[Added 12-6-2022 by Ord. No. 40-2022]
As used in this article, the following terms shall have the meanings indicated:
ACCOUNT
The custodial account maintained under the OPEB Trust by the designated custodian for OPEB assets.
BENEFICIARY or BENEFICIARIES
Retired City employees eligible for OPEB and their eligible spouses and dependents, if any, who may qualify for OPEB.
BENEFITS ADMINISTRATOR
A third-party administrator appointed by the City to administer OPEB.
BOARD OF TRUSTEES
The board established to manage the OPEB Trust upon the commencement of the transfer of OPEB assets to be used for OPEB.
BUSINESS ADMINISTRATOR
The director of the Department of Administration as described in § 610 of the Home Rule Charter and the initial OPEB trustee of the OPEB Trust.
CITY COUNCIL
The legislative branch of the governing body of the City of Scranton.
CITY or CITY OF SCRANTON
The municipal corporation located in Lackawanna County, Pennsylvania, governed pursuant the Home Rule Charter of the City of Scranton.
CODE OF ETHICS
Refers to Article VII, Code of Ethics,[1] included in the Administrative Code of the City of Scranton, as amended.
COLLECTIVE BARGAINING AGREEMENT
Any prior, current, or future written agreement between the City and its collective bargaining units and any amendment thereto, including any prior, current, or future memorandum of understanding and any amendment thereto, or any prior, current, or future arbitration settlement or award and any amendment thereto or any prior, current, or future court order directly affecting any such agreement, memorandum of understanding, or arbitration settlement or award.
CUSTODIAN
A financial institution that holds OPEB assets. The custodian shall not have any authority to manage OPEB assets.
CUSTODIAN AGREEMENT
The agreement made between the City of Scranton and the custodian to hold OPEB assets.
EMPLOYEE
An individual who performs or performed services for the City of Scranton.
FUNDING POLICY
A periodic written analysis of the OPEB Plan's cash flow history, short-term financial needs, long-term financial needs, sources of money for plan administration expenses, expected levels and timing of contributions, expected levels and timing of distributions, liquidity needs (including but not limited to the anticipated liquidity required to make benefit distributions), the City's ability to provide future funding, and other significant information which could affect cash flow or the exercise of discretion to manage the OPEB assets.
GASB
The Governmental Accounting Standards Board.
GOVERNING BODY
The Mayor and City Council jointly.
HOME RULE CHARTER
Refers to the Home Rule Charter of the City of Scranton adopted by the City's voters by referendum on May 21, 1974, which became effective on January 5, 1976.
INVESTMENT ADVICE
A recommendation, or a suggestion to engage in or refrain from taking a particular course of action, as to: i) the advisability of acquiring, holding, disposing of, or exchanging any assets, securities, or other investment property; ii) the funding policy; iii) the permissible investments set forth in the investment policy; iv) the composition of the OPEB Trust's portfolio; or v) the selection of persons to provide investment advice or investment management services with respect to the OPEB assets.
INVESTMENT ADVISER
Any person or firm which: i) has been appointed by the governing body to acquire or dispose of any OPEB asset to achieve the objectives of the adopted investment policy; ii) is registered as an investment adviser under the Investment Advisers Act[2] or is a bank as defined in the Investment Advisers Act or is an insurance company qualified to manage, acquire, or dispose of any asset of a plan under the laws of more than one state; and iii) has acknowledged in writing that it is a fiduciary with respect to the OPEB Plan.
INVESTMENT ADVISERS ACT
The Investment Advisers Act of 1940, as amended.[3]
INVESTMENT POLICY
The written investment objectives, policies, strategies, and restrictions for the account (or for any subaccounts therein), including, but not limited to, proxy voting guidelines, as amended.
IRC
The Internal Revenue Code of 1986, as amended.
MAYOR
The head of the executive branch of the governing body of the City of Scranton.
OPEB
Other post-employment benefits, other than pension, as described in detail in the collective bargaining agreements.
OPEB ASSETS
The securities, cash, and other property the City contributes, or causes to be contributed to the OPEB Trust, including contributions made pursuant to the OPEB Plan and amounts the City causes to be transferred to the account from any other funding medium maintained for the OPEB Plan; any investments and reinvestments thereof; and any income thereon, as provided herein.
OPEB PLAN
The City of Scranton Other Post-Employment Benefits Plan established to provide OPEB to beneficiaries.
OPEB TRUST
The City of Scranton Other Post-Employment Benefits Trust created as an entity separate from the City for the exclusive benefit of beneficiaries and not of the City.
