G.11 #1 FUNDING FOR PARS SECTION 115 TRUSTFUNDING FOR PARS SECTION
115 TRUST
FUNDING FOR PARS SECTION 115 TRUST
The City Council Adopted Resolution 2022-50 on September 13,2022,
authorizing participation in the PARS Post-Employment Benefits Trust
Program a Section 115 Trust to address the City’s unfunded pension liability.
The City’s UAL per the June 30,2020,Actuarial was $5,262,427.
Payments to be made from FY 2021-22 to FY 2043-2044 totaling $8,984,752
of which $3,722,325 is interest.
The City Council asked for information on the disposition of the sales
proceeds from the sale of Child Care Facility building,Staff provided this at
the October 11,2022 Council meeting.
FUNDING FOR PARS SECTION 115 TRUST
At the City Council meeting of October 11, 2022, Council asked for
additional information concerning the various investment strategies offered
by PARS Post-Employment Benefits Trust Program.
The PARS Post-Employment Benefits Trust Program’s Investment Manager is High Mark
Capital Management, and they offer the following Investment Strategies:
•Conservative 05-20% Equity
•Moderately Conservative 20-40% Equity
•Moderate 40-60% Equity
•Balanced 50-70% Equity
•Capital Appreciation 65-85% Equity
Portfolio Manager Keith Stribling, of Highmark Capital, is present to discuss the various
Investment Strategies and answer any questions the Council may have.
FUNDING FOR PARS SECTION 115 TRUST
Anthony Armas from PARS is also be present to answer any questions the
City Council may have regarding the administration of the Program.
The reasons to prefund the pension obligation are as follows:
1.Complete Local Control over Assets –The City has complete control overs assets,including
contributions,disbursements and the timing,amount,and risk tolerance level of investments.
2.Pension Rate Stabilization –Assets can be transferred to the retirement system at the City’s
direction,potentially reducing/eliminating large fluctuations in employer contribution amounts.
3.Rainy Day Fund –Emergency source of funds when employer revenues are strained in difficult
budgetary or economic times.
4.Diversification –Allows for investment flexibility and offers the potential for assets to earn
greater returns than the General Fund;spread the risk vs.sending additional money to CalPERS.
FUNDING FOR PARS SECTION 115 TRUST
Four-year history of two cities who have adopted and funded PARS Section 115 Trusts
Balance Contributions Earnings Balance
FY 2018-19 -$ 22,500,000.00$ 1,358,138.21$ 23,858,138.21$
FY 2019-20 23,858,138.21 - 985,280.23 24,843,418.44
FY 2020-21 24,843,418.44 - 5,581,699.63 30,425,118.07
FY 2021-22 30,425,118.07 - (4,087,827.80) 26,337,290.27
Moderate Strategy
Balance Contributions Earnings Balance
FY 2018-19 -$ 515,694.00$ 1,486.28$ 517,180.28$
FY 2019-20 517,180.28 - 12,034.04 529,214.32
FY 2020-21 529,214.32 - 138,751.34 667,965.66
FY 2021-22 667,965.66 - (93,477.14) 574,488.52
Moderately Conservative Strategy
FUNDING FOR PARS SECTION 115 TRUST
Staff is looking for direction for an amount for the initial funding of the PARS
Section 115 Trust.
Staff is recommending using a portion of the proceeds from the sale of the
Fire Station.
Questions