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Consent-General Government # 15.
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| Board of Supervisors |
Financial Services |
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| Subject |
| Adopt resolution approving creation of County of Yolo Section 115 Pension Trust administered by Public Agency Retirement Services. (No general fund impact) (Newens) |
| Recommended Action |
- Adopt resolution approving creation of County of Yolo Section 115 Pension Trust administered by Public Agency Retirement Services (PARS); and
- Authorize the Chief Financial Officer as the County's designated Plan Administrator to execute necessary legal and administrative documents and take additional actions necessary to create and maintain the County's Section 115 Pension Trust.
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| Strategic Plan Goal(s) |
Operational Excellence
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| Reason for Recommended Action/Background |
At the May 8, 2018 Board Meeting, the Board of Supervisors approved the Pension Funding Policy (Att. A). The policy guided the actuarial, funding and cost recovery aspects of pension benefits. A key element of the policy was the establishment of a Section 115 Trust for the purpose of Pension Funding Stabilization.
In order to implement the pension policy, the Department of Financial Services (DFS) solicited firms that provide administration and investment services for Section 115 Pension Trusts. Through extensive research, DFS determined that there are three primary firms that provide this service. As a result and due to the low initial fees (due to time needed to accumulate assets), DFS performed a process of internal request for quotes rather than a request for proposals consistent with the County Procurement policy.
The submissions were reviewed by the Chief Financial Officer, Assistant Chief Financial Officer, and Treasury manager, who determined based on both experience and cost, that Public Agency Retirement Services (PARS) was the most responsive proposer. The key criteria distinguishing PARS related to their extensive experience working with County agencies on 115 trusts, length of time in the industry, competitive pricing, and reduced administrative burden (due to Pension and OPEB assets being held with same provider).
PARS utilizes US Bank as the Trustee Bank (holding the assets) and Highmark Capital (subsidiary of Union Bank) who performs the discretionary investment function in accordance with the County's directive. The County oversees the investment portfolio through quarterly review of investment results achieved by the Department of Financial Services. DFS will perform an annual account review with PARS to review annual investment performance and strategize if any changes are needed to the investment approach. In addition to these reviews, an annual report will be made on the performance of the portfolio to the Board of Supervisors in accordance with the Pension Funding Policy. This above described approach is currently being applied for monitoring of the OPEB assets in the OPEB 115 Trust with PARS.
In order to create the Section 115 Trust for Pension Funding, it is requested that the Board approve the attached Resolution (Att. B) resolving to create the pension trust and providing a delegation of authority to the Chief Financial Administrator as the County's plan administrator to complete necessary forms and agreements to open the trust. For reference, the key documents necessary to open the Section 115 Trust that authority is being given to the Chief Financial Officer to execute include the Adoption Agreement (Att. C), Agreement for Administrative Services (Att. D), Trustee Bank Schedule (Att. E) have been attached. In addition to these documents, the Private Letter Ruling (Att. F) from the Internal Revenue Services is also provided. This is a key document that recognizes the trust as a governmental trust in which investment earnings are not subject to IRS income tax. |
| Collaborations (including Board advisory groups and external partner agencies) |
| The Department of Financial Services collaborated with the County Administrators' Office (CAO) on the creation of the pension funding policy and discussed recommendation of the Section 115 provider prior to requesting Board action. |
| Competitive Bid Process |
Request for Quotes Requested: Section 115 Pension Trust Administration and Investment Services
Evaluation Criteria Used:
- Experience and past performance
- Cost
Quotes Received
| Proposer |
Bid |
Notes |
| Public Agency Retirement Services(PARS) |
30 basis points (0.30%) on assets |
Tiered rate structure based on level of assets. County will reach $15 million tier (OPEB & Pension combined 115 balance) in 2018-19 resulting in fee of 30 basis points (0.30%) on assets |
| Public Financial Management, Inc. (PFM) |
35 basis points (0.35%) on assets |
Rate includes a 10 basis point reduction for PFM's existing relationship on the investment pool. The rate does not include Trust Fees for Trustee bank of minimum of $6,000 annually. |
| Keenan Financial Services |
30 basis points (0.30%) on assets |
Fee level constant regardless of assets. |
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