Title
Staff Report for Discussion on Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended September 30, 2021
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the Committee review the OPEB Trust and Pension Trust investment report for the quarter ended September 30, 2021. This report is for information only.
BACKGROUND
OPEB Trust
In fiscal year 2008-09, the City established a Section 115 OPEB Trust with PARS. The primary objective is to accumulate resources in the trust and generate investment income to fund the City's OPEB obligations in future years. The trust account was set up with an initial contribution of $500,000, and the City has been proactive in funding its unfunded liabilities. Over the years, the City Council has authorized various contributions into the trust. At the end of September 2021, the assets in the OPEB Trust total $21.6 million including contributions and investment earnings. The inception-to-date investment return is 6.60%. As of June 30, 2021, the City's OPEB plan/liability was 89% funded. A plan is considered healthy when the funded status is 80% or higher.
Pension Trust
In June 2021, the City Council authorized the establishment of a Section 115 Pension Trust with PARS. The goal is to set aside funds and accumulate investment earnings to buy down the City's unfunded pension liabilities. The $750,000 annual budget allocation that was used to fund the OPEB Trust would be used to fund the Pension Trust effective fiscal year 2020-21. As part of the fiscal year 2021-23 budget adoption, the City Council also approved a $5 million contribution to the trust.
Two initial contributions in the amount of $750,000 were transferred to PARS in the first quarter of fiscal year 2021-22 to open the trust account. The remaining $5 million will be sent to PARS over a five-month period. Using a dollar-cost averaging strategy to invest funds help the City to red...
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