CITY OF SANTA MARIA
RESERVE POLICY & 115 Trust
AUGUST 4, 2026
Recommendation
• Adopt a Resolution approving an updated General Fund Reserve Policy and Section 115 Trust; and
• Authorize the Finance Director to take steps to establish a Section 115 Trust for the City’s other post-employment and unfunded pension long-term debt; and • Authorize the Finance Director to align funding the reserves and the Section 115 trust as outlined in the Fiscal Considerations section to this report. – Fully fund the General Reserve (Core Operating Reserve) per policy at $22.7 million. This will require moving $2.9 million from the existing Pension Reserve.
– Increase the LEAF Reserve to $10.0 million. This will require moving $9.0 million from the existing Pension Reserve.
– Establish the Emergency/Catastrophic Reserve at $1.0 million. This will require moving $1.0 million from the existing Pension Reserve.
– Establish a General Fund Contingency account at $1.0 million. This will require moving $1.0 million from the existing Pension Reserve.
– Move $6,248,027 in OPEB Reserve from the investment pool to a OPEB Section 115 irrevocable trust account. Staff will return to City Council for next steps on that establishment. – Move $1,500,000 in Pension Reserve from the investment pool to a Pension Section 115 irrevocable trust account. Staff will return to City Council for next steps on that establishment. 13 General Fund History of Reserves
Note:
• The LEAF Reserve was established FY 2000-01.
• There was $19.8 million committed to the Economic Stabilization Reserve in FY 2010-11. • There was $6.9 million assigned to the OPEB Reserve in FY 2010-11. The balance today is $6.2 million. • There was $6.2 million assigned to the Pension Reserve in FY 2017-18. The balance today is $15.4 million.
Reserve % or $ Target Projected Balance
June 30, 2027
Unassigned Fund
Balance *
25% of General Fund
operating
appropriations
$26.9 M $0 M
Economic
Stabilization *
25% of operating
appropriations
$26.9 M $19.8 M
Local Economic
Augmentation
Fund *
5% of General Fund and
Measure U
appropriations
$7.4 M $937,650
OPEB Reserve No Target N/A $6.2 M
Unfunded
Pensions
Reserve
No Target N/A $15.4 M
* Discussed in detail on pp. 64-65 of the FY 2024-
26 Adopted Biennial Budget Book
Note: Should Economic Stabilization reserve be used, and its level falls below the minimum amount, the goal is to replenish within two fiscal years.
13 General Fund Reserve Policies and Available Reserves – Current Policy
Reserve % or $ Target
Unassigned Fund Balance
Available
Will be directed per policy N/A
General Fund Reserve
(Operating Reserve)*
16.7% of General Fund and
Measure U expenditures
$22.7 M
Local Economic Augmentation
Fund (Emergency Reserve)
10 - 15% of General Fund and
Measure U expenditures
$20.4 M
Emergency/Catastrophic
(Disaster Reserve)
5% of General Fund
expenditures
$5.4 M
OPEB Reserve Move to 115 Trust N/A
Unfunded Pensions Reserve Move to Various & 115 Trust N/A General Fund Budget Contingency is a
budgeted expense at 5% of operating
expenditures
13 General Fund Reserve Policies and Available Reserves – New Recommended Policy
* GFOA standard recommendation for
General Fund minimum reserve is two
months (~17%) of annual operating
Before & New Policy Direction
* Contingencies are
budgeted annually
and used for
General Fund
unanticipated
emergent costs
during the year, and
must be re-
budgeted annually
Table 2: General Fund Reserve Existing and New Policy Comparison Estimates Existing Policy
Target
Projected
June 30, 2027
Balance
New
Policy
Target
New Policy
Recommendation
Unassigned Fund
Balance $26.9 M $0 N/A N/A
General Reserve
(Core Operating
Reserve)
$26.9 M $19,800,000 $22.7 M $22,700,000
Local Economic
Augmentation Fund
(Emergency Reserve)
$6.8 M $937,650 $20.4 M $9,953,960
Emergency/Catastrophic
Reserve (Disaster
Reserve)
N/A - $5.4 M $1,000,000
Contingencies* N/A - $5.4 M $1,000,000
OPEB N/A $6,248,027 N/A -
PENSION N/A $15,416,310 N/A -
115 Trust for OPEB N/A N/A $6,248,027
115 Trust for Pension N/A N/A $1,500,000
Total Funds $64.8 M $42,401,987 $53.9 M $42,401,987
$ 15,416,310 Pension Reserve
$ (2,900,000) GF Reserve (Operating Reserve)
$ (9,016,310) LEAF
$ (1,000,000) Disaster Reserve
$ (1,000,000) Contingencies
$ (1,500,000) 115 Trust for Pension
$ - Balance
Transfers Out from Pension Reserve
Long Term Debt Requirements
Other Post-employment Benefits
• GASB 75 – the City is required to measure
and report its OPEB liability
• FY 2022-23 OPEB Liability = $19.1 million
• The City makes an annual pay-as-you-go
payment towards the debt
Net Pension Liability
• GASB 68 – the City is required to measure
and report its Pension liability
• FY 2023-24 Pension Liability = $195.7 million
• The City pays an annual payment towards its
unfunded liability
Section 115 Trust Vs. Government Investment Pool
Section 115 Trust
• Established under Internal Revenue Code
115.
