Council approves switch of OPEB prefunding from CalPERS CERBT to Schuster-run Section 115 trust; directs an investment policy return within 120 days

Cathedral City’s council authorized staff on June 25 to transition the city’s OPEB (other post‑employment benefits) prefunding from the CalPERS CERBT program to a Schuster Advisory Group‑administered Section 115 trust, subject to preparatory steps and a requirement that staff present a formal investment policy back to council within 120 days.

Financial Services Director Kevin Biersack and City Treasurer Greg Jackson explained that the city’s CERBT account has grown to about $15 million and that Schuster offers customizable portfolios and more investment‑management visibility than the CalPERS vehicle. Staff presented comparative performance figures for Schuster model portfolios versus CERBT alternatives and acknowledged that Schuster‑administered trust fees are higher (staff cited administrative and custody fees that sum to a higher percentage than CalPERS’ administrative charge). Staff argued the higher-fee program offers flexibility and the potential for higher net returns that could exceed the additional fee load.

Council members asked detailed questions about fees, the length of return history, auditability, and the role of the city treasurer and finance director in oversight. Treasurer Greg Jackson indicated he supports the move; staff pledged to prepare a written investment policy that sets guardrails (including risk-model limits, oversight roles and deposit timing), and the motion that passed included direction to return the policy within 120 days. Council voted unanimously to approve the transition and to discontinue participation in CalPERS’ CERBT if the implementation proceeds as planned.