Agenda packet, first session — Modesto City Council, January 11, 2022 (part 6 of 6)

To correct the UAL for each agency, CalPERS began requiring an additional payment beyond the normal cost. This payment gradually climbs over the next ten years and then begins to decline as each contract closes in on the UAL balance. The City’s current UAL balance is shown in the below graph.

Safety Contract $242,328,514
Miscellaneous Contract $149,983,223
Total $392,311,737
Each year, CalPERS performs an actuary on each contract to account for gains and losses from the previous year’s market performance and payments made by the agency. Required payments are adjusted accordingly. From the 2019 valuation report to the 2020 valuation report, the City’s UAL grew by $28,511,419.

DISCUSSION:

Many agencies are implementing strategies to address the UAL and associated additional payments. The City began negotiating with unions to agree to a supplementary employee contribution to be paid as an Additional Discretionary Payment (ADP). Making additional payments saves substantial interest accruals, thereby lowering future payments. While this strategy helps, the City still faces a peak in the required payment schedule. Our payments will continue to rise yearly for the next ten years, with the highest payment estimated at $41,430,1391 in FY 2030-31. The graph below is an illustration of the payment structure. 2 In addition to ADP’s, establishing a trust can assist the City with the payments during the peak years. Money can be deposited regularly, earning interest, until such time that it is needed. 1 Amount does not include normal cost – UAL only for both Safety and Miscellaneous contracts 2 Illustration of Safety contract
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City Council, January 11, 2022
Establishing a Section 115 Trust

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Funds can be withdrawn and used to pay some portion of the required payment, alleviating pressure on the budget during those years.

With City Manager approval, the Human Resources Department solicited competitive Request for Proposal’s (RFP’s) from five financial firms, and received three respondents. All proposals have been reviewed and staff recommends entering into a contract with Public Agency Retirement Services (PARS), Newport Beach, CA.

PARS was determined to be the superior choice by the review committee for the following reasons:
 37 years of experience managing Section 115 Trusts
 Over 495 Section 115 Trust clients
 Highest projected investment returns
 Lower cost than other proposals
 High level of customer service and trust administration  Utilization of a City trusted bank
 Ability to utilize the same contract for Other Post-Employment Benefits (OPEB) liabilities The need for an OPEB liability trust is also recognized to manage and mitigate growing liabilities due to growth in the workforce and fire services contracts with neighboring agencies. The liabilities associated to these contracts are captured in the cost for services. As these funds are collected, they will be deposited into the OPEB trust.

In accordance with Modesto Municipal Code (MMC) Sec. 8-3.204(a), Exceptions to Formal Bidding Requirements, the agreement is for professional services and, therefore, exempt from the bidding requirement. The approval for the administrative and management services of a Section 115 Trust to Public Agency Retirement Services conforms to MMC 8-3.204, subsection (a) as they are providing professional services.

FISCAL IMPACT:

PARS program fees are based on two types of fees for Trust Administration and Discretionary Trustee fees.

Trust Administration fee provides the overall plan services, including compliance monitoring, consulting, recordkeeping and reporting. The fee structure provided below would be based on the value of the City’s assets in the Trust Plan. As assets would be less than 10 million, the fee would originate at 0.25%.
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City Council, January 11, 2022
Establishing a Section 115 Trust

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The Discretionary Trustee fee provides the oversight of the investment policy for the plan, asset allocation recommendation, asset management and custodial services. The fee structure provided below is based on the value of the City’s assets in the Trust Plan. As assets would be less than 5 million, the fee would originate at 0.35%.

With Council approval, the City requests to contribute $1,000,000 to a pension trust from the Employee Benefits Fund (EBF) reserves. Our current EBF Reserves is estimated at $6.3 million. This reserve amount is not final until the City’s financials are finalized for Fiscal Year 2020-21. Additional funds being held for deposit into a pension trust include approximately $120,651, based on the 50% of the Modesto Confidential Management Association (MCMA) employee contribution that was established as part of recent concessions in Fiscal Year 2020- 21 and ongoing leave bank purchase transactions for MCMA employees. In addition to these funds, the contracts for Fire Services with the City of Oakdale, Oakdale Fire District, and City of Ceres provide cost recovery for ongoing pension obligations.

In addition to the above funds, the City adopted a policy for excess funds realized during a fiscal year. This policy states that one third of the excess would be deposited into the General Fund Reserve, one third would be dedicated to Deferred Maintenance, and one third would be utilized for Pension costs. The City estimates an excess General Fund revenue as the Fiscal Year 2020-21 closes, and requests the amount of $1,000,000 be deposited into the newly established pension trust and $900,000 to be deposited into the newly established OPEB trust. #25..
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City Council, January 11, 2022
Establishing a Section 115 Trust

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Staff recommends total City contributions for the pension 115 Trust would be $2,345,594 and total contributions for the OPEB 115 Trust would be $1,387,280. Below are tables outlining funds associated with the Excess General Fund reserves and matching Non-General Fund, EBF and Fire contract contributions.

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OPEB Trust Fund Contribution
Fund Total
0100 - General Fund $ 900,000
0100 - General Fund - Ceres Contract $ 42,790
0100 - General Fund - Oakdale Contract $ 30,564
1700 - Surface Transportation Fund $ 45,573
3220 - Infrastructure Financing Program Administration $ 6,026 4000 - Parking Fund $ 3,995
4100 - Water Fund $ 107,641
4210 - Sewer Operations Fund $ 116,123
4310 - Airport Operating Fund $ 4,588
4480 - Storm Drainage Fund $ 4,303
4700 - Community Center Operations Fund $ 3,638
4890 - Compost Fund $ 6,415
4891 - Solid Waste Fund $ 7,019
4892 - Green Waste Fund $ 27,685
5110 - Inventory Purchases Fund $ 1,826
5120 - Mail Services ISF Fund $ 950
5230 - Information Technology Fund $ 34,289
5310 - Insurance - Administration Fund $ 5,252
5400 - Fleet Management Fund $ 31,377
5520 - Employee Benefits Administration Fund $ 1,257
5800 - P/R Building Services Fund $ 5,969
Grand Total $ 1,387,280
The City continues to explore ongoing options for funding contributions to the Section 115 Trust plan. These options include the use of the Employee Benefits Internal Services Fund (ISF) to collect a contribution charge from each of the City’s funds that house employees to then be provided to the potential trust fund as well as the City and unions continued to partnership on ways to fund pension obligations. These options can be used in coordination with each other to assist the City with providing the Section 115 Trust with a substantial funding effort to curtail future pension and OPEB liabilities.

COMMITTEE RECOMMENDATION:

This agenda item was reviewed by the Finance Committee on November 22, 2021 and recommended to forward to Council for apoproval.

RECOMMENDED COUNCIL ACTION:

Staff Recommendations:

Resolution approving Professional Services Agreement with Public Agency Retirement Services (PARS), Newport Beach, CA, to provide Trust Administration Services for a three-year contract with four one-year extension options for a potential seven-year Agreement at the sole discretion of the City, in an amount based on the fee structure defined under Exhibit A, and authorizing the City Manager, or his designee, to execute the Agreement.

Resolution amending the Fiscal Year 2021-22 annual operating budget to transfer funds in the amount of $2,345,594 and $1,387,280 from various funds to the employee benefits fund to establish the Unfunded Accrued Liability (UAL) Trust Fund contribution and the Other PostEmployment Benefits Liability Trust Fund contribution and authorizing the City Manager, to take the necessary steps to implement the provisions of this resolution. #25..
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City Council, January 11, 2022
Establishing a Section 115 Trust

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Approved by:

Christina Alger, Director of Human Resources
Joseph P. Lopez, City Manager
Attachments:

1. Resolutions (2)

2. Exhibit A

3. Request for Proposals

4. Proposal

5. Contract
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MODESTO CITY COUNCIL
RESOLUTION NO. 2021 -

RESOLUTION APPROVING PROFESSIONAL SERVICES AGREEMENT

WITH PUBLIC AGENCY RETIREMENT SERVICES (PARS), NEWPORT

BEACH, CA, TO PROVIDE TRUST ADMINISTRATION SERVICES FOR A

THREE-YEAR CONTRACT WITH FOUR ONE-YEAR EXTENSION OPTIONS

FOR A POTENTIAL SEVEN-YEAR AGREEMENT AT THE SOLE

DISCRETION OF THE CITY, IN AN AMOUNT BASED ON THE FEE

STRUCTURE DEFINED UNDER EXHIBIT A, AND AUTHORIZING THE CITY

MANAGER, OR HIS DESIGNEE, TO EXECUTE THE AGREEMENT
WHEREAS, the City Manager authorized the Human Resources Department to issue a Request for Proposals (RFP) for the furnishing of Section 115 Trust administration services, and
WHEREAS, Human Resources sent the RFP for Section 115 Trust Administration Services to five (5) prospective proposers, and WHEREAS, following the request, three firms presented proposals to provide Section 115 Trust administration. Three (3) companies provided responsive and responsible proposals, and
WHEREAS, due to the technical nature of professional services, Modesto Municipal Code (MMC) purposely exempts professional services from formal bid requirements under MMC 8-3.204(a). Section 115 Trust administration services are professional services as defined in section 8-3.103 of the MMC, and WHEREAS, the award of proposal for the furnishing of Section 115 Trust administration services for Citywide use to Public Agency Retirement Services (PARS), Newport Beach, CA, conforms to Modesto Municipal Code 8-3.103. #25..
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NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves a professional services agreement with Public Agency Retirement Services, Newport Beach, CA to provide Section 115 Trust administration services for a three-year contract with four optional years of extension for a potential seven-year agreement at the sole discretion of the City, in an amount based on the fee structure defined under Exhibit A over seven years.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to execute the contracts in a form approved by the City Attorney.

The foregoing resolution was introduced in a regular meeting of the Council of the City of Modesto held on the 11th day of January, 2022, by Councilmember ?, who moved its adoption, which motion being duly seconded by Councilmember ?, was upon roll call carried and the resolution adopted by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST:

DANA SANCHEZ, Interim City Clerk
APPROVED AS TO FORM:

BY: _______________________________________
JOSE M. SANCHEZ, City Attorney
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1 MODESTO CITY COUNCIL
RESOLUTION NO. 2021 - XXX
RESOLUTION AMENDING THE FISCAL YEAR 2021-22 ANNUAL

OPERATING BUDGET TO TRANSFER FUNDS IN THE AMOUNT OF
$2,345,594 AND $1,387,280 FROM VARIOUS FUNDS TO THE

EMPLOYEE BENEFITS FUND TO ESTABLISH THE UNFUNDED

ACCRUED LIABILITY (UAL) TRUST FUND CONTRIBUTION AND

THE OTHER POST-EMPLOYMENT BENEFITS LIABILITY TRUST

FUND CONTRIBUTION AND AUTHORIZING THE CITY MANAGER,

TO TAKE THE NECESSARY STEPS TO IMPLEMENT THE

PROVISIONS OF THIS RESOLUTION
WHEREAS, the City is contracted with the California Public Employees Retirement System (CalPERS) to provide both Safety and Miscellaneous employees with a pension retirement, and
WHEREAS, CalPERS funds approximately 58% of the full liability of their pension obligation through investment returns and determines employer and employee contributions based on an assumed rate of return which causes volatility in the fund and has created shortfalls over the past several years, and
WHEREAS, CalPERS began requiring an additional payment beyond the normal cost for each agency to correct the Unfunded Accrued Liability (UAL), which gradually climbs over the next ten years and then begins to decline as each contract closes in on the UAL balance, and WHEREAS, the need for an Other Post-Employment Benefits liability trust is recognized to manage and mitigate growing liabilities due to growth in the workforce and fire services contracts with neighboring agencies, and
WHEREAS, the City requests to contribute $1,000,000 of Employee Benefits Fund (EBF) reserves to the Pension Trust as well as additional funds of $120,651 that have been held in trust from the 50% Modesto Confidential and Management Association (MCMA) employee contribution that was established as part of recent concessions in Fiscal Year 2020-21, and WHEREAS, the City adopted a policy for excess funds realized during a fiscal year that #25..
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2 one third of the excess General Fund carryover be deposited into the General Fund reserves, one third would be dedicated to deferred maintenance, and one third would be utilized for pension costs, and
WHEREAS, staff recommends total City contributions to the UAL Trust Fund from various funds as follows:

UAL Trust Fund Contribution
Fund Total
0100 - General Fund $ 1,000,000
0100 - General Fund - Ceres Contract $ 17,246
0100 - General Fund - Oakdale Contract $ 12,319
1700 - Surface Transportation Fund $ 34,754
3220 - Infrastructure Financing Program Administration $ 5,004 4000 - Parking Fund $ 3,141
4100 - Water Fund $ 84,142
4210 - Sewer Operations Fund $ 92,442
4310 - Airport Operating Fund $ 3,664
4480 - Storm Drainage Fund $ 3,308
4700 - Community Center Operations Fund $ 2,973
4890 - Compost Fund $ 5,005
4891 - Solid Waste Fund $ 5,697
4892 - Green Waste Fund $ 21,575
5110 - Inventory Purchases Fund $ 1,462
5120 - Mail Services ISF Fund $ 729
5230 - Information Technology Fund $ 27,819
5310 - Insurance - Administration Fund $ 3,585
5400 - Fleet Management Fund $ 15,954
5510 - Employee Benefits Management Fund $ 1,000,000
5800 - P/R Building Services Fund $ 4,775
Grand Total $ 2,345,594
WHEREAS, staff recommends total City contributions to the OPEB Trust Fund from various funds as follows:
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3 OPEB Trust Fund Contribution
Fund Total
0100 - General Fund $ 900,000
0100 - General Fund - Ceres Contract $ 42,790
0100 - General Fund - Oakdale Contract $ 30,564
1700 - Surface Transportation Fund $ 45,573
3220 - Infrastructure Financing Program Administration $ 6,026 4000 - Parking Fund $ 3,995
4100 - Water Fund $ 107,641
4210 - Sewer Operations Fund $ 116,123
4310 - Airport Operating Fund $ 4,588
4480 - Storm Drainage Fund $ 4,303
4700 - Community Center Operations Fund $ 3,638
4890 - Compost Fund $ 6,415
4891 - Solid Waste Fund $ 7,019
4892 - Green Waste Fund $ 27,685
5110 - Inventory Purchases Fund $ 1,826
5120 - Mail Services ISF Fund $ 950
5230 - Information Technology Fund $ 34,289
5310 - Insurance - Administration Fund $ 5,252
5400 - Fleet Management Fund $ 31,377
5520 - Employee Benefits Administration Fund $ 1,257
5800 - P/R Building Services Fund $ 5,969
Grand Total $ 1,387,280
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Modesto that it hereby approves amending the Fiscal Year 2021-22 Annual Operating to transfer funds in the amount of $2,345,594 and $1,387,280 from various funds as referenced herein to the Employee Benefits Fund to establish the Unfunded Accrued Liability (UAL) Trust Fund Contribution and the Other Post-Employment Benefits Liability Trust Fund Contribution.

BE IT FURTHER RESOLVED that the City Manager, or his designee, is hereby authorized to take the necessary steps to implement the provisions of this resolution.

The foregoing resolution was introduced at a regular meeting of the Council of the City of Modesto held on the 11th day of January 2022, by Councilmember _________, who moved its adoption, which motion being duly seconded by Councilmember ______, was upon roll call carried and the resolution adopted by the following votes:
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4 AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ATTEST: ________________________________
DANA SANCHEZ, Interim City Clerk
(SEAL)
APPROVED AS TO FORM:

BY: _____________________________________
JOSE M. SANCHEZ, City Attorney
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 21
Program Fees/Expenses
Fees for the PARS PRSP are broken down into trust administration (paid to PARS), and discretionary trustee/investment management costs (paid to U.S. Bank/HighMark). A full breakdown of these asset-based program fees is listed below. Please note there are no surrender, withdrawal, or deferred sales charges, nor are there any fees associated with transfer of assets or termination of contract. There are no minimum fees, start-up or termination costs associated with our program, or transaction, trading or hourly fees.

TRUST ADMINISTRATION/CONSULTING FEES
Trust administration fees provide for all plan administration services, including compliance monitoring, consulting, recordkeeping, funding analysis, and reporting.

COMPANY ONGOING FEE
PARS 0.25% for assets under $10 million

0.20% for assets $10-15 million

0.15% for assets $15-50 million

0.10% for assets over $50 million

DISCRETIONARY TRUSTEE/INVESTMENT MANAGEMENT FEES
Trustee and investment management fees are comprehensive and include investment policy development, asset allocation recommendations, asset management, and all custodial services. #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 22

COMPANY ONGOING FEE
U.S. Bank/HighMark 0.35% for assets under $5 million*

0.25% for assets $5—$10 million

0.20% for assets $10—$15 million

0.15% for assets $15—$50 million

0.10% for assets over $50 million
*Please note that all fees are waived on the portfolio’s money market fund. The 0.35% fee represents the highest weighted investment management fee that can be charged, but as of 6/30/21 actual fees for the 5 pre-established portfolio options ranged from 0.33% - 0.34%.

The only additional fees not listed above are the embedded fund fees which are charged on the funds within each portfolio. Please note that these fund level fees are already netted out of reported performance returns and are not additional fees charged on top of the asset based fees listed above. #25..
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Via e-mail
August 2, 2021
Request for Proposal
Public Sector Consulting Firm
The City of Modesto is seeking Statements of Qualifications (SOQ) from qualified firms who offer Internal Revenue Service (IRS) Code Section 115 Retirement Trust (hereinafter referred to as “Trust”) services to California local government agencies.

The services anticipated to be provided by the Firm include establishment and fiduciary investment advisor of a Trust(s) for Pension.

The City of Modesto is a charter city operating under the council/manager form of government. The City Council consists of seven members, including a directly-elected Mayor. Council members are elected by District to serve overlapping four-year terms (two-term limitation). Modesto is a full-service municipality, providing both police and fire services, along with eight additional departments, plus four charter officers and their respective staffs. The charter officers are City Manager, City Attorney, City Auditor and City Clerk.

The City budget of approximately $477.9 million reflects over 1,206.75 FTE’s. For FY 2021-22, The City’s general fund operating expenditures total $153.2 million with $153.2 million in operating revenues. The largest sources of general fund operating revenues are: property tax ($39.2 million); sales tax ($33.1 million); utility users tax ($20.5 million); departmental revenues ($26.2 million); business license tax ($13.4 million); and franchise fees ($4.9 million). Public safety, at approximately 78%, receives the majority of the general fund operating expense budget allocation. By Council policy, the general fund minimum reserve is established at eight percent of operating expenditures.

The City contributes to the California Public Employees’ Retirement System (PERS), a multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating public entities within the State of California. The City has two plans, one for public safety and one for all other employees.

As of the most recent valuation date, June 30, 2019, the City’s total pension unfunded accrued liability (UAL) is $363 million.

The City is exploring options to reduce its unfunded liability through investing into a section 115 pension trust fund.

The City of Modesto is currently exploring options for managing its long-term pension liabilities. One of the options under consideration is the City’s participation in a Trust.

The primary objective is to obtain information for purposes of evaluating prospective Firms who provide Trust services.
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For the scope of this project, the following services would be included:

A. Implement the trust program within 60-90 days after council approval.

B. Offer an IRS-approved irrevocable funding vehicle to protect the City’s assets.

C. Provide a full-service program that includes trust administration, trustee and investment management services.

D. With City staff, develop an Investment Policy for the Section 115 Pension Trust Fund.

E. Work directly with City staff to prepare asset allocation guidelines for the trust based upon the City’s investment objectives and risk tolerance parameters.

F. Provide education and presentations regarding the pension trust program to City staff.

G. Provide quarterly and annual comparative performance analyses and evaluation reports of the investments of the trust.

H. Coordinate all contributions into the trust and processes requests for distribution.

Best industry practices and/or best management practices may require additional services not explicitly enumerated. The Proposer should identify any additional services required, price them, and explain them in their response.

If you are interested in this opportunity, please submit your proposal by 5:00 pm, PST August 23, 2021.

