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PARS presents options to move county OPEB trust to combined OPEB/pension model
Summary
Consultants from Public Agency Retirement Services (PARS) recommended converting the county's 115 OPEB trust to a two‑bucket model that would allow pre‑funding for both retiree healthcare (OPEB) and pensions; the board received the presentation but took no formal action.
Representatives from Public Agency Retirement Services (PARS) briefed the Board of Supervisors on May 6 about the county's existing Internal Revenue Code section 115 trust for other post‑employment benefits (OPEB) and presented an option to expand the trust into a two‑bucket model that would prefund both OPEB and pension liabilities.
Mitch Barker, senior consultant with PARS, said the county's most recent actuarial valuation shows net OPEB liabilities in the range of $242–254 million and annual pay‑as‑you‑go retiree medical outlays of about $7.7 million, with projections that pay‑as‑you‑go could rise to about $13.5 million by 2033. Barker said the county currently has roughly $2.0 million in OPEB assets (as of March) after prior deposits and withdrawals.
"Bottom right there in red, no cost to do this, no requirement to put money into it in the future," Barker told the board when describing that converting to a combination trust would not force additional contributions and would preserve tax‑exempt treatment under a private letter ruling, according to the presentation transcript.
Carter Kimberly, PARS' pension expert, said adding a pension bucket would allow the county to smooth pension rate increases, provide another source of rainy‑day funds to offset employer contribution spikes, and pursue potentially higher long‑term investment returns than a cash management alternative.
The presentation was informational; the board did not take formal action during the meeting. PARS and county staff said they will provide additional analyses if the board wishes to consider a formal change to the trust structure and funding strategy.
