REPORT TO COUNCIL
SUBJECT
Title
Review and File the City of Sunnyvale Other Post-Employment (OPEB) Trust Account Investment Summary and Approve the Investment Policy Statement as Amended and Presented
Report
BACKGROUND
The City of Sunnyvale provides healthcare benefits to eligible retirees and their dependents through the California Public Employee's Retirement System (CalPERS) healthcare program (PEMHCA). Benefits including Other Post-Employment Benefits are established through agreements and memoranda of understanding between the City and bargaining units or salary resolution for unrepresented employees as approved by the City Council.
To implement a funding plan to address the unfunded liability associated with retiree medical benefits, the City created an Other Post-Employment Benefits (OPEB) Trust. By contributing to a retiree medical trust fund, the City will derive many benefits, including the reduction of future employer OPEB costs, as the earnings generated from trust fund investments will eventually be utilized to offset ongoing costs for the retiree medical insurance.
On July 20, 2010, Council approved the City entering into an Investment Advisory Agreement with PFM Asset Management, LLC (PFM) as investment manager for the City's OPEB Trust (RTC No. 10-187). On December 7, 2010, Council approved the City entering into a Trust Agreement with PFM as Trust Administrator and U.S. National Bank Association as Trustee for the OPEB Trust (RTC No. 10-326). The Investment Policy Statement for the OPEB Trust was also approved at that time.
On February 25, 2014, Council amended the Investment Policy Statement for the OPEB Trust (RTC No. 14-0048) based on PFM recommendations to 1) clarify language applicable to each asset class with the objective to take advantage of market opportunity while maintaining a broadly diversified portfolio and 2) make the Investment Policy Statement consistent with current investment language.
On June 20, 2017, Council amende...
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