Metro St Louis Sewer District

The meeting featured a presentation on the external audit process, including the scope of services, identification of risks, and the timeline for upcoming financial statement and benefit plan audits. Discussion also covered the implementation of new Governmental Accounting Standards Board (GASB) standards. Additionally, the committee reviewed the small contractor program, covering its administration, bidding process, and funding. The audit of this program resulted in a clean opinion with recommendations for improving the formalization and documentation of processes.

The board meeting included committee reports and several actions. The Finance Committee reviewed capital markets, investment terms for the defined benefit plan (noting a 15.1% return for 2025), the quarterly adjustment review, and the financial status report as of December 31, 2025. The Stakeholder Relations Committee discussed a resolution authorizing the renewal of the contract for specialized legal consulting services with Shans Albert Gianol Geianolicus and Gilgum LLP regarding stormwater and wastewater rates, and an ordinance updating the classification plan based on Civil Service Commission approval. Additionally, numerous resolutions were adopted expressing appreciation to retiring employees for their years of service. The board also considered exercising option year one of a previously authorized contract for legal consulting services and planned for the introduction of the preliminary Fiscal Year 2027 budget at a future meeting.

The meeting commenced with the finance committee session, the 323rd meeting of the committee, which included a motion to approve the minutes of the December 30th meeting. Key discussion points involved a quarterly pension update detailing market performance for 2025, focusing on the impact of Artificial Intelligence (AI) and the concentration of the MAG7 in the S&P 500 index. Other market themes covered included labor market softness, tariff impacts, risk asset performance, non-US equity market shifts due to the strengthening dollar, and favorable conditions for real assets like precious minerals and liquid infrastructure. The presentation reviewed calendar year 2025 market performance across global equity, international equity, fixed income, and multi-asset portfolios, noting positive returns for most segments, particularly international equities and liquid real assets. Discussions also covered the outlook for 2026, with four projected themes: AI's impact on capital and labor markets, US economic legislation effects, the US dollar's expected weakness, and continued softening in labor markets (slower wage increases and less job turnover). Finally, the asset allocation status as of year-end was reviewed, noting high cash levels for pension obligations, resizing of smidcap exposure, and the winding down of a legacy real estate fund. The process for strategic rebalancing, annual policy review, and triennial liability studies was also outlined.

The meeting included reports from various board committees. The Audit Committee reviewed processes for district project accounting, focusing on capital improvement and replacement programs, and received a satisfactory opinion on projects completed in fiscal years 2018 and 2019. The Program Management Committee discussed ordinances related to CSO volume reduction green infrastructure grants for the Mississippi River and River De Faire, and a design-build contract for the Mississippi flood wall pump stations rehab project. They also reviewed the Riverside and Yarnell sanitary relief plan and received an update on easement acquisition for the Stanwood and Bellwood storm system. The Finance Committee discussed the impact of COVID-19 on the market environment and reviewed the fourth-quarter performance of the pension plan, noting a suspension of redemptions for the UBS Trumbull property fund and a downgrade of an Alim structured alpha product, leading to a recommendation against authorizing further investment. The operating fund portfolio was reported as compliant with investment policy, and details were provided on savings achieved from recently executed refunding bonds. The committee also reviewed a budget transfer resolution and discussed the FY 21 strategic business and operating plan and preliminary budget, noting planned introduction and public hearing dates. The Stakeholders Relations Committee discussed implementing technical changes for social distancing during meetings, including live streaming and remote public comment submission. They also addressed appointments to the CBA steering committee, reviewed the diversity annual report and disparity study timeline, and discussed job training programs, including an award to the Building Union Diversity Program. Updates were provided on the Contractor Loan Fund and educational initiatives like internships and scholarships. Finally, the Stakeholders Relations report covered the status of the disparity study update, which was in the analysis phase.

The proceedings covered two separate committee meetings. The Audit Committee meeting provided an annual status update on previously issued recommendations, noting 26 open items as of year-end, with major focus areas including IT, operations, and safety programs. Key discussions involved the transfer of IT responsibilities for plant systems, updates on cybersecurity for OT networks, testing of business continuity plans, and progress on cloud environment security. The Program Management Committee meeting addressed funding for green infrastructure projects, specifically authorizing financial assistance to Davy Daycare Center to reduce combined sewer overflows. Additionally, the committee discussed a planned supplemental appropriation of $270 million for the Abyssal and Limay Wastewater Treatment Facility Fluidized Bed Incinerator Project, which aims to provide a long-term solids handling solution and is expected to be completed by September 2028.