, Hajes became the first black man elected in Princess Anne County, representing the locality in the Virginia Constitution Convention. He later served two terms on the board of supervisor for the Kinsville Magistrate District and was the first African-American to serve as the keeper of the Kate Henry Lighthouse. His mark is situated on South Witchduck Road near Singleton Wade Way. Thank you for your time.
010Thank you, Mr. Bellensteel. Hello. Um the governing board yesterday of the Green Run Collegiate met to dis and they reviewed the head of school report. They were considering program and budget items related to enrollment, student performance trips, testing fees, and fundraising. They're also got their gayla coming up, their fundraiser at the Weston March 14th, and they reported that the ticket sales are going really well. They also have a financial literacy plan with TRUS tomorrow at uh Green Run Collegiate where I will actually be part of the 10:30 session. And they only had two students who withdraw from school between the first and second semester, which is very happy for them because it's usually a considerably higher. Thank you. Thank you. Okay, we are now on to the Mercer update and we welcome Crystal Pate, Chief
011Financial Officer. Good afternoon, Chair Brown, Vice Chair Williams, school members, Dr. Robertson. Joining me this afternoon virtually is David Kio, principal with Mercer and in person, Linda Matkins, director of consolidated benefits. During this presentation, Mercer will provide a financial update reflecting claims data through November 30th, 2025. and the updated health fund balance as of the end of November. You will also see projection scenarios that maintain the 2026 employee and employer cost share ratio and then you will see projections on alternate cost share increases with increases to the employee contribution rates ranging from 10 to 25%. These projections will be shown on a plan year and fiscy year basis. And at this time, I will turn the presentation over to David to walk you through the detailed information and then we will open it up for
012questions. Thanks very much, Crystal. All right. I think uh Crystal covered. If you could pause for a second. Um Mr. Dan, I thank you. Um, Mr. Dan's going to adjust the volume here just a little bit. Um, we're having a little trouble hearing you. Okay. Thank you. Let me know when you're when you want me to proceed and if you can hear me. Okay. It's still a little quiet, I think. Okay. Can you give that a try? Um, yeah. How How does that sound now? I think that's a little better. Is that better? Colleagues, can you hear well enough? I'm I'm I'm hearing um Mr. Dan, if we could turn it up a little more still. Oh, that's as high as it's going. Can he turn up his volume? Kathleen, can he turn up his
013volume on his computer? I don't think so. I think it's a speaker thing. Okay. I guess that's as far as it'll go up for now. So, if you could go ahead. Thank you. Okay. Does that Does that sound a little bit better now? Just go on. Thank you. Okay. I will speak as as loud as I can. Um but please please let me know if you're having any trouble at all. Um okay, Crystal, thank you very much for for for having me here to provide an update and for covering the agenda there. There's uh those are the items that Crystal mentioned. So Linda, if you can advance to the next slide. Um we'll uh we'll start off with the projection. So this is the exhibit. Uh so as you know we discussed previously the financial
014position of the medical and prescription drug plan using data through September of 2025. This update reflects experience through November and I'm happy to report that there there is some improvement in the plan performance and we'll see how that trickles down. So um I will get to each of the years here in just a moment. But if I could call your attention to the top row there, which is uh the uh gross cost. So that's the gross the total cost of the medical and prescription drug plan before we consider whether the funding comes from the employer budget, the employee and retiree contributions or from the health fund. Uh and so you can see if you go from left to right from 25 26 to 27 you'll see the uh the increases there. Um it went up
015uh about 8 and a half% for 20 from 2025 to 2026 and then another uh just under 9% for 2027. Uh and so again we're using data through November. So I'll start in the 2025 column and uh we are updating the projection for the full year of 2025. So obviously if we're using data through November, we've got 11 12ths of 2025. Uh and so as that uh we use that data to to just sort of uh project the uh the end of the year for 2025. So you'll see there uh the health fund draw down the negative the red negative 1.9 million. So, we're expecting the health fund to draw down with the experience in December uh an additional 1.9 million uh leaving a health fund balance at 11.5 million which is projected uh at
016this time. And uh that 11.5 million represents about 58% of the generally accepted target for our reserve fund. And that's the row right below that, the projected two months reserve. So 212ths of the gross cost is just the industry um best practice target reserves. And that that reserve covers, you know, volatility and uh and so on and so forth. And it's just best practice to have that amount on on hand. So uh we're expecting the fund to be at about 58% of target at the end of 2025. we move over to 2026 and uh we're continuing we intentionally uh made the decision to rely upon the health fund to offset the employer and employee costs just as we had done in 24 and 25 uh as a stabilizing force. So that was a a decision
017and and you'll recall the health fund had built up over time due to favorable experience or experience being more favorable than the budget rates that uh that had been set uh previously. And so the intention was to use those funds to put them back into the plan to help stabilize the uh the experience as it as it uh has exceeded budget over the last couple of years. But let's talk about 2026 and see how that how that flows through. Um, and so with the updated experience, the gross cost of 128.8 million shows an improvement uh of about $4 million from the exhibits that we share with you for data through September. And so of that, the employer contributions are 103.5. Employee and retirees are contributing 17.5 million. The draw down from the health fund reserves
018is 7.8 million projected to be 7.8 million. Uh and that comprises all sources of funding with the 128 million uh 128.8 million projected gross cost. And so we update uh the health fund balance as of November 2025. You'll see there is 11.5 million. Uh and then there's a line item on there additional funds 5.8 million. So, we were advised that um as a result of the reversion process, there would be f a $5.8 million um ad to the health fund. And so, we've been advised to incorporate that in our exhibit here. And so, the combination uh and then the the expected draw down is is uh 7.8 million for the balance of 2026, leaving a estimated projected balance of 9.6 million. And that figure is a little bit lower uh in terms of its percentage
019of the target. The the target increases as well as as the gross cost goes up. 212th of that is going to obviously go up as well. So that targeted reserve fund of 21.5 million. It's covered uh about 45% of it is covered by the estimated balance. So that's the position for for 2026 that though you know that those decisions and the and the and the rates and budgets uh are all set. the column in 2027. Uh that is a preliminary uh exhibit and so nothing has been set for 2027 yet, but we're providing multiple scenarios scenarios as Crystal said um for you all to to orient you know some of the possibilities and and the financial ramifications of each. So this exhibit here in 2027 is intended to maintain the cost share ratio between the