• Allows public agencies to invest public funds
• Designed specifically to prefund government
liabilities, typically:
– OPEB such as retiree healthcare
– Pension stabilization funds
• Assets are held in a separate irrevocable trust
dedicated to those liabilities.
Government Investment Pool
• Examples include Local Agency Investment
Fund (LAIF) and California Asset
Management Program (CAMP).
• Designed for short-term cash management
and liquidity.
• Funds remain part of the agency’s general
investment portfolio.
Investment Flexibility and Returns
Section 115 Trust
• Allows a broader investment authority, often
similar to pension funds:
– Equities
– Fixed income
– Diversified portfolios
• Long-term expected returns often 5–7%+
depending on asset allocation as compared
to LAIF at 2-3%.
Government Investment Pool
• Highly conservative portfolios:
– Treasuries
– Agencies
– Highly rated short-term securities
• Designed for capital preservation and
liquidity, not growth.
• Returns are usually closer to short-term
interest rates.
Accounting and Actuarial Advantages (GASB)
Assets in a Section 115 Trust
• Can be used to offset the OPEB liability in
actuarial valuations.
• Allows use of a higher long-term investment
return assumption in the discount rate.
• This can significantly reduce the reported net
OPEB liability.
Assets in a Government Investment Pool
• Do not qualify as plan assets under GASB.
• Cannot reduce the actuarial liability.
Legal Protection of Funds
Section 115 Trust
• Assets are irrevocably dedicated to the
benefit plan.
• Cannot easily be diverted for other
governmental purposes.
• Provides credibility to rating agencies and
auditors.
Government Investment Pool
• Funds remain fully available to the agency.
• Can be used for any purpose.
Budget Stabilization Use
Section 115 Trust
• Some governments create Pension
Stabilization Trusts under Section 115.
Benefits include:
– Smoothing CalPERS contribution
volatility.
– Building reserves during good years.
– Using funds when employer contribution
rates spike.
Summary Comparison
Feature Section 115 Trust Government Investment
Pool
Purpose Prefund pension/OPEB
liabilities
Short-term cash
investment
Legal Structure Irrevocable trust Pooled investment account Investment Strategy Long-term diversified Conservative short-term Expected returns Higher (long horizon) Lower
GASB liability reduction Yes No
Investment Plan Comparisons ($6.2M OPEB Investment)
Investment Plan Comparisons – ($1.5M Pension Investment)
Recommendation
• Adopt a Resolution approving an updated General Fund Reserve Policy and Section 115 Trust; and
• Authorize the Finance Director to take steps to establish a Section 115 Trust for the City’s other post-employment and unfunded pension long-term debt; and • Authorize the Finance Director to align funding the reserves and the Section 115 trust as outlined in the Fiscal Considerations section to this report. – Fully fund the General Reserve (Core Operating Reserve) per policy at $22.7 million. This will require moving $2.9 million from the existing Pension Reserve.
– Increase the LEAF Reserve to $10.0 million. This will require moving $9.0 million from the existing Pension Reserve.
– Establish the Emergency/Catastrophic Reserve at $1.0 million. This will require moving $1.0 million from the existing Pension Reserve.
– Establish a General Fund Contingency account at $1.0 million. This will require moving $1.0 million from the existing Pension Reserve.
