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Board shifts OPEB portfolio to a more conservative mix and keeps pension prefunding strategy
Summary
After presentations from county actuary and PARS/PFM managers, supervisors voted to adopt a balanced investment objective for the county’s OPEB assets, maintain the pension pre-funding posture and continue funding the actuarially determined contribution.
San Benito County supervisors voted May 12 to change the investment objective for the county’s OPEB pre‑funding account and to maintain the existing pension pre‑funding strategy.
County staff presented results of a recent actuarial valuation for other post‑employment benefits (OPEB). Interim CAO Henny Ring and financial staff summarized the actuarial report: the plan’s funded ratio was reported at about 92.2% on the valuation date, with an estimated net OPEB liability near $2.7 million as of June 30, 2025. Staff warned that benefit changes can materially increase long‑term liability: an example cited in the valuation showed that a $200 per‑month change in retiree contributions produced a multi‑million‑dollar swing.
The county’s PARS 115 trust manager and asset manager presented investment options and performance history. Matt Spooner (PARS) and an investment officer from PFM Asset Management described five model investment objectives, from conservative through capital appreciation, with varying equity/fixed income mixes. PFM provided long‑term forecasts: capital appreciation (growth‑oriented) produced higher long‑term return assumptions while balanced and moderately conservative options reduced equity exposure and volatility.
After discussion, Supervisor Kozmicki moved—and the board approved with a 4–1 roll call (Supervisor Zenger opposed)—a motion to change the OPEB account’s investment objective from capital appreciation to a “balanced” allocation (moderate risk) to reduce downside volatility given the plan’s strong funded position. Separately, the board unanimously approved a motion to maintain the current pension prefunding strategy for the pension rate stabilization account. The board also unanimously approved staff recommendations to continue drawing retiree health care payments from the PARS 115 trust and to continue to fund the actuarially determined contribution as the county’s employer funding policy.
The motions will not change the county’s FY2025–26 budget immediately; actuarial assumptions will be reviewed in the next valuation and any change to the actuarially determined contribution (ADC) would appear in subsequent budget cycles if required. Staff said they will bring an updated investment policy statement for the OPEB portfolio to the board for signature.
