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Page 1 of 4 <br />Item #9 <br /> CITY COUNCIL AGENDA REPORT <br /> <br />November 19, 2024 <br />Finance <br /> <br />TITLE: ADOPT A RESOLUTION APPROVING THE REVISED INVESTMENT POLICY <br />DOCUMENTS FOR THE CITY'S PARS SECTION 115 PENSION TRUST FUND <br /> <br />SUMMARY <br />At the June 5, 2018, meeting, the Council approved the investment strategies for a <br />conservative portfolio and a capital growth custom portfolio for the City’s PARS Section 115 <br />Pension Trust. As stated in the investment guidelines documents, HighMark Capital <br />Management (HighMark) is the investment management firm for the City’s trust accounts. <br /> <br />In 2024, PARS informed the City that HighMark consolidated with PFM Asset Management <br />(PFMAM), both of which are wholly owned subsidiaries of U.S. Bank. The consolidation does <br />not have any significant impact on the City’s existing PARS Plan, or the services provided to <br />the City. The same investment management team will continue to serve in the same capacity <br />but will now operate under PFMAM. All previously agreed-upon investment management fees <br />and investment objectives for the City will remain the same. <br /> <br />Due to the consolidation, PFMAM has requested that the City approve the revised investment <br />policy documents for both portfolios. Overall, the revisions to the investment policies are not <br />significant. The key changes are highlighted in this report. <br /> <br />RECOMMENDATION <br />Adopt a resolution approving the revised investment policy documents for the City's PARS <br />Section 115 Pension Trust Fund, including a conservative portfolio and a capital growth <br />custom portfolio. <br /> <br />BACKGROUND <br />Like many agencies, the City has been proactive in implementing strategies to pay down its <br />pension liabilities. In June 2018, the City established a Section 115 Pension Trust. Pension <br />Trusts enable cities to set aside funds and earn greater investment returns than the City’s <br />General Fund. Those assets can then be used to stabilize pension costs in future years when <br />needed. <br /> <br />The City established a Section 115 Pension Trust Fund with PARS with an initial contribution <br />of $28.0 million in June 2018 and subsequent contributions of $10.0 million in FY 2019/20 for <br />a total of $38.0 million. Of the $38.0 million, $16.7 million was deposited into the PARS <br />conservative portfolio and the balance into the PARS capital growth custom portfolio. The <br />City’s objective is to ensure there will be sufficient funds in the PARS Trust to meet the City’s <br />expected increased pension contributions associated with the City’s unfunded pension <br />liabilities and fully fund the liabilities over time. <br /> <br />At the end of September 2024, the total market value of the City’s Trust Fund was $53.9, <br />Page 119 of 658