Title
Resolution Making Certain Administrative Amendments to the Local Government Other Post-Employment Benefits (“OPEB”) Trust Agreement Between the City of Greensboro and the Trustees
Body
Department: Financial and Administrative Services
Council District: All
Public Hearing: N/A
Advertising Date: N/A
Contact 1 and Phone: Richard Lusk, Finance Director, 373-2077
Contact 2 and Phone: Marlene Druga, Deputy Finance Director, 373-2094
PURPOSE:
An irrevocable OPEB Trust and a local government participation arrangement with the North Carolina Department of State Treasurer’s office for professional management of OPEB Trust investments was authorized and established by the City Council on June 21,2011 for the sole purpose of accumulating funds to pay post-employment health benefits to City retirees until age 65. Certain administrative amendments to the Trust Agreement are necessary to clarify the name of the Trust, allow for more flexibility in naming of Trustees when changes in City employment occur and to set forth and approve the Trust’s Investment policy.
BACKGROUND:
In FY 2016, the City paid approximately $4.7 million in post-employment health benefits to eligible retirees. To date, approximately $15.2 million has been accumulated in Trust to pay future OPEB benefits until age 65. The assets of the OPEB Trust are not subject to the claims of the City’s creditors and are held for the exclusive purpose of providing OPEB benefits to eligible City retirees and to pay reasonable administrative and actuarial expenses of the OPEB Trust. An actuary will provide an estimate of the City’s OPEB obligation and amounts the City should set aside and contribute each year, in order to accumulate sufficient funds to pay these future benefits when due.
In such OPEB Trust agreement dated June 21, 2011, Rashad Young, City Manager, Rick Lusk, Director of Finance, and Connie Hammond, Director of Human Resources were individually appointed Trustees of the OPEB Trust. Since Rashad Young is no longer employed with the City of Greensboro, the City desires to amend the OPEB Trust agreement to remove the “individual” naming of Trustees, but rather appoint Trustees by employment position only, such as “City Manager”, “Director of Finance” and “Director of Human Resources” in order for successor Trustees to be readily in place if individual employment transitions should occur.
In addition, the name of the OPEB Trust is requested to be changed from Local Government Other Post-Employment Benefits Trust to Local Government Other Post-Retirement Benefits Trust to correspond to the required statutory wording in N.C.G.S. 159-30.1.
Finally, the OPEB Trust investment policy, with oversight by the Investment Advisory Committee of the OPEB Trust, is defined and attached for City Council approval. In addition to investments authorized by state statute for daily local government use, and by special legislation in 2007 for certain employee benefit funds held in trust, state statutes allow local governments to place Trust funds that are of a longer-term nature in the North Carolina Ancillary Governmental Participant Investment Program, (“Program”) managed by the North Carolina Department of State Treasurer.
The Treasurer has established this Program to help local governments benefit from low cost professional investment management and to leverage the State’s relationships with more than $15 billion of existing investments in pension funds. The Treasurer selects and monitors the OPEB investment funds that are offered, and the Investment Advisory Committee of the OPEB Trust advises on how the funds are to be placed and/or allocated.
BUDGET IMPACT:
Any contributions made to the OPEB Trust Fund in FY 2017 are included in current year appropriations in the Employee Risk Retention Internal Service Fund and any future years’ contributions would be included in annual appropriations of those years.
RECOMMENDATION / ACTION REQUESTED:
The Financial and Administrative Services and Legal Departments recommend City Council approval of the attached resolution making certain administrative amendments to the Local Government Other Post-Employment Benefits Trust Agreement