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(a) County Retiree Benefit Plans. The Chief Administrative Officer must include the terms of any County retiree benefit plan, including eligibility and benefits, including those benefits collectively bargained, in a plan document. All benefits must meet any applicable Federal or State requirement. Subject to the County’s obligations under collective bargaining agreements and the collective bargaining laws, to the extent applicable, the Chief Administrative Officer may amend a plan document at any time. Subject to the County’s obligations under collective bargaining agreements and the collective bargaining laws, to the extent applicable, any retiree benefit plan may be terminated at any time for any reason. No retiree benefit is guaranteed, except as expressly provided by a contract entered into by the County.
(b) Establishment of Trust. An Other Post Employment Benefits Trust, known as the Consolidated Retiree Health Benefits (RHB) Trust, is established to fund all or a portion of benefits provided under the County retiree benefit plans or a County-funded agency retiree benefit plan. The Trust is intended solely as a funding mechanism to pay for County or County-funded agency retiree benefits provided under the terms of any applicable retiree benefit plan, and does not create any obligation by the County to provide any benefit listed in any County or County-funded agency retiree benefit plan. Any participant in a retiree benefit plan, any current or former County or a County- funded agency employee, or any current or former participating agency employee, has no right to any asset in the Trust fund. The Trust Fund may be, but is not required to be, the sole source of funding for any County or County-funded agency retiree benefit plan.
(c) Type of Trust. The County intends that the Trust Fund:
(1) be used to perform its essential government function of providing benefits, including health and life insurance benefits, to participants and eligible dependents; and
(2) qualify as a tax exempt trust under Internal Revenue Code Section 115.
(d) Assets of Trust Fund. All contributions and all earnings and other additions, less payments, constitute the assets of the Trust Fund.
(e) County-funded agency Participation. A County-funded agency may participate in the Trust Fund as a funding mechanism for its retiree benefit plans. A participant in any County-funded agency retiree benefit plan, or any current or former employee of a County-funded agency, has no right to the assets in the Trust Fund. The County is not responsible for establishing, maintaining, or providing any benefit for any County- funded agency retiree benefit plan.
(f) Exclusive Benefit. The Trust Fund must be held for the exclusive benefit of participants in retiree benefit plans and eligible dependents, and used only to provide benefits and defray reasonable expenses of administering retiree benefit plans. Trust Fund assets must not revert to the County or a County-funded agency unless the County or the County-funded agency terminates all retiree benefit plans. Some funds may partially revert to the County if at least one benefit plan is terminated under Section 33-166. (2008 L.M.C., ch 3, § 1; 2010 L.M.C., ch. 49, § 1; 2011 L.M.C., ch. 14, § 1.)
Editor’s note—2011 L.M.C., ch. 14, § 2, states: Transition. The Consolidated Health Benefits Trust Fund mentioned in County Code Sec. 33-159, as amended by Section 1 of this Act, does not create a new trust. The Trust Fund is the same legal entity first created in County Code Sec. 33-159 and inserted by Chapter 3, Laws of Montgomery County 2008. Any reference to the Retiree Health Benefits Trust in any document produced before the effective date of this Act [July 1, 2011] must be treated as referring to the Consolidated Retiree Health Benefit Trust referenced in County Code Sec. 33-159, as amended by Section 1 of this Act.
(a) Establishment. The Consolidated Retiree Health Trust Board of Trustees is established to manage the Trust. The Board has 19 members.
(b) Membership.
(1) Each member of the Board of Investment Trustees established under Section 33-59 is also a member of the Board.
(2) The County Executive must appoint, subject to County Council confirmation, 3 voting members nominated by the Montgomery County Board of Education, who must serve indefinitely while remaining the designee of the Montgomery County Board of Education. The members must include:
(A) a designee of the Superintendent;
(B) an active employee of the Montgomery County Public Schools who is a member of a bargaining unit; and
(C) a retiree of the Montgomery County Public Schools.
(3) The County Executive must appoint, subject to County Council confirmation, 3 voting members nominated by the Board of Trustees of Montgomery College, who must serve indefinitely while remaining the designee of Montgomery College. The members must include:
(A) a designee of the President;
(B) an active employee of Montgomery College who is a member of a bargaining unit; and
(C) a retiree of Montgomery College.
(c) Vacancies.
(1) A trustee may be automatically removed for missing meetings as described in Section 2-148(b).
(2) A vacancy on the Board must be filled for the unexpired term in the same manner as the previous trustee was appointed.
(d) Compensation. The trustees must serve without compensation from any source for service rendered to the Board, except that an active employee trustee may receive administrative leave to serve on the Board. The Board must reimburse a trustee for any expense approved by the Board. A trustee must not receive reimbursement for expenses from any other source.
(e) Written policies. The Board must establish written policies to administer and invest the funds created by this Article and to transact the business of the Trust Fund. Any delegation of duties by the Board under Section 33-162 must be specified in written policies and procedures.
(f) Officers. The Board must select a chair, vice chair, and secretary from the Board’s members.
(1) The chair must preside at meetings of the Board and may take administrative action on behalf of the Board.
(2) The vice chair must perform the duties and exercise the powers of the chair when the chair is unavailable, or the Board determines is otherwise unable to perform the duties of the chair.
(3) The secretary must record the proceedings and actions of the Board and may certify a document or action of the Board. A person may rely in good faith on the secretary’s certification as proof of the document or action.
(g) Meetings and actions.
(1) The Board must meet at least once during each calendar quarter. The chair, or 10 members of the Board, may call a meeting of the Board, in the manner and at times and places provided under the policies of the Board. The Board is a public body under the State Open Meetings Act.