020employer and the employee. And so uh that is specifically uh when you look at the 2026 column employer contributions for 2026 are 103.5 million employee contributions 17.5 million for a total of 121. When we look at that ratio, it's 85.5% covered by the employer, 14.5% covered by the employees. And so we just for this first scenario as a as a starting point, we we maintain that same ratio uh for 2027. And so with the projected gross costs of 140.2 2 million uh which again is just under 9% increase from 2026 based on our our projection our experience-based projection. Um you'll see the figures there. Uh so that $120 million for the employer contribution that represents about a 15.9% increase to the employer budget. And the 20.2 2 million for employees represents about a 15 15
02112% uh increase. And so again, we've got some scenarios for you. This is just for your consideration to understand what the what the potentials are. So under that under that scenario, you'll see how it flows through uh we are the there's a zero in the row for draw down from the health fund reserves. The intention is, you know, the the health fund kind of did its job. It helped support and stabilize the rates over time, but since the unfavorable experience has uh has continued beyond the health fund's capacity to to absorb it, we've got to discontinue reliance on the health fund. And so you'll see a zero in that row in the 2027 column. And so the uh the health fund balance of 9.6 6 million is is projected to be unchanged because we're not
022intending to rely upon it. And so uh the ending balance for 2026 of 9.6 equals the starting and ending balance of 9.6 for 2027 under this particular scenario. And uh in that in that uh in that scenario the 9.6 6 million covers about 41% of the projected two-month reserve which again is is just a best practice target. Um so with that um let's move forward Linda if we can to the actual scenarios on the next slide. So um this the scenario I I referenced that it was it was a little over 15% when we we preserved the same cost share ratio that happens to to be closely in line with the 15% scenario. So what we've done is we've modeled different scenarios using the projection based on November data for 2027 to come up with
023different scenarios to allow you to consider what what the ramifications are. And so uh we've started with a 10% increase to employee contributions and we've gone up in 5% increments. We can we we in fact we have a session scheduled for next week where we're working with the benefits committee to um use our interactive model and and we can go anywhere in between. Uh but we just for purposes of of this session we wanted to have some finite uh scenarios for you to consider. And so if you look at the figures here from from an employee perspective each 5% increment that's worth about $900,000. Um, so when you go from, you know, 0 to 5, 5 to 10, 10 to 15, each each 5% increment is worth about $900,000. Uh, and that is on a
024pre-tax basis for employees. Uh, so it would be a little bit less than that. But uh but just again just for context if we think about the total employees and retirees in the plan and just look at an average it would be uh it would be each uh each 5% increment. Look at this here. Actually I'll start with a 10% increment because that's the first column. So that 10% increment uh that on average represents about $25 per employee per year, which is about $17 per month. And of course, it'll be a little bit lower for those individuals that are enrolled in single co coverage, a little bit higher for those that are in family coverage, but that's we'll drill down to that when we have another session with the committee uh to look at the
025ramifications on a on an actual tier basis. of the specific the specific tiers. Um, so you can uh you can see so that $900,000 for each 5% increment will shift from the employer to the employees or vice versa as you as you raise the uh employee contribution going from 10 to 15 to 20 to 25. And so you can see the uh for we're not again we're not relying on the health fund. So if you look across each of these scenarios the health fund balance is unchanged from its starting point or projected ending point. Um it's just the in the uh the the impact is is is coming from either the employee or the employer. All right. So, I I welcome the opportunity for some personal And if I could just pause you for a
026second. Um, do you have notes related to this presentation as well? Because I'm sure some board members are going to want to go um back back through the context that you presented here that you might be able to share with the board like um like what you're speaking off of. So, do you have notes related to what you're talking about that you can share with the board from your presentation? Yeah, absolutely. Okay. All right. Okay. Thank you. Um, if you could just continue and then we'll do questions at the end. Thanks. Yep. Sounds good. All right. So, if we can get back to the the fiscal year projection. Are you is that is that the slide you're on, Linda? It's so I I will assume that you're on that slide. Yeah. Okay, there we go.
027I can see it in in presentation mode now. There. So, so the calendar year, the the plan year is the calendar year and that's what we just talked about. So 25, 26, and 27. The fiscal year runs July to June. And so we've got the 25 column in here just for consistency sake, but obviously the fiscal year ending June of 2025 is complete. So there's nothing to project there. It just the the numbers are are final. Uh and then in the 2026 column running from July of 25 to June of 2026, we've got data through November. So we've got about the first five months of that period. So we've still got some projection. We've still got some estimates to go. Uh and and and we want to do that. Um and so you'll see that
028the gross costs are 124 million. Uh that same figure for the calendar year, the full calendar year of 2026 that was 128.8 million. And so the uh since the calendar year is projecting further out into the future, there's there's more healthc care trend applied to the data. And that makes it uh makes the calendar year figure higher. And uh and then uh there's also that seasonality element too where costs are projected to be uh higher in the second half of the year after individuals meet their annual deductible and their annual out-of- pocket maximum. Once once those events occur, the plan ends up paying a higher percentage of cost. So, so costs generally are are higher in the in the latter half of the year uh due to that phenomenon. Uh and so the the fiscal
029year figures are are a little bit lower because they're sooner in time and then you've got that seasonality estimate uh element in there as well. Uh so the figures uh they'll they'll look a little bit favorable as a result and I'll not go line by line unless unless folks uh ask me to. Uh but you can see there the projected health fund balance at uh the end of fiscal year 2026 is the $18.7 million. Uh and that's uh you know that's that's 90%ish of of the target. So it's it represents a better position there. Uh and then 2027 same thing. We're projecting it's about 9% higher. And so uh you can see the the ramifications there. Uh and and this is the same scenario uh the same ratio of cost share for employee and employer.
