Staff Report
City Council
Item No. 3.I
Meeting Date: December 10, 2025
From: Kevin Biersack, Financial Services Director
Title: IRC Section 115 Trust Policy
RECOMMENDATION:
To approve the Internal Revenue Code (IRC) Section 115 Investment Trust Plan Policy for the City’s OPEB and authorize its implementation with Shuster Advisory Group, LLC in coordination with the Financial Services Director and the Elected City Treasurer.
BACKGROUND:
On June 25, 2025, the City Council approved Resolution 2025-19 to transfer approximately $16 Million+ from the California Public Employees Retirement System (CalPERS) California Employers’ Retiree Benefit Trust (CERBT) fund to an IRC Section 115 Trust Plan for the city’s Other Post Employment Benefits (OPEB). This Trust is now administered by Shuster Advisory Group, LLC, an independent investment advisory firm and fiduciary, who provides governmental and institutional retirement plan consulting services as well as private wealth management. Shuster Advisory Group, LLC currently serves as the fiduciary investment advisor and plan consultant for the City’s 457(b) and 401(a) plans. The services provided have a low-cost, transparent structure with a white glove approach. On October 22, 2025, the City Council directed staff to revise the draft OPEB Investment Policy to better reflect the City’s identity and operational structure. Specifically, Council requested the policy be personalized to reference the City of Cathedral City, its staff, and governing bodies—rather than using generic language—to ensure the policy clearly defines the City’s roles, responsibilities, and oversight in managing OPEB trust assets.
DISCUSSION:
The City’s Other Post-Employment Benefits (OPEB) obligations represent a significant long- term liability requiring disciplined investment management, prudent governance, and transparency. To support this effort, staff recommends adoption of the revised OPEB Investment Policy for assets held in the City’s IRC Section 115 Trust Plan, managed under the oversight of the City Treasurer and Financial Services Director in coordination with Shuster Advisory Group, LLC. The goal of this investment program is to provide a reasonable level of growth, which will result in sufficient assets to pay the present and future obligations of the plan.
Consistent with the City Council’s direction from June 25, 2025, staff has revised the OPEB Investment Policy to better reflect the City of Cathedral City’s organizational structure, fiduciary responsibilities, and internal oversight processes. The revised policy replaces generic terminology with specific references to the City, its staff, and designated fiduciaries.
It also clearly defines the roles and responsibilities of the City Treasurer, Financial Services Director, Trustee, Custodian, and Shuster Advisory Group, LLC, ensuring accountability at each level of plan administration. The revised policy also includes formal quarterly performance reporting by Shuster Advisory Group, LLC and ongoing portfolio review by the Financial Services Director and City Treasurer. Additionally, the policy now requires annual review by the City Council and City Manager to ensure continued alignment with the City’s fiscal objectives, funding needs, and investment strategy. While the City’s strategic investment approach remains consistent—with a balanced risk tolerance and globally diversified allocation, the policy now explicitly documents the City’s oversight structure and fiduciary framework. This refinement reinforces transparency, strengthens local control, and reflects the City Council’s intent that the policy accurately represents the City’s management of OPEB trust assets. By adopting the updated OPEB Investment Policy, the City of Cathedral City affirms its commitment to responsible fiscal stewardship, long-term financial sustainability, and the prudent investment of retiree benefit assets.
FISCAL IMPACT:
No fiscal impact.
FIVE-YEAR STRATEGIC PLAN:
Goal C - FISCAL STABILITY AND SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
Action C-7 – Continually review and streamline internal financial policies, procedures, and practices to remove unnecessary controls without sacrificing accountability and transparency.
ATTACHMENTS:
Chapter 20330 A&F OPEB Investment Policy
Cathedral City 115 50-50 Balanced_40 60 to 60 40 Agreement