– Move $6,248,027 in OPEB Reserve from the investment pool to a OPEB Section 115 irrevocable trust account. Staff will return to City Council for next steps on that establishment. – Move $1,500,000 in Pension Reserve from the investment pool to a Pension Section 115 irrevocable trust account. Staff will return to City Council for next steps on that establishment.
Discussion
• Discussion
– Questions & Comments
City of Santa maria
18 Replace with local or generic image. Image should reflect the agency in the best possible way. Try to find bright, energetic imagery. Send image to back (make sure white gradient on top is visible) The title box is adjustable; simply type the full name (Title Case – not CAPS) of the agency and allow the box to grow upwards as necessary. Afterwards, the white line can be manually adjusted to fit.
City of Santa maria
PARS 115 Trust – OPEB Prefunding Program & Pension Rate Stabilization Program (PRSP) Council Meeting : August 4, 2026
City of Santa maria
19 Pars 115 Trust Team
Trust Administrator & Consultant*
40+
Years of Experience
(1984-2026)
2,300+
Plans under
Administration
1,100+
Public Agency
Clients
$11.7 B+
Assets under
Administration
Investment Manager
• A division of U.S. Bancorp Asset Management, Inc.
• Fixed income and multi asset portfolios
• Strategic Blend and Index platform options
• Customized portfolios (with minimum asset level)
41 Years of Investment
Experience
(As of 6/30/2026)
$252.8 B *
Assets under Management
& Advisement
Trustee
• 5th largest commercial bank and one of the
nation’s largest trustees for Section 115 trusts
• Safeguard plan assets
• Oversight protection as plan fiduciary
• Custodian of assets
163
Years of Experience
(1863-2026)
$11.0 T
Assets under
Administration
550+
115 Trust Clients
• Serves as record-keeper, consultant,
and central point of contact
• Sub-trust accounting
• Coordinates all agency services
• Monitors plan compliance
(IRS/GASB/State Government Code)
• Processes contributions/disbursements
• Hands-on, dedicated support teams
750 K+
Plan Participants
*Please see disclosures at the end of this presentation As of May 31, 2026
* See important information regarding PARS in the Disclaimer page at the end of the presentation.
City of Santa maria
20 Subaccounts
OPEB and Pension assets are
individually sub-accounted,
and can be divided by dept.,
bargaining group, or cost center
Assets in the PARS Section 115
Combination Trust can be used
to address unfunded liabilities.
Financial Stability
Allows separate investment
strategies for OPEB and
Pension subaccounts.
Flexible Investing
OPEB and Pension assets
aggregate and reach lower fees
on tiered schedule sooner –
saving money!
Economies-of-ScaleAnytime Access
Trust funds are available
anytime; OPEB for OPEB
and Pension for Pension.
No set-up costs, no minimum
annual contribution amounts,
and no fees until assets are added.
No Set Up Cost or Minimums
Retiree Medical Benefits
Prefund OPEB GASB 75
OPEB
Reimburse agency; or
Pay benefits provider
Pension Rate Stabilization Program
Prefund Pension (PRSP) GASB 68
Pension
Reimburse agency; or
Pay retirement system
Assets can be used to: Assets can be used to:
prefund
either or both
General Fund
PARS IRS -Approved Section 115 combo Trust
City of Santa maria
21 Sampling of 550+ pars 115 Trust clients
CITIES & COUNTIES
SPECIAL DISTRICTS
EDUCATION
Goleta
Morro Bay
Port Hueneme
San Benito County
Santa Barbara
Solvang
Goleta Cemetery District
Goleta West Sanitary District
Montecito Fire Protection District
Mosquito & Vector Mgmt. Dist. Of Santa Barbara Co.
Santa Barbara County Law Library
Ventura Regional Sanitation District
Orcutt Union School District
San Luis Obispo County Community College District (Cuesta) Salinas City Elementary School District
Santa Barbara Unified School District
Santa Rita Union School District
City of Santa maria
22 OPEB Actuarial Results
Data from 2024 ACFR
Measurement Date:
June 30, 2023
Pay-as-you-Go
Discount Rate: 3.65% Percent Change Prefunding
Discount Rate: 6.09%
Total OPEB Liability (TOL) $18,618,290 25-30%▼ ?
Fiduciary Net Position $0 -- ?