030And then on the next slide, Linda, if you could advance one, we've showed the ramifications for the fiscal year for each of the scenarios that we that we talked about. uh 10 15 20 and 25% increases to the employees. So the the takeaway there is things have improved for a couple of reasons. The experience improved as well as there was the injection of the $5.8 million into the health fund. Those phenomena have have helped. Um we are in the process again this data is through November. Our next iteration will include data through December and so we'll be work we're working on that. Um it'll generally speaking it it would be predicted to have with with just adding one month of data the change uh would be expected to be to be less than than it
031might be with with two or more months of data uh as with this update. But just just providing that that context. Um, so that's all the slides that we've got to to orient you to the updated projection. Uh, we've got detail on the methodology that we've talked about uh previously in the appendix for your review, but at this time I'm happy to take any questions that that you may have. All right. I don't see anyone in line right now, so I have one question. Um while I give a chance for my colleagues here to chime in, is my interpretation of the projections correct in that the revenue between employer and employee is less than what the projected claims are. And so therefore making it so we're drawing down the health fund balance by $7.8 $8
032million in 2026 set assessment correct? That's exactly right. So the funding for 2026 is set and was known to be on the health and so you see that simply fun that reliance million dollar. Okay. All right. Thank you for that. All right, Mr. Co Pepper. Um, let's see. Um, I guess the first question I'll ask is on that same slide, um, that we were just discussing 2027, $140.2 million is the gross cost. Uh, the employer contributions 122, excuse me, 120 million. Just wonder where that number came from. Yeah, that is a hypothetical first pass scenario that preserves the ratio of cost share between employer and employee. So, no decisions whatsoever have been made on that. Uh we just took a look at 2026 when you look at the uh in the 2026 column that $121
033million that is split 85 and a.5% and 14.5% between employer and employee. And so we as a as a as a place to start we said well let's just start with that one. And it just so happens that it it landed, you know, the it landed pretty close to one of the scenarios, the 15% scenario on the next page, but uh but it was simply a a a uh a starting point for the discussion. Okay. So I guess I interpret that roughly to say you're saying that that's the requirement that we should budget for. uh wealth. So if you all based on all the constraints that that you have to contend with um it's at your discretion and so that's why we wanted to provide multiple scenarios depending on your access to funding and and
034um you know the the considerations that you want to make. So slide uh five shows the different scenarios and the specific implications. So there there's essentially $900,000 for each 5% increment. There's $900,000 that would need to come from somewhere if it doesn't come from the employees. Okay. Well, in reference to slide seven, there's there's been some discussion about aligning the the costs uh for our employees to the cost of the city. Do you know where that falls in roughly um in your projections here on slide seven? Yeah, Linda, I I might ask you to to to chime in as well. I don't have the cities in front of me right now, but can put that to later, but I would like to know what that is. Yeah. Yeah. How do I get this to stop?
035So, Mr. Co Pepper, I can uh answer that question. And I'm going to answer that question by not speaking for the city manager uh because I think it would be not appropriate for me to quote a number given to me by the city manager in a discussion um uh that we had with the team a week ago where they're still trying to determine uh actual costs as well. But there is an absolute will of trying to get in line with the city in terms of health care premium costs. Right. That'll do. That'll do. Mr. Callen. Yes. I appreciate your report, I think, and I appreciate Chairman Brown, Chairwoman Brown's request that you provide us with your notes so that we can review them. But I will be honest with you. I'm following the columns. I'm
036following the categories down the left hand side of the page, but I don't know what my eyes should focus on as uh when you get to the bottom line looking at the health of this process, financial health is my target for my eyes to reflect on and to process mentally. Am I supposed to be paying attention to the projected health fund balance, the total funding? There's got to be a bottom line, but I don't know where the bottom line to focus my eyes on should be. So, can you help me, coach? Yeah. Yes, absolutely. So uh the health fund the the the key takeaway is the health fund has uh retreated below the desired level and the desired level is that two 212s of the projected gross cost. And so the what we want to
037do is enable you all to consider your options to get that health fund to a a healthy balance uh a healthier balance. Uh and so it's not immediately imperative to have it at that level, but that the financial uh wherewithal to deal with volatility as it comes. So, uh, and so the different levels of funding that the school board can consider, uh, you know, with with the with the intention of getting that health fund balance back to a to to a desired level or as close to it. And it's a and it's certainly palatable to do it over a, you know, a two to threeyear period. Um, but that takes some planning and some some looking out into the future. So that that that's what we want want you to focus on. I'm sorry. Was
038there a question there? I heard heard a little bit of static. Okay, we're going to have to take a recess to fix this feedback issue so that we can continue. So, um, colleagues, we're going to take a five minute recess, um, and hopefully that'll get us up to date. And I I apologize, um, to the consultants from Mercer, but we're having some technical issues with the microphones. Thank you. Check. Check one two. Check one two. Check one two. the feed. Okay. Check. Check. Check. One, two. Check one, two. Check. Check. One, two, check one, two. Check, check, check, check. Check one, two, check one, two, check, check, check, check. Check, check, check, check, check. Still checking. Still checking. Check one, two. Check one, two. Check, check, check, check. One, two. I am not hearing it
039in the room. Check. Check. Check. Check. Check. Check. One. Two. Can you hear me? Are you seeing lights lighting up in there? Check. Check. Are you able to hear me? Check. Yeah, I know. But we're not going to be able to fix that right now. But are you able to hear me? Hello. Check. There we go. I've got room audio. That's better. All right. You want to try that one again? Check. Check one, two. Check one, two. Check. Check. Check. Check. Check. Check. One, two. Check one, two on the left turn. Check one, two, check one, two, standing far away. Check one, two, check one, two, check, check, check. Check one, two, check one, two, one, two, three, four, five. 1 2 3 4 5 6 7 8 9 10. 5 6 7 8 9
