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of Livermore. The California Employer's Retiree Benefit Trust Fund (CERBT) provided and managed by CaIPERS was determined to best meet the needs of the City. The CERBT Fund was established by CaIPERS in March 2007 to provide California public agencies with an uncomplicated, low cost, professionally managed trust for pre - funding OPEB costs. The CERBT program has grown to 284 participants with over $1.7 billion in total assets under management. CaIPERS, a government agency is a not for profit OPEB Trust which provides trust administration at a lower cost compared to its competitors. There are no outside investment or administrative costs. Over the last three years, the CERBT's costs have been below 10 basis points and CaIPERS expects the cost to remain under 20 basis points. Other providers considered by the City proposed annual fees that varied from 45 basis points to 150 basis points. Based on a portfolio of $9.8 million, annual fees provided by the three qualified firms ranged from $9,800 (CaIPERS CERBT) to a maximum of $147,000. When selecting a professional money manager fees aren't the only consideration; performance or overall return on investment (after fees) is much more important. CERBT investments are rnanaged by seasoned CaIPERS investment staff with a demonstrated track record of investment performance; earning in calendar year 2010 an investment return of 13.26% (after fees of less than 10 basis points). The expected rate of investment return for CaIPERS is 7.75% net of all costs, significantly higher than if the funds were to remain invested and managed by City staff in low risk fixed income securities (1.2 %). Long -terrn this higher rate of investment return reduces the unfunded liability and the annual contribution rates by both the City and the City of Livermore for their LPFD share. By entering into an agreement with CERBT, the City will rely on all investment decisions to be made by CaIPERS, as the CERBT provides for no investment decisions by local agencies and CaIPERS assumes the entire fiduciary responsibility for managing the CERBT. The two CERBT trusts would be simple, uncomplicated, professionally managed investment vehicles requiring little staff time to manage. Submitted by: Approved by: Emily E. Wagner Nelson Fialho Director of Finance City Manager Attachments: 1. Resolution 2. CERBT Agreements Page 3 of 3