Net OPEB Liability (NOL) $18,618,290 25-30%▼ ?
Service Cost $843,338 25-30%▼ ?
Annual Benefit Payments
(Pay-as-you-Go) $672,494 -- $672,494
Rule of thumb: For every one percent increase in the discount rate, the unfunded liability is lowered by 10-12%.
Valuation Date:
June 30, 2019
Total OPEB Liability (TOL)
Fiduciary Net Position
Net OPEB Liability (NOL)
Service Cost
for FY 2022-23
Annual Benefit Payments
(Pay-as-you-Go)
for FY 2022-23
For agencies that have NOT prefunded
Confirm the source, dates, and discount rate for all data on this slide.
City of Santa maria
23 • Greater expected rate of return (discount rate) which lowers your liabilities • Contributions into trust are “assets” that offset liabilities on financial statements • GASB 68 – Pension liabilities listed as line item on Balance Sheet in 2015 GASB 75 – OPEB liabilities listed as line item on Balance sheet in 2018 • GFOA recommends prefunding OPEB and considers it “best practice” (January 2012) • Credit rating companies look more favorably on agencies who adopt an Irrevocable Trust and prefund • OPEB assets are accessible for OPEB expenses at any time • Prefunding has no downside other than market fluctuation (similar to pension) Why prefund OPEB Obligations?
For agencies that have NOT prefunded
City of Santa maria
24 Combined Miscellaneous
& Safety Groups *
Valuation as of
June 30, 2023
Valuation as of
June 30, 2024 Change
Actuarial Liability $612.5 M $644.3 M 5.2% ↑
Assets $413.1 M $448.5 M 8.6% ↑
Unfunded Liability $199.4 M $195.7 M 1.8% ↓
Funded Ratio 67.4% 69.6% 3.2% ↑
Employer Contribution Amount
$23.2 M $25.5 M 10.0% ↑(FY 24-25) (FY 25-26)
Employer Contribution Amount – Projected * --- $30.3 M 18.8% ↑(FY 31-32) Pension Funding Status
As of June 30, 2024, City of Santa Maria’s CalPERS pension plan is funded as follows:
* Data through 2031-32 from Agency’s latest CalPERS actuarial valuation.
City of Santa maria
25 Why Prefund Pension Obligations?
Complete Local Control over Assets
Agency has complete control over assets, including contributions, disbursements and the timing, amount, and risk tolerance level of investments
1. Pension Rate Smoothing Tool
Assets can be transferred to the retirement system at the Agency’s direction, potentially reducing/eliminating large fluctuations in employer contribution amounts
2. Rainy Day Fund
Emergency source of funds when employer revenues are strained in difficult budgetary or economic times
3. Diversification
Allows for investment flexibility and offers the potential for assets to earn greater returns than the general fund; spread the risk vs. sending additional money to CalPERS
4. City of Santa maria
26 PFMAM Managed Strategies
Moderate
Balanced Capital Appreciation
Domestic
Equity
36.0%
Int'l Equity
18.0%Listed Real
Assets…
Cash
2.0%
Fixed
Income
38.0%
Domestic
Equity
30.0%
Int'l Equity
15.0%
Listed
Real
Assets
5.0%
Cash
2.0%
Fixed
Income
48.0%
Domestic
Equity
45.0%
Int'l Equity
22.5%Listed
Real
Assets…
Cash
2.0%
Fixed
Income
23.0%
Expected
Returns *
5-Year, 6.1%
30-Year, 6.3%
Expected
Returns *
5-Year, 6.5%
30-Year, 6.6%
Expected
Returns *
5-Year, 6.9%
30-Year, 7.0%
* Data from PFMAM Managed Strategies: Asset Allocation Summary. Representative as of 2026. Asset allocations and assumptions are subject to change. Please see important disclosures at the end of this presentation for additional information.