Please see the City’s Professional Services Insurance Requirements in the attached document. A sample form is found at
https://www.modestogov.com/DocumentCenter/View/4541/Insurance-RequirementSamples?bidId Business licensing information is found at https://www.modestogov.com/235/BusinessLicensing Please direct your response to:

Kelly Rice-Ortiz
Executive Assistant
City of Modesto
P. O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
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[email protected]
The proposal shall include the following information:
▪ Qualifications of the firm
▪ Professional fees and estimated out-of-pocket expenses ▪ Principal staff contacts
▪ List of references from municipal clients
▪ Additional services (Optional)
Should you have any questions, please feel free to contact me at [email protected].

I hope this opportunity will be of interest to you and look forward to your response.

Sincerely,
Christina Alger
Director of Human Resources
cc: Kelly Rice-Ortiz, Executive Assistant
Dawn Kelley, Human Resources Manager
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 1
Executive Summary
Public Agency Retirement Services (PARS), in collaboration with U.S. Bank and HighMark Capital Management (HighMark), proposes a comprehensive solution for the City of Modesto’s IRS Code Section 115 Retirement Trust Services needs. Using PARS’ pioneering, industry-leading Pension Rate Stabilization Program (PRSP), the City can prefund its pension and/or OPEB liabilities in an IRS-approved Section 115 trust which provides economies of scale for investment, administrative, and trustee services, while at the same time minimizing staff burdens and costs. For 26 years, PARS has successfully served the City of Modesto’s retirement plan needs with its Alternate Retirement System (ARS) program and commits with this proposal to bringing the same strong service level and team to its new Section 115 trust.

The Turn-key Solution Provider
With 37 years of experience, over 495 Section 115 Trust clients, 243 in California for pension prefunding, and $5 billion in assets, PARS has developed a unique, comprehensive program that combines the following services:
• Trust administration and recordkeeping
• Signature-ready trust documents
• Trustee and custodial services
• Fiduciary investment management/advisory services
• Consulting and advisory services
• Comprehensive reporting and performance monitoring
• Annual audits and GASB 67/68 reporting assistance
Please see “PARS Clients” in the Appendix for our complete client list.

The Pioneer of Pension Rate Stabilization Trusts
PARS has been administering Section 115 irrevocable trust services to public agencies since 2004 and is now one of the largest providers in the nation. Our unparalleled experience includes many firsts:
• First Section 115 trust program for pension prefunding approved by the IRS in 2015 on a multiple employer basis
• First Section 115 trust for OPEB approved by the IRS in 2004 • First combination trust that allows for pension and OPEB prefunding in one trust • Fastest growing Section 115 pension prefunding trust provider in the nation with 243 public entities joining since IRS approval
The Best Approach for the City
PARS has continually fine-tuned its Section 115 Trust Program to meet the distinct needs of California public agencies. Today, our program is comprised of the following key features:
• Ready-to-use, simply organized irrevocable Section 115 multiple employer trust that is compliant with California and federal law, as well as GASB rules. #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 2
• First-of-its-kind trust approach that allows pension and/or OPEB liabilities to be pre-funded within the same trust, but with assets accounted for separately (per GASB rules) • Local control is separate and apart from CalPERS that enables the City to determine its own target rate of return assumptions, distribution frequencies, and risk tolerance levels • Fees that decrease as assets accumulate
o Pension and OPEB assets are combined for fee reduction purposes • Market leading provider with over 495 Section 115 trust clients and 118 cities • 37-year veteran in the administration of retirement plans and trusts for over 1,000 public agencies in California
• Section 115 trusts are our core competence, not a sideline business for PARS — giving us unparalleled experience over other providers
• Fiduciary protection from U.S. Bank, the 5th largest bank and one of the largest Section 115 trustees in the nation
• Hands-on, individualized attention from a highly experienced PARS/HighMark service team that has a long, successful track record working with California cities — and the same team that currently serves the City’s ARS account
• IRS-approved trust with favorable PLR that provides immediate and guaranteed tax-exempt status on investments to clients
o IRS is no longer issuing PLRs to others with this type of trust • Flexible, discretionary investment options designed by HighMark specifically for prefunding pension and OPEB liabilities
o The City can select from 5 model portfolios as well as a customized option, all of which can be actively or passively managed (pension and OPEB investment strategies can be different) • Investment policy development, asset allocation assistance, and ongoing portfolio analysis to meet the City’s objectives
• Strong, historical investment returns that are GIPS-compliant o We provide true, historical 1, 3, 5 and 10-year return information, not hypothetical “what-if” scenarios
• No startup costs, minimum contribution requirements, transaction/trading fees, or ongoing compliance costs — meaning there’s no red tape or fees to enter or leave the trust, in addition to a no-cost 30-day termination option
• Assistance with GASB 67/68 reporting requirements, including certified trust-wide individual agency document audits, performed by CliftonLarsonAllen with accompanying SOC-1 Type II audit • Ongoing consulting and technical guidance led by PARS Account Manager Jennifer Meza A copy of PARS’ IRS Private Letter Ruling can be viewed in the Appendix under “IRS PLR.” #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 3
History & Experience of Program Providers
Below is an overview and history of the program’s trust administrator (PARS), trustee (U.S Bank), and investment manager (HighMark):

PARS (Trust Administrator)
PARS is a pioneer in the design and administration of governmental retirement plans for public agencies with over four decades of experience in the business. Throughout this time, our company has experienced continual corporate growth and has built a long track record of service which includes the following key accomplishments:
• Administration of over 2,000 plans for more than 1,000 public entities • Has provided retirement plan and trust administration services for the City of Modesto and its parttime, seasonal and temporary employees since 1995, resulting in savings to the City of over $1.4 million compared to the cost of Social Security
• Development of the first multiple-employer Section 115 Trust Program for pension pre-funding in the nation (2015) and first multiple-employer Section 115 OPEB Trust Program (2004) • Market leading Section 115 Pension prefunding trust provider with over 240 clients in CA, including 118 cities
• Ongoing servicing of over 500,000 public employees in our plans • Vast experience providing integrated retirement solutions and multiple trust programs to agencies – over 275 of our client agencies have multiple plans with us • Largest multiple-employer Section 115 trust provider for pension and OPEB liabilities nationwide • Development and administration of multiple employer Section 115 Trust programs for numerous associations and group entities including the Community College League of California, California School Boards Association, California Special Districts Association, Rhode Island Interlocal Trust, 4 County Massachusetts Trust, and Arizona Public Safety Personnel Retirement System #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 4
Key PARS Milestones
1984 Begins designing and administering niche retirement plans for public agencies. 1990 Creates the Public Agency Retirement System Trust, an IRC Section 401(a) multiple employer retirement trust program. PARS has since developed several other multiple employer trusts for public agencies based on this initial model.
1995 The City of Modesto hires PARS to implement and administer an alternative to Social Security for part-time, seasonal and temporary employees. The program continues to benefit the City and its employees today.
1996 Develops its first trust for prefunding retiree medical benefits in CA. 2003 Begins developing an innovative Section 115 irrevocable trust based on its already established multiple employer trust model.
2006 Receives the first ever IRS PLR (Private Letter Ruling) given on a multiple employer Section 115 trust for post-retirement health care funding. The IRS requests publication of the trust’s details as an example for other OPEB multiple employer trusts.
2015 Establishes a new Section 115 trust that allows prefunding of both pension and OPEB costs. This trust subsequently receives a favorable private letter ruling from the IRS, the first of its kind in the nation. 2016 Has a record year, adding over 60 clients to its pension prefunding trust, making the firm the clear market leader and program expert.
2017 PRSP continues to grow in client numbers and assets. Another 60+ agencies join the program with PARS administering over $1.5 billion in Section 115 trust assets. 2021 More than 495 public agencies now utilize PARS to prefund OPEB and Pension liabilities using our Section 115 Trust which has over $5 billion in assets under administration. PARS launches a statewide pension trust program for Arizona with a state retirement system. #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 5
U.S. BANK (Trustee)
Established in 1863, U.S. Bank is the fifth largest bank and highest rated in the country. U.S. Bank has offices throughout the U.S., including many in California, and manages over $450 billion in assets. U.S. Bank is consistently recognized for its fiscal conservativeness and sound business model which has enabled investments in core business lines such as Institutional Trust and Custody. This division, which provides advisory, trustee, and investment management services to PARS clients, prides itself on the following qualifications:
• Fifth largest custodian in the United States with more than 2,600 clients in 27 locations • Serves 611 Section 115 trust clients nationally
• Provides trust and investment services to over 1,400 government clients • One hundred years in institutional trust and custody business • Provided investment management and advisory services since 1914 • One of the largest trustees of Section 115 Retirement Trust assets in the country with a market value of over $10 billion
• Trustee for 1,000+ PARS clients
• Manages over $450 billion in institutional client assets The Bank first began providing trustee/investment services for Section 115 trusts in 2004 when it took on a large school board association trust with PARS as the administrator. In 2012, U.S. Bank became trustee to all of PARS’ 1,000+ clients, including the City of Modesto’s PARS Alternate Retirement System program.

HIGHMARK CAPITAL MANAGEMENT (Investment Manager)
Originally established as Union Bank in 1919, HighMark manages approximately $18 billion in U.S equity and fixed income strategies for a variety of individual and institutional clients including public agencies, corporate retirement plans, corporate cash portfolios, Taft-Hartley plans, hospital funds, insurance companies, and foundations and endowments.

Since the firm’s founding over 100 years ago, HighMark has provided innovative financial solutions to its clients and remains committed to outstanding research, disciplined investment processes, and comprehensive risk management. This three-pronged approach enables HighMark to deliver insightful investment guidance and superior service while at the same time striving to exceed client expectations and deliver value at every level of the investment relationship.

HighMark has provided fiduciary investment advisory and management services to PARS’ clients, including those in our retirement trust programs for over 25 years. Today, HighMark serves over 300 of PARS’ Section 115 trust clients, including all cities, county and special district clients in California, with $9.3 billion in assets under management and $9.5 billion in assets under advisement.1 HighMark has served as the investment manager for the City of Modesto’s PARS Alternate Retirement System Program since 1995. 1 Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”) include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A. #25..
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PARS PRSP Trust Structure
The Unique PARS Post-Employment Benefits Trust
PARS’ proposed trust solution to meet the services requested by the City of Modesto in our Section 115, IRSapproved irrevocable multiple-employer trust, which brings investment, administrative and legal economies of scale to the City. This model follows the same concept that PARS has utilized successfully for its pension/OPEB prefunding clients since 2004 and is currently being used by some of the largest cities, counties, and school districts in the country.

Our program is structured with the following characteristics:
• Separate Accounts: Separate accounts (or sub-trusts) are maintained for each employer and assets are segregated by individual agencies. In addition, agencies can create separate sub-accounts by PERS plan (e.g., Misc., Safety, etc.) or enterprise funding if required. • Economies of Scale: By using a multiple employer trust approach, the City benefits from the cost, legal, and administrative efficiencies associated with joining other public entities. • Local Control: There is no central authority placing mandates on the trust that may not be in the best interests of the City, and the trust is not controlled by the retirement system. • Tailored Investments: Assets can be pooled for investment purposes based on asset allocation risk models to fit with the City’s risk tolerance level.
• Combination Trust: PARS’ trust approach allows both pension and/or OPEB obligations to be funded in one single trust. Assets are held in separate sub-accounts but aggregated for fee reduction purposes.
• Separate Liabilities: Employer contributions provide benefits only for employees of that employer.

This means there is no cross-liability or joint liability among participating public agencies. • Discretionary and directed trustee options: allowed under trust agreement, making it the only trust program that does not restrict the City to one investment provider. It allows use of US Bank and subadvisor HighMark as investment manager under a discretionary trustee arrangement or an outside directed investment manager of its own choosing for full flexibility. • Favorable Private Letter Ruling: First obtained in 2006, and then again on our unique “combination” trust in 2015, the program’s Private Letter Ruling (PLR) ensures that it meets federal IRS laws and #25..
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guidelines which is important from a fiduciary standpoint as it legitimizes the tax treatment of the trust.

This PLR confirms the tax-exempt treatment of the PARS PRSP for each participating agency, so its favorable ruling is crucial. Therefore, if the City were to create its own Section 115 pension prefunding trust or join a multiple employer trust through a company who has not received a private letter ruling, it would not benefit from the added layer of protection that an IRS PLR provides. • Contributions: With the PARS Section 115 trust, the City has full discretion as to the amounts, timing, and frequency of contributions it makes into the trust. There are never any required contributions in any given year, which provides full flexibility based on your City’s budget. • Distributions: Like contributions, the District will have full control over the withdrawal of its funds, providing the legal restrictions imposed by the trust and plan are adhered to. For instance, pension assets can only be used to pay for pension plan or administrative expenses (e.g. CalPERS plan costs or actuarial valuation services) and OPEB assets can only be used for retiree healthcare and/or related costs. As long as these basic requirements are met however, there are no restrictions on the timing or frequency of disbursements. Our program also allows for expenses to be reimbursed for the last two years of employer contributions or retiree healthcare expenses (current and prior plan year).
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Program Services
Below is a list of trust administration, trustee and investment management services that are provided as part of the PARS PRSP, which meet all the services outlined in the RFP’s scope of work. Please note there are no additional costs for any of these services.

TRUST ADMINISTRATION (PARS)
PARS will provide the City with a full-service, collaborative approach to help address your long-term pension and OPEB liabilities through the trust. We will work in close conjunction with your staff to implement a program that meets the City’s unique needs. PARS takes pride in our hands-on approach that has proven successful for almost four decades.

As the largest and longest serving trust administrator for pension and OPEB prefunding in the nation, we will bring our unmatched expertise to the City. As our core business is focused on retirement trust funding for local governments, the City will receive hands-on support from a services team that understands your long-term goals and needs.

Our full-service program is designed for ease of administration and to limit the workload of staff, with the following services being provided:
• Signature-ready implementation documents which enable implementation to be completed within 3-4 business days of executed plan documents being received by PARS • Ongoing document management and compliance monitoring in conjunction with PARS attorneys • Maintenance of detailed accounting records, including any sub-accounting, which includes individual recordkeeping of the City’s contributions, earnings, and assets • Reconciliation of contributions to the trust account
• Coordination of distributions from the City’s trust account, which includes receiving distribution documentation and directing the trustee to make distributions • Monthly, quarterly, and annual reporting to the City as well as online reporting and any customized reports as requested
• All necessary forms, handbooks, training, and technical support • Administrative training meeting at implementation as well as ongoing training as necessary • Onsite client service reviews to ensure the City’s ongoing satisfaction with the program • Participation at meetings and assistance in education/presentation preparation for City Council or staff when requested
• Attendance at City Council meeting when contract is scheduled for approval and for ongoing updates of the plan
• Coordination of annual trust-wide audit
• Preparation and submission of documents as required by the City’s auditors for GASB 67/68 (and 74/75) reporting
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Value Added Consulting/Analytical Services
As the leading provider of pension-prefunding trusts in the state, PARS has a breadth of experience in understanding the unique and varied funding policies of California agencies. PARS will work closely with City staff to provide value-added evaluation in analyzing funding options and designing a funding program that will address the City’s rising CalPERS liabilities using the pension trust. Lead Consultant, Jennifer Meza, will oversee the analysis, implementation, design and administration of the City’s trust account and can provide the following consulting services initially and ongoing:
• Assistance with the implementation of the trust
o PARS will provide sample staff report, sample resolution and signature-ready documents to streamline the onboarding experience
o Assistance with council meeting adoption and ongoing council education during the initial phases and lifetime of the plan
o PARS and HighMark will meet with City staff, committee or council to discuss plan design, options, and make recommendations
• Discussion of plan and trust design options
o Ex.: Options to subaccount for different employee groups, cost centers, etc. • Analysis and review of various funding options
o PARS has a database of “funding policy” examples from hundreds of member agencies and will walk the City through a variety of strategies for consideration • Assistance with developing and modifying funding policies o After review of funding strategies, PARS can share detailed Staff Reports that align with City’s objectives, so that the City may build upon other agencies’ policies if desired o PARS also possesses examples of council PowerPoint presentations detailing funding/withdrawal plans
• Analysis and discussion of actuarial issues and valuations o Annual updates of projected City’s CalPERS future employer contribution rates and funding status to help aid timing of contributions/withdrawals
o PARS will discuss any changes to GASB or other reporting changes • Monitoring of legislation, laws, and regulations impacting pension pre-funding o PARS will keep the City apprised of changes within CalPERS that may impact pension o Moreover, PARS has an in-house department dedicated to monitoring major changes to state law, (such as PEPRA) and how it impacts clients/plan design features • Development of materials and presentations to assist the City’s and its Board with funding options and policy
• On-site reviews to discuss modifications to funding and investment strategies based on changing program and/or budgetary circumstances
TRUSTEE (U.S. BANK)
U.S. Bank will provide fiduciary protections for the City as its trustee and custodian of assets in compliance with the trust agreement and federal and state laws:
• Safeguarding of assets for the exclusive benefit of City employees, retirees, and beneficiaries • Receipt and investment of the City's contributions according to selected investment strategy • Electronic interface and reporting to the trust administrator #25..
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• Reimbursements for pension/OPEB related costs
• Maintains a fiduciary oversight role with respect to plan assets and investments • Can serve as discretionary trustee and/or investment manager • Provides oversight of its subadvisor, HighMark, for additional fiduciary controls

INVESTMENT ADVISORY/MANAGEMENT (HIGHMARK)
HighMark’s fundamental belief is that value can be added through investment advisory services designed to align investment goals and objectives with risk tolerance. HighMark believes that the key to adding value to portfolios, including for PARS Section 115 Trust clients, is the company’s innovative approach to asset allocation and diversification. The firm’s multi-dimensional approach to investing is comprehensive in nature and includes asset allocation, a disciplined investment process, portfolio construction methodology, and a strong commitment to client satisfaction.

HighMark designated Senior Portfolio Manager, Randy Yurchak, will gain an in-depth understanding of the City’s circumstances before providing assistance with asset allocation recommendations and developing an investment policy statement (IPS). During the initial “investment selection”/funding policy conversation, Randy will hone in on the City’s funding status and its future anticipated costs. From there, he will ask the City pointed questions to better understand their objectives for pension-prefunding to help determine how investments will interplay with funding policy. Based on the City’s feedback regarding funding/withdrawal policies, he will focus on determining a diversified, multi-asset portfolio structure that represents an optimal asset mix based on the City’s time horizon, risk tolerance level, and liquidity needs.

HighMark believes in active management and frequently uses actively managed strategies. The firm has internal research teams dedicated to discovering the best active investments including equities, bonds, and actively managed funds. In many cases, this process has demonstrated HighMark’s ability to add risk-adjusted return versus passive benchmarks. In addition, whether based on client preference or when active strategies are not available or are not favorable, the firm will also utilize index-based securities such as exchange traded funds in order to gain diversification and exposure to various markets at a traditionally lower embedded fund fee than actively managed funds. To maximize flexibility, the portfolios developed by HighMark for PARS Section 115 trust clients can be selected as either active or passively managed.

Rebalancing is an important part of the success story of any portfolio’s long-term returns, so HighMark places a high degree of importance on these decisions. HighMark’s approach to asset allocation and rebalancing client portfolios is driven specifically by HighMark’s Asset Allocation Committee (AAC). The AAC employs a multifactor approach to establish long-term strategic asset allocation ranges as well as provide tactical diversification guidelines to capitalize on short-term market opportunities. The AAC team is comprised of 16 senior investment professionals with an average of 26 years investment experience. The AAC meets monthly to review current portfolio positioning relative to the prevailing risks and opportunities across available asset classes. Tactical asset class overweight and underweight opportunities are proposed by committee members and formally approved by six voting members. On an annual basis, upon updating the capital market assumptions, HighMark’s AAC reviews and approves any necessary adjustments to strategic policy allocations.

