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City of San Leandro <br />City Council <br />Meeting Date: March 20, 2023 <br />Agenda Number: 10.c. <br />Agenda Section: CONSENT CALENDAR <br />File Number: 23-086 <br />File Type: Staff Report <br />Adopt Resolution to Accept 2022-23, City of San Leandro Section 115 OPEB Trust and Pension Trust <br />Investment Report for the Quarter Ended December 31, 2022 <br />SUMMARY AND RECOMMENDATION <br />Staff report for City Council resolution accepting the Section 115 OPEB Trust and Pension Trust <br />Investment report for the quarter ended December 31, 2022. <br />DISCUSSION <br />OPEB Trust <br />In 2008-2009, the City established the Section 115 OPEB Trust with PARS. The primary <br />purpose is accumulating resources in trust and generating investment income funding the City’s <br />OPEB obligations in future years. The trust account was set up with an initial contribution of <br />$500,000, and the City has been proactive in funding future liabilities. Over the years, the City <br />Council has authorized various contributions into the trust. At the end of December 2022, the <br />assets in the OPEB Trust total $18,900,000 including contributions and investment earnings. The <br />inception-to-date investment return is 4.96%. <br />Pension Trust <br />In June 2021, the City Council authorized establishing a Section 115 Pension Trust with PARS. <br />The goal is to set aside funds and accumulate investment earnings to buy down the City’s <br />unfunded CalPERS pension liabilities. At the beginning of the fourth quarter, assets in the <br />Pension Trust totaled $5,400,000, including both contributions (since inception of the fund in <br />2021-2022) and investment earnings. <br />In December 2022, the City Council authorized an additional contribution to the Pension Trust, <br />transferring funds from the set-aside for potential City liability for the Alameda County Fire <br />Department’s unfunded OPEB obligation. Following agreement between the City and ACFD <br />limiting the City’s OPEB liability to ACFD, a total of $8,222,700 was transferred to the Pension <br />Trust from the City’s ACFD set-aside. Going forward, the City will pay the full cost of current <br />ACFD contract services, including the amortized portion of the ACFD unfunded OPEB costs. <br />At the end of December 2022, the assets in the Pension Trust totaled $13,800,000. The 3-month <br />investment return was 5.93%, and the inception-to-date investment return is <br />-10.40%. The stock market has been volatile due to high inflation, the Ukraine crisis, and supply <br />chain challenges. <br />Highmark Capital has prepared a quarterly investment report for the OPEB Trust and Pension <br />Trust for the period ending December 31, 2022, summarizing the investment performance. The <br />asset allocations for both the OPEB Trust and the Pension Trust comport with the investment <br />Page 1 City of San Leandro Printed on 3/15/2023