HomeMy WebLinkAboutResolution 3779-08-2009A Resolution
NO 3779-08-2009
ADOPTING THE PUBLIC AGENCIES RETIREMENT SERVICES (PARS)
POST RETIREMENT HEALTH CARE PLAN TRUST
AND AUTHORIZING EXECUTION OF RELATED DOCUMENTS
WHEREAS, it is determined to be in the best interest of the City of Fort Worth
(the City) to participate m the PARS Public Agencies Post Retirement Health Care
Plan Trust (the `Program ') to fund post employment benefits for its employees and
WHEREAS, the City is eligible to participate in the Program a tax exempt trust
and plan performing an essential governmental function within the meaning of Section
115 of the Internal Revenue Code as amended and the Regulations issued thereunder
and is a tax exempt trust under the relevant statutory provisions of the State of Texas
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF FORT WORTH, TEXAS
1 That the City Council hereby adopts the PARS Public Agencies Post
Retirement Health Care Plan Trust including the PARS Public Agencies Post Retirement
Health Care Plan, as part of the City s program of benefits effective on the later of
September 1 2009 or the date as of which all documents required to effectuate such Trust
have been executed (the `PARS Legal Documents ') and
2 That the City Council hereby appoints the City Manager or his/her successor
or his/her designee as the City s Plan Administrator for the Program and
3 That the City Manager or any Assistant City Manager is hereby authorized to
execute the PARS Legal Documents on behalf of the City and to take whatever additional
actions are necessary to maintain the City s participation m the Program and the City s
Plan Administrator for the Program is hereby authorized to maintain compliance of any
relevant regulation issued or as may be issued therefore authorizing him/her to take
whatever additional actions are required to administer the City s PARS plan
ORT WORT
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RESOLUTION NO 3779 08 2009
Adopted this 18th day of August 2009
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A U G 1 8 2009
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City of Fort Worth, Texas
Mayor and Council Communication
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'COUNCIL ACTION: Approved on .8/1812009 -Res. No 3779-08 2009
DATE Tuesday August 18 2009
LOG NAME 130PEBTRUST
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REFERENCE NO C-23730
SUBJECT
Adopt a Resolution Adopting the Public. Agencies Retirement Services Post-Retirement Health Care Plan
Trust, Authorize the Transfer of $5 000 000 00 for Initial Funding of the Trust and Authorize Execution of
Related Documents
RECOMMENDATION
It is recommended that the City Council
1 Adopt the attached Resolution adopting the Public Agencies Retirement Services (PARS) Post
Retirement Health Care Plan Trust as part of the City's program of benefits in order to provide a funding
source for retiree health care benefits in response to Governmental Accounting Standards Board
Statement 45 (GASB 45),
2 Authorize the transfer of $5 000 000 00 to PARS for the purpose of funding the Trust; and
3 Authorize the City Manager to execute an Adoption Agreement, Master Plan Document, Agreement for
Administrative Services and any other documents with Phase II Systems a California corporation d/b/a
PARS (for Trust administration and compliance services) or Union Bank of California N.A. (for trustee
and investment management services) that-are necessary to incorporate the Trust as part of the City's
program of benefits in accordance with GASB 45
DISCUSSION
With the implementation of a new accounting rule Government Accounting Standards Board Statement
45 (GASB 45) the City must begin accounting for its Other Post Employment Benefits (OPEB) which are
the City's retiree healthcare and death related benefits
As of October 1 2008 the Unfunded Actuarial Accrued Liability (UAAL) as determined by Aon Consulting
was $986 million and the associated Annual Required Contribution (ARC) was $103 million
In order to lessen the City's future liability the City Council modified the health benefit offered to retirees
(M&C G-16299) Consequently employees and their dependents hired on or after January 1 2009 upon
retirement, may receive continued health coverage under the City's plan by paying the full cost. No City
contribution will be made towards that coverage
The City Council appropriated $5 million in the Fiscal Year 2009 budget to deposit in an irrevocable trust
that will be used to fund the City's OPEB liabilities The trust will allow the City to assume a higher yield on
investments and therefore lessen the funding requirements of the overall liability
A committee with representatives from Human Resources Financial Management Services the City's
financial advisors the City Attorney's Office and outside bond counsel reviewed OPEB trust proposals
Logname 130PEBTRUST Page 1 of 3
from PARS and ICMA. Based on the committee s review it is recommended that the City adopt the PARS
Health Care Plan Trust (the PARS Trust) as part of the City's program of benefits in order to provide a
funding source for retiree health care benefits Following adoption of the attached resolution and execution
of all documents necessary to incorporate the PARS Trust as part of the City's program of benefits the
City will transfer $5 million for deposit in the PARS Trust. PARS will provide Trust administration and
compliance services Union Bank of California N.A. will serve as trustee and will provide investment
management services
Two investment strategies exist for the investment of Trust funds 1) the City can actively or directly
manage the investments by selecting specific investments or 2) the City can take a discretionary
approach and allow Union Bank to manage the funds based on a particular investment strategy and act as
fiduciary Based on input from the City's financial advisors staff anticipates opting for the latter
discretionary approach
Fees are based as a percentage of the fund's value As the total value increases the percentage
decreases The fee schedules are outlined below
Union Bank Fees
Trustee Approach 1Trustee/Custodial Fees
Discretionary '..None
Directed a0 10 Percent of Assets
nvestment Management Fee
_..~~.~_ ~...v.....~:_.._~
35 Percent for Assets Under $5M ~~~
).25 Percent for Assets $5-$10M
).20 Percent for Assets $10-$15M
15 Percent for Assets $15-$50M
10 Percent on All Assets Over $50M
)epends on Investments Selected
PARS s fee structure for trust administration consulting and compliance is based solely on the fund's
value The fee structure is outlined below
PARS Fees
.~
Plan Set-up Fee -Trust Administration/Consulting/Compliance
-Fees
.__w_._~ _ ~.._..~_.~....~~ ___
~~0 25 Percent for Assets -Under $10M ~~~~
0 20 Percent for Assets $10-$15M
None '0 15 Percent for Assets $15-$50M
'!0 10 Percent on All Assets Over $50M
.:,__._~_ _ ~~ , W ..,:,, ~ _. _._'($400 monthly minimum).
It is anticipated that as additional funding for retiree health care benefits becomes available the City will at
some point create its own trust and will transfer any available funds in the PARS Trust into this specific
trust.
FISCAL INFORMATION /CERTIFICATION
The Financial Management Services Director certifies that funds are available in the current operating
budget, as appropriated of the General Fund
FUND CENTERS
Logname 130PEBTRUST Page 2 of 3
TO Fund/Account/Centers FROM Fund/Account/Centers
GG01 538070 0905500 X5,000,000.00
CERTIFICATIONS
Submitted for City Manager's Office b~:
Originating Department Head.
Additional Information Contact:
Karen Montgomery (6222)
Lena Ellis (8517)
Greg Jordan (8843)
Logname: 13OPEBTRUST Page 3 of 3