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THE CITY OF 1 0 _=S ,.�nm ,lLi I III CITY COUNCIL AGENDA REPORT LASJT61J. March 6, 2018 Finance TITLE: AUTHORIZE ADOPTION OF THE SECTION 115 POST EMPLOYMENT BENEFITS TRUST ADMINISTERED BY PARS TO HELP FUND THE CITY'S PENSION BENEFITS SUMMARY The City's CaIPERS unfunded liability is currently approximately $160 million. Based on CaIPERS Board recent policy decisions, the City's unfunded pension liability and annual pension contributions are expected to grow through FY 2029/30 and then level off through FY 2046/47 when the City's unfunded pension liability is expected to be fully funded. Mr. John Bartel, the City's actuary, made a presentation at the December 19, 2017 outlining the City's growth in pension contributions and discussed the City's options to address the matter. After Mr. Bartel's presentation, City Council directed staff to work with the Audit/Finance Committee to develop a recommendation for Council's consideration. The proposed participation in a Section 115 Pension Trust administered by PARS is an outcome of staff's work with the Audit/Finance Committee. AUDIT/FINANCE COMMITTEE RECOMMENDATION The Audit/Finance Committee (Committee) met on January 9, 2018 to discuss the City's options to address its unfunded pension liability and increasing CaIPERS contributions. The Committee directed staff to issue a Request for Proposal (RFP) for Section 115 Pension Trust Administrator services. Staff issued the RFP and received proposals from PARS, PFM and Keenan. Based on PARS experience, overall historic returns on investment, and fees, staff recommended PARS. The Committee met on February 23, 2018 to review staff's recommendation and to interview PARS representatives. Based on that review and interview, the Committee recommended that staff proceed with preparing an item for City Council's consideration to approve adopting a Section 115 Trust administered by PARS. RECOMMENDATION Staff recommends that the City Council adopt the attached resolution that (1)Adopts the PARS Public Agencies Post-Employment Benefits Trust to help fund the City's pension benefits and (2) appoints the City's Finance Director as the City's PARS Plan Administrator that is authorized to execute the PARS legal and administrative documents on behalf of the City. FINANCIAL STATEMENT PARS Section 115 Trust investment strategies in 2017 yielded between 6.73% and 16.72% gross of fees. The City's investment rate of return during that same period was