REPORT TO COUNCIL
SUBJECT
Title
Review and File City of Sunnyvale Other Post-Employment Benefits (OPEB) Trust Account Investment Summary and Independent Accountant's Report and Approve an Amendment to the Investment Policy Statement for the OPEB Trust Account
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). Benefit levels are established through agreements and memorandums of understanding between the City and employees or bargaining units.
To implement a funding plan to address the unfunded liabilities 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. Additionally, it will prevent OPEB obligations from being a significant liability on the City's balance sheets.
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 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 10-326). The Investment Policy Statement for the OPEB Trust was also approved at that time.
EXISTING POLICY
Council Policy 7.1.1 Fiscal - Long Range Goals and Financial Policies
Policy E.2.6: An Actuarial Retiree Medical Reserve will be maintained at a level that is deemed adequate to meet the projected liabilities as determined by an actuarial evaluation. This reserve should meet the GASB reporting requirements for ...
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