If at any point a portfolio’s allocation veers significantly from long-term and/or established targets because of performance (for example, the equity allocation may have risen due to a general rise in the equity market or other performance), HighMark will generally rebalance to the long-term equity targets set by the AAC. #25..
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Investments
HighMark’s core beliefs serve as the foundation of all investment decision making. These include:
• Actively manage every possible investment decision
• Investment philosophy influences top-down and bottom-up processes • Team-oriented portfolio management leverages multiple disciplines • Proprietary differentiation in asset allocation—strategic and tactical • Rigorous manager/mutual fund due-diligence optimizes investment selection decision • Enabling culture rewards creative initiative through incentives Discretionary Investment Approach - The City is able to mitigate fiduciary risk by designating a professional investment advisor to make strategic and tactical investment decisions. As a result, the City’s only responsibilities are to: (a) agree to investment goals and objectives formulated in the investment policy statement developed by HighMark and (b) monitor and evaluate the reports, statements, and quarterly reviews to confirm that HighMark’s portfolio is compliant with the investment policy statement. Ultimately, this approach leaves investment decisions in the hands of professionals, and typically results in stronger returns in the long run. Services include:
• Professional investment advisory and/or management services overseen by institutional team • Development and ongoing management of the City’s portfolio • Fiduciary role overseeing plan investments
• Investment manager monitoring, fund selection and review • Quarterly investment reports that include detailed portfolio analysis, performance comparisons and market outlook
• Investment policy statement development and management • Ongoing account monitoring
• Periodic asset rebalancing
• Periodic investment reviews led by City’s assigned Portfolio Manager • Ongoing investment research through institutional team • Investment performance analysis
• Legal and regulatory compliance in conjunction with the SEC, FINRA and other regulatory bodies • Materials and education regarding market outlook and conditions/trends • Interface with U.S. Bank to effectuate investment transactions Investment Policy Statement Development & Asset Allocation Assistance - As the program’s investment manager, HighMark will assist the City with the investment of its assets by providing asset allocation recommendations prior to program inception. However, prior to making any recommendations, designated Portfolio Manager Randy Yurchak, who also works on the City’s Alternative to Social Security (ARS) Plan, will gain an in-depth understanding of the City’s circumstances. Randy will focus on determining a diversified, multi-asset portfolio structure that represents an optimal asset mix based on your time horizon, risk tolerance level, and liquidity needs. Primary consideration for asset allocation is given to the following:
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• Investable Cash Flow – How does the City plan to prefund its pension liabilities? • Return Expectations – What are the target rate of return assumptions for the plan? • Risk Tolerance – What is the comfort level with investments and varying risk? • Income and Liquidity Needs – What are the income needs required to pay current liabilities? • Investment Restrictions – What type of investments would be not permitted by the City? Fiduciary Protection - As part of the program’s investment services, U.S. Bank will serve as a fiduciary to the trust acting as discretionary trustee. U.S. Bank takes its fiduciary responsibilities with the utmost seriousness and is dedicated to fulfilling its fiduciary responsibilities in line with the following core principles:
• Act in the sole interest of participants and beneficiaries • Act prudently and manage risk
• Follow the terms of plan documents
• Avoid conflicts of interest
• Avoid engaging in transactions that benefit interested parties as a conflict of interest • Treat beneficiaries with impartiality
As the program’s investment sub-advisor, HighMark is also considered a fiduciary to the trust. HighMark ensures the City’s fiduciary obligations are met by maintaining investment of assets according to the parameters established in California and federal law. Ultimately, the combined delivery of discretionary trustee and investment management services means that the City has significant fiduciary protection.

Investment Options - The PARS PRSP was designed to give client agencies maximum investment flexibility.

Utilizing HighMark as discretionary investment manager, the City has the following choices related to the investment of its funds.
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Five Risk Tolerance Levels
The City can participate in one of five risk tolerance levels that have been developed specifically for clients in PARS’ Section 115 Irrevocable Trust Programs. The five portfolios include: (a) actively-managed underlying mutual funds intended to outperform benchmarks or (b) low-cost Index/Exchange-Traded Funds (ETFs) which are baskets of stocks tracking the composition and performance of most leading market indices. The following table shows the tactical asset allocation targets for each of the five portfolios:

STRATEGY EQUITY Fixed Income Cash
Capital Appreciation 76% 22% 2%
Balanced 61% 36% 3%
Moderate 51% 46% 3%
Moderately Conservative 31% 66% 3%
Conservative 16% 78% 6%
Please see “PARS CPPs” in the Appendix for a full breakdown of the funds within the pre-established portfolios.

Customized Approach
Still using a discretionary trustee approach, the City can customize its own portfolio under the investment and fiduciary advice of HighMark to include: (a) any pre-approved funds available under an open architecture trading platform, (b) any combination of active and index funds in the pre-established portfolios, or (c) any individual securities/bonds. This customized option, which requires a $5 million asset balance or more, gives the City full flexibility of its investments.
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Historical Investment Returns - The annualized returns for the 5 pre-established portfolios developed by HighMark (as of 6/30/21) are as follows:

Actively Managed Portfolios
Portfolio 1 Year 3 Years 5 Years
Capital Appreciation 32.31% 13.14% 12.64%
Balanced 27.05% 11.93% 11.26%
Moderate 22.58% 10.87% 9.90%
Moderately Conservative 14.19% 8.62% 7.25%
Conservative 8.00% 6.99% 5.32%
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Passively Managed (Index) Portfolios
Portfolio 1 Year 3 Years 5 Years
Balanced 24.26% 11.22% 10.27%
Moderate 19.88% 10.20% 9.04%
Moderately Conservative 11.58% 8.18% 6.56%
Conservative 5.88% 6.55% 4.71%
It is important to keep in mind that these returns are:
• Actual, historical investment returns, not hypotheticals or projections • Net of the embedded expenses (embedded fund fees)
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Ongoing Staff Support & Resources
The PARS PRSP was designed as a comprehensive, full-service approach to minimize the burden and workload of participating agencies. Specifically, we will provide the following resources for the City and its staff:
• Direct contact information (telephone and email) for all members of the client service team • In-person plan and investment reviews
• Attendance at City Council meetings when requested
• Preparation of education materials and presentations for City Council and staff • Ongoing consulting support and technical guidance to ensure the City continually meets its goals and objectives
• Ongoing compliance monitoring and assistance with the GASB 67/68 reporting requirements • Hands-on investment support including IPS development, asset allocation recommendations and ongoing portfolio management
• Monthly, quarterly, annual and ad hoc reporting
• Guaranteed response to most questions/issues within 24 hours. (In a situation where there is a highly unusual request that requires more extensive research, we will be in regular contact with staff to keep you informed on when we expect an answer/resolution)
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Reporting
PARS and HighMark understand that regular, detailed, and fully transparent reporting is key for our clients.

Therefore, the following reports will be provided to the City from plan inception onwards:
• Monthly account statements - Produced by PARS, these will be mailed directly to the City and can also be sent electronically upon request. The statements summarize the City’s opening balance, contributions, distributions, earnings, fees, closing balance, and also provide monthly return information.
• Quarterly investment reports - Quarterly reports will be provided to the City by dedicated Senior Portfolio Manager, Randy Yurchak. These provide an analysis of the City’s selected portfolio by including information such as asset allocation ranges, investment returns, portfolio holdings, and capital market outlook.
• Annual statements - PARS will provide the City with an annual statement at the plan’s year-end.

These reports, which can be mailed and sent electronically, provide a full overview of account activity and performance comparisons for the previous year.
• Client reviews - In addition to producing statements, PARS and HighMark will meet with the City annually (or more often if requested) to conduct onsite client service reviews. These meetings will provide a full breakdown of the City’s plan/investment activity and are intended to ensure staff’s full satisfaction with the program.
• GASB 67/68 Reporting Documents - To assist with GASB 67/68 reporting and compliance, PARS will provide the City with the following:
o An individual trust statement of the City’s plan assets that shows a reconciliation of assets held at the beginning of the fiscal year through the end of the fiscal year, breaking out the appropriate plan contributions, benefit payments, expenses, and investment earnings o Year-end audited financial statements of the Trust as a whole including Schedule of Changes in Fiduciary Net Position by Employer completed by White Nelson Diehl Evans that are intended to be compliant with GASB 67/68 requirements.
o Supporting SOC 1-Type 2 report on the controls over the calculation and allocation of additions and deductions to employer accounts within the Trust o Investment allocation data and information on investment policies including target asset allocations and allowable asset class allocation ranges • Ad hoc reports - If the City requires additional or customized reports, PARS can work with staff to produce these at no additional cost.
• Audit - A trust-wide audit of PARS’ Section 115 trust is performed annually and will be provided to the City. Our current auditor is White Nelson Diehl Evans.

Please see attachment “PARS Fact Sheets Q2 2021” in the Appendix for a sample statement and quarterly investment reports.
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Client Services Team & Primary Contacts
PARS places a heavy emphasis on customer service and will dedicate a team of individuals to the ongoing administration and management of the City’s PRSP account. The following individuals, who already work in close conjunction with City staff on your Alternative to Social Security (ARS) program, will serve as the primary service team members and will also be supported by a larger team at PARS and HighMark’s headquarters
Jennifer Meza, CEBS, Account Manager & Consulting, PARS Role - Jennifer will serve as the designated representative and primary point of contact to facilitate services with the City of Modesto – from trust program initiation to ongoing administration. She will provide a full scope of consulting services to assist the City with the prefunding of its CalPERS pension liabilities, and will also take responsibility for coordinating services between PARS, U.S. Bank, and HighMark. City staff will have direct access to Jennifer on all matters, and she will be available to meet both in-person and over the phone as often as requested.

Experience - Jennifer has 17 years of customer service experience in various private sector industries, including over 8 years in the retirement plan industry. Her team provides full service to over 600 member agencies. Jennifer also provides consulting services to hundreds of public sector agencies in California. She is experienced in post-employment benefits trusts, defined benefit, defined contribution, and early retirement incentive programs. She joined PARS in February of 2013 and transitioned to her current position in PARS’ Client Services and Consulting Department in November of 2013.

Education - Jennifer has a bachelor’s degree in Business Administration from the California State University, Fullerton. She has also received her Certified Employee Benefit Specialist (CEBS) designation from the International Foundation of Employee Benefits and the Wharton School of Business.

Mitch Barker, Executive Vice President, PARS
Role - Mitch will serve as additional support and Consultant for the City’s PRSP account.

He will work in conjunction with Jennifer and Phillip to ensure the highest level of service is provided to the City and will provide executive level oversight for all PARS PRSP accounts.

Experience - Mitch has been with PARS for over 17 years. His primary focus is on Section 115 Pension and OPEB prefunding programs for municipalities, counties, and special districts in CA, so he is particularly well-suited to provide services to the City of Modesto.

Mitch has helped more than 200 agencies set up their Section 115 trust account since PARS first started providing services in 2004.

Mitch has over 38 years of experience in the health care and retirement industries. Before joining PARS, Mitch formed his own consulting company and provided national profitability improvement services to hospitals and physician groups for 14 years. Prior to this, he also held many other positions in the healthcare field.

Education - Mitch holds a bachelor’s degree in Biomedical Sciences from Texas A&M University. #25..
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Randall Yurchak, CFA, Vice President and Portfolio Manager, HighMark Role - As a Senior Portfolio Manager, Randy is responsible for managing investment portfolios on behalf of Section 115 Trust clients, retirement plans, foundations, not-for-profit organizations, and high net worth investors. On plan inception, he will meet with staff to discuss the City’s investment needs, and will construct an Investment Policy Statement that will serve as the underlying investment guide to your account. The City will have direct access to Randy at all times, and he will be available to provide ongoing investment advice at the City’s request.

Experience - Randy joined HighMark in 2017 and has been working in the investment industry since 2002.

Prior to joining HighMark, he was a Managing Director and Senior Portfolio Manager at Insight Capital, where he managed equity portfolio strategies, contributed to business development, and oversaw operations.

Education - Randy has a bachelor’s degree in Biochemistry from University of Washington and Master of Business Administration (MBA) from Arizona State University. In addition, he is a CFA charterholder.

Angela Tang, Client Services Coordinator, PARS
Role - Angela will be responsible for ongoing client services support related to the City’s pension account. She currently serves the City’s ARS account, and will also be the internal point of contact for your staff. Specifically, Angela will develop the administrator’s handbook, work with the plan administrator to ensure a smooth contribution/distribution process, coordinate meetings with the trustee/investment manager, and lead the client service review meetings. Additionally, she will manage any administrative issues that arise and provide ongoing technical support regarding reporting, contributions, distributions, and other trust account activities.

Experience - Angela has 5 years of experience in various client relations positions including 3 years working closely with public agencies as the lead for various projects. She joined PARS’ Client Services Department in 2018.

Education - Angela holds a bachelor’s degree in Management from the University of California, Davis. She also received her Retirement Plans Associate (RPA) designation from the International Foundation of Employee Benefits and the Wharton School of Business.

Ryan Maxey, Vice President, Relationship Manager, U.S. Bank Role - Ryan serves as a relationship manager for a select group of Institutional Trust and Custody clients. Ryan is responsible for overseeing complex relationships, ensuring each client’s unique needs are met. He works with various client types, including corporations, foundations, endowments, insurance companies and government entities.

Experience - Ryan brings more than 20 years of industry experience to his clients. He joined U.S. Bank with the Union Bank acquisition in 2012. #25..
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Education - Ryan has a Bachelor of Science in business administration from Eastern Oregon University. #25..
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Program Fees/Expenses
Fees for the PARS PRSP are broken down into trust administration (paid to PARS), and discretionary trustee/investment management costs (paid to U.S. Bank/HighMark). A full breakdown of these asset-based program fees is listed below. Please note there are no surrender, withdrawal, or deferred sales charges, nor are there any fees associated with transfer of assets or termination of contract. There are no minimum fees, start-up or termination costs associated with our program, or transaction, trading or hourly fees.

COMPANY ONGOING FEE
PARS 0.25% for assets under $10 million

0.20% for assets $10-15 million

0.15% for assets $15-50 million

0.10% for assets over $50 million

DISCRETIONARY TRUSTEE/INVESTMENT MANAGEMENT FEES
Trustee and investment management fees are comprehensive and include investment policy development, asset allocation recommendations, asset management, and all custodial services. #25..
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COMPANY ONGOING FEE
U.S. Bank/HighMark 0.35% for assets under $5 million*

0.25% for assets $5—$10 million

0.20% for assets $10—$15 million

0.15% for assets $15—$50 million

INVESTMENT PORTFOLIO OPERATING EXPENSE RATIO

ACTIVE PASSIVE
Capital Appreciation 0.52% 0.11%
Balanced 0.51% 0.10%
Moderate 0.49% 0.10%
Moderately Conservative 0.48% 0.08%
Conservative 0.46% 0.07%
Please see “Operating Expense Ratio” in the Appendix for the pre-established portfolio options as of 6/30/21.
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References
PARS serves over 25 cities with population sizes comparable or larger to the City of Modesto.

The following are three references of which PARS currently provides Section 115 pension prefunding trust services.

Reference Contact Information
City of Merced
115 pension client since 2019
Venus Rodriguez
Finance Officer
Phone: 209-385-8547
Email: [email protected]
City of Lodi
115 pension client since 2016
Steven Schwabauer
City Manager
Phone: 209-333-6700
Email: [email protected]
City of Atwater
115 pension & OPEB client since
2018
Jeanna Del Real
Personnel Director
Phone: 209-357-6310
Email: [email protected]
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Conclusion: Key Program Advantages
Market Leader of
Pension Prefunding
Trusts
• PARS developed the concept of pension and OPEB prefunding trusts and today is the only provider with significant clients and experience for pension prefunding trusts. No other provider has more than a small number of clients.
• Section 115 trust services for prefunding pension and OPEB is our core business. This is not the case for other providers (competitors serve 15-45 clients, PARS serves 243, including 118 cities.)
• PARS pioneered the first Section 115 Combination Trust with a Private Letter Ruling. We are one of only two providers in the nation capable of prefunding both OPEB and pension in the same trust, which brings economies of scale as well as administrative and fee efficiencies to members.

Long-Term
Experienced Provider
to the City
• As PARS has provided retirement services to the City of Modesto since 1995, we understand your unique needs and have vast experience working in close conjunction with the City’s staff.

Experienced,
Knowledgeable
Section 115 Trust
Provider
• Unlike other providers, our main business is niche retirement trust administration for public agencies. We have spent the last 17 years finetuning our Section 115 trust program to ensure we offer the best program available.
• PARS dedication and knowledge of clients’ needs is the reason why we were the first in the nation to develop a multiple-employer trust for combined pension and OPEB prefunding and why we are the only large-scale provider of this type of trust.
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 26
Local Control and
Less Red Tape
• PARS offers local control, meaning there is no central authority placing mandates on the trust. Other providers require the City to join external Boards that make collective investment decisions for your City more difficult and increase administrative burden.
• The trust operates completely separate and apart from CalPERS which provides maximum autonomy.
• Other providers may also charge minimum annual fees, trading/transaction fees, disbursement fees, etc., while all fees with PARS are asset-based. • We only require a 30-day termination notice, but competitors may take up to 150 days to transfer funds and may require Board approval, slowing down the process.
• PARS includes a mutual indemnification clause in agreements, providing an additional layer of legal protection to the City and is in the City’s best interests, while other providers do not include such a clause. • Our program allows for two plan year reimbursements, unlike one year for other providers, which is helpful in an emergency or tough budget year Diversified
Investment Focus
• HighMark specializes in pension and OPEB trust investing, rather than fixed income general fund investing, which is common with providers that mainly manage cash and fixed income, rather than long-term liabilities. • We are not limited to the same investment managers and approaches of CalPERS, and we provide further diversification and greater local autonomy.

Transparent
Investments
• The City will have access to true, historical return information from actual trust investment portfolios with asset backing. PARS shares return information over 1, 3, 5, and 10-year periods.
• We are not proposing hypotheticals and composites based on portfolios that still need to be developed, which can make it difficult to evaluate performance history and even underlying investment expenses. #25..
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 27
Most Flexible
Investment Approach
• We offer five pre-established investment portfolios as well as a customized allocation and both active and passive strategies, enabling the City to choose an investment structure that most effectively meets its needs. • PARS provides the most investment flexibility of all competitors, including more aggressive investment options which have proven over time to outperform more conservative strategies.
• Senior Portfolio Manager, Randy Yurchak, will provide hands-on investment policy development, asset allocation recommendations, ongoing investment support, and direct cell-phone access. He will be supported by a full team of investment professionals and analysts at HighMark’s headquarters who review client portfolios on an ongoing basis.
• This flexibility and trust structure means that the City is not tied to using one investment firm/option, unlike other pension prefunding trust providers.

Most Comprehensive
Administration
• No other provider offers the same level of comprehensive administrative services that reduce workload and costs for the City.
• PARS will provide all consulting, plan design, state and federal compliance monitoring, document preparation/management, trust administration, plan-level recordkeeping, employer statements, reporting, plan communications materials, audit and actuarial support, consulting and analysis, and ongoing client reviews and services. As program administrator, PARS will also serve as liaison between the City, U.S. Bank, and HighMark.