OPEB TRUSTEE
The Business Administrator or the Board of Trustees. The OPEB Trustee shall be the manager of the OPEB Trust.
PLAN ADMINISTRATOR
The City of Scranton Human Resources Director or their designee, or any other City of Scranton official appointed by the Mayor.
SECRETARY
The secretary of the Board of Trustees who shall be the plan administrator or their designee.
[1]
Editor's Note: See Ch. 6, Art. VII.
[2]
Editor's Note: See 15 U.S.C. § 80b-20.
[3]
Editor's Note: See 15 U.S.C. § 80b-20.
Pursuant to the City of Scranton's Home Rule Charter, the City hereby authorizes: 1) the establishment of the City of Scranton Other Post-Employment Benefits Plan; 2) the establishment of the City of Scranton Other Post-Employment Benefits Trust; and 3) the establishment of the City of Scranton Other Post-Employment Benefits Trustee. The OPEB Plan and the OPEB Trust, including the role of the OPEB Trustee, are created for the sole purpose of financially assisting with the long-term costs of obligations for its beneficiaries, who shall be City retirees and family members, if any, entitled to receive OPEB from the City.
A. 
The name of the OPEB Plan shall be formally referred to as the City of Scranton Other Post-Employment Benefits Plan.
B. 
The OPEB Plan is established as a single employer defined benefit plan to provide OPEB to beneficiaries.
C. 
The establishment of this OPEB Plan does not create, nor is it intended to create, a right or promise to OPEB for any individual employee or beneficiary.
D. 
The duties and responsibilities of the plan administrator shall include, but not be limited to, the following:
(1) 
Verify that an employee is eligible for OPEB and is paid according to provisions of the OPEB Plan and the applicable terms of their respective collective bargaining agreement.
(2) 
Oversee the transfer of OPEB: i) to one or more benefits administrator for subsequent distribution to or for the benefit of beneficiaries; ii) to or for the benefit of beneficiaries; or iii) to the City for reimbursement of documented OPEB paid from City assets.
(3) 
Maintain the files and records detailing all OPEB transfers.
(4) 
Take any and all other actions, in accordance with any governing law, that are deemed prudent, ordinary, or necessary in the furtherance of the duties and responsibilities delegated under this section or as directed by the OPEB Trustee.
E. 
Investment adviser.
(1) 
Within 90 days after the adoption of this article, the governing body shall appoint an investment adviser pursuant to the provisions of the Administrative Code of the City of Scranton for procuring professional services. The investment adviser shall be responsible to the OPEB Trustee. From time to time, the City may reappoint said investment adviser, or appoint a new investment adviser, pursuant to the provisions of the Administrative Code.
(2) 
The duties of the investment adviser shall include, but not be limited to, the following:
(a) 
Providing guidance to the OPEB Trustee about managing the investment of OPEB assets in accordance with the investment policy.
(b) 
Providing guidance to the OPEB Trustee regarding the funding policy.
(c) 
Providing the OPEB Trustee with any reports required by this article or any reports requested by the OPEB Trustee.
(3) 
The City shall pay the expenses of the appointed investment adviser from the City's General Fund until such time as the OPEB asset value in the OPEB Trust exceeds $10,000,000, at which time the City may, in its discretion, relinquish this responsibility to the OPEB Trustee for such expenses to be paid from OPEB assets.
A. 
The name of the OPEB Trust shall be formally referred to as the City of Scranton Other Post-Employment Benefits Trust.
B. 
The OPEB Trust is a single employer trust and is established pursuant to IRC Section 115. The OPEB Trust shall be considered as an entity separate from the City where contributions can be made and set aside for the exclusive benefit of beneficiaries. The established OPEB Trust shall be irrevocable.
C. 
The OPEB assets, together with any earnings thereon, shall be held by the custodian in an Account separate and apart from any assets of the City. Legal ownership of all contributions to the OPEB Trust shall held by the custodian, not the City. The OPEB assets shall not be considered funds or assets of the City for any purpose. Neither the plan administrator, nor the City, nor any benefits administrator, nor any entity associated with the plan administrator, the City, or any benefits administrator shall have any legal or equitable interest in the OPEB Trust or OPEB assets.
D. 
The principal of the OPEB Trust, together with any earnings thereon, shall be exempt from federal income taxation under Section 115 of the IRC Code.
E. 
The OPEB assets are to be included for purposes of GASB Statement 75. Contributions to the OPEB Trust may constitute part or all of the City's unfunded accrued OPEB liability.
F. 
The establishment of this OPEB Trust shall not compel, constrain, or oblige the City to cease paying any or all of its OPEB obligations from the City's general operating budget.
