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  Agenda Item   23.    
City Council Meeting
Meeting Date: 08/15/2023  
FROM: Bill Gallardo

Investment Policy Guidelines for the City of Brea's Employee Benefits Fund Pension Plan
Review and approve the Investment Policy Guidelines for the City of Brea's Employee Benefits Fund Pension Plan through Public Agencies Retirement Services (PARS).
On November 17, 2015, the City Council approved participation within the Public Agencies Post-Employment Benefit Trust Program that established the City of Brea's Employee Benefits Fund Pension Plan ("Plan"). The Plan is administered by Public Agencies Retirement Services (PARS) to assist the City in "pre-funding" its pension obligations in an irrevocable Section 115 Trust account. Some of the benefits of participating in the program are summarized below:
  • City maintains oversight of investment management and control over the risk tolerance level of the portfolio;
  • Assets held in the PARS Section 115 Trust account allow for greater investment flexibility and risk diversification compared to the City's General Fund investments;
  • Assets could be accessed to offset unexpected CalPERS rate increases (rate stabilization);
  • Potential to improve an agency's bond rating; and
  • Flexibility to access assets at any time as long as it is used to pay employer's pension obligations.
The investment strategies for these assets are defined within the City's Investment Policy Guidelines that were developed and evaluated by PARS, HighMark Capital Management (the Plan’s Investment Advisory Firm) and the City's Investment Advisory Committee (IAC). The purpose of the Investment Policy Guidelines is to facilitate communication and confirm the City's investment objectives for the Plan. It also helps maintain a long-term perspective when market volatility is caused by short-term market movements. The policy also details the Plan's Trustee, the Investment Manager and the Investment Advisory Committee's roles and responsibilities. 

The Investment Advisory Committee, including PARS and HighMark Capital Management, annually reviews the Investment Policy Guidelines and provides recommendations (if any) on any changes for the upcoming annual review period.   The current investment objective is a "Balanced Objective" which has a dual goal to seek growth of income and principal.  As part of the annual review, there were no new changes recommended (with the exception of minor grammatical and formatting changes) to this year's Investment Policy Guidelines.

The proposed Investment Policy Guidelines for the City of Brea's Employee Benefits Fund Pension Plan is attached.
On July 24, 2023, the Investment Advisory Committee reviewed the Investment Policy Guidelines and recommended for City Council approval.
There is no fiscal impact for approving the Investment Policy Guidelines.
William Gallardo, City Manager
Prepared by:  Faith Madrazo, Financial Services Manager-Revenue, and
Monica Lo, Deputy Director of Administrative Services
Concurrence:  Kristin Griffith, Director of Administrative Services
Proposed 2023 Employee Benefits Fund Pention Plan Investment Guidelines

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