User-Friendly Trust
Approach
• Our program was designed to maximize ease of administration. • We have no minimum fees, no minimum contribution amounts (neither initially nor annually), no account start up fees, and no termination fees. • We also provide fully vetted, CA and IRS compliant, signature-ready trust documents that enable the City’s trust account to be set up quickly and easily. • Once the program is adopted, the City’s only role would be to make contributions, request disbursements, and monitor reports on account and investment activity. We do the rest.
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City of Modesto
IRS Code Section 115 Retirement Trust Services
Public Agency Retirement Services ▎ 28
Personalized Service • PARS understands that a hands-on, individualized approach is the most effective method for administration and we take great pride in working closely with clients like the City of Modesto.
• The City’s assigned services team will always be directly available to staff and we guarantee regular in-person client reviews. We are dedicated to continuing our long-term relationship with the City.
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Client list ▎ 1
115 Trust – OPEB/PENSION Client list
COUNTIES (31)
Alpine
Amador
Calaveras
Colusa
Contra Costa
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Mariposa
Merced
Mono
Monterey
Napa
Nevada
Placer
Plumas
Riverside
San Benito
Shasta
Siskiyou
Solano
Sonoma
Sutter
Trinity
Tulare
Yolo
Yuba
CITIES & TOWNS (135)
Updated August 2021
Alameda
Alhambra
Anaheim
Atherton
Atwater
Bakersfield
Bell Gardens
Benicia
Beverly Hills
Brea
Brisbane
Burlingame
Camarillo
Capitola
Carmel
Chino Hills
Chula Vista
Claremont
Colma
Commerce
Corcoran
Coronado
Costa Mesa
Covina
Crescent City
Cudahy
Cupertino
Cypress
Daly City
Del Rey Oaks
Dinuba
Duarte
Dublin
El Cajon
El Centro
El Segundo
Elk Grove
Emeryville
Escondido
Fairfax
Fairfield
Fountain Valley
Fullerton
Galt
Garden Grove
Gilroy
Glendale
Goleta
Grass Valley
Half Moon Bay
Healdsburg
Hemet
Hercules
Hermosa Beach
Huntington Beach
Indian Wells
Indio
La Habra
La Mesa
La Quinta
La Verne
Laguna Niguel
Lake Forest
Lakewood
Lemon Grove
Livermore
Lodi
Los Alamitos
Los Altos Hills
Mammoth Lakes
Manhattan Beach
Merced
Monrovia
Morgan Hill
Napa
National City
Norwalk
Novato
Oakley
Orinda
Oroville
Pacifica
Palmdale
Palo Alto
Pasadena
Perris
Pico Rivera
Piedmont
Pinole
Pittsburg
Placentia
Pleasanton
Port Hueneme
Rancho Cucamonga
Redding
Redwood City
Rialto
Richmond
Riverside
Rohnert Park
Rolling Hills
Rosemead
Ross
Salinas
San Anselmo
San Leandro
San Ramon
Santa Ana
Santa Clara
Santa Clarita
Sausalito
Selma
Solana Beach
Stanton
Stockton
Taft
Temecula
Temple City
Thousand Oaks
Tiburon
Tustin
Union City
Upland
Vallejo
Villa Park
Walnut
West Covina
West Sacramento
Westminster
Winters
Woodland
Woodside
Yountville
Yuba City
Yucca Valley
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Client list ▎ 2
115 Trust – OPEB/PENSION Client list
Agoura Hills/Calabasas Community Center Authority
Alameda County Mosquito Abatement District
Beach Cities Health District
Bighorn-Desert View Water Agency
Bodega Bay Public Utilities District
Calaveras County Water District
California Joint Powers Insurance Authority
California Joint Powers Risk Management Authority
Central Contra Costa Sanitary District
Central Contra Costa Transit Authority
Coastline Regional Occupational Program
Coastside Fire Protection District
Conejo Recreation & Park District
Contra Costa County EEs' Retirement Association
Contra Costa Mosquito and Vector Control District
Crestline Village Water District
Delta Diablo
Desert Recreation District
East Bay Regional Park District
East Contra Costa Fire Protection District
East Orange County Water District
Eastern Sierra Community Services District
Eastern Sierra Transit Authority
El Dorado Hills County Water (& Fire) District
Fallbrook Public Utility District
Fresno Irrigation District
Fresno Metropolitan Flood Control District
Glenn-Colusa Irrigation District
Goleta Cemetery District
Goleta West Sanitary District
Great Basin Unified Air Pollution Control District
Greater Vallejo Recreation District
Hayward Area Recreation & Park District
Hesperia Fire Protection District
Housing Authority of the County of Butte
Housing Authority of the County of Contra Costa
Housing Authority of the County of San Bernardino
Housing Authority of the County of Santa Cruz
Humboldt Bay Fire Joint Powers Authority
Humboldt Bay Municipal Water District
Humboldt No. 1 Fire Protection District
Menlo Park Fire Protection District
Mesa Water District
Metropolitan Transportation Commission
Midpeninsula Regional Open Space District
Mid-Peninsula Water District
Mojave Desert Air Quality Management District
Montecito Fire Protection District
Monterey Bay Unified Air Pollution Control District
Moraga-Orinda Fire Protection District
Mosquito & Vector Mgmt Dist. of Santa Barbara Co.

Mountains Recreation and Conservation Authority
Municipal Pooling Authority
Municipal Water District of Orange County
Napa County Mosquito Abatement District
Nevada County Consolidated Fire District
North Central Fire Protection District
Northern Salinas Valley Mosquito Abatement District
Novato Sanitary District
Orange County Fire Authority
Orange County Mosquito and Vector Control District
Orange County Water District
Orchard Dale Water District
Public Agency Risk Sharing Authority of CA (PARSAC)
Pebble Beach Community Services District
Placentia Library District
Placer County Air Pollution Control District
Placer County Resource Conservation District
Rancho Cucamonga Fire Protection District
Rancho Murieta Community Services District
Regional Housing Authority
Rowland Water District
Sacramento Area Flood Control Agency
San Andreas Sanitary District
San Elijo Joint Powers Authority
San Mateo County Mosquito & Vector Control District
Santa Barbara County Law Library
Santa Cruz Regional 9-1-1 JPA
Sewer Authority Mid-Coastside
Shasta Valley Cemetery District
South Coast Water District
South Montebello Irrigation District
South Orange County Wastewater Authority
South Placer Fire Protection District
Southern Marin Fire Protection District
State Water Contractors
Superior Court of CA, County of Imperial
Superior Court of CA, County of Inyo
Superior Court of CA, County of Kern
Superior Court of CA, County of Marin
Superior Court of CA, County of Merced
Superior Court of CA, County of Orange
Superior Court of CA, County of San Mateo
Superior Court of CA, County of Shasta
Superior Court of CA, County of Siskiyou
Superior Court of CA, County of Sonoma
Sweetwater Springs Water District
Three Valleys Municipal Water District
Twentynine Palms Water District
Ventura Regional Sanitation District
Walnut Valley Water District
West Bay Sanitary District
West County Wastewater District
Western Riverside Council of Governments
Yorba Linda Water District
Zone 7 Water Agency
SPECIAL DISTRICTS (106)
Shasta County Office of Education
Sonoma County Office of Education
Intelecom
EDUCATION DISTRICTS (3)
Updated August 2021
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Client list ▎ 3
115 Trust – OPEB/PENSION Client list
SCHOOL DISTRICTS (51)
Alisal Union School District
Alta Loma School District
Auburn Union School District
Bass Lake Joint Union Elementary School District
Bellflower Unified School District
Beverly Hills Unified School District
Calistoga Joint Unified School District
Campbell Union High School District
Compton Unified School District
Corning Union Elementary School District
Coronado Unified School District
Cotati-Rohnert Park Unified School District
El Dorado Union High School District
El Monte Union High School District
Folsom Cordova Unified School District
Fontana Unified School District
Fowler Unified School District
Hermosa Beach City School District
Hesperia Unified School District
Hughes-Elizabeth Lakes Union Elementary School District John Swett Unified School District
Lakeside Union School District (San Diego)
Lemon Grove School District
Lindsay Unified School District
Madera Unified School District
Manteca Unified School District
Moreno Valley Unified School District
Napa Valley Unified School District
Natomas Unified School District
Newport-Mesa Unified School District
Ocean View School District (Ventura)
Ontario-Montclair School District
Orcutt Union School District
Palmdale School District
Placer Union High School District
Porterville Unified School District
Poway Unified School District
Red Bluff Joint Union High School District
Red Bluff Union Elementary School District
River Delta Unified School District
Riverdale Joint Unified School District
San Bruno Park School District
San Dieguito Union High School District
San Marino Unified School District
Santa Barbara Unified School District
Santa Rita Union School District
Trona Joint Unified School District
Visalia Unified School District
Westside Union School District
Whittier City School District
Wilsona School District
Citrus CCD
Coast CCD
Grossmont-Cuyamaca CCD
Hartnell CCD
Imperial CCD
Marin CCD
Palo Verde CCD
Pasadena Area CCD
Rancho Santiago CCD
Rio Hondo CCD
San Bernardino CCD
San Luis Obispo County CCD (Cuesta)
Shasta-Trinity-Tehama Joint CCD
State Center CCD
Victor Valley CCD
West Valley-Mission CCD
Yosemite CCD
COMMUNITY COLLEGE DISTRICTS (17)
Updated August 2021
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Client list ▎ 4
PARS Client list – PRSP (241)
CITIES & TOWNS (117)
Alameda
Anaheim
Atherton
Atwater
Bell Gardens
Benicia
Beverly Hills
Brea
Brisbane
Burlingame
Camarillo
Capitola
Carmel
Chino Hills
Chula Vista
Claremont
Colma
Commerce
Corcoran
Coronado
Costa Mesa
Cudahy
Cupertino
Cypress
Daly City
Del Rey Oaks
Dinuba
Duarte
Dublin
El Cajon
El Centro
El Segundo
Emeryville
Escondido
Fairfax
Fairfield
Fountain Valley
Fullerton
Garden Grove
Gilroy
Glendale
Goleta
Grass Valley
Half Moon Bay
Healdsburg
Hercules
Huntington Beach
Indian Wells
Indio
La Habra
La Mesa
La Quinta
La Verne
Laguna Niguel
Lake Forest
Lemon Grove
Lodi
Los Alamitos
Los Altos Hills
Manhattan Beach
Merced
Monrovia
Morgan Hill
Napa
National City
Norwalk
Novato
Oakley
Oroville
Pacifica
Palmdale
Palo Alto
Pasadena
Perris
Pico Rivera
Piedmont
Pinole
Pittsburg
Placentia
Pleasanton
Port Hueneme
Rancho Cucamonga
Redwood City
Rialto
Riverside
Rohnert Park
Rolling Hills
Ross
San Anselmo
San Leandro
San Ramon
Sanger
Santa Ana
Santa Clara
Sausalito
Selma
Solana Beach
Stanton
Stockton
Taft
Temecula
Thousand Oaks
Tiburon
Tustin
Union City
Upland
Vallejo
Villa Park
Walnut
West Covina
West Sacramento
Westminster
Woodland
Woodside
Yountville
Yuba City
Yucca Valley
COUNTIES (21)
Calaveras
Colusa
Humboldt
Kings
Lake
Lassen
Mariposa
Merced
Monterey
Napa
Nevada
Placer
Plumas
Riverside
San Benito
Siskiyou
Solano
Sutter
Tulare
Yolo
Yuba
SPECIAL DISTRICTS (60)
Agoura Hills/Calabasas Community Center JPA
Alameda County Mosquito Abatement District
Beach Cities Health District
Bighorn-Desert View Water Agency
Central Contra Costa Sanitary District
Conejo Recreation & Park District
Delta Diablo (Sanitation District)
East Bay Regional Park District
East Contra Costa Fire Protection District
East Orange County Water District
El Dorado Hills County Water District
Fallbrook Public Utility District
Goleta West Sanitary District
Great Basin Unified Air Pollution Control District
Greater Vallejo Recreation District
Hesperia Fire Protection District
Housing Authority of the County of Butte
Housing Authority of the County of San Bernardino
Housing Authority of the County of Santa Cruz
Humboldt Bay Municipal Water District
Mesa Water District
Metropolitan Transportation Commission
Midpeninsula Regional Open Space District
Midpeninsula Water District
Mojave Desert Air Quality Management District
Montecito Fire Protection District
Monterey Bay Unified Air Pollution Control District
Monterey County Mosquito Abatement District
Moraga-Orinda Fire Protection District
Mosquito & Vector Mgmt Dist. of Santa Barbara Co.

Mountains Recreation and Conservation Authority
Municipal Pooling Authority
Municipal Water District of Orange County
Napa County Mosquito Abatement District
Nevada County Consolidated Fire Department
North Central Fire District
Novato Sanitary District
Orange County Fire Authority
Orange County Mosquito & Vector District
Orchard Dale Water District
Pebble Beach Community Services District
Placer County Air Pollution Control District
Public Agency Risk Sharing Authority of CA
Rancho Cucamonga Fire Protection Department
Regional Housing Authority
Sacramento Area Flood Control Agency
San Elijo Joint Powers Authority
San Mateo Mosquito and Vector Control District
Shasta Valley Cemetery District
South Coast Water District
Southern Marin Fire Protection District
Superior Court of CA, County of Inyo
Superior Court of CA, County of Kern
Sweetwater Springs Water District
Three Valleys Municipal Water District
Twentynine Palms Water District
West Bay Sanitary District
Western Riverside Council of Governments
Yorba Linda Water District
Zone 7 Water District
EDUCATION DISTRICTS (43)
Citrus CCD
Coast CCD
Grossmont-Cuyamaca CCD
Hartnell CCD
Imperial CCD
Marin CCD
Pasadena CCD
Rancho Santiago CCD
Rio Hondo CCD
San Bernardino CCD
San Luis Obispo County CCD
(Cuesta College)
Shasta-Trinity-Tehama Joint CCD
Victor Valley CCD
West Valley-Mission CCD
Yosemite CCD
Alisal Union SD
Alta Loma USD
Bass Lake Joint Union ESD
Beverly Hills USD
Calistoga Joint USD
Campbell Union HSD
Corning Union ESD
Coronado USD
Cotati-Rohnert Park USD
El Monte Union HSD
Fontana USD
Hermosa Beach City SD
Hesperia Unified SD
Lakeside Union SD
Lemon Grove SD
Lindsay USD
Madera Unified SD
Natomas USD
Ocean View SD
Ontario-Montclair SD
Placer Union HSD
Porterville USD
River Delta USD
San Marino USD
Santa Rita Union SD
Shasta County OE
Visalia USD
Whittier City SD
Updated August 2021
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HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Conservative HighMark Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 11.05 10.65 10.13 2.56 2.31 n/a <6 52.78 8.87
2018 -1.35 -1.71 -0.60 2.63 2.19 n/a <6 44.96 7.41
2017 6.73 6.35 5.24 2.61 2.08 n/a <6 43.27 14.00
2016 4.18 3.80 3.92 2.83 2.38 n/a <6 36.84 15.25
2015 0.29 -0.07 0.31 2.78 2.42 n/a <6 34.72 15.10
2014 3.88 3.51 4.76 2.79 2.22 n/a <6 32.97 15.27
2013 3.69 3.32 3.18 3.59 2.30 n/a <6 21.96 14.53
2012 8.45 8.06 4.93 3.81 2.22 n/a <6 19.58 17.50
2011 2.19 1.83 3.86 4.88 3.37 n/a <6 16.80 15.65
2010 8.68 8.30 6.18 n/a <6 14.30 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards.

Verification does not ensure the accuracy of any specific composite presentation.

HighMark, a wholly owned subsidiary of MUFG Union Bank, N.A., is a registered investment adviser. The firm’s list of composite descriptions is available upon request. All returns are expressed in U.S. dollars.

The PARS Tax Exempt Conservative HighMark Plus Composite includes all institutional portfolios invested in actively managed mutual funds.

The strategy is to provide a consistent level of inflation-protected income over the long term. Under normal conditions, allocation ranges are:

Equity 5%-20%, Fixed Income 60%-95%, and Cash 0%-20%. The composite was created in April 2009.

Effective 10/1/2012, the benchmark consists of: 7.5% S&P 500, 2.5% Russell 2000, 2% MSCI EAFE (net), 1.5% Russell MidCap, 1.0% MSCI EM (net), 52.25% Bloomberg Barclays US Aggregate Bond, 25.75% ICE BofA 1-3 Year US Corporate/Government, 2.0% ICE BofA US High Yield Master II, 0.5% Wilshire REIT, and 5% FTSE 1 Month T-Bill, rebalanced monthly. The benchmark was changed to reflect added strategy investments in mid cap and REITs. Prior to 9/30/2012, the benchmark consisted of: 12% S&P 500, 1% Russell 2000, 2% MSCI EAFE (net), 40% ICE BofA 1-3 Year US Corporate/Government, 40% Bloomberg Barclays US Aggregate Bond, and 5% FTSE 1 Month T-Bill, rebalanced monthly. MSCI EAFE (net) and Russell 2000 were added due to enhancements in the investment process, which were designed to increase diversification through exposure to small cap and international equities. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index.

Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. Net returns are net of model investment management fees in effect for the respective time period and are derived using the maximum fixed fee rate. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Fees charged are at the discretion of HighMark and U.S. Bank, N.A.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

The internal dispersion of annual returns is measured by the equal-weighted standard deviation of portfolio returns included in the composite for the full year. For those years with less than or equal to 5 portfolios, the calculation of internal dispersion is not a meaningful statistical measure.

The three year annualized ex-post standard deviation measures the variability of the composite (using gross returns) and the benchmark returns over the preceding 36 month period. The standard deviation is not shown for periods prior to 2011 because it is not required. HighMark’s policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Conservative Index Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 10.37 9.98 10.13 2.47 2.31 n/a 6 38.51 8.87
2018 -1.09 -1.45 -0.60 2.44 2.19 n/a 6 35.53 7.41
2017 5.52 5.14 5.24 2.31 2.08 n/a <6 26.74 14.00
2016 3.75 3.38 3.92 2.52 2.38 n/a <6 28.44 15.25
2015 0.06 -0.30 0.31 2.58 2.42 n/a <6 23.70 15.10
2014 4.32 3.95 4.76 2.46 2.22 n/a <6 17.75 15.27
2013 3.40 3.02 3.18 2.92 2.30 n/a <6 12.49 14.53
2012 6.22 5.84 4.93 2.98 2.22 n/a <6 9.39 17.50
2011 3.70 3.33 3.86 4.43 3.37 n/a <6 8.64 15.65
2010 7.67 7.29 6.18 n/a <6 15.22 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Conservative Index Plus Composite includes all institutional portfolios invested in index-based securities. The strategy is to provide a consistent level of inflation-protected income over the long term. Under normal conditions, allocation ranges are: Equity 5%-20%, Fixed Income 60%-95%, and Cash 0%-20%. The composite was created in April 2009.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Moderately Conservative HighMark Plus Composite January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 13.73 13.33 13.53 3.89 3.67 0.28 18 178.57 8.87
2018 -2.60 -2.95 -1.86 3.79 3.45 0.17 17 114.88 7.41
2017 9.56 9.17 8.11 3.64 3.20 n/a 9 82.48 14.00
2016 4.94 4.56 5.42 4.00 3.62 n/a <6 57.74 15.25
2015 0.32 -0.04 0.14 3.99 3.63 n/a 6 51.73 15.10
2014 4.41 4.04 5.92 4.06 3.34 0.09 6 53.66 15.27
2013 7.30 6.91 7.13 5.55 3.88 n/a 6 44.39 14.53
2012 10.88 10.48 7.32 6.26 4.41 n/a 6 42.37 17.50
2011 1.75 1.38 3.79 7.68 6.06 n/a <6 36.46 15.65
2010 10.46 10.07 8.12 n/a <6 64.75 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Moderately Conservative Highmark Plus Composite includes all institutional portfolios invested in actively managed mutual funds. The strategy is to provide current income, with capital appreciation as a secondary objective. Under normal conditions, allocation ranges are: Equity 20%-40%, Fixed Income 50%-80%, and Cash 0%-20%. The composite was created in April 2009.

Effective 10/1/2012, the benchmark consists of: 15.5% S&P 500, 4.5% Russell 2000, 4.0% MSCI EAFE (net), 3.0% Russell MidCap, 2.0% MSCI EM (net), 49.25% Bloomberg Barclays US Aggregate Bond, 14.0% ICE BofA 1-3 Year US Corporate/Government, 1.75% ICE BofA US High Yield Master II, 1.0% Wilshire REIT, and 5% FTSE 1 Month T-Bill, rebalanced monthly. The benchmark was changed to reflect added strategy investments in mid cap and REITs. Prior to 9/30/2012, the benchmark consisted of: 25% S&P 500, 1.5% Russell 2000, 3.5% MSCI EAFE (net), 25% ICE BofA 1-3 Year US Corporate/Government, 40% Bloomberg Barclays US Aggregate Bond, and 5% FTSE 1 Month T-Bill, rebalanced monthly. MSCI EAFE (net) and Russell 2000 were added due to enhancements in the investment process, which were designed to increase diversification through exposure to small cap and international equities. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Moderately Conservative Index Plus Composite January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 13.53 13.13 13.53 3.66 3.67 0.22 16 228.97 8.87
2018 -2.33 -2.68 -1.86 3.46 3.45 0.14 16 226.16 7.41
2017 8.08 7.70 8.11 3.27 3.20 0.13 14 168.14 14.00
2016 5.42 5.05 5.42 3.64 3.62 0.17 10 188.96 15.25
2015 -0.18 -0.54 0.14 3.76 3.63 0.26 11 172.46 15.10
2014 5.40 5.02 5.92 3.62 3.34 1.09 11 151.84 15.27
2013 6.78 6.39 7.13 4.61 3.88 1.12 10 156.33 14.53
2012 8.24 7.85 7.32 5.33 4.41 0.25 9 113.65 17.50
2011 3.24 2.87 3.79 7.17 6.06 1.05 8 88.09 15.65
2010 9.72 9.33 8.12 n/a 7 117.08 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Moderately Conservative Index Plus Composite includes all institutional portfolios invested in index-based securities.

