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City of San Leandro City Council Meeting Date: October 16, 2023 Agenda Number: 5.e. Agenda Section: CONSENT CALENDAR File Number: 23-461 File Type: Staff Report Adopt a Resolution to Accept the 2022-2023 City of San Leandro Section 115 Other Post-Employment Benefits (OPEB) and Pension Trust Investment Report for the Quarter Ended June 30, 2023 SUMMARY AND RECOMMENDATION Staff recommends that the City Council accept the City's Section 115 Other Post-Employment Benefits (OPEB) and Pension Trust Investment Report for the quarter ended June 30, 2023. DISCUSSION OPEB Trust In 2008-2009, the City established the Section 115 OPEB Trust with PARS. Its primary purpose is accumulating resources in trust and generating investment income to fund the City’s OPEB obligations in future years. The trust account was set up with an initial contribution of $500,000, and the City has been proactive in funding future liabilities. Over the years, the City Council has authorized various contributions into the trust. At the end of June 30, 2023, assets in the OPEB Trust total $19,960,000 including contributions and investment earnings. The inception-to-date investment return is 5.20%. Pension Trust In 2021, the City Council authorized establishing a Section 115 Pension Trust with PARS. The goal is setting aside funds and accumulating investment earnings to buy down the City ’s unfunded CalPERS pension liabilities. At the beginning of the second quarter of 2023, assets in the Pension Trust totaled $14,400,000, including both contributions (since inception of the fund in 2021-2022) and investment earnings. In December 2022, the City Council authorized the transfer of funds from the set -aside for potential City liability for the Alameda County Fire Department ’s unfunded OPEB obligation. Following mutual reaffirmation of provisions within the existing services agreement between the City and ACFD stating that the City is not liable for the OPEB obligations associated with ACFD employees, a total of $8,222,700 was transferred from the City ’s ACFD set-aside to the Pension Trust. Going forward, the City will pay the full cost of current ACFD contract services, including the amortized portion of the ACFD unfunded OPEB costs. At the end of June 2023, the assets in the Pension Trust totaled $14,850,000. The 3-month investment return was 3.08%, and the inception-to-date investment return is negative 3.88%. The stock market has been volatile due to high inflation, fear of recession, and the Ukraine war crisis. Quarterly Investment Report HighMark Capital has prepared a quarterly investment report for the OPEB Trust and Pension Trust for the period ending June 30, 2023, summarizing the investment performance. The Page 1 City of San Leandro Printed on 12/21/2023