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