The strategy is to provide current income, with capital appreciation as a secondary objective. Under normal conditions, allocation ranges are:

Equity 20%-40%, Fixed Income 50%-80%, and Cash 0%-20%. The composite was created in April 2009.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Moderate HighMark Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 17.71 17.29 17.65 6.08 5.86 0.37 30 422.47 8.87
2018 -4.03 -4.37 -3.37 5.68 5.47 0.30 29 330.82 7.41
2017 13.19 12.79 11.65 5.25 5.02 0.57 24 302.91 14.00
2016 6.45 6.07 7.41 5.73 5.57 0.47 22 294.11 15.25
2015 0.14 -0.22 -0.12 5.55 5.43 0.23 20 261.74 15.10
2014 4.84 4.46 6.95 5.47 4.99 0.23 20 253.18 15.27
2013 13.06 12.66 13.06 7.50 6.21 0.97 20 265.51 14.53
2012 12.25 11.85 10.26 9.21 7.57 0.79 18 226.43 17.50
2011 0.55 0.18 3.05 11.02 9.79 0.65 15 191.09 15.65
2010 12.42 12.02 10.23 1.14 12 127.66 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Moderate Highmark Plus Composite includes all institutional portfolios invested in actively managed mutual funds. The strategy is to provide current income and moderate capital appreciation. Under normal conditions, allocation ranges are: Equity 40%-60%, Fixed Income 40%-60%, and Cash 0%-20%. The composite was created in April 2009.

Effective 10/1/2012, the benchmark consists of: 26.5% S&P 500, 7.5% Russell 2000, 6% MSCI EAFE (net), 5% Russell MidCap, 3.25% MSCI EM (net), 33.5% Bloomberg Barclays US Aggregate Bond, 10% ICE BofA 1-3 Year US Corporate/Government, 1.5% ICE BofA US High Yield Master II, 1.75% Wilshire REIT, and 5% FTSE 1 Month T-Bill, rebalanced monthly. The benchmark was changed to reflect added strategy investments in mid cap and REITs. Prior to 9/30/2012, the benchmark consisted of: 43% S&P 500, 2% Russell 2000, 5% MSCI EAFE (net), 15% ICE BofA 1-3 Year US Corporate/Government, 30% Bloomberg Barclays US Aggregate Bond, and 5% FTSE 1 Month T-Bill, rebalanced monthly. MSCI EAFE (net) and Russell 2000 were added due to enhancements in the investment process, which were designed to increase diversification through exposure to small cap and international equities. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Moderate Index Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 17.52 17.11 17.65 5.81 5.86 1.07 29 218.24 8.87
2018 -4.03 -4.38 -3.37 5.38 5.47 0.27 26 171.39 7.41
2017 11.59 11.19 11.65 4.96 5.02 0.13 20 137.75 14.00
2016 7.23 6.84 7.41 5.46 5.57 0.36 17 90.74 15.25
2015 -0.52 -0.87 -0.12 5.47 5.43 0.78 14 71.47 15.10
2014 5.72 5.35 6.95 5.17 4.99 1.33 12 64.82 15.27
2013 12.79 12.39 13.06 6.89 6.21 0.52 12 37.61 14.53
2012 10.91 10.51 10.26 8.49 7.57 n/a 11 28.86 17.50
2011 2.29 1.92 3.05 11.01 9.79 n/a <6 22.55 15.65
2010 11.77 11.37 10.23 n/a <6 14.76 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Moderate Index Plus Composite includes all institutional portfolios invested in index-based securities. The strategy is to provide current income and moderate capital appreciation. Under normal conditions, allocation ranges are: Equity 40%-60%, Fixed Income 40%-60%, and Cash 0%-20%. The composite was created in April 2009.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Balanced HighMark Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 19.85 19.42 19.77 7.35 7.04 0.33 29 390.68 8.87
2018 -4.88 -5.22 -4.18 6.81 6.56 0.31 27 273.95 7.41
2017 15.46 15.05 13.54 6.20 6.00 0.35 25 257.43 14.00
2016 6.81 6.42 8.38 6.75 6.62 0.44 24 211.15 15.25
2015 0.04 -0.32 -0.29 6.50 6.40 0.55 24 196.62 15.10
2014 4.70 4.33 7.52 6.34 5.87 0.68 21 159.33 15.27
2013 16.61 16.20 16.05 8.88 7.42 0.64 15 121.82 14.53
2012 13.25 12.85 11.90 10.90 9.16 0.25 12 88.73 17.50
2011 -0.46 -0.82 2.89 12.57 11.71 0.45 8 71.39 15.65
2010 14.11 13.71 11.49 n/a 6 54.05 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Balanced HighMark Plus Composite includes all institutional portfolios invested in actively managed mutual funds. The strategy is to provide growth of principal and income. Under normal conditions, allocation ranges are: Equity 50%-70%, Fixed Income 30%- 50%, and Cash 0%-20%. The composite was created in April 2009. The composite name was changed from PARS Tax Exempt Moderately Aggressive HighMark Plus to PARS Tax Exempt Balanced HighMark Plus in May 2013.

Effective 10/1/2012, the benchmark consists of: 32.0% S&P 500, 9.0% Russell 2000, 7.0% MSCI EAFE (net), 6.0% Russell MidCap, 4.0% MSCI EM (net), 27.0% Bloomberg Barclays US Aggregate Bond, 6.75% ICE BofA 1-3 Year US Corporate/Government, 1.25% ICE BofA US High Yield Master II, 2.0% Wilshire REIT, and 5% FTSE 1 Month T-Bill, rebalanced monthly. The benchmark was changed to reflect added strategy investments in mid cap and REITs. Prior to 9/30/2012, the benchmark consisted of: 51% S&P 500, 3% Russell 2000, 6% MSCI EAFE (net), 5% ICE BofA 1-3 Year US Corporate/Government, 30% Bloomberg Barclays US Aggregate Bond, and 5% FTSE 1 Month T-Bill, rebalanced monthly. MSCI EAFE (net) and Russell 2000 were added due to enhancements in the investment process, which were designed to increase diversification through exposure to small cap and international equities. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Balanced Index Plus Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 19.59 19.16 19.77 6.97 7.04 0.28 15 222.45 8.87
2018 -5.05 -5.39 -4.18 6.44 6.56 0.14 13 163.15 7.41
2017 13.39 12.98 13.54 5.88 6.00 0.09 11 149.71 14.00
2016 8.25 7.86 8.38 6.46 6.62 0.21 12 135.54 15.25
2015 -0.81 -1.17 -0.29 6.39 6.40 0.19 9 99.49 15.10
2014 6.08 5.70 7.52 6.04 5.87 0.32 10 90.62 15.27
2013 15.63 15.22 16.05 8.15 7.42 0.47 9 73.67 14.53
2012 11.93 11.53 11.90 10.12 9.16 0.85 8 57.98 17.50
2011 1.60 1.23 2.89 12.50 11.71 n/a 8 45.50 15.65
2010 12.76 12.36 11.49 n/a <6 36.19 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Balanced Index Plus Composite includes all institutional portfolios invested in index-based securities. The strategy is to provide growth of principal and income. Under normal conditions, allocation ranges are: Equity 50%-70%, Fixed Income 30%-50%, and Cash 0%-20%. The composite was created in April 2009. The composite name was changed from PARS Tax Exempt Moderately Aggressive Index Plus to PARS Tax Exempt Balanced Index Plus in May 2013.

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Tax Exempt Capital Appreciation Consolidated Composite January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 22.62 22.18 22.81 8.87 8.78 0.58 15 180.05 8.87
2018 -5.82 -6.16 -5.55 8.09 8.17 0.38 14 131.18 7.41
2017 16.72 16.31 16.55 7.39 7.53 n/a 9 81.31 14.00
2016 8.81 8.42 9.57 8.08 8.23 n/a <6 4.44 15.25
2015 -0.27 -0.62 -0.62 7.80 7.90 n/a <6 2.36 15.10
2014 6.05 5.67 7.89 7.41 7.48 n/a <6 1.15 15.27
2013 20.33 19.90 20.62 10.21 10.11 n/a <6 26.76 14.53
2012 13.87 13.46 13.38 12.60 12.47 n/a <6 21.85 17.50
2011 -1.35 -1.70 -0.26 15.26 15.70 n/a <6 17.87 15.65
2010 12.95 12.54 14.63 n/a <6 14.36 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Tax Exempt Capital Appreciation Consolidated Composite includes all institutional portfolios invested in either actively managed mutual funds or index based securities. The strategy is to provide growth of principal. Under normal conditions, allocation ranges are: Equity 65%-85%, Fixed Income 10%-30%, and Cash 0%-20%. The composite was created in May 2013. As of March 31, 2017, the composite name was changed from PARS Tax Exempt Capital Appreciation HighMark Plus to PARS Tax Exempt Capital Appreciation Consolidated.

The benchmark consists of: 39.5% S&P 500, 10.5% Russell 2000, 10.25% MSCI EAFE (net), 7.5% Russell MidCap, 5.25% MSCI EM (net), 16% Bloomberg Barclays US Aggregate Bond, 3% ICE BofA 1-3 Year US Corporate/Government, 1% ICE BofA US High Yield Master II, 2% Wilshire REIT, 5% FTSE 1 Month T-Bill, rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index..

The standard management fee is 0.36%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

HighMark Capital Management, Inc.

Composite Performance Presentation
PARS Short-to-Intermediate Fixed Income Composite
January 1, 2010 through December 31, 2019
As of December 31
Year
Composite
Gross
Return (%)
Composite
Net Return
(%)
Benchmark
Return
(%)
Composite
3-Yr Std Dev
(%)
Benchmark
3-Yr Std Dev
(%)
Internal
Dispersion
(%)
Number
of
Portfolios
Composite
Assets
($M)
Firm
Assets
($B)

2019 3.30 3.23 3.55 0.34 0.94 n/a <6 153.34 8.87
2018 1.94 1.86 1.59 0.32 0.85 n/a <6 147.05 7.41
2017 1.50 1.42 0.43 0.32 0.74 n/a <6 140.62 14.00
2016 1.29 1.22 0.88 0.30 0.75 n/a <6 140.60 15.25
2015 0.47 0.40 0.53 0.23 0.56 n/a <6 141.40 15.10
2014 0.52 0.45 0.61 0.34 0.44 n/a <6 147.06 15.27
2013 0.73 0.66 0.34 0.40 0.52 n/a <6 152.10 14.53
2012 1.72 1.65 0.42 0.43 0.75 n/a <6 153.38 17.50
2011 0.83 0.75 1.57 0.98 1.04 n/a <6 151.66 15.65
2010 1.69 1.61 2.35 n/a <6 154.90 16.68
HighMark Capital Management, Inc. (“HighMark”) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. HighMark has been independently verified for the period January 1, 2003 through December 31, 2019. The verification report is available upon request.

Verification does not ensure the accuracy of any specific composite presentation.

The PARS Short-to-Intermediate Fixed Income Composite includes all institutional portfolios that invest in U.S. short-term to intermediate-term securities that offer liquidity, stability of principal, and competitive yields. Portfolios in this composite are diversified with security maturities less than 8 years and primarily a weighted average maturity of between 1.5 and 3 years. The composite was created in April 2009.

The benchmark is the ICE BofA 1-3 Year U.S. Treasury Index. Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. Total benchmark returns assume the reinvestment of dividends and other earnings. An investor cannot invest directly in an index.

The standard management fee is 0.072%. Standard management fees do not include any platform, administration, or other distribution fees that client may pay in addition to the management fees.

Past performance does not guarantee future results. Securities investments involve risk, including the possible loss of the principal amount invested. Investments are not deposits of the adviser’s parent or any of the adviser’s affiliates, and are NOT FDIC insured. #25..
- 1118 -
#25..
- 1119 -
HighMark Plus Composite (Active)
Current Quarter* 2.84%
Blended Benchmark*,** 2.09%
Year To Date* 1.64%
Blended Benchmark*,** 1.33%
1 Year 8.00%
Blended Benchmark** 6.08%
3 Year 6.99%
Blended Benchmark** 6.30%
5 Year 5.32%
Blended Benchmark** 4.71%
10 Year 4.63%
Blended Benchmark** 4.20%

PARS DIVERSIFIED PORTFOLIOS

CONSERVATIVE

INVESTMENT OBJECTIVE

ANNUAL RETURNS
ASSET ALLOCATION — CONSERVATIVE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.

Key features include: sophisticated asset allocation
and optimization techniques, four layers of
diversification (asset class, style, manager, and
security), access to rigorously screened, top tier
money managers, flexible investment options, and
experienced investment management.

Rigorous Manager Due Diligence
Our manager review committee utilizes a rigorous
screening process that searches for investment
managers and styles that have not only produced
above-average returns within acceptable risk
parameters, but have the resources and commitment
to continue to deliver these results. We have set high
standards for our investment managers and funds.

This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.

Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:

HighMark Plus utilizes actively managed mutual
funds while Index Plus utilizes index-based
securities, including exchange-traded funds. Both
investment options leverage HighMark’s active asset
allocation approach.

Risk Management
The portfolio is constructed to control risk through
four layers of diversification – asset classes (cash,
fixed income, equity), investment styles (large cap,
small cap, international, value, growth), managers
and securities. Disciplined mutual fund selection and
monitoring process helps to drive return potential
while reducing portfolio risk.

WHY THE PARS DIVERSIFIED
CONSERVATIVE PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 - Present: 7.5% S&P500,

1.5% Russell Mid Cap, 2.5% Russell 2000, 1% MSCI EM (net), 2% MSCI EAFE (net), 52.25% BBG Barclays US Agg, 25.75% ICE BofA 1-3 Yr US Corp/Gov’t, 2% ICE BofA US High Yield Master II, 0.5% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012, the blended benchmark was 12% S&P 500; 1% Russell 2000, 2% MSCI EAFE (net), 40% ICE BofA 1-3 Year Corp./Govt, 40% BBG Barclays US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 15% S&P 500, 40% ICE BofA 1-3Yr Corp/Gov, 40% BBG Barclays US Agg, and 5% FTSE 1 Mth US T-Bill.

To provide a consistent level of
inflation-protected income over
the long-term. The major portion
of the assets will be fixed
income related. Equity securities
are utilized to provide inflation
protection.

Conservative
Moderately Conservative
Moderate
Balanced
Capital Appreciation
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Strategic Range Policy Tactical
Equity 5 – 20% 15% 16%
Fixed Income 60 – 95% 80% 83%
Cash 0 – 20% 5% 1%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Index Plus Composite (Passive)
Current Quarter* 2.40%
Blended Benchmark*,** 2.09%
Year To Date* 1.18%
Blended Benchmark*,** 1.33%
1 Year 5.88%
Blended Benchmark** 6.08%
3 Year 6.55%
Blended Benchmark** 6.30%
5 Year 4.71%
Blended Benchmark** 4.71%
10 Year 4.29%
Blended Benchmark** 4.20%

PORTFOLIO FACTS
HighMark Plus (Active)
Composite Inception Date 07/2004
No of Holdings in Portfolio 20
Index Plus (Passive)
Composite Inception Date 07/2004
No of Holdings in Portfolio 13
HighMark Plus Composite (Active)
2008 -9.04%
2009 15.59%
2010 8.68%
2011 2.19%
2012 8.45%
2013 3.69%
2014 3.88%
2015 0.29%
2016 4.18%
2017 6.73%
2018 -1.35%
2019 11.05%
2020 9.03%
Index Plus Composite (Passive)
2008 -6.70%
2009 10.49%
2010 7.67%
2011 3.70%
2012 6.22%
2013 3.40%
2014 4.32%
2015 0.06%
2016 3.75%
2017 5.52%
2018 -1.09%
2019 10.37%
2020 8.56%
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
#25..
- 1120 -

HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE ADVISER
HighMark® Capital Management, Inc. (HighMark) has
100 years (including predecessor organizations) of
institutional money management experience with $9.3
billion in assets under management and $9.5 billion in
assets under advisement*. HighMark has a long term
disciplined approach to money management and
currently manages assets for a wide array of clients.

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA ®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Randy Yurchak, CFA®
Senior Portfolio Manager
Investment Experience: since 2002
HighMark Tenure: since 2017
Education: MBA, Arizona State University;
BS, University of Washington
Asset Allocation Committee
Number of Members: 17
Average Years of Experience: 26
Average Tenure (Years): 14
Manager Review Group
Number of Members: 8
Average Years of Experience: 20
Average Tenure (Years): 9
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria:

Accounts are managed by HighMark with full investment authority according to the PARS Conservative active and passive objectives.

The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios.

US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank.

The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.

Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free floatadjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the midcap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA US High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg Barclays U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.

HighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of MUFG Union Bank, N.A. (MUB). HighMark manages institutional separate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, and public and private retirement plans. MUB, a subsidiary of MUFG Americas Holdings Corporation, provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account management and construction will vary depending on each client’s investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. 350 California Street
Suite 1600
San Francisco, CA 94104
800.582.4734
www.highmarkcapital.com

HOLDINGS
STYLE
Small Cap

2.5%
Interm-Term Bond

63.9%
High Yield

3.1%
Short-Term Bond

16.2%
Large Cap Core

4.5%
Large Cap Growth

1.7%
Mid Cap

1.2%
Intl Stocks

3.5%
Cash

1.0%
Large Cap Value

1.9% Real Estate

0.5%
Holdings are subject to change at the
discretion of the investment manager.

HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation - Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Victory RS Small Cap Growth - R6 Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
#25..
- 1121 -

PARS DIVERSIFIED PORTFOLIOS

MODERATELY CONSERVATIVE

INVESTMENT OBJECTIVE

ANNUAL RETURNS
ASSET ALLOCATION — MODERATELY CONSERVATIVE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.

This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.

Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:

WHY THE PARS DIVERSIFIED
MODERATELY CONSERVATIVE PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 - Present: 15.5% S&P500, 3% Russell Mid Cap, 4.5% Russell 2000, 2% MSCI EM (net), 4% MSCI EAFE (net), 49.25% BBG Barclays US Agg, 14% ICE BofA 1-3 Yr US Corp/Gov’t, 1.75% ICE BofA US High Yield Master II, 1% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 - 9/30/2012: the blended benchmark was 25% S&P 500; 1.5% Russell 2000, 3.5% MSCI EAFE (net), 25% ICE BofA 1-3 Year Corp./Govt, 40% BBG Barclays US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007, the blended benchmark was 30% S&P 500, 25% ICE BofA 1-3Yr Corp/Gov, 40% BBG Barclays US Agg, and 5% FTSE 1 Mth US T-Bill.

To provide current income, with
capital appreciation as a
secondary objective. The major
portion of the assets is
committed to income-producing
securities. Market fluctuations
should be expected.

