OPEB Trust

The MACo Pooled OPEB Investment Trust Fund is a vehicle designed to help local governments invest current funds toward future obligations for retiree health insurance, a.k.a. “other post-employment benefits.” Recent accounting rule changes have highlighted these liabilities on government balance sheets, and many counties are amidst plans to save toward these future costs.

Joining the MACo OPEB Trust has made it easier, and cheaper, for our county to deliver these benefits for our future retirees. We get all the best resources, and at a bargain price.

- Jason M. Bennett, CPA, County Administrator, Allegany County

Why a Trust?

Investing through an entity like the MACo Pooled OPEB Trust offers governments an opportunity under state law to invest funds in a manner suitable for longer-term assets, and outside the laws generally governing “public funds.” The Trust arrangement ensures that the funds may not be extracted for purposes other than the intended benefits, making that distinction clear. Some counties have created similar entities on their own, but others have sought a collective effort to make costs manageable and seek greater expertise from outside advisors.

Why Pool Together?

Pooling assets together have multiple potential benefits for participating governments:

  • this is a “ready to go” option for a government who doesn’t have a Trust established
  • sharing legal and administrative overhead costs reduces each participant’s share
  • pooling assets gain opportunities for lower fees for investment advisors
  • greater pooled assets gain access to stronger investment options

Who Can Join?

Both county and municipal governments, and other county-funded entities (like libraries and community colleges), are welcome to join the MACo OPEB Trust – regardless of whether they currently have their own Trust, have current assets in use, or only have a plan to target this issue.

Joining the Trust does not bind your government to any particular OPEB funding policy – this is only an investment tool for your county to use for this purpose. Whether you have one-time funds to put toward OPEB costs, or are funding annual contributions, the Trust can put your investment to work for your jurisdiction.

There is no minimum deposit to join the Trust and establish an account. Funds may be withdrawn at any time.

Who Runs The Trust?

The Trust itself is managed and overseen by a Board of Trustees

Board of Trustees:

  • Patty Stiegman, CFO, St. Mary’s County Metropolitan Commission, Chair
  • Jason Bennett, County Administrator, Allegany County, Vice Chair
  • Kathy Cogar, CFO, Harford County Public Library
  • Jodee Dickenson, Director of Finance, City of Annapolis
  • Nichole Hepfer, Director of Budget and Finance, Queen Anne's County
  • Lisa Moody, Director of Finance, Town of Bel Air
  • Lori Shupe, Lead General Ledger Fiscal Coordinator, College of Southern Maryland
  • Martha Sparks, Finance Director, Talbot County
  • Michael Sanderson, Executive Director of MACo, Ex-Officio

Trust Advisors:

Davenport & Company – offering Trust management and administrative services
McGuire Woods – offering legal services to the Trust and its members
Boomershine Consulting – actuarial services to the Trust and its members
Wilmington Trust – custodial and reporting services
GYL Financial Synergies – investment consultant to the Trust
Clifton Larson Allen – independent auditors

What is The Trust’s Investment Policy?

Overall, the Trustees have adopted a fairly conservative mixed portfolio, with 65% in equities and 35% in fixed income investments. The target rate of return for the Trust is 7% annually, set generally in keeping with industry trends given the diversified portfolio construction. Members may continue to use their own return assumption embedded in local plan valuations.

Working with investment advisors GYL Financial Synergies, the Trustees have allocated funds with a number of index investments to keep administrative fees low, while capturing the various sectors specified as part of the overall strategy. A recent summary sheet of Trust managers and allocations is available online. (Note that the trust is currently migrating into active investments using a dollar cost averaging method, with some allocations still in cash during that transition)

The full adopted Investment Policy details the standards and objectives of the Trustees.

Where Can I Find More Information?

Contact MACo Executive Director (and ex-officio Trustee) Michael Sanderson at 410.269.0043 with any inquiries.

Listen to Davenport & Company's Jennifer Diercksen join Kevin Kinnally and Michael Sanderson on the Conduit Street Podcast to discuss MACo's OPEB Trust, along with the ins and outs of municipal bond ratings — including the role of ratings agencies in assessing creditworthiness; the factors that influence interest rates, investment appetite, and bond pricing; and the differences between short-term and long-term debt ratings.