County of Yolo is the Latest to Pre-Fund with PARSCategories: Hot Sheets,OPEB/GASB 45/75
Since its inception in 2004, GASB 45 has prompted many public agencies to address their unfunded OPEB liabilities by pre-funding into an irrevocable trust. While an agency may choose to set up its own trust, most have joined multiple-employer trusts, like the PARS/Union Bank OPEB Trust, to avoid costly set-up fees and administration.
With GASB 45 looming, the County of Yolo set aside $1.1 million in 2007 for its OPEB liability. Since that time, Yolo County has continued to make payments towards its post-retirement healthcare obligations on a “PAYGO” basis. During that period, the County watched its liability continue to rise to an estimated $37.1 million and began seeing a negative impact on its financial statements each year. Realizing this could potentially affect the County’s credit ratings, the Board of Supervisors decided it was time to contribute funds into an irrevocable trust, a GASB 45 requirement, to offset the OPEB liability on its financial statements.
Yolo County sought a trust program that provided security, flexibility, economies of scale and service. Howard Newens, Auditor-Controller/Treasurer-Tax Collector comments, “PARS allows the County’s participation in selecting from nine investment strategies or complete customization, giving us control of our risk tolerance level. Union Bank is able to offer the County on-line access. PARS and Union Bank have been very responsive to our needs. We look forward to a long-term relationship with PARS and Union Bank.”
The PARS OPEB Trust
Many local government agencies are joining the PARS OPEB Trust program to comply with GASB 45 standards. The advantages of the PARS approach are:
- 15 years of successful OPEB trust experience with Union Bank as Trustee and Investment Manager
- IRS-approved IRC Section 115 multiple-employer trust
- Maximum fiduciary protection for governing boards and councils
- Investment flexibility on strategy, risk tolerance and target rate of return
- Highest degree of personal service including on-site reviews
- 90-day termination option with no fees incurred
Over the last 28 years, PARS has designed and delivered over 1,230 individualized retirement solutions for more than 600 public agencies. We are on the cutting edge of design and administration of post-retirement healthcare funding programs for California local governments. PARS first began administering post-retirement healthcare trusts in 1996. Since that time, we have consulted with numerous public agencies on GASB 45 issues and have designed and developed two trailblazing multiple-employer IRC Section 115 trusts.
Like the County of Yolo, you can take advantage of PARS’s experience and innovation, with Union Bank’s strength and protections.
Contact PARS for a no-obligation proposal.