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Home My WebLink About04.c. Overview and discussion of PARS Section 115 Pension Rate Stabilization Program and cost 4.c. PARS Pension Rate Stabialization Pr ogra Central Contra Costa Sanlotar Districtk February 21, 2017 UI AGES SERMCES PA..RS TRUSTED SOWN&LASTINO RESULTS. od Contacts PW PARS Mitch Barker, Executive Vice President mbarker.@pars.org; 800.540.6369 ext. 116 Rachael Sanders, Supervisor, Client Services rsanders@gars-org; 800.540.6369 ext. 121 HighMark Capital Management Andrew Brown, CFA, Vice President, Senior Portfolio Manager Andrew.Brown@highmarkcapitaLcom; 415-705-7605 OPEB/ PRSP Trust Team a ! H WMDOM IGHMARK� 5�nv��cs CAPITAL MANAGEMENT Trust Administrator and Trustee Investment Manager Consultant we Safeguard Plan Assets • Investment Sub-advisor to U.S. • Retordkeeping/Sura-trust Oversight Protection Bank Accounting * Plan Fiduciary • Open Architecture Role ' Actuarial Coordination • Custodian of Assets ' Investment Policy Assistance •Monitor Contributions/process Disbursernents • Monitor Plan Compliance • Ongoing Client Liaison •Pre-fund Pension Option 33 years 154 years 9$ years � Corporate Experience (1984 - 2017) (1863 - 201 7) (1919 - 2017) OPEB Experience 21 years 12 years 21 years Number of Plans under 1�400+ plans for 700+ pubfic, agencies Administration More than Dollars under More than More than Administration $2.1 billion � $4 trillion $15.4 b4ilHion under management i PARS IRS-Approved Comb'Inat*ion 115 Frust OPEB and/or Pension GASB 45/75 GASB 68 F Assets are sub-accounted for separately Can access funds at anytime; fJPEB for OPEB and Pre-fund one now and the pother later pension for pension • Addresses unfunded liabilities Assets (OPEB and Pension) aggregate and reach lower fees on tiered schedule sooner— saving • Can choose different investment risk tolerance money bevels for each • No cost to set up; no fees until assets are added ctua ri a I Results In response to the lack of options, PARS developed a Section 115 Trust program to enable public agencies to prefund retirement obligations through a, locally controlled trust. As of June 30, 2016, Central Contra Costa Sanitary District's CCCERA pension plan is as follows: Net Pension Liability $91.-!, M Funded Ratio 74.14% Total Employer Contribution $15.3 M Airount for F'�E 2016 Pens*ion Rate Stabilization Program ( PRSP) PARS received a Favorable Private Letter Ruling (PLR) determination from the IRS in June 2015. SeventV (70) CA public agencies have adopted our program thus far: Cities & Towns Educational Districts Special Districts City of Brea City of Napa Grossniont-Cuyarnaca CCD Delt-c-3 Diablo(Sanitation District) City of Brisbane City of Palo Alto Hartnel]CCD El Dorado HIlls County Water District City of Capitcla City of Rancho Cucarnonga San Bernardino CCD Fallbrook Public Utility District City of Chino Hills pity of Rohn rt.Dark Victor Valley CCD Great Basin Unified APCD City of Coron ado- City of Santa Ana Yosernite CCD Mojave Desert AQMD City of Fullerton City of Santa Clara Corning Union ESD Moraga-Orinda Fire Protection District Cityof Half Moon Bay City of Sausalito Bass Lake Joint Union ESD Napa County Mosquito Abaternent District City of Healdsburg City of Solana Beach Callstoga Joint USID Novato Sanitary District City of Huntington Beach City of Stanton Cotato-Rohnert Park USD Rancho Cucamonga Fire PD City of La Mesa City of Upland River Delta USD South Coast Water District City of Lake Forest City of Yuba City Riverdale Joint USD Su pe r i o r Cou r t of CA-County of Kern City-of Lodi Town of C-olrna San Marino USD Three Valleys Municipal'mater Dstrict City of Morgan hill Town of Tiburon Santa Mita USD Twentynine Palrns Water District Visalia USD West Bay Sanitary District Counties Hesperia Unified SO Lakeside Union SD Lemon Grove SD County of Humboldt County of San Benito Natornas USD County of Kings County of So.lano Ocean View SD County of Riverside County of Sutter Ontario-Montclair SO Placer Union 51) Westside Union SD Whittier City SD Updated.-reburary 2017 SUmn�ary: Why Prefu nd Pensi+an i n a Separate Trust .? 1. Local control of reserve funds 2. Potential for greater return than general fund 3. Addresses future pension liabilities 4, Helps offset pension rate increases or underperformance by retirement system,, Assets (C�PEB and Pension) will aggregate and reach lower fees on tiered schedule 50 sooner — saving money. 6. Cary use these funds for pension obligations at anytime 7a Can choose less aggressive investment strategy than retirement system 8. No downside to prefunding pension (other than market fluctuation) Fee Schedule U.S. Bank/HighMark Fee Schedule PARS Fee Schedule Soto $5,000,000 0.26% $0 to Ss,00a,00a 0.23% $510001001 to $101000,000 0.19% $s,000,001 to $10,000,000 0.23% S1o,000,001 to $15,0001,000 0.15% Sio,000,00i to $15,000,000 0.18% $15,000,001 to $50,00,0100-0 0.11% $15,000,001 to $50,000,000 0.14% $50,000,001 and above 0.07% $50,000,001 and above 0.09% Assets for OPEB and Pension subacc,ounts aggregate for fee purposes. Existing assets for the OPER subaccount total $45.5M as of 12/31/16. Within 6 months, based on an initial contribution of $3.359M into the Pension subaccount', the U.S. Bank fee would be 0.07%, and the PARS fee would be 0.09%, for a total of 0.16% in fees.