Strategic Range Policy Tactical
Equity 20 - 40% 30% 32%
Fixed Income 50 - 80% 65% 67%
Cash 0 - 20% 5% 1%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
Current Quarter* 3.67%
Blended Benchmark*,** 3.12%
Year To Date* 3.97%
Blended Benchmark*,** 3.47%
1 Year 14.19%
Blended Benchmark** 11.97%
3 Year 8.62%
Blended Benchmark** 8.24%
5 Year 7.25%
Blended Benchmark** 6.78%
10 Year 6.01%
Blended Benchmark** 5.89%
Index Plus Composite (Passive)
Current Quarter* 3.25%
Blended Benchmark*,** 3.12%
Year To Date* 3.50%
Blended Benchmark*,** 3.47%
1 Year 11.58%
Blended Benchmark** 11.97%
3 Year 8.18%
Blended Benchmark** 8.24%
5 Year 6.56%
Blended Benchmark** 6.78%
10 Year 5.73%
Blended Benchmark** 5.89%

PORTFOLIO FACTS
HighMark Plus (Active)
Composite Inception Date 08/2004
No of Holdings in Portfolio 20
Index Plus (Passive)
Composite Inception Date 05/2005
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
HighMark Plus Composite (Active)
2008 -15.37%
2009 18.71%
2010 10.46%
2011 1.75%
2012 10.88%
2013 7.30%
2014 4.41%
2015 0.32%
2016 4.94%
2017 9.56%
2018 -2.60%
2019 13.73%
2020 10.76%
Index Plus Composite (Passive)
2008 -12.40%
2009 11.92%
2010 9.72%
2011 3.24%
2012 8.24%
2013 6.78%
2014 5.40%
2015 -0.18%
2016 5.42%
2017 8.08%
2018 -2.33%
2019 13.53%
2020 9.74%
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
#25..
- 1122 -

HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Randy Yurchak, CFA®
Senior Portfolio Manager
Investment Experience: since 2002
HighMark Tenure: since 2017
Education: MBA, Arizona State University;
BS, University of Washington
Asset Allocation Committee
Number of Members: 17
Average Years of Experience: 26
Average Tenure (Years): 14
Manager Review Group
Number of Members: 8
Average Years of Experience: 20
Average Tenure (Years): 9
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The performance records shown represent a size-weighted composite of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Moderately Conservative active and passive objectives.

Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.

Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA US High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg Barclays U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole.

The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S.

Treasury Bill Index tracks the yield of the 1-month U.S. Treasury Bill.

HOLDINGS
STYLE
Small Cap 4.6%
Interm-Term Bond

53.2%
High Yield 2.7%
Short-Term Bond

11.7%
Large Cap Core

8.9%
Large Cap Growth

3.5%
Mid Cap 2.3%
Intl Stocks 7.2%
Cash 1.0%
Large Cap Value

4.0%
Real Estate 1.0%
Holdings are subject to change at the
discretion of the investment manager.

PARS DIVERSIFIED PORTFOLIOS

MODERATE

INVESTMENT OBJECTIVE

ANNUAL RETURNS
ASSET ALLOCATION — MODERATE PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.

This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.

Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:

WHY THE PARS DIVERSIFIED
MODERATE PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 – Present: 26.5% S&P500, 5% Russell Mid Cap, 7.5% Russell 2000, 3.25% MSCI EM (net), 6% MSCI EAFE (net), 33.50% BBG Barclays US Agg, 10% ICE BofA 1-3 Yr US Corp/Gov’t, 1.50% ICE BofA US High Yield Master II, 1.75% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012: the blended benchmark was 43% S&P 500; 2% Russell 2000, 5% MSCI EAFE (net), 15% ICE BofA 1-3 Year Corp./Govt, 30% BBG Barclays US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 50% S&P 500, 15% ICE BofA 1-3Yr Corp/Gov, 30% BBG Barclays US Agg, and 5% FTSE 1 Mth US T-Bill.

To provide current income and
moderate capital appreciation.

It is expected that dividend and
interest income will comprise a
significant portion of total return,
although growth through capital
appreciation is equally important.

Strategic Range Policy Tactical
Equity 40 - 60% 50% 53%
Fixed Income 40 - 60% 45% 46%
Cash 0 - 20% 5% 1%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
HighMark Plus Composite (Active)
Current Quarter* 4.77%
Blended Benchmark*,** 4.30%
Year To Date* 7.12%
Blended Benchmark*,** 6.66%
1 Year 22.58%
Blended Benchmark** 20.51%
3 Year 10.87%
Blended Benchmark** 10.52%
5 Year 9.90%
Blended Benchmark** 9.43%
10 Year 7.81%
Blended Benchmark** 7.96%
Index Plus Composite (Passive)
Current Quarter* 4.39%
Blended Benchmark*,** 4.30%
Year To Date* 6.76%
Blended Benchmark*,** 6.66%
1 Year 19.88%
Blended Benchmark** 20.51%
3 Year 10.20%
Blended Benchmark** 10.52%
5 Year 9.04%
Blended Benchmark** 9.43%
10 Year 7.55%
Blended Benchmark** 7.96%

PORTFOLIO FACTS
HighMark Plus (Active)
Composite Inception Date 10/2004
No of Holdings in Portfolio 20
Index Plus (Passive)
Composite Inception Date 05/2006
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
HighMark Plus Composite (Active)
2008 -22.88%
2009 21.47%
2010 12.42%
2011 0.55%
2012 12.25%
2013 13.06%
2014 4.84%
2015 0.14%
2016 6.45%
2017 13.19%
2018 -4.03%
2019 17.71%
2020 12.92%
Index Plus Composite (Passive)
2008 -18.14%
2009 16.05%
2010 11.77%
2011 2.29%
2012 10.91%
2013 12.79%
2014 5.72%
2015 -0.52%
2016 7.23%
2017 11.59%
2018 -4.03%
2019 17.52%
2020 11.23%
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
#25..
- 1124 -

HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Randy Yurchak, CFA®
Senior Portfolio Manager
Investment Experience: since 2002
HighMark Tenure: since 2017
Education: MBA, Arizona State University;
BS, University of Washington
Asset Allocation Committee
Number of Members: 17
Average Years of Experience: 26
Average Tenure (Years): 14
Manager Review Group
Number of Members: 8
Average Years of Experience: 20
Average Tenure (Years): 9
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Moderate active and passive objectives.

The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The 0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual subadvisory fee rate of 0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.

Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA US High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg Barclays U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1- month U.S. Treasury Bill.

HOLDINGS
STYLE
Small Cap

7.6%
Interm-Term Bond

35.9%
High Yield

2.1% Short-Term Bond

8.5%
Large Cap Core

15.2%
Large Cap Growth

5.9%
Mid Cap

3.7%
Intl Stocks

11.5%
Cash

1.0%
Large Cap Value

6.8%
Real Estate

1.8%
Holdings are subject to change at the
discretion of the investment manager.

PARS DIVERSIFIED PORTFOLIOS

BALANCED

INVESTMENT OBJECTIVE

ANNUAL RETURNS
ASSET ALLOCATION — BALANCED PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.

This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.

Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:

WHY THE PARS DIVERSIFIED
BALANCED PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: From 10/1/2012 – Present: 32% S&P500, 6% Russell Mid Cap, 9% Russell 2000, 4% MSCI EM (net), 7% MSCI EAFE (net), 27% BBG Barclays US Agg, 6.75% ICE BofA 1-3 Yr US Corp/Gov’t, 1.25% ICE BofA US High Yield Master II, 2% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill. From 4/1/2007 – 9/30/2012: the blended benchmark was 51% S&P 500; 3% Russell 2000, 6% MSCI EAFE (net), 5% ICE BofA 1-3 Year Corp./Govt, 30% BBG Barclays US Agg, 5% FTSE 1 Mth US T-Bill. Prior to April 2007: the blended benchmark was 60% S&P 500, 5% ICE BofA 1-3Yr Corp/Gov, 30% BBG Barclays US Agg, and 5% FTSE 1 Mth US T-Bill.

To provide growth of principal
and income. While dividend and
interest income are an important
component of the objective’s
total return, it is expected that
capital appreciation will
comprise a larger portion of the
total return.

Strategic Range Policy Tactical
Equity 50 – 70% 60% 63%
Fixed Income 30 – 50% 35% 36%
Cash 0 – 20% 5% 1%

ANNUALIZED TOTAL RETURNS
(Gross of Investment Management Fees, but Net of
Embedded Fund Fees)
HighMark Plus Composite (Active)
Current Quarter* 5.33%
Blended Benchmark*,** 4.94%
Year To Date* 8.76%
Blended Benchmark*,** 8.27%
1 Year 27.05%
Blended Benchmark** 24.96%
3 Year 11.93%
Blended Benchmark** 11.66%
5 Year 11.26%
Blended Benchmark** 10.76%
10 Year 8.67%
Blended Benchmark** 9.02%
Index Plus Composite (Passive)
Current Quarter* 4.96%
Blended Benchmark*,** 4.94%
Year To Date* 8.39%
Blended Benchmark*,** 8.27%
1 Year 24.26%
Blended Benchmark** 24.96%
3 Year 11.22%
Blended Benchmark** 11.66%
5 Year 10.27%
Blended Benchmark** 10.76%
10 Year 8.40%
Blended Benchmark** 9.02%

PORTFOLIO FACTS
HighMark Plus (Active)
Composite Inception Date 10/2006
No of Holdings in Portfolio 20
Index Plus (Passive)
Composite Inception Date 10/2007
No of Holdings in Portfolio 13
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation
Balanced
HighMark Plus Composite (Active)
2008 -25.72%
2009 21.36%
2010 14.11%
2011 -0.46%
2012 13.25%
2013 16.61%
2014 4.70%
2015 0.04%
2016 6.81%
2017 15.46%
2018 -4.88%
2019 19.85%
2020 14.06%
Index Plus Composite (Passive)
2008 -23.22%
2009 17.62%
2010 12.76%
2011 1.60%
2012 11.93%
2013 15.63%
2014 6.08%
2015 -0.81%
2016 8.25%
2017 13.39%
2018 -5.05%
2019 19.59%
2020 12.07%
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
#25..
- 1126 -

HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Randy Yurchak, CFA®
Senior Portfolio Manager
Investment Experience: since 2002
HighMark Tenure: since 2017
Education: MBA, Arizona State University;
BS, University of Washington
Asset Allocation Committee
Number of Members: 17
Average Years of Experience: 26
Average Tenure (Years): 14
Manager Review Group
Number of Members: 8
Average Years of Experience: 20
Average Tenure (Years): 9
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The performance records shown represent size-weighted composites of tax exempt accounts that meet the following criteria:

Accounts are managed by HighMark with full investment authority according to the PARS Balanced active and passive objectives.

The composite name has been changed from PARS Balanced/Moderately Aggressive to PARS Balanced on 5/1/2013. The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank may charge clients as much as 0.60% annual management fee based on a sliding scale. US Bank pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The

0.36% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of

0.36% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.53 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Gross returns are presented before management and custodial fees but after all trading expenses and reflect the reinvestment of dividends and other income. A client's return will be reduced by the advisory fees and other expenses it may incur as a client. Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.

HOLDINGS
STYLE
Small Cap

9.0%
Interm-Term Bond

28.5%
High Yield

1.7%
Short-Term Bond

5.8%
Large Cap Core

18.5%
Large Cap Growth

7.1%
Mid Cap

4.6%
Intl Stocks

13.7%
Cash

1.0%
Large Cap Value

8.1%
Real Estate

2.0%
Holdings are subject to change at the
discretion of the investment manager.

PARS DIVERSIFIED PORTFOLIOS

CAPITAL APPRECIATION

INVESTMENT OBJECTIVE

ANNUAL RETURNS
ASSET ALLOCATION — CAPITAL APPRECIATION PORTFOLIO
Comprehensive Investment Solution
HighMark® Capital Management, Inc.’s (HighMark)
diversified investment portfolios are designed to
balance return expectations with risk tolerance.

This is a highly specialized, time consuming
approach dedicated to one goal: competitive and
consistent performance.

Flexible Investment Options
In order to meet the unique needs of our clients,
we offer access to flexible implementation strategies:

WHY THE PARS DIVERSIFIED
CAPITAL APPRECIATION PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized. **Breakdown for Blended Benchmark: 39.5% S&P500, 7.5% Russell Mid Cap,

10.5% Russell 2000, 5.25% MSCI EM (net), 10.25% MSCI EAFE (net), 16% BBG Barclays US Agg, 3% ICE BofA 1-3 Yr US Corp/Gov’t, 1% ICE BofA US High Yield Master II, 2% Wilshire REIT, and 5% FTSE 1 Mth US T-Bill.

To provide growth of principal.

The major portion of the assets
are invested in equity securities
and market fluctuations are
expected.

Strategic Range Policy Tactical
Equity 65 - 85% 75% 79%
Fixed Income 10 - 30% 20% 20%
Cash 0 - 20% 5% 1%
ANNUALIZED TOTAL RETURNS (Gross of Investment Management Fees, but Net of Embedded Fund Fees)
Consolidated Composite
Current Quarter* 5.97%
Blended Benchmark*,** 5.75%
Year To Date* 10.83%
Blended Benchmark*,** 10.48%
1 Year 32.31%
Blended Benchmark** 31.54%
3 Year 13.14%
Blended Benchmark** 13.12%
5 Year 12.64%
Blended Benchmark** 12.61%
10 Year 9.75%
Blended Benchmark** 10.06%

PORTFOLIO FACTS
Consolidated Composite
Composite Inception Date 01/2009
No of Holdings in Portfolio 20
Efficient Frontier
Risk (Standard Deviation)
Reward (Rate of Return)
Conservative
Moderately Conservative
Moderate
Capital Appreciation Balanced
Consolidated Composite
2008 N/A
2009 23.77%
2010 12.95%
2011 -1.35%
2012 13.87%
2013 20.33%
2014 6.05%
2015 -0.27%
2016 8.81%
2017 16.72%
2018 -5.82%
2019 22.62%
2020 14.50%
(Gross of Investment Management Fees, but Net of Embedded Fund Fees)
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HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Andrew Brown, CFA®
Senior Portfolio Manager
Investment Experience: since 1994
HighMark Tenure: since 1997
Education: MBA, University of Southern California;
BA, University of Southern California
Salvatore “Tory” Milazzo III, CFA®
Senior Portfolio Manager
Investment Experience: since 2004
HighMark Tenure: since 2014
Education: BA, Colgate University
J. Keith Stribling, CFA®
Senior Portfolio Manager
Investment Experience: since 1985
HighMark Tenure: since 1995
Education: BA, Stetson University
Christiane Tsuda
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2010
Education: BA, International Christian University, Tokyo Anne Wimmer, CFA®
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 2007
Education: BA, University of California, Santa Barbara
Randy Yurchak, CFA®
Senior Portfolio Manager
Investment Experience: since 2002
HighMark Tenure: since 2017
Education: MBA, Arizona State University;
BS, University of Washington
Asset Allocation Committee
Number of Members: 17
Average Years of Experience: 26
Average Tenure (Years): 14
Manager Review Group
Number of Members: 8
Average Years of Experience: 20
Average Tenure (Years): 9
*Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”)
include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The performance records shown represent a size-weighted composite of tax exempt accounts that meet the following criteria: Accounts are managed by HighMark with full investment authority according to the PARS Capital Appreciation active and passive objectives.

Blended benchmarks represent HighMark’s strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction of advisory fees or other expenses of investing but assumes the reinvestment of dividends and other earnings. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is representative of the performance of large companies in the U.S. stock market. The MSCI EAFE Index is a free float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The ICE BofA US High Yield Master II Index tracks the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Wilshire REIT index measures U.S. publicly traded Real Estate Investment Trusts. The unmanaged Bloomberg Barclays U.S. Aggregate Bond Index is generally representative of the U.S. taxable bond market as a whole. The ICE BofA 1-3 Year U.S. Corporate & Government Index tracks the bond performance of the ICE BofA U.S. Corporate & Government Index, with a remaining term to final maturity less than 3 years. The unmanaged FTSE 1-Month U.S. Treasury Bill Index tracks the yield of the 1- month U.S. Treasury Bill.

HOLDINGS
STYLE
Small Cap

10.5%
Interm-Term Bond

16.6%
High Yield

1.3%
Short-Term Bond

2.3%
Large Cap Core

23.3%
Large Cap Growth

8.7%
Mid Cap

5.7%
Intl Stocks

18.6%
Cash

1.0%
Large Cap Value

10.0%
Real Estate

2.0%
Holdings are subject to change at the
discretion of the investment manager.

HighMark Plus (Active) Index Plus (Passive)
Columbia Contrarian Core I3 iShares Core S&P 500 ETF
Vanguard Growth & Income Adm iShares S&P 500 Value ETF
Dodge & Cox Stock Fund iShares S&P 500 Growth ETF
iShares S&P 500 Value ETF iShares Russell Mid-Cap ETF
Harbor Capital Appreciation – Retirement Vanguard Real Estate ETF T. Rowe Price Growth Stock - I iShares Russell 2000 Value ETF iShares Russell Mid-Cap ETF iShares Russell 2000 Growth ETF Vanguard Real Estate ETF iShares Core MSCI EAFE ETF
Undiscovered Managers Behavioral Value-R6 Vanguard FTSE Emerging Markets ETF Victory RS Small Cap Growth - R6 Vanguard Short-Term Invest-Grade Adm DFA Large Cap International Portfolio iShares Core U.S. Aggregate Dodge & Cox International Stock Vanguard High-Yield Corp Adm MFS International Growth - R6 First American Government Obligations Z Hartford Schroders Emerging Markets Eq
Vanguard Short-Term Invest-Grade Adm
PIMCO High Yield Instl
PIMCO Total Return Fund - Inst
PGIM Total Return Bond - R6
DoubleLine Core Fixed Income - I
First American Government Obligations Z
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PARS DIVERSIFIED PORTFOLIOS

SHORT-TO-INTERMEDIATE FIXED INCOME

PHILOSOPHY

ANNUAL COMPOSITE RETURNS
(GROSS OF INVESTMENT MANAGEMENT FEES)

PROCESS
Fundamental Economic Analysis
Our Asset Allocation Committee, composed
of our most senior investment professionals,
conducts fundamental analysis of global
economic indicators and fiscal and monetary
policy. A strategic focus is placed on the leading
indicators that have historically provided insight
into the business cycle and potential changes
in Federal Reserve policy. Our goal is to ensure
that your portfolio is carefully positioned within a
macroeconomic framework.

Market and Credit Analysis
We identify the most attractive issues among
diverse asset classes and market sectors to
enhance portfolio diversification and yield. Yield
curve analysis identifies pricing opportunities
that give us the chance to reposition a portfolio
and take advantage of changes in the slope of the
yield curve. Sector analysis allows us to identify
areas that offer the most attractive yields on a
risk-adjusted basis. Our team evaluates historical
spread volatility and excess return trends, in
addition to expected relative performance of each
sector. Finally, our in-house research staff analyzes
the creditworthiness of new security candidates
and existing securities on an ongoing basis.

Portfolio Construction
In building a diversified and customized portfolio
tailored to clients stated objectives and liquidity
needs, our team seeks to diversify across multiple
industries and security types. Portfolios are
periodically repositioned to seek opportunities
arising from changes in interest rates, the yield
curve, and sector spreads.

Risk Management
Our overarching goal is to ensure risk is managed
and minimized through portfolio diversification, the
monitoring of portfolio holdings, and interest rate
sensitivity analysis. Comprehensive performance
measurement, compliance tools, and constant
adherence to investment guidelines allow us to
manage risk consistent with expectations.

WHY THE PARS DIVERSIFIED
SHORT-TO-INTERMEDIATE PORTFOLIO?
Q2 2021
* Returns less than one year are not annualized
We believe that safety, liquidity, and yield are the most important drivers of our shortto-intermediate strategy. We seek to maximize after-tax income while preserving principal and maintaining liquidity.