04010. 1 2 3 4 5 6 7 8 9 10. Check. Check. Check. One. One. One. One. 1 2 3 4 5 6 7 8 9 10. 1 2 3 4 5 6 7 8 9 10. 10 98 76 54 32 1 Check. 1 2 3 4 5 6 7 8 9 10 8 9 765 44321 1 2 3 4 5 6 7 8 9 10 98 765 44321 Probably skipped a few numbers. 1 2 3 4 5 6 7 8 9 10. ABCD E. Check. 1 2 3 4 5 6 7 8 9 10. Check. 1 2 3 4 5 6 7 8 9 10. Check. Check. Check. 1 2 3 4 5 6 7 8 9 10. 10 9 8 7 6 5 4 3 2 1. Check check. 1 2 3 4
0415 6 7 8 9 10. Check. 1 2 3 4 5 6 7 8 9 10. Check check check. One two check. 1 2 3 4 5 6 7 8 9 10. One 2 3 4 5 6 7 for the room down. 1 2 3 4 5 6 7 8 9 10. All right. Okay, we are now back from recess. Okay, and you can go back ahead with your follow-up questions, Mr. Kalen. Yes, I think in light of the conversation that I just had that the bottom line that we focusing on is the projected health fund balance at year end. Am I correct in that understanding? That gives you a look at what the health of the health fund will be at the end of that year. And then uh further from that um just
042to to get to the point that David had mentioned where it's um best practice to keep two and a half months of gross cost in your health fund so that you have the flexibility when you know claims are higher than expected. That is the 23.4 million. And so if you look in that 2027 column, I'm looking at page four, um, it's below where we would desire to be at two and a half months of gross cost. Hang on, let me find you. You're on page four. Yes. And what column? 2025, 26, or 27? 27. Okay. And we're looking at what line item on the left hand side. So on the and column Oh. Um, so as you mentioned, there's the projected health fund balance at year end. Okay. That's going to show you what we
043project or Mercer is projecting we will have in our health fund at year end based on the expenses. However, based upon best practice to have two and a half months of gross cost in your health fund, we would be below that because that's 23.4 million and we would only have 9.6. So that's what that negative 13.8 8 is is just saying we're below at the end of 2027, we would still be below best practice. So is the bottom line for my focusing as a member of this board and trying to make wise decisions. Am I focusing on that red n number in the variance from two months reserve? Is that what my attention should be directed towards? Because there's got to be a bottom line in this process. when all is said and done, I
044get to a bottom line and in light of the health of that number, whether it's positive or negative, whatever we're shooting for, there's got to be a bottom line that I've got to pay paying attention to. And can you help me understand what that bottom line is? This is what you want to be looking at. Well, my only response to that is if you're looking at that bottom line number, I don't think we would be in a position to make a change to make that zero. So, alternatively, um, unless someone tells me differently, we'd probably looking at the projected health fund balance at year end just to make sure that we are in the positive and reaching towards that twomonth best practice reserve. Okay? I don't mean to be redundant, but I just want to
045make sure I'm hearing what do I focus on as it relates to measuring the health of this report. Yeah, Mr. K, please. Yeah. Um, yes. So, that number is a very important number. It's a single number that in general can u illustrate the overall health of the of the of the fund. So, right now or this 2027 column that n the the balance of the fund is 9.6 million. In a perfect world, you would have 23.4 million projected to uh to be in there. And that would have it have uh the the best practice fund availability perfectly covered. And so so so that's a single number. If you if you if you want to focus on a single number that will quickly tell you is the health of a fund u perfectly funded or a
046little underfunded or a little overfunded that number can help you get to that assessment. Now it is the the the value of having that fund is that it helps the plan to withstand financial volatility yeartoear. So in general, we would expect it to have some movement and to be plus or minus right on the ideal number. So the fact that it doesn't have that ideal number is is not in and of itself, you know, a a an impossible situation. Um, however, that said, we do want to make decisions to the plan that will help to increase the likelihood that it will trend closer to that actual number. Recognizing all of the dynamics of the plan, which include the budget constraints that the school board faces and the uh desire to mitigate increases to the employees
047as well. So there's there's those three factors. You want in a perfect world, you want the fund to be right on the desired uh reserve balance as shown there. You want to have increases to your employees that are palatable. And you want to have the employer budget be something that you all can manage. So, those are the three areas, three aspects of funding the plan that we're trying to give you all the information so that you can balance those um as you need to. Okay. But those three items still lead to a bottom line. Correct. That's right. And that bottom line is the variance from the two months, the projected health month balance or something else. The bottom line in the scenarios we've proposed, they make additional uh contribution to the employer budget and then
048the employer budget. You all have the discretion uh you know or the the potential ability to take your sources of fund which are going to be your your sources plus the employee contributions to move it into the fund to get it to move in a direction of a balance that uh you know that that that you would prefer. And so if you're if you're just looking for a single single place to look then then it would be that doesn't it all mathematically lead to some bottom line number for assessment purposes and if so what is that bottom line I'm supposed to be focusing on I hate to be making I would just this difficult but this is I'm trying to do my job and understand the process and arrive at a wise decision. Yeah, I
049think Mr. Cal might help. The bottom line is the cost of the health the gross cost of the health care plan $140.2 million. Now look, let's all be clear that is not the number that it's going to be when it's all settled. Okay, we're basing this this report is on November 2025 data. On March 3rd, we're going to give you a presentation which will include December 2025 data, which means we'll have the entire um year of 2025 into new projections. It's likely that that 140.2 million could fluctuate a little bit either way and what's available in the health fund balance could fluctuate because of the amount of claims that will come through in that last month. Um and then it's still at that point we're looking at trend data to make a projection that even
