Title
Discussion on Section 115 OPEB (Other Post-Employment Benefits) Trust and Pension Trust Investment Report for the Quarter Ended March 31, 2022
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the Finance Committee (Committee) review the OPEB Trust and Pension Trust investment report for the quarter ended March 31, 2022. This report is for information only.
BACKGROUND
OPEB Trust
In Fiscal Year (FY) 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 March 2022, the assets in the OPEB Trust total $20.8 million including contributions and investment earnings. The inception-to-date investment return is 6.02%.
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 FY 2020-21. As part of the FY 2021-23 budget adoption, the City Council also approved a $5 million contribution to the trust.
The City transferred $1.5 million to PARS in the first quarter to open the trust account, and the remaining $5.0 million was transferred to PARS in the second and third quarters of FY 2021-2022. Using a dollar-cost averaging strategy to invest funds helped the City to reduce the risks of volatility/market downturns.
At the end of March 2022, the assets in the Pension Trust total $6.3 million. The inception-to-date investment return is -5.13%. The sto...
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