The Superior Courts of the Counties of Marin, San Mateo and Shasta Join the Full-Service OPEB Trust

Categories: Hot Sheets,OPEB/GASB 45/75
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PARS created a comprehensive “one-stop” program to help agencies like the Superior Courts of California, with the challenges of complying with GASB 45 related to retiree health care benefits.  Many courts have recently been contacting PARS about pre-funding OPEB for a number of reasons, including the following:

•     Actuarial valuations reflecting a larger than expected gap in their unfunded liability.

•     Severe budget cuts during the last five years have accelerated the number of retirees, thus increasing the number of retiree health insurance costs.

•     Court Executive Officer’s (CEOs) understand the wisdom of pre-funding their OPEB liability, especially if the State changes its policy to fund such expenses.

Superior Court of California, County of San Mateo’s Story

Consistent with San Mateo County policy and practice, the Superior Court of CA, County of San Mateo (the Court), has provided post employment health benefits to its retired employees.  Prior to October 2012, the Court has been paying these benefits on a “pay-as-you-go” basis, ear-marking funds over the past several years from their reserves to reduce their unfunded liability.  This method was no longer feasible for the Court and they sought out PARS to help find an alternative solution.  The PARS OPEB Trust was recommended based on many benefits, including flexible investment options, no required contribution amount, and the fact that three other courts and two local agency clients of PARS favorably recommended PARS.  The Court’s Staff Report states, “Just the establishment of the PARS trust will improve our financial position.  Any deposit would earn investment returns and would, in turn, reduce future liabilities from accruing.  PARS was very helpful and always made themselves available to us while we were making this important decision.”

The Full-Service Leader – PARS

Our program helps agencies of all sizes and types with GASB 45 compliance, including the process of selecting an actuary and completing an actuarial valuation to designing a realistic plan for pre-funding their OPEB liabilities. Upon completion of the actuarial valuation, PARS reviews and evaluates your report and assists in analyzing and evaluating various funding options to address the GASB 45 requirements and liabilities.  PARS can provide the following:

An analysis of the benefits of pre-funding the GASB 45 obligation versus not pre-funding. An analysis of the benefits of pre-funding the GASB 45 liability within a trust using potentially higher yielding investment options.

If an agency wishes to begin pre-funding its obligation, then PARS offers a multiple-employer trust program, in compliance with GASB 45, to fund the benefits under IRS Section 115. The trust is particularly well suited for Superior Courts because they join with other public agencies for investment and administrative economies of scale, thus lowering costs. At the same time, the courts have local control and flexibility in terms of diversified investment options, contributions, distributions and other plan features which include:

•     Highly-rated Trustee, U.S. Bank (5th largest commercial bank in the nation)
•     IRS-approved 115 OPEB Trust
•     5 risk tolerance levels or custom designed strategy
•     Investment Policy assistance by dedicated Senior Portfolio Manager
•     Local control on actuarial assumptions, including discount rate
•     Easy-to-adopt Master Trust
•     No minimum contribution required

The PARS OPEB Trust Program is here to help agencies like the Superior Courts of California with the challenges of GASB 45.  Please feel free to contact us for a complimentary proposal and see why it might make sense for your agency.


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