G. 
The establishment of this OPEB Trust does not create, nor is it intended to create, a right or promise to OPEB for any individual employee or beneficiary.
H. 
OPEB assets held in the OPEB Trust are not subject to the claims of creditors of the plan administrator, the City, the Benefits Administrator, the OPEB Trustee, or any beneficiaries.
I. 
Beneficiaries shall have no preferred claim, lien, or encumbrance of any kind on, or security interest in, or any beneficial interest in any particular OPEB asset.
J. 
Except to the extent allowed by law, the expectation of any beneficiary to receive any OPEB is not subject to attachment or garnishment or other legal process by any creditor of any such beneficiary, nor shall any beneficiary have the right to alienate, anticipate, commute, pledge, encumber, or assign any OPEB until same shall have been paid to the beneficiary.
K. 
All OPEB assets and all income thereon are dedicated to, and shall be used for the exclusive purpose of, paying OPEB, and for paying the reasonable and ordinary expenses of administering the OPEB Trust. At no time shall any OPEB assets be used for, or diverted to, any other purposes.
L. 
Custodian.
(1) 
Within 120 days after the adoption of this article, the governing body shall appoint a custodian pursuant to the provisions of the Administrative Code of the City of Scranton for procuring professional services. The City shall enter into a custodian agreement with the custodian authorizing the transfer of monies to the custodian to be deposited in the account designated by the custodian for OPEB assets. From time to time, the City may reappoint said custodian, or appoint a new custodian, pursuant to the provisions of the Administrative Code.
(2) 
The appointed custodian shall be independent of the investment adviser.
(3) 
The City shall pay the expenses of the appointed custodian from the City's General Fund until such time as the OPEB assets value in the OPEB Trust exceeds $10,000,000 at which time the City may, in its discretion, relinquish this responsibility to the OPEB Trustee for such expenses to be paid from the OPEB assets.
M. 
Trust contributions.
(1) 
As soon as is practical after the appointment of an investment adviser and the execution of the custodian agreement, the City shall make an initial contribution to the custodian of $2,000,000 from monies currently identified for this purpose from the appropriate City account.
(2) 
At its sole discretion, the City may, from time to time and at any time, make or cause to be made additional contributions of cash or other assets acceptable to the custodian from City funds, employee contributions, or any other source.
(3) 
Neither the custodian, nor any beneficiary, nor the OPEB Trustee, nor any party to or any other entity referred to in the OPEB Plan, shall have any right to compel such additional City contributions.
(4) 
All such contributions and all income thereon are irrevocably dedicated to, and shall be used for the exclusive purpose of, paying the cost of OPEB and for paying expenses of administering the OPEB Plan and OPEB Trust.
N. 
Trust transfers.
(1) 
In order to fund the OPEB Trust in accordance with the desires of the City and needs of the beneficiaries, and in order to not deplete the OPEB assets, the transfer of OPEB assets for OPEB may not commence until the OPEB asset value is deemed by the Business Administrator, as initial OPEB Trustee, and in consultation the investment adviser, to be sufficient to sustain transfers for OPEB expenditures beneficiaries.
(2) 
Neither the custodian, nor any beneficiary, nor any party to or any other entity referred to in the OPEB Plan, shall have any right to compel the commencement of transfers from OPEB assets.
(3) 
Nothing in this article shall be interpreted to prohibit the City from continuing to fund a part or all of its OPEB from the City's general operating budget, after the commencement of transfers from the OPEB Trust, in order to preserve the financial integrity of OPEB assets.
O. 
As an irrevocable trust, the OPEB Trust shall only be modified to comply with changes in the law, or modified or terminated by court order should the OPEB Trust's purpose cease to exist. If the purpose of the OPEB Plan shall cease to exist, any amount of OPEB remaining shall be returned to the City and shall only be used to provide an essential government function of the City.
A. 
The name of the OPEB Trustee shall be formally referred to as the City of Scranton Other Post-Employment Benefits Trustee.
B. 
Upon the approval of this article, the City Business Administrator shall serve as the initial OPEB Trustee. When the Business Administrator, as OPEB Trustee, determines that it to be in the best interest of the OPEB Trust to initiate the first transfer of OPEB assets pursuant to § 53-14N(1) of this article, the Business Administrator, as OPEB Trustee, shall notify in writing the Board of Trustees and the plan administrator. At the moment such notification is made, and prior to any such transfer being authorized or made, the Business Administrator shall no longer serve as OPEB Trustee and the Board of Trustees shall become the OPEB Trustee.
C. 
The duties and responsibilities of the OPEB Trustee shall include, but not be limited to, the following:
(1) 
General.
