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BACKGROUND The City offers two types of retirement benefits to employees who retire from the City with a minimum of 5 years of service; • a pension benefit based on years of service, vesting formula and other provisions provided in the City's contract with CaIPERS, and • payment or reimbursement of a portion of medical insurance premiums for eligible employees based on years of service upon retirement from the City. The retiree health benefit has been offered to employees of the City of Pleasanton since 1990. This benefit allows eligible retirees to continue participation in group health plans upon retirement where the City pays a percentage of the cost based on years of service. As an example, if an employee retires with fifteen years of service, the City's contribution is 60% of the monthly premium. To be eligible for the benefit an employee must retire directly from the City of Pleasanton with a minimum of five years of service. New accounting standards implemented June 23, 2009 (GASB #45) brought attention to the long -term costs of this benefit and resulted in public agencies that offer this benefit to plan and account for funding the long -term cost. This is commonly referred to as "Other Post Employment Benefits ", or OPEB. In 2009, the City with the assistance of Bartel & Associates (actuarial consultant) and Hanson Bridgett, LLC (legal consultants) created two Internal Revenue Code Section 115 Irrevocable Trusts (Trusts) as an interim strategy to comply with GASB #45 and the financial obligations regarding an OPEB. The Trusts have accumulated $9.8 million since their establishment in 2009 and these funds have been managed in -house by City staff. Staff has very conservatively invested these funds in short -term, low risk federal agency securities. Staff has recently identified third party OPEB trust providers who can professionally manage these funds and meet the City's long -term strategy for the City's Trusts. This strategy involves a longer -term investment horizon and assets invested in a diversified, portfolio that includes fixed income securities, bonds and stocks. DISCUSSION A formal Request for Proposal (RFP) was circulated by City staff and the City received four proposals from qualified third party OPEB trust providers. Third party OPEB trust providers offer: • professional money managers with experience in long -term investments including stocks and bonds • opportunity for higher returns on investments • investment decisions (within parameters) and in some cases provider assumes fiduciary responsibility of investment decisions • program administration • custodial trust services for holding investments • constant review of regulatory requirements (i.e., GASB #45 and other regulatory requirements). After review of the proposals by staff, three of the qualified firms were selected for further consideration and an interview by both City staff and staff members from the City Page 2 of 3