050on March 3rd we'll be 9 months out to January 1, 2027. So we're not we're not saying that at this point you guys got to make decisions on 140.2, but what you do eventually have to do is help us in developing the budget. how much money we put into the employer portion of health care and how much money we put in to rebuild the health fund balance. You also will have the opportunity out of this year's operating budget to make a decision uh later in the spring to move additional money from this year's operating budget into that health fund balance to rebuild that health fund balance further. And again the gold would be the gold standard is that you have two months of a of of reserve um based upon the annual cost. So it's
051it's it's not crystal clear at this time. I say amen to that. Thank you for your efforts and I appreciate yours as well, Linda, and you as well, sir. But I'm still looking for Waldo. Miss Rogers, thank you so much. Um, I'm going to direct my questions at Dr. Robertson if that's okay. I know that you already discussed um that we want to be aligned with the the city, but I was and maybe I was wrong, but I was of the understanding that when we had given our stipen and then that had um finished, so to speak, that we were aligned. We are we not I'm confused on that. We we are aligned with the city. Yes. We were not aligned with the city um in 2023 2024. Right. Because we were giving the stipen.
052Correct. Okay. Well, not the stipen. We were using the health fund balance to lower their cost. Right. And that's what I was saying stipen. So we were lowering the costs in 22 23 but now that that's ended because I don't know where the discussion was about being aligned with the city. So that's why I'm saying so we are currently our employees in the school division are paying the same amount that the city employees are. The question is whether or not that's going to increase based on the projections and based on what we're expecting to happen and if we're going to if we're going to have to ask all the city employees to pay more and we're going to have to put in more for ourselves. That's the understanding. Okay. I just wanted to make that
053clear. Thank you. All right. Thank you. I think my um other my questions are related to how this goes into budget. So I'm going to save that for budget. All right. And we are now on to the budget workshop number four. And we welcome Crystal Kate, chief financial officer, Jack Freeman, chief operations officer, and Matthew Delaney, chief schools officer. Okay. Good evening, Chairwoman Brown, Vice Chairwoman Williams, school board members, Dr. Robertson. So this evening marks our fourth budget workshop presentation. The agenda for this evening is shown on this slide. We begin by sharing positive news regarding a budget award followed by addressing questions from schoolboard members. We will then provide updates on any recent actions or directions from the general assembly and at the federal level. And next we will present a preliminary budget balancing
054update and a capital improvement plan or CIP update. We will conclude this portion of the meeting with time for questions and discussion before transitioning to the final departmental presentation. The budget and finance department is very proud to share that it has received the government finance officers association's distinguished budget presentation award for fiscal year 2025 budget document. This recognition highlights excellence in budget presentation and reflects the division's strong commitment to transparency, clarity, and best practices in public budgeting. The division had not submitted a budget document for award considerations since 2019 when changes to the application criteria made participation particularly challenging. With recent adjustments to the criteria, the team set a goal to once again pursue this recognition and their efforts were rewarded. This award is a true testament to the dedication, professionalism, and exceptional work of
055the budget staff. Moving on to schoolboard questions. Uh the first schoolboard question was a request for departmental organizational charts. This slide is an example of BBCPS's organizational leadership chart. All departmental organizational charts have been uploaded to the schoolboard secured site for your review. The next schoolboard request was for an inventory of school buses and their ages. This slide provides a summary of the fleet, distinguishing between buses used for daily pupil transportation and those for other purposes, including activity buses, the reading bus, the energy project bus, and buses utilized for work study equipment programs. A file containing the complete inventory, including vehicle ages, has been posted to the schoolboard secure site for your review. The next school board request was for a list of deferred maintenance projects totaling 1.3 million as shared during the January 27th
056meeting as part of the Department of School Division services presentation. The projects included on the list range from replacement of expansion control joints, speakers, damaged floors, windows, office units, and other facility related needs. A file containing the complete list of the deferred maintenance projects has been posted to the schoolboard secure site for your review. The next question was regarding the number of buildings with solar panels. We have eight buildings that have completed solar panel installations. One building is currently in the design phase and two additional buildings are under evaluation and being studied. The final question focused on the Virginia retirement system plans and the associated cost to the division for professional plans one and two which is the first column at first table at the top on the on the left which includes teachers, school
057counselors, psychologists, library media specialists, principles, assistant principles and central office instructional administrators and the like. This table shows the employer contribution percentages for the defined benefit, the health insurance credit, and group life insurance. These employer contribution rates are applied to eligible payroll, not to total compensation and not to the employees comp contribution. Both the employer and employee contribution rates for professional employees are mandated by the general assembly. The next table displays employer contribution rate uh contribution rates for non-professional plans one and two. So this is the table at the top on your right. This includes classified hourly and salaried staff such as bookkeepers, custodians, bus drivers, and food services staff. Again, these rates apply to eligible payroll. Contribution rates for the employer and employee for the non-professional classification are actuarily determined by Virginia Retirement System
058for our specific employee group. The table that is on the left at the bottom reflects the professional employees under the VRS hybrid plan. VRS hybrid employees are provided a contribution to a defined benefit, a health insurance credit, and group life. Employer contribution rates for each of these remain consistent with plans one and two. Employees on the hybrid plan also participate in a defined contribution plan with employer matching contributions to a 401A and the and a Virginia local disability program. There is a mandatory 1% contribution by both the employer and employee. And in addition, voluntary employee contributions are matched by the division according to the employees contribution. So for example, if an employee voluntarily contributes 2%, then Virginia Beach City Public Schools must contribute 1.5%. This contribution rate varies. There are nine different voluntary employer matching