(a) 
The OPEB Trustee or their designee shall perform their duties and responsibilities as a fiduciary solely in the interest of beneficiaries.
(b) 
The OPEB Trustee shall be responsible for managing OPEB assets.
(c) 
The OPEB Trustee shall be responsible for adopting and monitoring compliance with the investment policy.
(d) 
The OPEB Trustee shall be responsible for overseeing the activities of the plan administrator, ensuring that all transfers from the OPEB Trust are in accordance with the OPEB Plan and that all contributions made to the plan are promptly deposited with the custodian.
(2) 
Investments.
(a) 
The OPEB Trustee shall be responsible for overseeing the activities of the Investment Adviser ensuring that investments are made:
[1] 
Solely in the interest of, and for the exclusive purpose of, providing for the funding of OPEB for beneficiaries, maximizing City contributions thereto, and controlling the expenses of administering the OPEB Trust;
[2] 
With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims; and
[3] 
By diversifying the investments of the OPEB Trust to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.
(b) 
The OPEB Trustee is expressly authorized to acquire and retain investments not regarded as traditional for trusts, including, without limitation, investments that integrate environmental, social, and corporate governance (ESG) considerations, regardless of whether such ESG considerations and investments would otherwise be regarded as imprudent, improper, or unlawful under 20 Pa.C.S.A. § 7203 or any applicable jurisdiction's "prudent person" or "prudent investor" rule, and any such rule of applicable state law is expressly waived with respect to such investments. The OPEB Trustee has full discretion to engage in one or more sustainable, socially responsible, or ESG investment strategies, in addition to, or in place of, other investment strategies.
(c) 
Investment policy. The Business Administrator, as initial OPEB Trustee, shall compose a written investment policy. The Business Administrator shall utilize the service of professionals, including the appointed investment adviser, when composing the investment policy. The initial investment policy shall be completed by the Business Administrator no more than 120 days after the appointment of the investment adviser. The investment policy shall be reviewed annually by the OPEB Trustee and based on such evaluation, either confirm the terms of the investment policy as then in effect or amend the investment policy as appropriate. The investment policy shall:
[1] 
Document investment objectives, performance expectations, and investment guidelines for OPEB assets;
[2] 
Establish an appropriate investment strategy for managing all OPEB assets, including an investment time horizon, risk tolerance ranges, socially responsible investment factors, and asset allocation to provide sufficient diversification and overall return over the long-term time horizon of the OPEB Trust;
[3] 
Establish investment guidelines to control overall risk and liquidity;
[4] 
Establish periodic performance reporting requirements that will effectively monitor investment results and ensure that the investment policy is being followed; and
[5] 
Comply with all fiduciary, due diligence, and other legal requirements for the investment of OPEB assets.
(3) 
Other. The OPEB Trustee may take any and all other actions in accordance with any governing law that are deemed prudent, ordinary, or necessary in furtherance of their fiduciary capacity and in the furtherance of the duties and responsibilities delegated under this section.
D. 
Resources.
(1) 
The OPEB Trustee may request that City personnel, including but not limited to City employees and consultants, assist the OPEB Trustee in carrying out its fiduciary duties and responsibilities to the OPEB Trust.
(2) 
The OPEB Trustee may engage any service providers, other than a custodian or investment adviser, only when necessary to carry out their fiduciary responsibilities or required by law, to assist in the performance of their duties and responsibilities, including but not limited to auditors, actuaries, or legal counsel.
(3) 
The OPEB Trustee may utilize funds under the OPEB Trust to pay reasonable expenses of the OPEB Trust, including but not limited to compensation of any service provider to the OPEB Trust appointed by the OPEB Trustee, provided that, the City shall pay these expenses from the City's General Fund until such time as the OPEB assets in the OPEB Trust exceed $10,000,000 at which time the City may, in its discretion, relinquish this responsibility to the OPEB Trustee for such expenses to be paid from OPEB assets.
E. 
Board of Trustees.
(1) 
Board of Trustees. The Board of Trustees shall consist of the following five Trustees: Mayor, City Council President, Controller, Business Administrator, and Treasurer. In each case, the role may be filled by the officeholder or their designee.
(2) 
Officers. The officers of the Board of Trustees shall be the Business Administrator, Chair, and the City Council President, Vice-Chair. In each case, the role may be filled by the officeholder or their designee. The plan administrator or their designee shall serve as the Board Secretary and shall have no voting authority.
