Title
Adopt a Resolution Accepting the Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended March 31, 2024
Staffreport
COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY
Resolution accepting the Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended March 31, 2024.
RECOMMENDATION
Staff recommends the City Council adopt the resolution accepting the OPEB Trust and Pension Trust investment Report for the quarter ended March 31, 2024.
BACKGROUND
OPEB Trust
In 2008-2009, the City established the Section 115 OPEB Trust with 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 is proactively funding these future liabilities. Since it was established, the City Council has authorized various contributions into the trust. At the end of March 2024, assets in the OPEB Trust total $21,461,200, including contributions and investment earnings. The inception-to-date investment return is 4.41%.
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 beginning of the fourth quarter of 2023, assets in the Pension Trust totaled $25,541,100, including contributions (since inception of the fund in 2021) and investment earnings. On March 31, 2024, assets in the Pension Trust totaled $26,614,500. The 3-month investment return is 4.04%, and the inception-to-date investment return is 0.97%.
Analysis
QUARTERLY INVESTMENT REPORT
PFM Asset Management prepared the quarterly investment report for the OPEB Trust and Pension Trust for the period ending March 31, 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 $20,949,700 in the prior quarter to $21,461,200. Assets in the Pension Trust totaled $25,541,100 at the end of the prior quarter and are now $26,614,500. 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 9.36% 0.98% 4.16% 4.39% 5.37%
Pension 13.63% N/A N/A N/A 0.97%
REVIEW BY FINANCE COMMITTEE
The OPEB Trust and Pension Trust investment Report for the quarter ended March 31, 2024 was reviewed by the City Council Finance Committee on May 22, 2024. The Finance Committee unanimously recommends the OPEB Trust and Pension Trust investment Report be moved to the City Council for acceptance.
ATTACHMENTS
• Attachment A: Resolution Accepting OPEB/Pension Investment Report
• Attachment B: Investment Report for the Quarter Ended March 31, 2024
PREPARED BY
T. Michael Yuen, Finance Director