HomeMy WebLinkAbout05/23/2022
Staff: Committee Members:
Christian Clegg, City Manager Councilmember, Andrae Gonzales – Chair
Mario Orosco, Budget Officer Councilmember, Kenneth Weir
Councilmember, Eric Arias
Regular Meeting of the Budget and Finance Committee
of the City Council – City of Bakersfield
Monday, May 23, 2022 12:00 p.m. City Hall North, First Floor, Conference Room A
1600 Truxtun Avenue, Bakersfield CA 93301 A G E N D A 1. ROLL CALL
2. PUBLIC STATEMENTS
a. Agenda Item Public Statements
b. Non-Agenda Item Public Statements
3. ADOPTION OF THE FEBRUARY 28, 2022 AGENDA SUMMARY REPORT
4. NEW BUSINESS
a. Discussion and Committee Recommendations regarding Pension Section 115 Trust Update – McKeegan
b. Discussion and Committee Recommendation regarding insurance Rates and
Self-Insurance Fund – Covey/McKeegan
c. Discussion and Committee Recommendation regarding FY20-21 Annual Audit
Reports – McKeegan
d. Discussion and Committee Recommendations regarding PSVS Policy
Ongoing Expenditures - Clegg
5. COMMITTEE COMMENTS
6. ADJOURNMENT
Staff: Christian Clegg Committee Members:
City Manager Councilmember, Andrae Gonzales – Chair
Councilmember, Ken Weir
Councilmember, Eric Arias
REGULAR MEETING OF THE BUDGET AND FINANCE COMMITTEE of the City Council - City of Bakersfield
February 28, 2022
12:00 p.m.
City Hall North
1600 Truxtun Avenue, Bakersfield, CA 93301
First Floor, Conference Room A
AGENDA SUMMARY REPORT
The meeting was called to order at 12:02 p.m.
1. ROLL CALL
Committee members present: Councilmember Andrae Gonzales
Councilmember Ken Weir
Councilmember Eric Arias
Staff present: Christian Clegg, City Manager Brianna Carrier, Assistant to the City Manager
Kevin Truelson, Assistant to the City Manager Josh Rudnick, Deputy Attorney
Randy McKeegan, Finance Director Paul Saldana, Economic Development Director
Misty Eaton, Community Development Coord. Gregg Strakaluse, Public Works Director
Caryn Claiborne, Revenue Supervisor II Stuart Patteson, Deputy Public Works Director
Zachary Meyer, Assistant Public Works Director
Additional Attendees: Members of the Public
2. ADOPT DECEMBER 7, 2021, AGENDA SUMMARY REPORT
/s/ Christian Clegg
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 28, 2022, Agenda
Page 2
The report was adopted as submitted.
3. PUBLIC STATEMENTS
There were no public statements.
4. NEW BUSINESS
A. Committee Discussion and Recommendations Regarding FY 2022-23
CDBG, HOME, ESG Action Plan –Saldana/McKeegan
Director of Economic Development, Paul Saldana presented on the HUD
Budget & Action Plan for the FY 2022-23. Director Saldana noted that the
project areas are part of a larger strategic plan to move towards total
revitalization over a period of years. Director Saldana clarified for the
committee that the administrative costs of $792,000 covers the salary and
benefits and operating expenses for staff of the CDBG unit. Further
explaining that when there are remaining funds, that they are carried over
to the following fiscal year.
Committee Member Gonzales asked that staff consider for the future how
are we serving disadvantaged children and families in the area of the
McMurtrey Aquatic Center.
After discussion, a motion by Committee Member Eric Arias and seconded by Committee Member Ken Weir, was made for staff recommendation to
be taken to full council for consideration. Motion carried.
B. Committee Discussion and Recommendations Regarding Wastewater
Rate Study Results: Equity and Phased-in Rate Increase – Strakaluse
Public Works Director, Gregg Strakaluse provided a summary of
presentation content noting the wastewater fund is healthy and can
continue to provide high level service through fiscal year 25-26 and
maintain adequate reserves. Director Strakaluse introduced Rick Simonson,
with consulting firm HF&H who provided presented on Wastewater Rate
Study Results.
Committee Member Ken Weir requested examples of where we could
have different tiers for connection fees based on the limited discretion.
