A representative from PARS (Public Agency Retirement Services) briefed the board on a Section 115 trust as a tool to prefund the district’s retiree health liability (OPEB). The board directed staff to investigate opening a trust for possible future contributions.

Ryan Acasio, senior vice president at PARS, described the 115 trust administration: PARS would serve as administrator, US Bank as trustee/custodian and PFM Asset Management as investment manager. Benefits of a trust include tax‑exempt earnings on invested assets, potential to lower the district’s net OPEB liability by increasing the discount rate used in actuarial valuations, and adherence to GASB reporting updates that treat net OPEB liabilities as a line item on financial statements.

Acasio said there are no setup costs; fees apply only after assets are deposited. He presented index‑based target portfolios, historical returns and a fee schedule (PARS fee starting at 25 basis points with trustee/investment fees on top). The district’s most recent valuation (as of 06/30/2024) showed a net OPEB liability just over $6 million because the district had not yet prefunded a trust.

Board discussion and direction

Trustees asked whether the district could open the trust without committing funds immediately; Acasio confirmed it could. Staff noted the district has amounts in Fund 20 (retirement account) that could be used to seed a trust without affecting general fund reserves. Several trustees expressed support for continuing to develop a plan to prefund OPEB, noting the low administrative fee relative to potential investment returns.

Next steps

Staff will continue the trust exploration and return with an implementation plan and options for initial contribution amounts and investment strategies. PARS materials and a future recommendation will be scheduled before the board if the district seeks to adopt a resolution to participate in the trust.