TO: Board of Supervisors
FROM: Ryan J. Alsop, County Executive Officer
REPORT BY: Becky Craig, Assistant County Executive Officer
SUBJECT: Section 115 Trust Annual Report
RECOMMENDATION
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Receive and file the Section 115 Trust Annual Report regarding funding of Other Post-Employment Benefits. (No Fiscal Impact, Discretionary)
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BACKGROUND
The County opened a Section 115 Trust with Public Agency Retirement Services (PARS) Trust in 2008 to fund its Other Post-Employment Benefits - Health Insurance unfunded liability. The County has made periodic contributions to reduce the reportable liability and to generate earnings on the contributions. Eventually, the County will draw on the fund to make retiree healthcare obligation payments.
The Total OPEB Liability totaled $106.3 million, and the Unfunded Actuarial Accrued Liability (UAAL) totaled $8.1 million at 6/30/23 with a measurement date of 6/30/22. The Trust balance of $98.2 million at the measurement date provided 92.4% coverage.
The Trust’s actual balance totaled $110 million at 6/30/23 and $116.6 million at 12/31/23. Fund earnings / losses are the result of market investment volatility. The County appears to have fully funded its OPEB liability, subject to actuarial valuation and market performance. The County shall develop policies and procedures to apply the contributions and earnings to future obligations.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it currently budgeted? |
Yes |
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Where is it budgeted? |
Section 115 Trust |
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Is it Mandatory or Discretionary? |
Discretionary |
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Discretionary Justification: |
The County is being a good steward of its resources by funding its OPEB liability. |
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Is the general fund affected? |
No |
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Future fiscal impact: |
The funds will eventually reduce the County’s allocation of annual tax revenues to fund retiree healthcare obligations. |
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Consequences if not approved: |
The county OPEB obligations would increase without use of the Trust |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.