City Manager Clegg recommended that the committee move forward
with Proposition 218 due to the time frame to send out notices and bring
back connection fee conversation to a later meeting for further discussion.
After discussion, a motion by Committee Member Ken Weir and seconded
by Committee Member Eric Arias, was made for staff recommendation to
AGENDA SUMMARY REPORT
Budget and Finance Committee Meeting
Monday, February 28, 2022, Agenda
Page 2
be taken to full council for consideration regarding the rate study in terms of wastewater treatment rates and staff to come back with additional
discussion on sewer connection fee. Motion carried.
C. Committee Discussion and Recommendations Regarding Solid Waste Rate Study and Phase I Rate Increase – Strakaluse
Public Works Director, Greg Strakaluse introduced the Solid Waste Enterprise
Fund. Noting that in contrast of Wastewater, without a rate increase, fund
balance will dramatically decrease into future years. Part of the challenge
comes from Senate Bill (SB) 1383 and the State’s strict standards on how to
meet goals for organics reduction, adding to the increasing costs of
materials.
Consultant Ricky Simonson with HF&F provided a presentation on the Solid
Waste Rate Study that includes solid waste, recyclable materials, and
organic materials from residents and businesses as well as operating the Mt.
Vernon Green Waste Recycling Facility, Materials Recycling Facility, and
Composting Facility.
After discussion, a motion by Committee Member Eric Arias and seconded
by Committee Member Ken Weir, was made for staff recommendation on
Solid Waste Rate Option 1 (13% rate increase in year 1 plus CPI increases in
years 2 through 5) to be taken to full council for consideration. Motion carried.
D. Committee Discussion and Recommendation Regarding Adoption of the
2022 Committee Meeting Schedule – Carrier
The committee meeting schedule was adopted as submitted.
5. COMMITTEE COMMENTS
There were no comments made.
6. ADJOURNMENT
The meeting was adjourned.
May 2022
Presented by:
Conor Boughey, ARM
SVP, Alliant Insurance Services, Inc.
Cell: (415) 744-4889
cboughey@alliant.com
City of Bakersfield
Projection Insurance
Costs & Market Conditions
Presentation Overview
1.Liability Market Summary
2.Property Market Summary
3.Workers Compensation
4.Summary of Costs
Quick History of Market Cycles
Net Written Premium
3
(Percent)1975-78 1984-87 2000-03
* **Pre/Post-COVID-19 forecast from A.M. Best Review & Preview (Feb. 2020, 2021). NOTE: Shaded areas denote “hard market” periodsSources: A.M. Best (1971-2013, 2021F), ISO (2014-19); Risk & Uncertainty Management Center, Univ. of South Carolina
Net Written Premiums Fell 0.7% in 2007 (First Decline Since 1943) by 2.0% in 2008, and 4.2% in 2009, the First 3-Year Decline Since 1930-33.
2020 Outlook
Pre-COVID: 3.8%
Actual: 1.8%**
-5%
0%
5%
10%
15%
20%
25%
71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
21
F
CA Liability
Pools
CA Changes
Legislation -
Starts WC Pools
Pool
Membership Increases
1986
Current Market
Liability Market
Bakersfield is a founding Member of ACCEL, 1986
City’s Self Insured Retention (SIR) has been $1,000,000
since inception –SIR’s will be evaluated for 7/1/2023
ACCEL acts as a risk financing vehicle excess of the
city’s risk management program.
ACCEL manages a retained layer of risk, the City is on
the Board of Directors (currently President)
ACCEL markets and purchases excess insurance,
structure depends on market conditions.
ACCEL currently provides a $55M limit to all members.
