Retiree Benefit Trust Fund Saves the County Money

The County of Marin can now fully fund retiree health benefits just like it does employee pensions by ensuring that funds are set aside for unfunded liabilities as well as current costs.  Marin is now in a minority of counties fully funding its retiree health benefits.

The County has joined the California Employers’ Retiree Benefit Trust Fund, an optional program offered through the California Public Employees’ Retirement System, in a move to pre-fund employees’ health care.  Agencies can make contributions into the CERBT fund to cover current retiree health care costs as well as unfunded liabilities so participants can use investment earnings to help cover retiree health benefit costs. 

“One of the benefits of creating a trust would not only be to set money aside but to also earn a higher investment return on these funds,” said Marin County Administrator Matthew Hymel.

Donna Lum, CalPERS’ Deputy Executive Officer of Customer Services and Support, credited the County of Marin for taking a “proactive step” by becoming the 14th California county to join the fund.

“The Marin County Board of Supervisors has been committed to proactively addressing retiree liabilities,” said Daniel Eilerman, Deputy County Administrator for the County. He said staff recommended CERBT after a competitive review process as the best fit for the County “given our goal to establish and build an asset base with competitive investment performance at low cost and with uncomplicated administrative procedures.”

Managed by CalPERS staff, CERBT has $2.5 billion from 355 agencies invested in a diversified portfolio that includes bonds, U.S. and international stocks and real estate investment trusts.

County staff began investigating options after the Governmental Accounting Standards Board issued Statement No. 45, which required employers to report their retiree health liabilities on their financial statements after 2007.  The action did not require funding of the liabilities, but the disclosure requirements bring greater transparency to the issue, Eilerman said.

“Our Board of Supervisors was an early leader in adopting a strategy to fully fund these benefits,” he said, “not only to protect our excellent credit rating but also to ensure that employees who plan on receiving these benefits upon their retirement have the added security that they will be available for them when they decide to retire.”

Any city, county or other public agency may join CERBT, regardless of whether the agency contracts with CalPERS for health or pension benefits.

The County has more than 1,800 active employees and nearly 1,000 retirees to whom it provides health care independent of the CalPERS system.