First Massachusetts School District Joins the PARS OPEB Trust ProgramCategories: Hot Sheets,New England Developments,OPEB/GASB 45/75
On January 12, 2015, Southern Worcester County Regional Vocational School District became one of the first regional school districts in the Commonwealth to approve prefunding its retiree healthcare (OPEB) liabilities into an irrevocable trust, and the first to use the PARS (Public Agency Retirement Services) low cost, “turn-key” OPEB trust program.
The District sought out an OPEB trust provider that could provide all the initial and ongoing services it needed: IRS approved trust documents, compliance, trustee, custodian, investment management, and consulting services. The PARS OPEB Trust limits costs, risks, and staff burdens, offering economies of scale that would not be possible if the District had developed the trust on its own.
Superintendent John LaFleche attended a Massachusetts Association of Regional Schools sponsored presentation by PARS last fall, and after subsequent meetings realized that the trust program was the right solution to fund the District’s liability that had steadily grown to $9,696,449 by June 30, 2014.
Advantages of the PARS OPEB Trust
- Low-cost investment pools with Vanguard – With specially designed investment portfolios offered by Vanguard, the District is able to diversify its investments with one of the world’s leading investment managers.
- Multiple employer trust structure – With the PARS model, the District avoided all legal and setup costs associated with developing a single employer trust on its own. The program already has a favorable Private Letter Ruling from the IRS which ensures the District, its employees, and retirees have tax exempt status from day one of funding.
- Economies of scale – The District wanted to obtain investment economies of scale on its contributions by joining other agencies in a large scale trust with investment pools. The trust maintains separate accounts for each member but pools investments for cost efficiencies with no risk-sharing.
- Ready and easy to use – Vetted for compliance by Massachusetts attorneys, the PARS OPEB Trust can be quickly implemented and is ready to use. Fully compliant with M.G.L. 32B 20, the trust program is free from creditors, used solely for retiree healthcare funding, and applies Massachusetts Prudent Investor Law.
- Personalized services – The District benefits from a dedicated customer service team that includes a Massachusetts based Lead Consultant and Client Services Coordinator who can meet with staff whenever the need arises.
- OPEB trust experience – As one of the largest private OPEB trust providers in the nation, PARS in conjunction with U.S bank at trustee, has grown the trust program to more than 140 clients and almost $1 billion in assets.