(3) 
Regular meetings. The initial regular meeting of the Board of Trustees shall be held within 30 days that written notification is made by the Business Administrator, as OPEB Trustee, pursuant to § 53-15B. Thereafter, the Board of Trustees shall hold at least two regular meetings annually, one in March and one in September, at a place and time determined by the Board of Trustees. The Board of Trustees may, by motion or resolution, schedule more regular meetings annually, however, the Board of Trustees must hold at least two regular meetings annually.
(4) 
Special meetings. Upon the call of the Chair or upon a written request signed by three members of the Board of Trustees, the Board of Trustees may conduct a special meeting. Special meetings of the Board of Trustees may be called, as needed, to address any relevant topic.
(5) 
Quorum. Three members of the Board of Trustees shall constitute a quorum. An affirmative vote of a majority of the Board of Trustees participating in a meeting in which a quorum is present is necessary in order to transact any business.
(6) 
Agenda. The Chair, in consultation with the Secretary, shall prepare and distribute meeting agendas to members of the Board of Trustees a minimum of three calendar days in advance of the scheduled meetings. Members of the Board of Trustees may request an item to be included on the agenda by contacting the plan administrator.
(7) 
Minutes. The Secretary or their designee shall cause to be recorded in the minutes the time and place of each meeting of the Board of Trustees, the names of Board of Trustees members present, all official acts of the Board of Trustees, the votes given by Board of Trustees members except when the action is unanimous, and when requested by a member of the Board of Trustees their stated reasons for dissent or approval, and shall cause the minutes to be written forthwith and presented for approval at the next regular meeting. The approved minutes shall form part of the permanent records of the Board of Trustees.
(8) 
Committees. The Board of Trustees may create committees of Board Trustees for the purpose of making recommendations to the Board of Trustees on any subject matter before the Board. Committee recommendations shall not be binding on the Board of Trustees.
(9) 
Execution of documents. Any documents or orders for payment shall be signed by the Chair, or in the Chair's absence, by the Vice-Chair. The Secretary shall attest the signature of documents or orders for payment.
(10) 
Compliance with Sunshine Act. All meetings, including notices, agendas, and minutes, shall comply with the requirements of the Act of July 3, 1986 (P.L. 388, No. 84), as amended, and known as the Sunshine Act.[1]
[1]
Editor's Note: See 65 Pa.C.S.A. § 701 et seq.
(11) 
Rules of order. Robert's Rules of Order, as amended, shall be considered the default procedural rules for the Board of Trustees, to the extent they do not conflict with applicable law, this article, or any bylaws or other procedural rules formally adopted by the Board of Trustees.
F. 
Accountability.
(1) 
Annual audit. An audit of the financial statements of the OPEB Trust shall be conducted annually according to generally accepted government auditing standards by an independent certified public accountant appointed by the OPEB Trustee. The annual audit shall be completed no later than eight months after the close of the fiscal year. The fiscal year shall begin on January 1 and end on December 31.
(2) 
Quarterly financial reports. The OPEB Trustee shall receive, at minimum, quarterly financial reports from the Investment Adviser which shall include all pertinent financial information to ensure that the OPEB assets are being used in compliance with the OPEB Plan and investment policy. The OPEB Trustee may require additional financial reports from the investment adviser.
(3) 
Review of financial information. The OPEB Trustee shall review and approve all audits and quarterly regular reports and any other similar information to ensure compliance with approved financial control practices and accounting rules.
(4) 
The plan administrator or their designee shall provide the governing body with quarterly reports, the annual audit and meeting minutes of the Board of Trustees, as applicable.
(5) 
Right to know. The OPEB Trustee shall comply with the Act of the Legislature, February 14, 2008, Act No. 3, as amended, also known as the Right-To-Know Act,[2] as applicable.
[2]
Editor's Note: See 65 P.S. § 67.101 et seq.
G. 
Conflicts of interest. The OPEB Trustee, and any City employees and officials, as defined in the Code of Ethics,[3] shall abide by and comply with the provisions of the Code of Ethics and all other laws and policies governing said persons' professional or ethical responsibilities.
[3]
Editor's Note: See Ch. 6, Art. VII.
If any section, clause, provision, or portion of this article shall be held invalid or unconstitutional by any court of competent jurisdiction, such decisions shall not affect any other section, clause, provision, or portion of this article so long as it remains legally enforceable minus the invalid portion.
This article is enacted by the Council of the City of Scranton under the authority of the Act of the Legislature, April 13, 1971, Act No. 62, known as the "Home Rule Charter and Optional Plans Law,"[1] and any other applicable law arising under the laws of the State and Pennsylvania.
[1]
Editor's Note: See 53 Pa.C.S.A. § 2901 et seq.