059formulas based on the amount that an employee may choose to contribute to the defined contribution plan. And as mentioned, a component of the hybrid plan is the Virginia local disability plan. And the employer rate for the professional classification is listed in the table. The final table at the bottom right uh presents employer contribution rates for nonprofessional hybrid plan employees. Defined benefit, health insurance credit, and group life rates remain unchanged from plans one and two. The defined contribution structure mirrors that of the professional hybrid plan with a separate employer contribution rate for the Virginia local disability plan. Regarding the general assembly update, as you know, former governor Yncan included a bonus for SOQ positions in a in his proposed current bianual budget. One of the amendments adopted on Friday converted this bonus from a percentage-based increase
060to a flat dollar amount and provided greater flexibility in how and when bonuses may be distributed. While the House and Senate differ um slightly in dollar amounts, both chambers adopted the same approach. We are currently seeking clarification on specific language in the legislation to ensure we completely understand understand the intent if this passes. It remains unclear whether there will be any additional amendments to the current bianual budget um which will be introduced as the process continues and at this time there are no further updates related to the next bianual budget. Committee amendments are expected to be released within the next couple of weeks. On the federal front at the last budget workshop I shared positive news at the federal level. a minibus appropriations package provided a $5 million increase to impact aid um compared to
061the fiscal year 2025, a $20 million increase for title one part A and a $20 million increase for IDA part B and maintain flat funding for most other K through2 programs. There were no apparent changes to these funding levels in the legislation subsequently approved by Congress and signed by the president. Funding for Carl D. Perkins and Adult Education and Family Literacy Act programs remain near fiscal year 2025 funding levels and the maximum annual award for the Pell Grant award was maintained. Additionally, the final legislation increased funding for the US Department of Education by approximately $217 million above fiscal year 2025 levels. Moving on to the budget update. The slide you have seen several times reflects projected revenue growth of approximately $33.4 million over the fiscal year 202526 approved amended budget based on former Governor Yncan's
062budget proposal. These projections exclude budgeted debt service and PIGO amounts which are treated as off-the-top expenditures. And as always, these figures are preliminary and subject to change as the state budget process continues. Beginning with the projected 33.4 million in additional revenue. This slide represents the first of three budget balancing slides. The first three items were information we have previously shared with the board. The first two represent the part one and two personnel and non-personnel cuts totaling 5.2 million. You may recall from the January 13th presentation that these reductions build upon reductions already made over the past three years totaling approximately $16.7 million. The next line item represents the projected savings of $18.1 million due to changes in the VRS fringe benefit rates. The two lines highlighted in yellow relate to health insurance employer contributions. The
063first highlighted line of approximately $9.2 million was based on Mercer's projections using claims data and the health fund balance as of November 2025. Per Mercer's presentation, employer contributions for the 2027 plan year over the 2026 plan year show an increase of approximately $16.5 million. So an estimated portion of this increase for fiscal year 2027 is represented by the 9.2 million. And please note that since this projection is based on November 2025 data, it will be updated as we move through the year. The next line shows an additional $5 million being dedicated as an additional employer contribution. This additional funding will go directly to the health fund balance to help rebuild the reserve to the recommended two months of gross cost. The next section highlighted in green has to do with employee compensation. At the January
06427th, 2026 schoolboard workshop, Seagull in collaboration with the Department of Human Resources presented two compensation scenarios for consideration to address employee salary increases for the teacher pay scale. Scenario A from the seagull presentation was a 2% increase to the entry level and a 1.5% step increase to support a 3.5% increase for eligible employees at a cost of approximately $14.9 million. We have added additional funding of approximately $7.7 million for teacher compensation shown in the next line. This additional funding will add another $1,000 to the entry level, which will flow through the pay scale, resulting in an overall average increase of 5.23%. Moving to the unified scale, scenario A from the seagull presentation was a 2% increase to the entry level with a 1% step for years 1 through 14 and a 1.5% step for years
06515 and above to support a 3 to 3.5% increase for eligible employees at a cost of approximately $ 8.5 million. We have added additional funding of approximately 2.6 6 million for compensation for employees on the unified scale. This additional funding will add an additional 1% to the entry level, which will flow through the pay scale, resulting in an overall average increase of 4.17%. Consistent with the school board's interest in increasing the starting salary for teachers, the proposed funding places a greater emphasis on the teacher pay scale. This approach results in a salary increase for teachers that exceeds the unified pay scale increase by more than 1% supporting recruitment and retention efforts. So before moving on to the rest of the budget balancing, these next two slides show the impact of the additional funding on each
066pay scale. Beginning with the teacher pay scale, this slide displays the current 2025 2026 salary scale in the second column and the proposed adjustments for the 2026 2027 school year using scenario A from the SQL presentation on January 27th. Under the 2025 2026 teacher pay scale column, the starting salary is $55,687. The next column titled proposed 2026 2027 reflects scenario A which again proposes a 2% adjustment to the entry level starting salary of the 55687. Under this scenario, the starting salary for the 2026 2027 school year would increase to $56,81. The next column builds off of scenario A by applying an additional $1,000 adjustment to the entry-level salary, resulting in a final starting salary of $57,81. This represents a 3.8% increase over the current year's entrylevel salary. In terms of employee impact, a current entrylevel