Moderately Conservative
Domestic
Equity
18.0%
Int'l …Listed Real Assets
3.0%
Cash
2.0%
Fixed
Income
68.0% Expected
Returns *
5-Year, 5.4%
30-Year, 5.6%
Conservative
Domestic
Equity
9.0%
Int'l Equity
4.5%
Listed
Real …
Cash
2.0%
Fixed
Income
83.0% Expected
Returns *
5-Year, 4.8%
30-Year, 5.1%
The following strategies, actively managed by PFM Asset Management (PFMAM), may be structured with blend of active and passive funds (strategic blend) or passive funds only (index):
City of Santa maria
27 Strategy Equity (%) 1 Year 3 Years 5 Years 10 Years
Capital
Appreciation 65-85% 18.01% 15.28% 8.44% 9.93%
Balanced 50-70% 15.37% 13.30% 6.77% 8.49%
Moderate 40-60% 13.39% 11.66% 5.72% 7.45%
Moderately
Conservative 20-40% 9.65% 8.77% 3.68% 5.07%
Conservative 5-20% 6.83% 6.56% 2.17% 3.76%
Managed Strategies Investment Returns As of June 30, 2026 INDEX PORTFOLIO ANNUALIZED RETURNS* (Gro ss o f I nv estment M a nagement Fees, but Net o f Embedded Fund Fees) Please see co mplet e I nv estment St rat egy Sheet s fo r mo re info rmation. *Returns shown are for the respective index strategy in the PARS OPEB & Pension Combo Trust, except for the Moderate and Conservative strategies for periods up to 5 years and which have not reached 10 years since inception (9-1-16 and 2-1-17, respectively). Returns for the 10-year period are the Moderate Index strategy in the PARS OPEB Trust and the Conservative strategic blend strategy in the PARS OPEB & Pension Combo Trust. Returns provided are gross of investment advisory fees and net of mutual fund fees.
Subject to change due to rebalancing; Past performance does not guarantee future results.
Please see important additional disclosures to the PARS portfolios included in the individual strategy fact sheets.
City of Santa maria
28 Plan Set-Up Fee: Ongoing Fees Paid to U.S. Bank:
None 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
Program Fees
Plan Set-Up Fee: Ongoing Fees:
None 0.25% for assets $0-10 million
0.20% for assets $10-15 million
0.15% for assets $15-50 million
0.10% for assets over $50 million
Trust Administration/Consulting Fees *
Discretionary Trustee/Investment Management Fees **
Please note that OPEB and pension assets will be combined for fee calculation purposes. * PARS does not receive any compensation from the investments or any commissions, back-end loads, or any other forms of compensation. ** Subject to change due to rebalancing. Additional information on U.S. Bancorp Asset Management, Inc. and a description of its fees are described in its ADV which is available on the SEC’s website at www.adviserinfo.sec.gov. Fees charged by U.S. Bank National Association N.A. as Discretionary Trustee/Investment Management are based on individual agency assets. U.S. Bank N.A. compensates the sub-adviser for these services from its own fees, as detailed above. See disclosures at the end of this presentation for more information.
City of Santa maria
29 Steps to Implementation
1 City Council adopts resolution authorizing City to join PARS Combo Trust and appoints a position of employment to serve as Plan Administrator (PA)* 2 City sends signed copy of resolution to PARS. PARS sends legal documents to City PA for review and signature
3 PARS coordinates meeting with City to discuss investment options. City selects strategy
4 City signs documents and returns to PARS. PARS coordinates with Trustee, U.S. Bank to establish City’s account on the trust system 5 PARS provides City with contribution instructions once account is open. City makes initial deposit to the PARS Trust
6 PARS conducts an annual review of City’s account and investment performance (or more frequently as requested)
*The Council resolution must adopt the PARS Trust by name, "Public Agencies Post - Employment Benefits Trust" and appoint a position of employment as Plan Administrator.
