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Page 4 of 6 <br />Staff continued to be conservative on investment. Staff will continue to monitor cash inflows <br />and outflows, taking into consideration anticipated construction costs for large capital projects <br />and unexpected events. <br /> <br /> <br /> <br />Section 115 Trust Fund <br />In December 2018, the City Council approved the investment of $28.0 million of various <br />reserves into a Section 115 Trust Fund to help smooth the pension liabilities, which are <br />expected to grow in the long run. The investment is made in two separate portfolios: the first <br />for $6.7 million in a Conservative portfolio which is available to pay the annual unfunded <br />liabilities if necessary, and the second for $21.3 million in a long-term Capital Growth portfolio. <br /> <br /> <br />In February 2020, the City Council authorized Finance staff to deposit, and withdraw from, the <br />Conservative portfolio an additional amount up to the total annual required CalPERS payment. <br />In March and December 2020, two additional $5.0 million contributions were deposited into <br />the Conservative portfolio for a total of $16.7 million deposited into the Conservative portfolio. <br /> <br />As presented in the chart below, the Conservative portfolio balance was $20.3 million at the <br />end of March 31, 2025, an increase of $0.1 million from the prior quarter. The Conservative <br />portfolio investment return for the quarter ended March 31, 2025 was 0.95 percent, and the <br />five-year annualized return was 4.45 percent. <br /> <br />Page 37 of 249