ANNUALIZED TOTAL RETURNS
(GROSS OF INVESTMENT MANAGEMENT FEES)
2008 1.06%
2009 5.39%
2010 1.69%
2011 0.83%
2012 1.72%
2013 0.73%
2014 0.52%
2015 0.47%
2016 1.29%
2017 1.50%
2018 1.94%
2019 3.30%
2020 1.82%

PORTFOLIO MATURITY

1. Fundamental
Economic
Analysis

2. Market
and Credit
Analysis

3. Portfolio
Construction
Risk Management
2Q21* YTD* 1 YR 3 YR 5 YR 10 YR
PARS Short-toIntermediate Composite 0.13 0.17 0.53 2.16 1.79 1.36 ICE BofA 1-3 Year
U.S. Treasury Index -0.02 -0.06 0.11 2.70 1.60 1.20

SECTOR WEIGHTINGS
Weight
UNDER 30 DAYS 5.64%
31 – 60 DAYS 4.79%
61 – 90 DAYS 9.34%
91 – 180 DAYS 7.99%
181 – 365 DAYS 12.03%
365+ DAYS 60.21%
TOTAL 100.00%
Weight
COMMERCIAL PAPER 27.09%
CORPORATE BONDS 55.31%
ABS 16.95%
MONEY MARKET 0.65%
TOTAL 100.00%
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HIGHMARK CAPITAL MANAGEMENT
350 California Street
Suite 1600
San Francisco, CA 94104
800-582-4734

ABOUT THE PORTFOLIO MANAGEMENT TEAM
Greg Haendel, CFA®
Head of Fixed Income
Investment Experience: since 1998
HighMark Tenure: since 2020
Education: BA, Economics, Amherst College;
MBA, Business, Finance and Accounting, UCLA
Anderson School of Business
Dorothy Cooney
Senior Portfolio Manager
Investment Experience: since 1987
HighMark Tenure: since 1997
Education: BA, Political Science, University
of Colorado; MBA, Marketing Management,
University of San Francisco
Cori Farwell
Short Duration Fixed Income Strategies Manager
Investment Experience: since 1992
HighMark Tenure: since 2002
Education: BS, Business Administration,
California State University, San Francisco;
MBA, Finance, St. Mary’s College
Philip B. Levy, CFA®, CPA
Portfolio Manager
Investment Experience: since 1991
HighMark Tenure: since 2008
Education: BA, Business Economics, University of
California, Santa Barbara
Curtis Wigginton
Portfolio Manager
Investment Experience: since 2018
HighMark Tenure: since 2018
Education: BS, Economics, Brigham Young University;
MBA, St. Mary’s College
The second quarter of 2021 was characterized by the continuation of global monetary stimulus, increased Covid vaccinations, an easing of Covid restrictions, a strong U.S. economic recovery, a pick-up in inflation, and a potentially more hawkish Fed. Despite the aforementioned, long maturity interest rates declined during the quarter, the interest rate curve flattened, and investment grade and high yield credit spreads tightened with lower quality generally outperforming.

Given unprecedented levels of fiscal stimulus and positive movement toward re-opening, U.S. economic data posted strong gains in manufacturing, employment, personal consumption, and consumer goods and services prices. Core PCE1 registered the highest year-over-year reading since 1992. Drivers of the increased inflation metrics include base effect comparisons, supply chain disruptions (causing a surge in used car prices), pent up demand for travel and leisure, as well as shelter costs and wage pressures. While most of these factors are believed to be transitory, it remains a controversial and greatly debated market issue.

The June FOMC meeting resulted in no change in the Fed Funds target rate, though the Fed pivoted to a potentially more hawkish stance on forward monetary policy. Specifically, the median estimate of the Fed Funds rate among FOMC members increased to two rate hikes by the end of 2023. Further, current forecasts for near term inflation increased while the range of long term inflation forecasts widened. However, the FOMC re-emphasized their pledge to its new policy-making framework, which entails a willingness to allow average inflation to exceed 2.0% for an undisclosed period of time in order to achieve more broad based employment improvement. There was also no change to the Fed’s quantitative easing (QE) program although internal dialogue has commenced regarding how and when to begin tapering QE purchases.

Intermediate and long maturity interest rates declined during the quarter and the interest rate curve flattened. Notably, 10-year rates declined 27 bps to 1.47% while the 30-year bond fell 32 bps to

2.09%. This translated to a 3.1% and 7.8% gain for 10- and 30-year US Treasuries, respectively.

Short maturity treasury interest rates were mixed, with 2-year rates increasing 9 bps to 0.25%, 3-year rates increasing 11 bps to 0.46%, while 5-year rates declined 5 bps to 0.89%, reflecting the market’s anticipation that the Fed may accelerate its timeline surrounding the removal of policy accommodation.

The inflation expectations component of interest rates (TIPS break-evens) remained relatively unchanged during the quarter.

The ICE BofA 1-3 Year U.S. Corporate and Government Index returned 0.06%, an excess return of 10 bps, due to strength from short duration investment grade credit. The ICE BofA 1-3 year U.S.

Corporate Index posted a 0.34% gain, outperforming comparable treasuries by 38 bps, while the ICE BofA 1-3 year U.S. Treasury Index lost -0.03% for the quarter as the front end of the rate curve remained anchored by the Fed. Short duration investment grade corporate bond index credit spreads narrowed by 8 bps during the quarter +39, finishing at an historical tight valuation dating back to 2001.

For the year-to-date, 1-3 year Corporates are ahead 0.36%, outperforming U.S. Treasuries by 49 bps.

Mortgage-backed securities posted a gain of 0.33% in the second quarter, underperforming Treasuries by -61 bps and remaining a laggard year-to-date with a negative excess return of -45 bps.

Mortgages have already begun factoring in a taper of asset purchases by the Fed, while valuations remain at snug levels. Asset-backed securities gained 0.34% during the quarter, posting a positive excess return of 24 bps for the quarter and 39 bps YTD.

Outlook:

We remain overweight investment grade corporate credit due to improving credit fundamentals and modestly positive supply demand technical factors offset by relatively rich valuations. Corporate balance sheets are on an improving trajectory after bottoming in mid-2020 while EBITDA growth should begin to accelerate as the global economy continues to reopen. The potential for heightened shareholder friendly activity such as share buybacks, increased dividends, and M&A pose some risk to a continued improvement in credit fundamentals on an issuer specific basis. Although corporate credit valuations are very full, significant opportunities still exist within industry and issuer selection. Despite full valuations within asset-backed securities, credit improvement and relative value opportunities remain down the capital structure as well as within esoteric securitized assets. The outlook for agency mortgage-backed securities is mixed and positioning remains underweight relative to the Index. Fed asset purchases are creating a near-term technical positive, however the likely tapering of these purchases within the next year could put valuations at risk given their rich relative starting place.

Despite the significant rally in intermediate and long maturity U.S. Treasury yields during the second quarter, we continue to expect a move higher over the next several quarters. The catalyst for higher rates may be a combination of a continued global economic recovery, an eventual slowdown in Covid, record net U.S. Treasury issuance, TGA balances stabilizing, and initial steps globally toward slowing accommodative monetary policy.

HighMark® Capital Management Perspectives and Commentary *Assets under management (“AUM”) include assets for which HighMark provides continuous and regular supervisory and management services. Assets under advisement (“AUA”) include assets for which HighMark provides certain investment advisory services (including, but not limited to, investment research and strategies) for client assets of its parent company, MUFG Union Bank, N.A.

The adviser to the PARS portfolios is US Bank, and HighMark serves as sub-adviser to US Bank to manage these portfolios. US Bank charges clients a 0.12% annual management fee and pays HighMark 60% of the annual management fee for assets sub-advised by HighMark under its sub-advisory agreement with US Bank. The 0.072% paid to HighMark, as well as other expenses that may be incurred in the management of the portfolio, will reduce the portfolio’s returns. Assuming an investment for five years, a 5% annual total return, and an annual sub-advisory fee rate of 0.072% deducted from the assets at market at the end of each year, a $10 million initial value would grow to $12.72 million after fees (Net-of-Fees) and $12.76 million before fees (Gross-of-Fees). Additional information regarding the firm’s policies and procedures for calculating and reporting performance results is available upon request. Performance results are calculated and presented in U.S. dollars and do not reflect the deduction of investment advisory fees, custody fees, or taxes but do reflect the deduction of trading expenses. Returns are calculated based on trade-date accounting.

Benchmark returns do not reflect the deduction of advisory fees, custody fees, transaction costs, or other expenses of investing. An investor cannot invest directly in the unmanaged index stated above. The ICE BofA 1-3 Year U.S. Treasury Index is an unmanaged index consisting of all public U.S. Treasury obligations having maturities from 1 year to 2.99 years. Total returns assume the reinvestment of dividends and other earnings. Results for periods greater than one year are annualized.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions.

Investments employing HighMark strategies are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal. 1Primary inflation metric that the Fed focuses on to gauge interest rate policy #25..
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Active OPEB Portfolio as of June 2021
Ticker Fund Name
Equity <20% equity <40% equity <60% equity 50-70% equity 65-85% equity Large Cap Core 1.66% 3.09% 5.23% 6.37% 7.92% COFYX COLUMBIA CONTRARIAN CORE-I3 Large Cap Core 2.87% 5.81% 9.96% 12.13% 15.37% VGIAX VANGUARD GROWTH & INCOME-ADM Large Cap Value 1.30% 2.71% 4.66% 5.59% 6.79% DODGX DODGE & COX STOCK Large Cap Value 0.63% 1.27% 2.11% 2.54% 3.17% IVE ISHARES S&P 500 VALUE ETF Large Cap Growth 0.84% 1.74% 2.97% 3.56% 4.35% HNACX HARBOR CAPITAL APPRECIA-RTR Large Cap Growth 0.84% 1.74% 2.97% 3.56% 4.35% PRUFX T ROWE PR GROWTH STOCK-I Mid Cap Blend 1.14% 2.29% 3.74% 4.57% 5.71% IWR ISHARES RUSSELL MID-CAP ETF Real Estate 0.50% 1.05% 1.77% 2.00% 2.00% VNQ VANGUARD REAL ESTATE ETF Small Cap Value 1.25% 2.29% 3.78% 4.50% 5.25% UBVFX UNDISC MGRS BEHAV VAL-R6 Small Cap Growth 1.25% 2.29% 3.78% 4.50% 5.25% RSEJX VICTORY RS SM CAP GROW-R6 International 1.08% 2.20% 3.47% 4.11% 5.75% DFALX DFA L/C INTERNATIONAL PORTF International 0.50% 1.10% 1.70% 2.01% 2.86% DODFX DODGE & COX INTL STCK International 0.50% 1.11% 1.71% 2.01% 2.87% MGRDX MFS INTERNATIONAL GROWTH-R6 Emerging Markets 1.39% 2.80% 4.63% 5.57% 7.10% HHHFX HRTFRD SCHR EM MRKT EQ-F

15.75% 31.50% 52.50% 63.00% 78.75%
Fixed Income
Short Term Bond 16.20% 11.69% 8.45% 5.75% 2.33% VFSUX VANGUARD S/T INVEST GRD-ADM High Yield 3.13% 2.67% 2.14% 1.75% 1.29% PHIYX PIMCO HIGH YIELD FUND-INST Interm Term Bond 21.30% 17.72% 11.97% 9.50% 5.54% PTTRX PIMCO TOTAL RETURN FUND-INST Interm Term Bond 21.30% 17.72% 11.97% 9.50% 5.54% PTRQX PGIM TOTAL RETURN BOND-R6 Interm Term Bond 21.30% 17.72% 11.97% 9.50% 5.54% DBLFX DOUBLELINE CORE FIX INC-I

83.25% 67.50% 46.50% 36.00% 20.25%
Cash 1.00% 1.00% 1.00% 1.00% 1.00% FGZXX FIRST AM GOV OBLIG-Z TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%

0.46% 0.48% 0.49% 0.51% 0.52% Weighted embedded expense ratio*

0.35% 0.35% 0.35% 0.35% 0.35% Weighted investment management fee** *Represents the weighted embedded expense ratio for that fund (Source: Morningstar Direct) **Represents the weighted investment management fee net of any waivers in place for assets invested in funds for which US Bank serves as advisor; assuming a $5 million account
PARS
Conservative
PARS
Moderately
Conservative
PARS
Moderate
PARS
Balanced
PARS Capital
Appreciation
Actively Managed Mutual Funds
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Passive OPEB Portfolio as of June 2021
PARS
Conservative
PARS
Moderately
Conservative
PARS
Moderate
PARS
Balanced
PARS Capital
Appreciation Ticker
Passively Managed Mutual Funds
Fund Name
Equity <20% equity <40% equity <60% equity 50-70% equity 65-85% equity Large Cap Blend 4.52% 8.90% 15.19% 18.49% 23.29% IVV ISHARES CORE S&P 500 ETF Large Cap Value 1.93% 3.98% 6.77% 8.12% 9.96% IVE ISHARES S&P 500 VALUE ETF Large Cap Growth 1.68% 3.48% 5.94% 7.12% 8.71% IVW ISHARES S&P 500 GROWTH ETF Mid Cap Blend 1.14% 2.29% 3.74% 4.57% 5.71% IWR ISHARES RUSSELL MID-CAP ETF Real Estate 0.50% 1.05% 1.77% 2.00% 2.00% VNQ VANGUARD REAL ESTATE ETF Small Cap Value 1.25% 2.29% 3.79% 4.50% 5.25% IWN ISHARES RUSSELL 2000 VALUE E Small Cap Growth 1.25% 2.29% 3.79% 4.50% 5.25% IWO ISHARES RUSSELL 2000 GROWTH International 2.08% 4.41% 6.89% 8.12% 11.48% IEFA ISHARES CORE MSCI EAFE ETF Emerging Markets 1.39% 2.80% 4.63% 5.57% 7.10% VWO VANGUARD FTSE EMERGING MARKE

15.75% 31.50% 52.50% 63.00% 78.75%
Fixed Income
Short Term Bond 16.20% 11.69% 8.45% 5.75% 2.33% VFSUX VANGUARD S/T INVEST GRD-ADM High Yield 3.13% 2.67% 2.14% 1.75% 1.29% VWEAX VANGUARD HI YLD CORP-ADM Intermediate Term Bond 63.91% 53.15% 35.91% 28.50% 16.63% AGG ISHARES CORE U.S. AGGREGATE

83.25% 67.50% 46.50% 36.00% 20.25%
Cash 1.00% 1.00% 1.00% 1.00% 1.00% FGZXX FIRST AM GOV OBLIG-Z TOTAL 100.00% 100.00% 100.00% 100.00% 100.00%

0.07% 0.08% 0.10% 0.10% 0.11% Weighted embedded expense ratio*

PARS satisfies the City’s insurance limits and requirements; however, we respectfully request that ‘agents’ be removed as an additional insured given that the term is broad and not defined.

PARS also requests that architects, engineers, consultants, counselors, attorneys, and accountants be removed from the additional insureds endorsement requirement as PARS would have no contractual obligation to parties not related to the City.

The Additional Insured endorsement only applies to the Commercial General and Auto Liability policies.
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-1-

STANDARD AGREEMENT

FOR CONSULTANT SERVICES
THIS AGREEMENT made and entered into in the City of Modesto, State of California, this 14th day of December 2021, (“Effective Date”) by and between the CITY OF MODESTO, a municipal corporation of the State of California, hereinafter referred to as "City", and PUBLIC AGENCY RETIREMENT SERVICES and PARS, a California Corporation, hereinafter referred to as "Consultant".

This Agreement is made with regard to the following recitals:

A. The City has determined that it needs assistance to provide administrative and management services for establishment of a Trust Fund.

B. Consultant represents that it is qualified, willing and able to provide the services to prepare said document(s).

C. The City has adopted the PARS Public Agencies Post-Employment Benefits Trust for the purpose of pre-funding pension obligations and/or Other Post-Employment Benefits (“OPEB”) obligations (“Plan”) and is desirous of retaining the Consultant as Trust Administrator to the Trust, to provide administrative services.

NOW, THEREFORE, in consideration of this Agreement, and the mutual promises, covenants, and stipulations hereinafter contained, the parties agree as follows:

1. SCOPE OF SERVICES.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in Exhibit "A", Services, in a manner compatible with the standards of its profession and shall produce a fully complete project that is acceptable to City.

2. TERM OF AGREEMENT.

This Agreement is effective for a term of December 14, 2021, to December 13, 2024, with the option to extend on an annual basis for up to four (4) additional years and will continue in effect until City’s acceptance of and payment for all services #25..
- 1137 -
-2-
authorized by City and performed by Consultant, unless terminated earlier in accordance with the provisions of the termination clause in this Agreement.

Consultant shall undertake and complete the preparation of the scope of work as set forth and described in Exhibit "A" and made a part hereof. City hereby gives Consultant notice to proceed with the preparation of the project in the manner described in Exhibit "A", Consultant shall diligently proceed with the preparation of the project and agrees to complete said preparation set forth in Exhibit "A" in a timely manner, subject to the further provisions of the Agreement.

3. COMPENSATION.

Consultant will be compensated for performance of the Services as described in the exhibit attached hereto as Exhibit “B”, Fees for Services. Payment for the Services will be remitted directly from Plan assets unless the City chooses to make payment directly to Consultant. In the event that the City chooses to make payment directly to Consultant, it shall be the responsibility of the City to remit payment directly to Consultant based upon an invoice prepared by Consultant and delivered to the City. If payment is not received by Consultant within thirty (30) days of the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per month. If payment is not received from the City within sixty (60) days of the invoice delivery date, payment plus accrued interest will be remitted directly from Plan assets, unless Consultant has previously received written communication disputing the subject invoice that is signed by a duly authorized representative of the City.

4. FEES FOR SERVICES BEYOND SCOPE.

Fees for services beyond those specified in this Agreement will be billed to the City at the rates indicated in the Consultant’s standard fee schedule in effect at the time the services are provided and shall be payable as described in Section 3 of this Agreement.

Consultant’s current standard fee schedule is attached hereto as part of Exhibit “B”. Before any such services are performed, Consultant will provide the City with a detailed description of the #25..
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services, terms, and applicable rates for such services. Such services, terms, and applicable rates shall be agreed upon in writing and executed by both parties.

5. OBLIGATIONS OF CONSULTANT.

Throughout the term of this Agreement, Consultant shall possess, or secure all licenses, permits, qualifications and approvals legally required to conduct business.

Consultant warrants that it has all of the necessary professional capabilities and experience, as well as all tools, instrumentalities, facilities and other resources necessary to provide the City with the services contemplated by this Agreement. Consultant further warrants that it will follow the best current, generally accepted and professional practices to make findings, render opinions, prepare factual presentations, and provide professional advice and recommendations regarding this project.

6. PERFORMANCE BY KEY EMPLOYEE.

Consultant primarily responsible for the performance of the services referred to in this Agreement. City has entered into this Agreement in reliance on that representation by Consultant.

7. INFORMATION FURNISHED TO CONSULTANT.

Consultant will provide the Services contingent upon the City providing Consultant the information specified in the exhibit attached hereto as Exhibit “C” (“Data”). It shall be the responsibility of the City to certify the accuracy, content, and completeness of the Data so that Consultant may rely on such information without further audit. It shall further be the responsibility of the City to deliver the Data to Consultant in such a manner that allows for a reasonable amount of time for the Services to be performed. Unless specified in Exhibit “A”, Consultant shall be under no duty to question Data received from the City, to compute contributions made to the Plan, to determine or inquire whether contributions are adequate to meet and discharge liabilities under the Plan, or to determine or inquire whether contributions made to the Plan are in compliance with the Plan or applicable law. In addition, Consultant shall #25..
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not be liable for nonperformance of Services to the extent such nonperformance is caused by or results from erroneous and/or late delivery of Data from the City. In the event that the City fails to provide data in a complete, accurate and timely manner and pursuant to the specifications in Exhibit “C”, Consultant reserves the right, notwithstanding the further provisions of this Agreement, to terminate this Agreement upon no less than ninety (90) days written notice to the City.

8. OWNERSHIP OF DOCUMENTS/TITLE TO DATA.

Ownership of Documents
All reports, drawings, designs, graphics, working papers and other incidental work or materials furnished hereunder shall become and remain the property of the City, and may be used by City as it may require without any additional cost to City. No reports shall be used by the Consultant for purposes other than this Agreement without the express prior written consent of City.

Title to Data
If, as a part of the Agreement, Consultant is required to produce data such as, but not limited to, drawings, plans, specifications, calculations, models, flow diagrams, visual aids and other related materials, the originals of all such data generated under this Agreement will be delivered to City upon the completion or termination of services under the Agreement.

All materials, documents, data or information obtained from the City data files or any City medium furnished to Consultant in the performance of this Agreement will at all times remain the property of the City. Such data or information may not be used or copied for direct or indirect use by Consultant after termination of this Agreement without written consent of the City. All information so obtained shall be accorded confidential treatment as provided under applicable law.
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9. CONFIDENTIALITY.

Without the City’s consent, Consultant shall not disclose any information relating to the Plan except to duly authorized officials of the City, subject to applicable law, and to parties retained by Consultant to perform specific services within this Agreement. The City shall not disclose any information relating to the Plan to individuals not employed by the City without the prior written consent of Consultant, except as such disclosures may be required by applicable law.

