City of Patterson 1
City of Patterson
PARS 115 Trust – Pension Rate Stabilization Program (PRSP) January 18, 2022
City of Patterson 2
Pars 115 Trust Team
Trust Administrator & Consultant
38 Years of Experience
(1984-2022)
2,000+
Plans under
Administration
1,000+
Public Agency
Clients
$6.4 B
Assets under
Administration
500 K+
Plan
Participants
• Recordkeeping
• Sub-trust accounting
• Monitors plan compliance
• Processes contributions/disbursements
• Hands-on, dedicated support teams
• Coordinates all agency services
Investment Manager
• Investment sub-advisor to trustee, U.S. Bank
• Investment policy assistance
• Uses open architecture
• Active and passive platform options
• Customized portfolios (with minimum asset level)
103
Years of Experience
(1919-2022)
$19.0B
Assets under
Management/Advisement
Trustee
• 5th largest commercial bank and one of the
nation’s largest trustees for Section 115 trusts
• Safeguards plan assets
• Oversight protection as plan fiduciary
• Custodian of assets
159
Years of Experience
(1863-2022)
$5.0T
Assets under
Administration
430+
115 Trust
Clients
City of Patterson 3
Combined Miscellaneous
& Safety Groups *
Valuation as of
June 30, 2019
Valuation as of
June 30, 2020
Change
Actuarial Liability $43.0 M $47.4 M 10.3% ↑
Assets $33.0 M $36.3 M 10.2% ↑
Unfunded Liability $10.0 M $11.1 M 10.6% ↑
Funded Ratio 76.65% 76.59% 0.1% ↓
Employer Contribution Amount $1.8 M $2.15 M 16.3% ↑
(FY 20-21) (FY 21-22)
Employer Contribution Amount – Projected *
---
$2.37 M 10.3% ↑
(FY 26-27)
Pension Funding Status
As of June 30, 2020, City of Patterson’s CalPERS pension plan is funded as follows:
* Data through 2026-27 from Agency’s latest CalPERS actuarial valuation.
City of Patterson 4
• Section 115 Trusts are used by local governments to fund essential governmental functions (i.e., pension benefits and retiree health care) into an irrevocable trust • The PARS Trust received the first IRS Private Letter Ruling (PLR) in June 2015 to fund both OPEB and Pension Liabilities for a multiple-employer trust • Any income derived from a Section 115 Trust is tax exempt • CA Govt Code Section 53216.6 govern plan investments
• Contributions
— Agency has full flexibility in regard to its contribution amounts and timing — Funds can be transferred into the trust at any time
• Once contributions are placed into The PARS Trust, assets from the Trust can be used for specific benefit plan purposes including:
— Reimbursing the Agency for PERS Contributions
— Paying down specific CalPERS liabilities
— Paying plan expenses (actuarial valuation or audit)
Section 115 Trust Background
City of Patterson 5
PARS Client list – PRSP (251)
CITIES & TOWNS (122)
Alameda
Anaheim
Atherton
Atwater
Beaumont
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
Norco
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 Jacinto
San Leandro
San Ramon
Sanger
Santa Ana
Santa Clara
Santa Clarita
Sausalito
Selma
Solana Beach
Stanton
Stockton
Taft
Temecula
Thousand Oaks
Tiburon
Tustin
Twentynine Palms
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 (62)
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 LAFCO
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
Santa Fe Irrigation 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 (46)
Allan Hancock CCD
Brea Olinda USD
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 January 2022
City of Patterson 6
1 Complete Local Control over Assets
Pension Rate Stabilization Program provides an alternative to sending money directly to retirement system to address unfunded pension liabilities 2 Pension Rate Stabilization
Assets can be transferred to retirement system plan at the Agency’s direction, which can reduce or eliminate large fluctuations in Employer contributions to retirement system
3 Rainy Day Fund
Emergency source of funds when Employer revenues are impaired based on economic or other conditions
4 Diversified Investing
Potential for Greater Return than General Fund
Why Prefund Pension Obligations?
City of Patterson 7
• Agency maintains oversight of the
investment manager and the portfolio’s
risk tolerance level
• Investment restrictions that apply to the
general fund (CA Government Code 53601)
are not applicable to assets held in
The PARS Section 115 Irrevocable Trust
• Assets held in The PARS Section 115
Irrevocable Trust can be invested per
Government Code Sections 53216 (Pension)
and 53620 (OPEB)
• Investments can be diversified and invested
in a prudent fashion
• Investments can be tailored to the Agency’s unique demographics and needs • Increased risk diversification
Investment Flexibility
Diversified Investing
Assets held in The PARS Section
115 Irrevocable Trust can be
diversely invested in a prudent
fashion per Government Code
Sections 53216 (Pension)
and 53620 (OPEB).
GOV § 53216 (Pension)
GOV § 53620 (OPEB)
City of Patterson 8
Strategy Equity (%) 1 Year 3 Years 5 Years 10 Years
Capital
Appreciation 65-85% 23.25% 11.22% 11.42% 11.12%
Balanced 50-70% 19.24% 10.30% 10.11% 9.83%
Moderate 40-60% 15.94% 9.54% 8.93% 8.72%
Moderately
Conservative 20-40% 9.83% 7.80% 6.61% 6.64%
Conservative 5-20% 5.40% 6.58% 4.95% 4.97%
HighMark Capital Management
ACTIVE PORTFOLIO RETURNS
* Past performance does not guarantee future results.
As of September 30, 2021
City of Patterson 9
Key Program Advantages
1. IRS-approved trust structure which protects the Agency from Day 1 of prefunding
2. Market pioneer and leader with 240+ PRSP client agencies in California
3. Low-cost prefunding solution with economies-of-scale and low investment fees
4. No start-up costs
5. No minimum annual contribution amounts or minimum annual fees
6. No fees charged until assets are in trust
7. No trading fees
8. No termination fees or restrictions
9. True, historical return information over 1, 3, 5 and 10 year periods – not hypotheticals
10. Five active or passive risk tolerance portfolios in addition to a custom portfolio option City of Patterson 10
Contacts
Jennifer Meza
Manager, Consulting
(800) 540-6369 x141
[email protected]