Title
Discussion of Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended June 30, 2024
Staffreport
COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY
Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended June 30, 2024, is for information only.
RECOMMENDATIONS
Staff recommends the City Council Finance Committee review the OPEB Trust and Pension Trust investment Report for the quarter ended June 30, 2024.
BACKGROUND
OPEB Trust
In 2008-2009, the City established the Section 115 OPEB Trust with Public Agency Retirement Services (PARS). The Trust’s primary purpose is accumulating resources to generate investment income for funding the City’s future OPEB obligations. The trust account was set up with an initial contribution of $500,000, and the City has been proactively funding these future liabilities. Since it was established, the City Council has authorized various contributions into the trust. At the end of June 2024, assets in the OPEB Trust total $21,662,830, including contributions and investment earnings. The 3-month investment return is 0.93%, and the inception-to-date investment return is 4.40%. Due to a change in account status, inception of the fund is measured started August 1, 2015.
Pension Trust
In 2021, the City Council established the Section 115 Pension Trust with PARS. The goal is setting aside funds and accumulating investment earnings to buy down the City’s unfunded CalPERS pension liabilities. At the end of March, 2024, assets in the Pension Trust totaled $26,633,656, including contributions (since inception of the fund in 2021-22) and investment earnings. On June 30, 2024, assets in the Pension Trust totaled $31,600,441. Over the course of fiscal year 2024 (July 1, 2023 through June 30, 2024) the City contributed $14,210,000 to the Trust. The 3-month investment return is 4.09%, and the inception-to-date investment return is 0.98%.
Analysis
QUARTERLY INVESTMENT REPORT
PFM Asset Management has prepared the quarterly investment report for the OPEB Trust and Pension Trust for the period ending June 30, 2024, summarizing investment performance. The asset allocations for both the OPEB Trust and the Pension Trust follow City Council-approved investment policies.
Assets in the OPEB Trust portfolio increased from $21,480,143 in the prior quarter to $21,662,830. Assets in the Pension Trust totaled $26,631,221 at the end of the prior quarter and are now $31,600,441. Investment fluctuations are expected due to changing market conditions.
Investment returns are as follows. Please refer to the attached investment report for details.
Trust 1 Year 3 Years 5 Years 7 Years Inception to Date
OPEB 8.48% 0.07% 3.73% 4.20% 4.40%
Pension 11.53% N/A N/A N/A 1.30%
ATTACHMENTS
Attachment A: Investment Report for the Quarter Ended June 30, 2024
Attachment B: OPEB Trust and Pension Trust Investment Report Presentation for the Quarter Ended June 30, 2024
PREPARED BY: Heather Rowden, Interim Finance Director, Finance Department