067teacher completing one year of experience would move to a one-year salary of $58,668, representing a $2,981 increase shown in the green box or a $5.35% increase over their 2025 2026 salary. Scenario A plus the thousand entry-level increase strengthens the salary scale, maintains the integrity of the 1.5% difference between steps while delivering a meaningful impact for employees. For the unified pay scale, we will continue to use grade seven to demonstrate the employee impact for increases. As previously shared, this paygrade is used to compensate bus assistance, cafeteria assistants, as well as custodian one employees. Beginning with the 2025 2026 current starting pay rate of $15.76 applying seagull scenario A for the unified scale which proposed a 2% adjustment to the entry-level pay rate the starting pay rate for 2026 2027 would increase to $16.7. Building off of
068that scenario A and implying additional 1% increase to the entrylevel pay rate. The next column shows the new starting pay rate of $16.23. This represents a 3% increase over the current year's entryle salary. Under this option, an employee completing one year of experience would now move to year 1 for 2026 2027 with a pay rate of $16.39. This represents an increase of 4.02% 02% or 63 cents per hour over their current 2025 2026 pay rate. Scenario A plus the 1% entry level increase improves the starting salary for employees maintains the 1% step for years 1 through 14 and the 1.5% for years 15 and above. The proposed salary adjustments for both the teacher and unified pay scales reflect a coordinated and thoughtful approach to compensation while taking into consideration the proposed funding. So, transitioning back
069to the budget balancing. Um, this slide continues the list of items proposed to be funded for fiscal year 2026 2027. Well, I'm not going to go through each one, but I will take a moment to highlight some of the items. Funding for unpaid student meal debt. The board has received presentations on this issue and it continues to rise. So, we have included $250,000 to assist in offsetting that debt. McKenna homeless. It has been mentioned in a departmental presentation the rising cost of the federal mandate requiring the school division to transport homeless students to their school. There is an effort to try and mitigate this cost by bringing some of these services inhouse. So, we have dedicated an estimated amount of funding in the amount of $500,000 for drivers and vehicles. While the process of estimating
070the exact cost of this opportunity is ongoing, it was important for us to include some funding at this time for this initiative. There is also 500,000 to fund the traditional McKini Vento transportation program as those costs continue to rise above what we currently have in our budget this fiscal year. The next item is interactive whiteboards. While we have been utilizing a break fix system for our interactive whiteboards for a few years and using mid-year funds for replacement, we are putting them on a replacement cycle with funding built into the base budget. Based on the information from the Department of Technology on our current inventory for these items and age, we have included $1 million to start the replacement cycle. And the last item I will mention on this slide is $107,650 to restore early commitment
071incentives for student teachers. This next slide is the final slide for budget balancing. And again, I'm not going to read each of these items, but only highlight some of them. $520,000 to increase funding for statemandated indoor air quality assessment cycle testing. $410,000 to increase funding to support ADA building compliance, $500,000 to increase funding for utilities, a million to increase funding to general maintenance, and recall we have that 1.3 million u of deferred maintenance projects, $535,855 to move security assistance from grant funding to the operating budget, $160,512 to increase funding for the Microsoft division license. And lastly, 146,980 to increase funding for Google Workspace. All of these proposals are preliminary pending approval of the state budget. This the concludes the presentation and I'll be glad to answer any questions you may have. Miss Felton. Thank you,
072Ch Brown. Um, Miss Pace, thank you for this detailed um presentation. Appreciate it much. uh back on page um nine I guess screen nine we talked about the categories and the contribution for the VRS plan which category would the school bus drivers fall under. So they will be on the non-professional and depending on when they were hired or whether I don't know if they could opt in at the time that they could opt in after a certain date if they were hired they are automatically in the hybrid plan on the non-professional scale. There was an option at the time for those on plan one and two to opt into the hybrid if they wish to. Um so there could be some non-professionals on the hybrid that were prior hired prior to that date. I don't
073think that was a large number of people that chose that option though. Okay. So that's basically for the bus drivers. We have like you said wasn't many that that phase into that. Not if you were on plan one and plan two because those are defined benefit plans which are almost obsolete at this point. So but there were I it's been a while but I do recall that there were some employees that did make that option but most of them stayed if they were plan one plan two they stayed with those plans. Okay. Thank you. I just want to point out the time since there's three folks in line. If um we could just keep an eye on how long we're going. Um Miss Rogers, thank you Miss Pig for this um presentation. I again just
074wanted to reiterate that is and I guess maybe ask but this $1,000 to the entry level that increases a thousand to all the steps right on the teacher pay. Yes. Because I want to make sure that we're not experiencing compression when we're adding $1,000. So that was one of it flows through the entire pay. Yep. I just wanted to make sure. And then um for the prelim preliminary budget balancing, I am really excited to see that you have a planetarium teacher projected. I know that the planetarium has not been open for many years. We loved the planetarium um teacher who was there. He was incredibly incredibly talented. And so to um know that the planetarium is coming back and hopefully with um that same teacher who was absolutely incredible. It's one of my kids favorite
075things to do each year and it was super sad to um not have it for several years. So very glad to see that. Thanks, Vice Chair. We um thank you. So on slide 12, obviously the five um million additional dollars for the contribution of the health insurance will get us $5 million closer to that magical number of what we need in the balance. Correct. Yes. And then the nine approximately 9 million for the health insurance contribution increase. What will that do for our employees premiums? That is reflective of the total cost that you saw at us actually Mercer projecting the employer contribution rates. So those rates are what have been loaded into the budget system based on that difference we see in the plan year of that projection. So it just it it'll give us
