The document discusses options for pre-funding retiree healthcare benefits (OPEB) for California public agencies. It outlines several funding alternatives including pay-as-you-go, internal service funds, and irrevocable trusts. Irrevocable trusts are considered the best option as they fully fund future benefits and improve financial reporting. The document also discusses trust structure options, investment considerations, asset allocation, and outlines the typical implementation process for establishing an OPEB trust.
16. What Will You Need?
PFM
• Most Agencies do the following:
― Create trust
― Hire trustee/custodian bank
― Create governing/oversight board
― Discretionary versus Non-Discretionary Model
― Review asset/liability profile
― Create appropriate asset allocation
― Create investment policy statement
― Select investments
― Discretionary versus Non-Discretionary Model
― Non-discretionary: Board hires money managers
― Discretionary: Fiduciary investment advisor hires money managers
― Continued oversight and rebalancing
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