City of Santa maria
30 questions
Mitch Barker
Executive Vice President
(800) 540-6369 x116
[email protected]
Kevin O’Rourke
Senior Municipal Consultant
(707) 249-5356
[email protected]
Mike Graves
Senior County Consultant
(916) 834-7545
[email protected]
Jennifer Meza
Manager, Consulting
(800) 540-6369 x141
[email protected]
Benson Lao
Senior Analyst, Consulting
(800) 540-6369 x182
[email protected]
Jeff Hermann
Senior Analyst, Consulting
(800) 540-6369 x163
[email protected]
Fred Hurst
Director
(415) 705-5015
[email protected]
Hoddy Fritz
Director
(949) 553-7141
[email protected]
Andrew Brown, CFA
Director, Senior Portfolio Manager
(415) 705-7605
[email protected]
Tory Milazzo, CFA
Senior Portfolio Manager
(805) 564-6219
[email protected]
Keith Stribling, CFA
Senior Portfolio Manager
(949) 553-2591
[email protected]
Anne Wimmer, CFA
Senior Portfolio Manager
(310) 550-6547
[email protected]
Christiane Tsuda
Senior Portfolio Manager
(858) 551-5359
[email protected]
Randall Yurchak, CFA
Senior Portfolio Manager
(415) 705-7579
[email protected]
Shawn Tan
Senior Analyst, Consulting
(800) 540-6369 x180
[email protected]
Gregory Haendel, CFA
Managing Director, Head of Fixed Income
(213) 236-5292
[email protected]
Rachael sanders, CEBS
Vice President, Consulting
[email protected]
(800) 540-6369 x121
City of Santa maria
31 APPENDIX
Conservative Moderately
Conservative Moderate Balanced Capital
Appreciation
Equity 13.5% 27.0% 45.0% 54.0% 67.5%
US Large Cap Equity 8.6% 17.1% 28.5% 34.2% 42.8%
US Small Cap Equity 0.5% 0.9% 1.5% 1.8% 2.3%
Int'l Developed Equity 3.4% 6.8% 11.3% 13.5% 16.9%
Emerging Market Equity 1.1% 2.3% 3.8% 4.5% 5.6%
Listed Real Assets 1.5% 3.0% 5.0% 6.0% 7.5%
REITs 0.8% 1.5% 2.5% 3.0% 3.8%
Listed Infrastructure 0.8% 1.5% 2.5% 3.0% 3.8%
Fixed Income 83.0% 68.0% 48.0% 38.0% 23.0%
Core Bonds 76.8% 63.0% 44.5% 35.0% 21.3%
High Yield Bonds 6.3% 5.0% 3.5% 3.0% 1.8%
Cash 2.0% 2.0% 2.0% 2.0% 2.0%
Intermediate-Term Assump. (5 Years)
Expected Return 4.8% 5.4% 6.1% 6.5% 6.9%
Standard Deviation 5.2% 6.3% 8.5% 9.7% 11.7%
Return / Standard Deviation 0.93 0.86 0.72 0.66 0.59
Long-Term Assump. (30 Years)
Expected Return 5.1% 5.6% 6.3% 6.6% 7.0%
Standard Deviation 5.2% 6.3% 8.5% 9.7% 11.7%
Return / Standard Deviation 0.98 0.89 0.75 0.68 0.60
32Representative based on 2026 Capital Markets Assumptions. Asset allocations and assumptions are subject to change. Please see important disclaimers at the end of this presentation for additional information.
PFMAM Managed Strategies
The information provided reflects standard risk and return metrics for the portfolio depicted and are derived by running Monte Carlo simulations using PFMAM’s Capital Market Assumptions and target asset class allocations based on the specific scenario within this presentation. Please refer to PFMAM’s Capital Market Assumptions for key assumptions and the methodology utilized. PFMAM’s Capital Market Assumptions are available upon request.
The return data is representative in nature and should not be relied upon as independently verifiable information. There is no guarantee that the projected returns can or will be achieved. Results may vary with each use and over time. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon or used in substitution for the exercise of independent judgement.
Past performance is not a guarantee of future results. Prior to investing, you should consult your accounting, tax, and legal advisors to understand the implications of such an investment. Asset class and risk return analytics are run through FactSet.
The returns presented in this simulation are not actual returns experienced by a real investor, but rather simulated returns that we believe could have been achieved under controlled circumstances using a number of assumptions. No representation or warranty is made to the reasonableness of the assumptions made or that all assumptions used in achieving the returns have been stated or fully considered.
No assurance can be given as to whether the information and/or assumptions upon which this hypothetical performance is based reflect present market conditions or future market performance. Actual performance results may differ from this hypothetical performance presented. Changes in the assumptions may have a material impact on the hypothetical performance presented. Past performance is not a guarantee of future results.
The material is provided to you on the understanding that, as a sophisticated investor, you will understand and accept its inherent limitations. 33 Important Disclaimers for Return Projections (Intermediate and Long-Term) Disclaimer
Disclosures
Public Agency Retirement Services (“PARS”) is a third-party and not affiliated with PFMAM, USBAM or U.S. Bank. PARS serves as th e trust administrator to the Public Agencies Post - Employment Benefits Trust, Public Agencies Post-Retirement Health Care Plan Trust, and the Public Agency Retirement System Trust (the “Trusts”). U.S. Bank N.A. serves as the discretionary trustee to the Trusts. In its capacity as discretionary trustee, U.S. Bank N.A. delegates the investment manage ment of the Trusts to its affiliate USBAM through a sub - advisory agreement. PARS is serviced by PFMAM, a division of USBAM.