076more revenue from the employer side that will depending on claims trend and data it it could contribute to the health fund balance or it just could help us pay the claims and not touch any type of health fund balance. Okay. So it's not going to do any that this on this particular line will not do anything for the employee that it it would just help offset any cost. I mean, again, it just depends on what that decision is made, but it's it it's us trying to maintain that trend as we see it right now for the employer based on what you saw earlier this evening. Okay. All right. Thank you, Mr. Ken. Yes, ma'am. If I could direct your attention to slide nine, there were four categories of employees, and I believe you made reference
077to the fact that some of these items are mandated. Could you revisit what category is represented by the mandated items? Sure. So on the professional plan which were normally our teachers, our school counselors, a lot of the central office administrators for those the employer and employee contribution rates are mandated by the general assembly for which category is it? The defined benefit, the health, right? Health insurance and the group life. All of them are mandated. Okay. And that's true for both professional and non-professional or just professional. So for professional on nonprofessional because you have a different group of employees and I think I kind of mentioned this in last workshop when this topic came up. Whereas those contribution rates on the professional side are mandated by the general assembly and we receive those rates when the
078VRS board um has their meeting. On the nonprofessional they're actuarily determined by VRS. So our division can have different employer contribution rates for those employees than another local division and we each will receive our own letter if you will for those contribution rates. So if I'm hearing you correctly on the non-professional side of the three items that are listed there are all of them mandated the employer contribution rates. Yes. Okay. Now is that true in any respect for the nonprofessional for hybrid I should say? So in hybrid they run a it's the same kind of idea behind that. The only difference we're trying to make is distinguish between that when you go to a hybrid plan their defined benefit the way it's structured will be a little bit less than a defined benefit for a
079plan one or plan two employee because they've added this defined contribution to the structure and then requiring us to to match. And the mandatory piece for that would be 1% for employer, 1% for employee is mandated on the hybrid. Okay. So if I'm am I hearing you correctly that all of the items on the hybrid column which are five different entries, are all of those mandated? They're set. Yes, they're mandated. They're set. Yeah. Now the last question. There's this issue called funded or unfunded mandates. Are we dealing with a funded mandate from the state on these items or is this unfunded and we have to find the dollars to make that happen? That no. Well, they are funded. I mean, they are funded based on what the VRS board and what their staff um presents
080to them from an actuarialist standpoint, the performance of the fund because of their investments. And so they are able to look at all of that data that's presented to them and come back and say in this case we have been able to lower that rate for the professional because the fund is doing so much better. So um yeah so I mean it's really just kind of based on that piece of that. Okay. Um thank you. Yeah. Okay. I just want to make sure that I'm understanding correctly. So here in the yellow on this preliminary budget balancing this employer health insurance contribution increase was already seen in these Mercer projections that we received this evening. That is where we came up with that estimate. We took the plan year and the difference between 2026 and 2027.
081And even though we operate on a fiscal year, we looked at the plan year because if we can make that contribution, it will help us going forward a little bit. And if we can just um hold that thought for a second. So is this 5 million also included in that projection? Because right now we we're still showing a draw down of that fund balance. So the 9 9.2 million was already included but the 5 million was not already loaded into that presentation into the Mercer presentation. Correct. So the Mercer presentation was used to determine the $9.2 million. So that's not started yet. that won't start. Okay. So, that wasn't in the Mercers estimates million. And that's what I was trying to make sure that I I understood because, you know, if not, I would be
082a little bit concerned. Um, Mr. Cummings. Yeah, I'll just be quick. Um, just looking at the preliminary budget balancing um, spreadsheets, you know, I think there's a lot of things on here. I think this this balance of $33 million is something that there's going to probably be more discussion about and this is probably a very agile table, but I think in future we get more um table or more information and more potential preliminary budgets having a descriptor of what some of these things are for so that we might have more knowledge on what we'll potentially be voting and allocating for. So, you know, with pathway expansion for aviation and maintenance and medical assisting, is that something that the board will vote on in the future or need to vote on or is that just Yeah.
083So, Mr. Mr. Cummings, um, uh, we're really looking forward to the conversations next win, next Tuesday where we can go through all these line items, okay? And also hear from the board is what's missing, what are some of the priorities that are missing and get clarity on all these other items. And um when we introduce new courses, uh we always introduce new courses if there's a cost to know that either we're going to have to find that money in the budget or we're going to have to build that money into the budget. And as we expand CTE and have to pay tuition for these higher education centers, that very likely is going to be required new money. Yeah. Okay. I just know that in our audit committee that we had recently that software utilization was
084a topic that we discussed. So I do see some new software expenses on here that are expensive but you know there's pros and cons to everything and and whatnot. So just I think that's something that's also on my mind as well as a board member. Okay. So, we have um still one more presentation here related to capital improvements. Um and so we're not going to be able to do that here in our workshop. Um and so I just wanted to ask my colleagues if you would rather put this on information. I think we have some staff that would or would narrowly stay here uh to the end of our meeting. um on information C when we go to the adoption of the agenda or if you want to just leave it on the end after
085everything else has been voted on. So um yeah, I I think we should move it to C2. That would be my recommendation, but I just wanted to ask the board before I brought that forward. It doesn't really modify the agenda a lot. So, all right. Well, with that, we are going to recess and we will reconvene at 6 PM for our formal meeting.