10. NEWS AND INFORMATION RELEASE.

Consultant agrees that it will not issue any news releases in connection with either the award of this Agreement, or any subsequent amendment of or efforts under this Agreement, without first obtaining review and approval of said news releases from City through the City Manager.

11. DESIGNEES.

The City Manager, or their designee, shall have the authority to act for and exercise any of the rights of the City as set forth in this Agreement, subsequent to and in accordance with the written authority granted by the City Council, a copy of which writing shall be delivered to Consultant. Any officer of Consultant, or his or her designees, shall have the authority to act for and exercise any of the rights of Consultant as set forth in this Agreement.

12. INTEREST OF CONTRACTOR.

Consultant warrants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of services required to be performed under this Agreement. Consultant warrants that, in performance of this Agreement, Consultant shall not employ any person having any such interest. Consultant agrees to file a Statement of Economic Interests with the City Clerk at the start and end of this Agreement if so required at the option of City. #25..
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13. AMENDMENTS.

Both parties to this Agreement understand that it may become desirable or necessary during the execution of this Agreement, for City or Consultant to modify the scope of services provided for under this Agreement. Any material extension or change in the scope of work shall be discussed with City and the change and cost shall be memorialized in a written amendment to the original Agreement prior to the performance of the additional work and executed by the parties hereto.

Until a change order is so executed, City will not be responsible to pay any charges Consultant may incur in performing such additional services, and Consultant shall not be required to perform any such additional services.

14. INDEPENDENT CONTRACTOR.

All acts of Consultant, its agents, officers, and employees and all others acting on behalf of Consultant relating to the performance of this Agreement, shall be performed as independent contractors and not as agents, officers, or employees of City. Consultant, by virtue of this Agreement, has no authority to bind or incur any obligation on behalf of City.

Consultant has no authority or responsibility to exercise any rights or power vested in the City.

No agent, officer, or employee of the City is to be considered an employee of Consultant. It is understood by both Consultant and City that this Agreement shall not under any circumstances be construed or considered to create an employer-employee relationship or a joint venture.

Consultant, its agents, officers and employees are and, at all times during the terms of this Agreement, shall represent and conduct themselves as independent contractors and not as employees of City.

Consultant shall determine the method, details and means of performing the work and services to be provided by Consultant under this Agreement. Consultant shall be responsible to City only for the requirements and results specified in this Agreement, and, except as expressly provided in this Agreement, shall not be subjected to City's control with respect to #25..
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the physical action or activities of the Consultant in fulfillment of this Agreement. Consultant has control over the manner and means of performing the services under this Agreement.

Consultant is permitted to provide services to others during the same period service is provided to City under this Agreement. If necessary, Consultant has the responsibility for employing other persons or firms to assist Consultant in fulfilling the terms and obligations under this Agreement.

If in the performance of this Agreement any third persons are employed by Consultant, such persons shall be entirely and exclusively under the direction, supervision, and control of Consultant. All terms of employment including hours, wages, working conditions, discipline, hiring, and discharging or any other term of employment or requirement of law shall be determined by the Consultant.

It is understood and agreed that as an independent contractor and not an employee of City neither the Consultant or Consultant's assigned personnel shall have any entitlement as a City employee, right to act on behalf of the City in any capacity whatsoever as an agent, or to bind the City to any obligation whatsoever.

It is further understood and agreed that Consultant must issue W-2 forms or other forms as required by law for income and employment tax purposes for all of Consultant's personnel.

15. FORCE MAJEURE.

When a party’s nonperformance hereunder was beyond the control and not due to the fault of the party not performing, a party shall be excused from performing its obligations under this Agreement during the time and to the extent that its performance is prevented by such cause. Such cause shall include, but not be limited to: any incidence of fire, flood, acts of God or unanticipated communicable disease, acts of terrorism or war commandeering of material, products, plants or facilities by the federal, state or local government, a material act or omission by the other party or any law, ordinance, rule, guidance #25..
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or recommendation by the federal, state or local government, or any agency thereof, which becomes effective after the date of this Agreement that delays or renders impractical either party’s performance under the Agreement

16. ASSIGNMENT.

Neither this Agreement nor any portion thereof shall be subcontracted or assigned without the express prior written consent of the City in each and every instance.

17. PATENT/COPYRIGHT MATERIALS.

Unless otherwise expressly provided in the Agreement, Consultant shall be solely responsible for obtaining the right to use any patented or copyrighted materials in the performance of this Agreement. Consultant shall furnish a warranty of such right to use to City at the request of City.

18. NOTICES.

Notice required by this Agreement shall be given in writing and shall be deemed given and effective upon receipt provided that such are delivered in accordance with the provisions of this Section. Notices shall be delivered either by: (a) personal delivery (including delivery by an overnight courier service which obtains confirmation of receipt); or (b) by facsimile, provided that such transmission is followed by delivery by an overnight courier service which obtains confirmation of receipt; or (c) postage prepaid, return receipt requested, certified mail; or (d) by electronic transmission subject to reasonable proof that the notice was both transmitted and received. Each such notice shall be sent to the parties at the address respectively set forth below or to such other address as a party may designate by written notice given in accordance with the provisions of this Section:

FOR CONSULTANT: Name: Public Agency Retirement Services Address: 4350 Von Karman Avenue, Suite 100
Newport Beach, CA 92660
Attention: Daniel Johnson, President &
Phone: (800) 540-6369
Attention: Jennifer Meza, Manager & City’s consultant
Phone: (800) 540-6369 ext. 141
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FOR CITY: Contact: City of Modesto
Address: P.O. Box 642
1010 Tenth Street, Suite 2200
Modesto, CA 95353
Attention: Christina Alger, Director of Human Resources Phone: (209) 577-5126

19. INSURANCE REQUIREMENTS.

The Consultant shall provide at its own expense and maintain at all times the following insurance with insurance companies licensed in the State of California and shall provide evidence of such insurance to the City as may be required by the Risk Manager of the City. The policies or certificates thereof shall provide that, thirty (30) days prior to cancellation (except 10-days’ notice of cancellation for non-payment of premium) or material change in the policy, notices of same shall be given to the Risk Manager of the City by First Class U.S. mail, for all of the following stated insurance policies.

In the event the certificates of insurance required hereunder do not provide for notice of cancellation to the certificate holder and/or additional insureds, the Consultant shall provide, and shall require its subcontractors to provide, as an express condition precedent to payment hereunder, an endorsement from their insurers providing that the additional insureds identified herein shall be provided 30 days notice of the cancellation on the policies of insurance required hereunder (10 days notice if the policies are cancelled for non-payment of premium). In addition, the named insured on all such policies shall provide to the additional insureds identified herein any notices of cancellation of said insurance policies within 5 business days of receipt of such notice. The Consultant shall, as a further express condition precedent to payment for work performed, affirm under penalty of perjury that the required insurance on the project remains in place and said insurance has not been cancelled.
(a) Worker's Compensation - in compliance with the statutes of the State of California, plus employer's liability with a minimum limit of liability of $1,000,000. #25..
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(b) General Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. This insurance shall indicate on the certificate of insurance the following coverages and indicate the policy aggregate limit applying to: premises and operations; broad form contractual; independent consultants and subcontractors; products and completed operations as applicable.
(c) Automobile Liability insurance with a minimum limit of liability per occurrence of $1,000,000 for bodily injury and property damage. This insurance shall cover any automobile for bodily injury and property damage.
(d) Professional Liability insurance with a minimum limit of $1,000,000 per claim and policy aggregate of $2,000,000. If coverage is on a claims made basis it shall be maintained for at least three (3) years following completion of the work.

If at any time any of said policies shall be unsatisfactory to the City, as to form or substance, or if a company issuing such policy shall be unsatisfactory to the City, the Consultant shall promptly obtain a new policy, submit the same to the Risk Manager for approval and submit a certificate thereof as hereinabove provided. Upon failure of the Consultant to furnish, deliver or maintain such insurance and certificates as above provided, this Agreement, at the election of the City, may be forthwith declared suspended or terminated.

Failure of the Consultant to obtain and/or maintain any required insurance shall not relieve the Consultant from any liability under this Agreement, nor shall the insurance requirements be construed to conflict with or otherwise limit the obligations of the Consultant concerning indemnification. The City, its officers, employees, and volunteers shall be named as an additional insured on all insurance policies required herein, except Workers' Compensation and Professional Liability. The Workers' Compensation insurer shall agree to waive all rights of #25..
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subrogation against the City, its officers, employees, and volunteers for losses arising from work performed by Consultant for the City. The Consultant's insurance policy(ies) shall include a provision that the coverage is primary as respects the City; shall include no special limitations to coverage provided to additional insured; and, shall be placed with insurer(s) with acceptable Best's rating of A-:VII or with approval of the Risk Manager. The Consultant must deliver certificates evidencing existence of the insurance listed above to the City prior to the time the Agreement is signed.

CONSULTANT shall provide CITY with separate endorsements evidencing proof of the CITY’s additional insured status as to both the general liability and automobile liability insurance policies. In addition, CONSULTANT shall provide CITY with a Workers Compensation subrogation waiver by way of a separate endorsement. All endorsements referenced above must include the applicable policy number.

For any claims related to this project, the CONSULTANT’S insurance coverage shall be primary insurance as respects the Entity, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the Entity, its officers, officials, employees, or volunteers shall be excess of the CONSULTANT’S insurance and shall not contribute with it.

20. TERMINATION OF AGREEMENT.

Either party may terminate this Agreement at any time by giving thirty (30) days written notice to the other party of the intent to terminate.

Termination by City for Default of Consultant
Should Consultant default in the performance of this Agreement or materially breach any of its provisions, at its option, City may terminate this Agreement by giving written notification to Consultant.

The termination date shall be the effective date of the notice. For the purposes of this section, material breach of this Agreement shall include, but not be limited to, #25..
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any of the following: failure to perform required services or duties, willful destruction of City's property by Consultant, dishonesty or theft.

The City gives Consultant written notice of such a breach or nonperformance, Consultant shall have thirty (30) days in which to take the necessary actions to cure the breach or nonperformance. The notice shall specify in reasonable detail the events the City believes to have occurred, the provisions of the Agreement that have not been complied with and the actions that, in the opinion of the City, would be required to fulfill the requirements of this Agreement and cure Consultant’s material breach or nonperformance of a material obligation. If Consultant’s breach or nonperformance is not cured or excused, the City may terminate the Agreement by delivering a notice of termination to Consultant not less than thirty (30) days prior to the effective date of the termination.

Termination by City for Convenience
The City may also terminate the Consultant's performance under the Agreement, either in whole or in part, at its own discretion, or when conditions encountered during the Services make it impossible or impracticable to proceed, or when the City is prevented from proceeding with the Agreement by act of God, by law, or by official action of a public authority, or upon a determination by the City that such termination is in the best interest and convenience of the City, or whenever the Consultant is prohibited from completing the Services for any reason. The City shall provide no less than thirty (30) calendar days written notice of its intent to terminate the Agreement for convenience, and shall endeavor to provide the Consultant with consultation with the City prior to termination.

Authorization to Terminate Agreement
The City may terminate this agreement only upon the authorization of the City Council.
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21. INDEMNITY.

Consultant and City hereby indemnify each other and hold the other harmless, including their respective officers, directors, employees, and agents from any claim, loss, demand, liability, or expense, including reasonable attorneys’ fees and costs, incurred by the other to the extent arising out of Consultant’s or City’s, as the case may be, negligent acts, errors or omissions or willful misconduct with respect to the performance of their respective duties hereunder.

23. ENTIRE AGREEMENT.

This Agreement and its exhibits contain the entire understanding between Consultant and City. Additional or new terms contained in this Agreement which vary from Consultant's proposal are controlling and are deemed accepted by Consultant by commencement of performance hereunder. All previous proposals, offers and communications relative to this Agreement, whether oral or written, are hereby superseded except to the extent that they have been incorporated into this Agreement. No future waiver of or exception to any of the terms, conditions, and provisions of this Agreement shall be considered valid unless specifically agreed to in writing by all the parties.

24. PARTIAL INVALIDITY.

If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.

25. WAIVER.

The waiver by any party to this Agreement of a breach of any provision hereof shall be in writing and shall not operate or be construed as a waiver of any other or subsequent breach hereof unless specifically stated in writing. #25..
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26. AUDIT.

The City's duly authorized representative shall have access at all reasonable times to all reports, contract records, contract documents, contract files, and personnel necessary to audit and verify Consultant's charges to City under this Agreement.

Consultant agrees to retain reports, records, documents, and files related to charges under this Agreement for a period of four (4) years following the date of final payment for Consultant services.

27. GOVERNING LAW.

This Agreement shall be governed according to the laws of the State of California. Venue for any dispute shall be in the state and federal courts of Stanislaus County, California.

28. HEADINGS NOT CONTROLLING.

Headings used in the Agreement are for reference purposes only and shall not be considered in construing this Agreement.

29. COMPLIANCE WITH LAWS.

Consultant and City shall insure compliance with all safety and hourly requirements for employees, in accordance with federal, state, and county safety and health regulations and laws. Consultant and City shall fully comply with all applicable federal, state, and local laws, ordinances, regulations and permits.

30. CITY BUSINESS LICENSE.

Consultant will have a City of Modesto business license. #25..
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IN WITNESS WHEREOF, the CITY OF MODESTO, a municipal
corporation, has authorized the execution of this Agreement by its City Manager and attested by its City Clerk under the authority of Resolution No. 2021- adopted by the Council of the City of Modesto on the 14th day of December 2021, and Public Agency Retirement Services caused this Agreement to be duly executed.
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EXHIBIT A

SERVICES
Consultant will provide the following services for the City of Modesto Public Agencies PostEmployment Benefits Trust:

1. Plan Installation Services:
(A)Meeting with appropriate City personnel to discuss plan provisions, implementation timelines, actuarial valuation process, funding strategies, benefit communication strategies, data reporting, and submission requirements for contributions/reimbursements/distributions;
(B) Providing the necessary analysis and advisory services to finalize these elements of the Plan;
(C) Providing the documentation needed to establish the Plan to be reviewed and approved by City legal counsel. Resulting final Plan documentation must be approved by the City prior to the commencement of Consultant Plan Administration Services outlined in Exhibit A, paragraph 2 below.

2. Plan Administration Services:
(A) Monitoring the receipt of Plan contributions made by the City to the trustee of the Consultant Public Agencies Post-Employment Benefits Trust (“Trustee”), based upon information received from the City and the Trustee;
(B) Performing periodic accounting of Plan assets, reimbursements/distributions, and investment activity, based upon information received from the City and/or Trustee; (C) Coordinating the processing of distribution payments pursuant to authorized direction by the City, and the provisions of the Plan, and, to the extent possible, based upon Cityprovided Data; (D)Coordinating actions with the Trustee as directed by the Plan Administrator within the scope of this Agreement;
(E) Preparing and submitting a monthly report of Plan activity to the City, unless directed by the City otherwise;
(F) Preparing and submitting an annual report of Plan activity to the City; (G)Facilitating actuarial valuation updates and funding modifications for compliance with the applicable GASB pronouncements and/or statements, if prefunding OPEB obligations;
(H) Coordinating periodic audits of the Trust;
(I) Monitoring Plan and Trust compliance with federal and state laws.

3. Consultant is not licensed to provide and does not offer tax, accounting, legal, investment or actuarial advice.
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EXHIBIT B

FEES FOR SERVICES
Consultant will be compensated for performance of Services, as described in Exhibit A based upon the following schedule:

An annual asset fee shall be invoiced to and paid by the City or paid from Plan assets based on the following schedule:

For Plan Assets from: Annual Rate:
$1 to $10,000,000 0.25%
$10,000,001 to $15,000,000 0.20%
$15,000,001 to $50,000,000 0.15%
$50,000,001 and above 0.10%
Annual rates are prorated and paid monthly. The annual asset fee shall be calculated by the following formula [Annual rate divided by 12 (months of the year) multiplied by the Plan asset balance at the end of the month]. Trustee and Investment Management Fees are not included.

Annual Asset Fee Payment Option (Please select one option below):
 Annual Asset Fee shall be paid from Plan Assets.
 Annual Asset Fee shall be invoiced and paid by the City. #25..
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EXHIBIT C

DATA REQUIREMENTS
Consultant will provide the Services under this Agreement contingent upon receiving the following information. City is solely responsible for ensuring that all information and documentation provided to Consultant is true, correct, and authorized:

1. Executed Legal Documents:
(A) Certified Resolution
(B) Adoption Agreement to the Public Agencies Post-Employment Benefits Trust (C) Trustee Investment Forms

2. Contribution – completed Contribution Transmittal Form signed by the Plan Administrator (or authorized Designee) which contains the following information:
(A) City name
(B) Contribution amount
(C) Contribution date
(D) Contribution method (Check, ACH, Wire)

3. Distribution – completed Payment Reimbursement/Distribution Form signed by the Plan Administrator (or authorized Designee) which contains the following information:
(A) City name
(B) Payment reimbursement/distribution amount
(C) Applicable statement date
(D) Copy of applicable premium, claim, statement, warrant, and/or administrative expense evidencing payment
(E) Signed certification of reimbursement/distribution from the Plan Administrator (or authorized Designee)

4. Other information pertinent to the Services as reasonably requested by Consultant and Actuarial Provider.
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OFFICE OF THE CITY CLERK

NOTICE OF SPECIAL MEETING
Please take notice that a special Closed Session meeting of the Council of the City of Modesto has been called pursuant to Section 2-1.02 of the Modesto Municipal Code to be convened on
TUESDAY, JANUARY 11, 2022, at 4:30 P.M.
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.

Any and all of the following agenda items are subject to action being taken by the Modesto City Council.

The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:

CLOSED SESSION

1. Consider appointing Real Property Negotiators Jaylen French, Director of Community & Economic Development and Jose M. Sanchez, City Attorney for Property: APN: 135-029- 022.

Motion appointing Real Property Negotiators Jaylen French, Director of Community & Economic Development and Jose M. Sanchez, City Attorney for Property: APN: 135-029-022.

City Attorney, Jose M. Sanchez, 577-5284, [email protected] CONFERENCE WITH REAL PROPERTY NEGOTIATORS:
(Pursuant to Section 54956.8 of the Government Code)
Property: 4125 Sisk Road, Modesto CA 95356 – APN 135-029-022 Property Owners: Kimberly Anne Soranno, Trustee of the Leonard J. Soranno Marital Trust Negotiating Parties:

For City: Jaylen French, Director of Community & Economic Development Jose M. Sanchez, City Attorney
For Owner: Mr. Arnold J. Wolf – Freeman Firm
Under Negotiation: Price and Terms
CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Two Cases (Pursuant to Section 54956.9(d)(1) of the Government Code) Name of Case: Civic Partners Modesto, Inc. v. City of Modesto Redevelopment #26..
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Successor Agency
Stanislaus County Superior Court
Case No. 9000266
Peltier v. City of Modesto
Superior Court of California, County of Stanislaus
Stanislaus County Case No. 2022652
January 7, 2022 BY ORDER OF THE CHAIR
/S
Dana Sanchez, Interim City Clerk
Posted pursuant to Government Code Section 54956 on the bulletin board at Tenth Street Place on at by
date time signature
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TO: THE CLERK OF THE CITY OF MODESTO
RE: CLOSED SESSION
Pursuant to Section 2-1.02 of the Modesto Municipal Code, you are hereby authorized and empowered to call a special Closed Session meeting of the Council of the City of Modesto to be convened on
TUESDAY, JANUARY 11, 2022, at 4:30 P.M.
and after the regularly scheduled meeting in the Tenth Street Place, Chambers Conference Room, Basement Level, 1010 Tenth Street, Modesto, California.

Any and all of the following agenda items are subject to action being taken by the Modesto City Council.

The business to be considered at said City Council meeting shall consist of a Closed Session concerning the following:

CLOSED SESSION

1. Consider appointing Real Property Negotiators Jaylen French, Director of Community & Economic Development and Jose M. Sanchez, City Attorney for Property: APN: 135-029- 022.

Motion appointing Real Property Negotiators Jaylen French, Director of Community & Economic Development and Jose M. Sanchez, City Attorney for Property: APN: 135-029-022.

Modesto City CouncilJanuary 11, 2022

Modesto City Council
January 11, 2022