City of Bakersfield’s Liability Placement
ACCEL Members –Payroll Discussion
2017-18 2018-19 2019-20 2020-21 2021-22
Anaheim $ 251,095,466 $ 254,136,300 $ 264,499,278 $ 246,774,442 $ 252,450,219
Bakersfield $ 104,724,603 $ 105,666,240 $ 111,901,464 $ 117,592,581 $ 138,338,483
Burbank $ 111,365,382 $ 109,970,272 $ 114,498,943 $ 118,791,167 $ 126,410,338
Modesto $ 84,553,083 $ 87,496,089 $ 90,094,798 $ 90,712,212 $ 95,758,960
Monterey $ 41,886,030 $ 42,715,512 $ 43,819,132 $ 37,856,726 $ 38,372,940
Mountain View $ 76,519,131 $ 81,288,206 $ 84,203,168 $ 85,395,781 $ 84,371,814
Ontario $ 99,516,325 $ 106,597,105 $ 116,164,985 $ 113,719,325 $ 113,212,045
Palo Alto $ 116,644,088 $ 122,188,044 $ 126,026,438 $ 123,125,295 $ 121,262,095
Salinas $ 65,177,145 $ 64,580,045 $ 65,090,865 $ 65,567,776
Santa Barbara $ 99,075,934 $ 99,785,113 $ 101,361,494 $ 98,754,235 $ 101,155,636
Santa Cruz $ 66,052,781 $ 67,587,185 $ 69,656,906 $ 68,390,287 $ 70,730,576
Santa Monica $ 217,662,567 $ 227,481,141 $ 230,134,246 $ 206,219,121 $ 198,558,320
Visalia $ 48,694,050 $ 50,942,502 $ 53,023,805 $ 52,163,325 $ 56,374,147
Total $ 1,317,789,439 $ 1,421,030,855 $ 1,469,964,702 $ 1,424,585,363 $ 1,462,563,349
Bakersfield is: 7.95%7.44%7.61%8.25%9.46%
Costs are allocated on payroll and claims experience.
California does not have tort caps, and is experiencing a rapid
escalation of verdict sizes.
Liability insurance carriers are:
Increasing minimum retentions to $3-5M or higher for cities, moving towards
$10M for JPAs.
Reducing their limits to $10M of less.
Increasing pricing.
As a result:
ACCEL retains more risk –$9M xs. $1M.
ACCEL utilizes reinsurance and excess insurance.
ACCEL’s rates are increasing, but shared risk layers are significantly less
than insurance market pricing.
Liability Market: State of the Market
7
Liability Market: Large PE Verdicts
8
Insured Insured Type State Claim Type Loss Year Total Incurred
USC School -University CA SML 1987-2017 $ 1,100,000,000
University of Southern California School -University CA SML Undefined $ 852,000,000
University of California School -University CA SML 1983-2018 $ 246,300,000
Los Angeles Unified School District School K-12 CA SML 2005-2010 $ 169,200,000
SoCalGas *CA GL 2015 $ 120,000,000
County of San Bernardino County CA GL 2014 $ 113,400,000
Union School District School K-12 CA SML 2009-2014 $ 102,500,000
San Diego County County CA LEL 2015 $ 85,000,000
UC System (UCLA)School -University CA SML 1983-2019 $ 73,000,000
Town of Apple Valley Town CA GL 2016 $ 60,000,000
Los Angeles Unified School District School K-12 CA SML 2002-2012 $ 58,000,000
County of Los Angeles County CA LEL / Strip Search 2008-2015 $ 53,000,000
American Ambulance Ambulance CA MedMal 2018 $ 50,000,000
SoCalGas Utility CA AL 2017 $ 46,000,000
City of Santa Monica City CA SML 1986-1995 $ 42,600,000
Los Angeles County County CA AL 2015 $ 42,000,000
Durham School Services Transit Agency CA GL 2017 $ 36,100,000
San Bernardino County County CA LEL 2015 $ 33,500,000
City of Beverly Hills City CA GL 2014 $ 32,500,000
Torrance Unified School District School K-12 CA SML 1995-1996, 2013-2015 $ 31,000,000
Los Angeles Unified School District School K-12 CA SML 2010-2011 $ 30,000,000
Victor Elementary School District School K-12 CA GL 2017 $ 28,500,000
City of Whittier City CA GL 2016 $ 28,000,000
ACCEL Board has addressed the current claims environment by increasing
funding in retained layers.
As insurance premiums increase or become unavailable, ACCEL pivots to
expanding the self insured program.
ACCEL evaluates its attachment point to excess coverage annually.
ACCEL will be evaluating Member attachment points, and may increase SIRs.
Excess rates continue to climb due to the claims development trends across
the state.
