COUNTY OF SAN MATEO

Inter-Departmental Correspondence

County Manager’s Office

 

DATE:

August 2, 2006

BOARD MEETING DATE:

August 15, 2006

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

John L. Maltbie, County Manager

SUBJECT:

Investment of Employee Retiree Health Benefit Funds

 

RECOMMENDATION:

Adopt a resolution implementing Government Code Sections 53620-53622 for the purpose of investing funds for the payment of employee retiree health benefits and delegating investment authority to the County Manager.

 

VISION ALIGNMENT:

Commitment: Responsible, effective and collaborative government

Goal(s): Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.

 

BACKGROUND:

Historically, the Treasurer has been statutorily limited in the kinds of investments that can be made for moneys belonging to, or in the custody of, the County. These investments are primarily made in government bonds and commercial paper. In 1998, the Legislature adopted Government Code §53620, which exempts the investment of funds designated for the payment of employee retiree health benefits from those limitations. Accordingly, funds designated for this purpose can be invested in securities.

 

DISCUSSION:

Due to the high cost and long-term nature of the obligation to fund retiree health benefits, the County Manager’s office is researching the various available investment vehicles for placement of funds to pay for these costs. Currently, there are two bills pending that address this issue. One would authorize the placement of these funds for investment by the County’s Board of Retirement (AB2863 Karnette) and the other with PERS (SB 1729 Soto). Upon the chaptering of either or both of these bills, we will determine if the new statutory provisions suit the needs of the County. In the meantime, it is in the best interest of the County to invest the funds in a manner that will maximize the rate of return as well as minimize the risk of loss.

 

The resolution submitted for your consideration will authorize the County Manager or his designees to invest or to reinvest funds intended for the payment of employee retiree health benefits, or to sell or exchange securities purchased for that purpose in manner consistent with Government Code §53622. A Request for Proposals (RFP) process will be conducted to select an investment firm. The County Manager will appoint members to a committee that would oversee the investments.

 

FISCAL IMPACT:

The County will be investing $80 million for the purpose of funding approximately 80% of its retiree health liability.