U.S. Bank N.A. pays the sub-adviser up to 67% of the annual management fee for assets sub -advised under its sub-advisory agreement with U.S. Bank N.A. Refer to your U.S. Bank N.A. fee schedule for investment management fees applied to your specific portfolio. U.S. Bank N.A. compensates the sub -adviser for these services from its own fees.
The views expressed within this material constitute the perspective and judgment of U.S. Bancorp Asset Management, Inc. (USBA M) at the time of distribution and are subject to change. Any forecast, projection, or prediction of the market, the economy, economic trends, and equity or fixed -income markets are based upon current opinion as of the date of issue and are also subject to change. Opinions and data presented are not necessarily indicative of future events or expected perfo rmance. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. N o representation is made as to its accuracy or completeness.
Additional information on U.S. Bancorp Asset Management, Inc. and a description of its fees are described in its ADV which is available at www.adviserinfo.sec.gov.
PFM Asset Management (PFMAM) serves clients in the public sector and is a division of U.S. Bancorp Asset Management, Inc. whi ch is the legal entity providing investment advisory services. U.S. Bancorp Asset Management, Inc. is a registered investment adviser, a direct subsidiary of U.S. Bank N.A. and a n indirect subsidiary of U.S. Bancorp. U.S. Bank N.A. is not responsible for and does not guarantee the products, services, or performance of U.S. Bancorp Asset Management, Inc.
NOT FDIC INSURED : NO BANK GUARANTEE : MAY LOSE VALUE 34 Investment returns▎ 35
Net Performance Fee Analysis
Over 1
Year
Over 3
Years
Over 5
Years
Over 10 Years 1 1
P A R S P A R S P A R S P A R S
Capital Appreciation (Index)* Capital Appreciation (Index)* Capital Appreciation (Index)* Capital Appreciation (Index)* (23% Fixed
Income/Cash) 18.01%
(23% Fixed
Income/Cash) 15.28%
(23% Fixed
Income/Cash) 8.44%
(23% Fixed
Income/Cash) 9.93%
minus weighted PARS
administration fee (-) 0.25% minus weighted PARS
administration fee (-) 0.25% minus weighted PARS
administration fee (-) 0.25% minus weighted PARS
administration fee (-) 0.25%
minus weighted
Discretionary
Trustee/Investment
Management Fee
(-) 0.35% minus weighted
Discretionary
Trustee/Investment
Management Fee
(-) 0.35% minus weighted
Discretionary
Trustee/Investment
Management Fee
(-) 0.35% minus weighted
Discretionary
Trustee/Investment
Management Fee
(-) 0.35%
1-Year Net Return 17.41% 3-Year Net Return 14.68% 5-Year Net Return 7.84% 10-Year Net Return 9.33%
C A L P E R S C E R B T C A L P E R S C E R B T C A L P E R S C E R B T C A L P E R S C E R B T Strategy 1**
(28% Fixed
Income/Cash) 17.40%
Strategy 1**
(28% Fixed
Income/Cash) 13.56%
Strategy 1**
(28% Fixed
Income/Cash) 6.20%
Strategy 1**
(28% Fixed
Income/Cash) 8.52%
minus fees (-) 0.09% minus fees (-) 0.09% minus fees (-) 0.09% minus fees (-) 0.09% 1-Year Net Return 17.31% 3-Year Net Return 13.47% 5-Year Net Return 6.11% 10-Year Net Return 8.43% As of June 30, 2026
vs. CERBT
Please see important additional disclosures to the PARS portfolios included in the individual strategy fact sheets.
Subject to change due to rebalancing; past performance does not guarantee future results.
PARS program fees are illustrated based on assets under $5.0 Million *Returns shown are for Capital Appreciation index strategy in the PARS OPEB & Pension Combo Trust (4-1-16). Returns provided are net of mutual fund fees. **Source: CERBT Strategy 1 quarterly fact sheet. www.calpers.ca.gov as of June 30, 2026.