[Added 12-6-2022 by Ord. No. 40-2022]
As used in this article, the following terms shall have the
meanings indicated:
The custodial account maintained under the OPEB Trust by
the designated custodian for OPEB assets.
Retired City employees eligible for OPEB and their eligible
spouses and dependents, if any, who may qualify for OPEB.
A third-party administrator appointed by the City to administer
OPEB.
The board established to manage the OPEB Trust upon the commencement
of the transfer of OPEB assets to be used for OPEB.
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.
The legislative branch of the governing body of the City
of Scranton.
The municipal corporation located in Lackawanna County, Pennsylvania,
governed pursuant the Home Rule Charter of the City of Scranton.
Refers to Article VII, Code of Ethics,[1] included in the Administrative Code of the City of Scranton,
as amended.
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.
A financial institution that holds OPEB assets. The custodian
shall not have any authority to manage OPEB assets.
The agreement made between the City of Scranton and the custodian
to hold OPEB assets.
An individual who performs or performed services for the
City of Scranton.
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.
The Governmental Accounting Standards Board.
The Mayor and City Council jointly.
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.
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.
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.
The Investment Advisers Act of 1940, as amended.[3]
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.
The Internal Revenue Code of 1986, as amended.
The head of the executive branch of the governing body of
the City of Scranton.
Other post-employment benefits, other than pension, as described
in detail in the collective bargaining agreements.
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.
The City of Scranton Other Post-Employment Benefits Plan
established to provide OPEB to beneficiaries.
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.
The Business Administrator or the Board of Trustees. The
OPEB Trustee shall be the manager of the OPEB Trust.
The City of Scranton Human Resources Director or their designee,
or any other City of Scranton official appointed by the Mayor.
The secretary of the Board of Trustees who shall be the plan
administrator or their designee.
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.
(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.
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 shall become effective immediately upon approval.
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.