The following budget projects include:
Payroll: Actual for the current year, 8% 23/24 and 5% for 24/25
Rate: Actual for the current year, 10% 23/24 and 5% for 24/25
Liability Market: Take Away
Liability Actual Budget
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Payroll $102,338,081 $104,724,603 $105,666,240 $111,901,464 $117,592,581 $138,338,483 $149,405,562 $156,875,840
Premium $ 818,101 $ 977,452 $ 1,132,254 $ 1,900,937 $ 3,162,434 $ 4,260,000 $ 5,060,000 $ 5,580,000
Limit $ 75,000,000 $ 75,000,000 $ 75,000,000 $ 55,000,000 $ 55,000,000 $55,000,000 $55,000,000 $55,000,000
9
Property Market
The City of Bakersfield participates in the PRISM
Property Insurance Program. The primary insurance
carrier participating is Lexington/AIG.
The Program has many insurance carrier participants.
Carrier participation is marketed every year.
The Program is a joint purchase on behalf of many
counties and cities.
The coverage and cost provided by this program
structure provides significant benefit to participant
agencies, especially in a hard market.
PRISM retains risk to allow members to have very low deductibles.
City’s Property Coverage
11
Property Coverage Structure
Premiums are determined by:
Total Insured Values * rate = Premium
Current economic pressures bring existing values into focus:
Cost of Labor
Cost of Materials
Inflation
California cities continue to invest in new locations, increasing insured
values.
Values of existing locations historically increase at Marshall Swift trend
rates, which are now hovering at about 20% year over year.
PRISM negotiated with the markets to increase values 7.5% for structures
and 5% for contents
Property Market
13
The City’s property insurance is in a very large well placed program.
The city maintains high limits and low retention.
The following budget assumes:
Values continue to increase due to new additions and trending, this year is 8%, and 5% for
the following two years.
The rate is budgeted to increase 13% this year, and then 10% and 7% for the following
years.
Property Market: Take Away
14
Property Actual Budget
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
TIV $ 504,920,380 $ 527,738,688 $ 589,924,855 $ 616,235,607 $ 628,227,018 $680,637,176 $714,669,035 $750,402,487
Premium $ 332,606 $ 361,239 $ 398,910 $ 530,603 $ 681,713 $ 834,495 $ 963,842 $ 1,082,876
Rate $ 0.066 $ 0.069 $ 0.068 $ 0.086 $ 0.109 $ 0.123 $ 0.135 $ 0.144
Deductible $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000
Workers Compensation
The City of Bakersfield participates in PRISM for Workers
Compensation Coverage.
PRISM is one of the largest JPA in the county, providing
excess workers compensation to most public entities in the
state. Over 78% of cities purchase WC through this program.
Workers Compensation coverage has been relatively stable for
several years, with moderate rate increases occurring.
Substantial area of cost, but mostly within retention. Excess
workers compensation coverage is relatively low cost and
provides statutory limits.
Workers Compensation Market
16
Workers Compensation
Coverage Structure
17
Workers Compensation remains stable and the largest impact to
pricing is the city’s ex-mod.
The city could consider a higher retention to lower premium costs,
self-insured program will require additional funding.
The following budget projects include:
Payroll: Trending at 4% increase per year, will be audited to actual.
Rate: 10% for 22/23, 5% 23/24 and 3% for 24/25
Workers Compensation Market: Take Away
18
WorkersComp Actual Budget
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Payroll $109,262,913 $117,225,990 $119,373,854 $142,445,967 $149,054,774 $155,016,965 $161,217,644 $167,666,349
Premium $ 825,739 $ 907,331 $ 893,312 $ 1,147,435 $ 1,325,647 $ 1,516,540 $ 1,656,062 $ 1,773,973
SIR $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000
Ex Mod 121%132%111%112%119%???
Total Budget Projections
Each line item is conservatively budgeted.
These estimates should represent the high range of expectations.
Insurance Budget Projections
20
Liability
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Payroll 102,338,081$ 104,724,603$ 105,666,240$ 111,901,464$ 117,592,581$ 138,338,483$ 149,405,562$ 156,875,840$
Premium 818,101$ 977,452$ 1,132,254$ 1,900,937$ 3,162,434$ 4,260,000$ 5,060,000$ 5,580,000$
Limit 75,000,000$ 75,000,000$ 75,000,000$ 55,000,000$ 55,000,000$ 55,000,000$ 55,000,000$ 55,000,000$
Property
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
TIV 504,920,380$ 527,738,688$ 589,924,855$ 616,235,607$ 628,227,018$ 680,637,176$ 714,669,035$ 750,402,487$
Premium 332,606$ 361,239$ 398,910$ 530,603$ 681,713$ 834,495$ 963,842$ 1,082,876$
Rate 0.066$ 0.069$ 0.068$ 0.086$ 0.109$ 0.123$ 0.135$ 0.144$
Deductible 5,000$ 5,000$ 5,000$ 5,000$ 5,000$ 5,000$ 5,000$ 5,000$
Workers Comp
2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
Payroll 109,262,913$ 117,225,990$ 119,373,854$ 142,445,967$ 149,054,774$ 155,016,965$ 161,217,644$ 167,666,349$
Premium 825,739$ 907,331$ 893,312$ 1,147,435$ 1,325,647$ 1,516,540$ 1,656,062$ 1,773,973$
SIR 500,000$ 500,000$ 500,000$ 500,000$ 500,000$ 500,000$ 500,000$ 500,000$
Ex Mod 121%132%111%112%119%???
TOTAL 1,976,446$ 2,246,022$ 2,424,476$ 3,578,975$ 5,169,794$ 6,611,035$ 7,679,904$ 8,436,850$
BudgetActual
Actual Budget
Actual Budget
Questions?
Thank You
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City of Bakersfield
PARS 115 Trust –OPEB Prefunding Program and
Pension Rate Stabilization Program Client Review
May 23, 2022
City of Bakersfield ▎2
Contacts
Mitch Barker
Executive Vice President
(800) 540-6369 x116
mbarker@pars.org
Jennifer Meza, CEBS
Manager, Consulting
(800) 540-6369 x141
jmeza@pars.org
Andrew Brown, CFA
Director, Senior Portfolio Manager
(415) 705-7605
andrew.brown@highmarkcapital.com
City of Bakersfield ▎3
Pars 115 Trust Team
Trust Administrator & Consultant
38
Years of Experience
(1984-2022)
2,000+
Plans under
Administration
1,000+
Public Agency
Clients
$6.4 B
Assets under
Administration
500 K+
Plan Participants
Investment Manager
•Investment sub-advisor to trustee U.S. Bank
•Investment policy assistance
•Uses open architecture
•Active and passive platform options
•Customized portfolios (with minimum asset level)
103
Years of Experience(1919-2022)
$20.2 B
Assets under Management & Advisement
Trustee
•5th largest commercial bank and one of the
nation’s largest trustees for Section 115 trusts
•Safeguard plan assets
•Oversight protection as plan fiduciary
•Custodian of assets
159
Years of Experience(1863-2022)
$9.0 T
Assets under Trust Custody
490+
115 Trust Clients
•Serves as record-keeper, consultant,
and central point of contact
•Sub-trust accounting
•Coordinates all agency services
•Monitors plan compliance
(IRS/GASB/State Government Code)
•Processes contributions/disbursements
•Hands-on, dedicated support teams
City of Bakersfield ▎4
Subaccounts
OPEB and pension assets are individually sub-accounted, and can be divided by dept.,
bargaining group, or cost center.
Assets in the PARS Section 115 Combination Trust can be used to address unfunded liabilities.
Financial Stability
Allows separate investment strategies for OPEB and pension subaccounts.
Flexible Investing
OPEB and pension assets aggregate and reach lower fees
on tiered schedule sooner –
saving money!
Economies-of-ScaleAnytime Access
Trust funds are available anytime; OPEB for OPEB
and pension for pension.
No set-up costs, no minimum annual contribution amounts,
and no fees until assets are added.
No Set Up Cost or Minimums
Retiree Medical Benefits
Prefund OPEB GASB 75
OPEB
$86.2M
Reimburse agency; or
Pay benefits provider
Pension Rate Stabilization Program
Prefund Pension (PRSP)GASB 68
Pension
$4M
Reimburse agency; or
Pay retirement system
Assets can be used to:Assets can be used to:
prefundeither or both
General Fund
PARS IRS-Approved Section 115 Trust
City of Bakersfield ▎5
PARS OPEB TRUST Program
for prefunding Other Post-Employment Benefits
The
City of Bakersfield ▎6
Plan Type:IRC Section 115 Irrevocable Exclusive Benefit Trust
Trustee Approach:Discretionary
Plan Effective Date:January 17, 2007
Plan Administrator:City Manager
Current Investment Strategy:Custom Strategy; Individual Account
*Prior to July 2019: Moderately Conservative Index Plus
Summary of Agency’s opeb Plan
AS OF APRIL 30, 2022:
Initial Contribution:February 2007: $2,400,000
Additional Contributions:$55,260,986
Total Contributions:$57,660,986
Disbursements:$0
Total Investment Earnings:$30,788,557
Account Balance:$86,243,181
City of Bakersfield ▎7
Summary of Agency’s opeb Plan
*Plan Year Ending June 2007 is based on 5 months of activity.**Plan Year Ending June 2022 is based on 10 months of activity.
HISTORY OF CONTRIBUTIONS, DISBURSEMENTS, AND TOTAL ASSETS AS OF APRIL 30, 2022:
Year Contributions Disbursements Total Assets
Jun-07 $4,800,000 $0 $4,853,695
Jun-08 $5,560,000 $0 $10,228,616
Jun-09 $2,565,600 $0 $12,179,117
Jun-10 $3,043,300 $0 $16,400,695
Jun-11 $1,641,300 $0 $20,101,236
Jun-12 $13,092,600 $0 $34,383,140
Jun-13 $10,292,900 $0 $46,532,951
Jun-14 $0 $0 $50,722,418
Jun-15 $4,076,300 $0 $55,667,283
Jun-16 $1,295,500 $0 $58,775,463
Jun-17 $0 $0 $61,606,436
Jun-18 $3,019,586 $0 $66,455,251
Jun-19 $1,336,050 $0 $72,477,718
Jun-20 $2,780,850 $0 $79,590,814
Jun-21 $2,589,250 $0 $92,259,963
Jun-22 $1,567,750 $0 $86,243,181
$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
$100,000,000
Plan Year Ending
Contributions
Disbursements
Total Assets
City of Bakersfield ▎8
•We have received the actuarial report by Segal Consulting dated November 7,
2019, with a measurement date as of June 30, 2019. In the table below, we have
summarized the results.
OPEB Actuarial Results
Demographic Study Measurement Date:
June 30, 2017
Measurement Date:
June 30, 2019
Actives 594 513
Retirees 754 757
Total 1,348 1,270
City of Bakersfield ▎9
OPEB Actuarial Results
Valuation Date: June 30, 2017
5.00% Discount Rate
Measurement Date: June 30, 2019
5.00% Discount Rate
Total OPEB Liability (TOL)$140,014,779 $129,471,089
Plan Fiduciary Net Position $61,606,436 $72,477,717*
Net OPEB Liability (NOL)$78,408,343 $56,993,372
Funded Ratio (%)44.00%55.98%
Actuarially Determined Contribution (ADC)$7,530,031 $6,973,711
Annual Benefit Payments (Pay-as-you-Go) $5,050,000 $6,604,007
**As of April 30, 2022, assets at $86,243,181 (approx. ~66.61% funded).Rule of thumb:For every one percent increase in the discount rate, the unfunded liability is lowered by 10-12%.
City of Bakersfield ▎10
PARS Pension Rate
Stabilization Program
for prefunding pension obligations
The
City of Bakersfield ▎11
Plan Type:IRC Section 115 Irrevocable Exclusive Benefit Trust
Trustee Approach:Discretionary
Plan Effective Date:March 2, 2022
Plan Administrator:City Manager
Current Investment Strategy:Moderately Conservative (Active) Strategy; Individual Account
Initial Contribution May 5, 2022:$4,000,000
Summary of Agency’s Pension Plan
City of Bakersfield ▎12
HighMark Capital Management
Investment Review
City of Bakersfield
April 30, 2022
Presented by:
Andrew Brown, CFA
13
Economic and Market Forecast
May 2022
2022
Assumptions
GDP 2.1% -2.6%
S&P 500 Earnings $215 -$220
Unemployment 3.6% -4.1%
Core PCE Inflation 3.7% -4.2%
Fed Funds Target 1.75% -2.5%
Source: HighMark Asset Allocation Committee
14
Inception Date: 03/01/2007FromMarch1,2007 to February 28,2013,the Plan’s assets were managed under the PARS/PRHCP Moderately Conservative Index Pooled strategy, under account 6746019204.On March 1,2013
the Plan’s assets were transferred,in-kind, out of this account and into a separately managed account.This account is 6746045900 and is still invested under the Moderately Conservative IndexObjective.For the investment performance periods before March 1,2013,the portfolio’s performance will be linked to the performance record of the PARS/PRHCP Moderately Conservative Indexstrategy, account number 6746019204.Returns are gross of account level investment advisory fees and net of any fees, including fees to manage mutual fund or exchange traded fund holdings.
Returns for periods over one year are annualized.The information presented has been obtained from sources believed to be accurate and reliable.Past performance is not indicative of futurereturns.Securities are not FDIC insured, have no bank guarantee, and may lose value.
PARS/City of Bakersfield 15
3 Months
Year
to Date
(4 Months)1 Year 3 Years 5 Years 10 Years
Inception
to Date
03/01/2007
Cash Equivalents .02 .02 .04 .57 .95 .53 .85
Lipper Money Market Funds Index .03 .03 .03 .55 .91 .48 .75
Fixed Income ex Funds -6.94 -8.73 -7.47
Total Fixed Income -6.73 -8.53 -7.26 .99 1.48 1.75 3.00
Bloomberg US Aggregate Bd Index -7.51 -9.50 -8.51 .38 1.20 1.73 3.26
Total Equities -7.77 -13.12 -5.17 9.86 9.95 10.51 7.33
Large Cap Funds -7.94 -12.65 .20 13.57 13.34 13.34 9.39
S&P 500 Composite Index -8.17 -12.92 .21 13.85 13.66 13.67 9.57
Mid Cap Funds -6.10 -13.02 -6.30 10.21 10.47 11.79
Russell Midcap Index -6.02 -12.94 -6.10 10.48 10.66 11.99 8.85
Small Cap Funds -8.20 -17.05 -17.22 6.05 6.73 10.17 7.84
Russell 2000 Index -7.82 -16.69 -16.87 6.73 7.24 10.06 7.23
International Equities -10.13 -12.48 -12.07 3.49 4.37 4.27 1.85
MSCI EAFE Index -7.53 -12.00 -8.15 4.44 4.77 5.77 2.59
MSCI EM Free Index -10.45 -12.15 -18.33 2.24 4.32 2.89 3.63
RR: REITS -1.65 -9.93 7.68 9.33 8.36
Wilshire REIT Index -1.40 -8.24 14.11 10.29 9.03 9.07 5.68
Total Managed Portfolio -6.81 -9.78 -6.35 3.90 4.25 4.48 4.28
Selected Period Performance
Bakersfield OPEB
Period Ending: 4/30/2022
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fu
n
d
e
d
st
a
t
u
s
of
th
e
pl
a
n
an
d
ac
c
e
l
e
r
a
t
e
the paydown
of
th
e
un
f
u
n
d
e
d
ac
c
r
u
e
d
li
a
b
i
l
i
t
y
(UAL).
•
An
n
u
a
l
co
n
t
r
i
b
u
t
i
o
n
s
ba
s
e
d
on savings from
ad
v
a
n
c
e
d
UA
L
pa
y
m
e
n
t
.
•
Fi
x
e
d
pe
r
c
e
n
t
a
g
e
of
su
r
p
l
u
s
fund balance
ca
l
c
u
l
a
t
e
d
at
ye
a
r
en
d
.
•
An
n
u
a
l
c
o
n
t
r
i
b
u
t
i
o
n
s
fr
o
m
$4 million (in 2021 ‐22)
to
$1
0
mi
l
l
i
o
n
pe
r
ye
a
r
.
•
Al
l
pr
o
p
o
s
e
d
co
n
t
r
i
b
u
t
i
o
n
s
would be dependent
on
th
e
op
e
r
a
t
i
o
n
a
l
ne
e
d
s
of the City.
•
Ci
t
y
ad
m
i
n
i
s
t
r
a
t
o
r
s
wi
l
l
re
v
i
e
w
significant events
im
p
a
c
t
i
n
g
fu
n
d
i
n
g
pr
o
g
r
e
s
s
ea
c
h
year recommending
co
u
r
s
e
co
r
r
e
c
t
i
o
n
s
to
th
e
Ci
t
y
Co
u
n
c
i
l
as
n
e
c
e
s
s
a
r
y