(2) A. Ten trustees constitute a quorum.
B. Each trustee has one vote.
C. Ten trustees must agree for the Board to act.
(3) The Board may act without a meeting. All of the trustees must concur in writing for the Board to approve any action the Board takes without a meeting.
(4) The Board may adopt procedures consistent with this Section.
(5) In its written policies and procedures, the Board may authorize a trustee, the Executive Director, or a similarly situated County employee, to execute instruments on behalf of the Board.
(h) Records.
(1) The Board must keep investment accounts and records necessary to calculate the value of each retiree health benefit trust fund and evaluate the experience and performance of the Trust Fund.
(2) The Board may designate a person to maintain the records.
(3) Accounts and records are subject to State law on public records.
(i) Removal of trustee. With the Council’s approval, the County Executive may remove a trustee for violating this Article or other good cause.
(j) Legal adviser. The County Attorney is the legal adviser to the Board.
(k) Management. The Board must hold legal title to all assets of the Trust Fund, but may transfer some incidents of ownership to the Board’s agents as provided in this Article. The powers and duties of the Board under this Article are not effective until the Board members have accepted the Trust Fund in writing. Within 10 days after the Council confirms a Board member, the member must certify in writing to the Chief Administrative Officer that the member accepts the Trust Fund and will administer its affairs with care, skill, prudence, and diligence. (2008 L.M.C., ch 3, § 1; 2011 L.M.C., ch. 14, § 1; 2012 L.M.C., ch. 21, § 1; 2014 L.M.C., ch. 3, § 1; 2016 L.M.C., ch. 37, §1; 2019 L.M.C., ch. 12, §1.)
(a) County Contributions. The County may contribute to the Trust Fund those amounts that the Council appropriates. The County is not required to make any contribution to the Trust Fund unless a written contract with one or more beneficiaries so requires.
(b) County-funded Agency Contributions. The County may contribute to the Trust Fund, on behalf of a County-funded agency, those amounts that the County Council appropriates. A County-funded agency may also make contributions to the Trust Fund in its discretion. Notwithstanding the preceding sentence, the County must make any contribution necessary to pay a County-funded agency’s pro rata cost of the expenses of the Trust Fund. Contributions to the Trust Fund made on behalf of a County-funded agency or by a County-funded agency must be attributed to the County-funded agency for actuarial valuation and financial reporting.
(c) Acceptance of Contributions. The Board must accept all contributions deposited in the Trust Fund and held by the custodian as Trust Fund property. The Board is not responsible for calculating or collecting any contribution, but is only responsible for contributions deposited to the Trust Fund and amounts held in the Trust Fund. The Board must separately account for any contribution made on behalf of a County-funded agency and earnings and expenses attributable to that contribution.
(d) Payments.
(1) Payments for County Retiree Benefit Plans. Payments may be made from the Trust Fund attributable to the County in those amounts directed by the Chief Administrative Officer only to pay for all or part of the benefits provided by any County retiree benefit plan, administrative expenses relating to a retiree benefit plan and expenses of the Trust Fund. The Board is not liable for any payment directed by the Chief Administrative Officer and is not required to confirm compliance with any retiree benefit plan.
(2) Payments for a County-funded Agency Retiree Benefit Plan. The Chief Administrative Officer may direct that payments be made from the Trust Fund attributable to a County-funded agency as authorized by a County Council appropriation resolution. Payments from the Trust Fund must be used to pay for all or part of the benefits provided by a County-funded agency retiree benefit plan and expenses of any County-funded agency retiree benefit plan. The Board is not liable for any payment made under the direction of the Chief Administrative Officer and has no responsibility to confirm compliance with any retiree benefit plan.
(e) Expenses. The Board must be reimbursed for expenses solely incurred in the administration of the Trust Fund and must pay from the Trust Fund expenses reasonably incurred by the Chief Administrative Officer to administer any County retiree benefit plan to the extent that those expenses have not been paid by the County. The Board may pay expenses incurred under Section 33-162(h)(11) without direction of the Chief Administrative Officer. The Chief Administrative Officer may direct the Board to pay expenses reasonably incurred by a County-funded agency to administer its retiree benefit plans. (2008 L.M.C., ch 3, § 1; 2011 L.M.C., ch. 14, § 1.)
(a) General. The Board has the exclusive authority to manage the Trust Fund’s assets. All powers and duties required to manage the Trust Fund are vested in the Board by this Article.
(b) Procurement. Chapter 11B does not apply to the procurement of goods and services by the Board for the Trust Fund.
(c) Transfer agents.
(1) The Board may register any assets in its own name or in the name of a nominee. The Board or its agent must keep records that show that the investments are part of the Trust Fund.
(2) The Board may form a partnership under State law to hold or transfer assets as the Board’s nominee.
(3) The Board may designate in writing a trustee to hold or transfer assets as the Board’s nominee.
(4) The Board must provide that any trustee or partnership that the Board designates must act only as agent of the Board. The Board may set other conditions that the Board finds prudent.
(5) Any trustee or partnership that the Board designates may retain the services of a bank or other financial institution to conduct business.
(d) Authorized investments.
(1) The Board may invest or permit an investment manager to invest the assets of the Trust Fund in any investment it considers prudent within the Board’s policies, except as otherwise prohibited in this Section. The Board must use an investment manager except when making an investment in any type of pooled investment vehicle, including any combined, common, or commingled trust fund, retirement or annuity contract, mutual fund, investment company, association or business trust. The Board also may authorize the Board staff to make investments in pooled investment vehicles and transition assets from one investment manager to another investment manager.
(2) If an investment through any combined, common, or commingled trust fund exists, the declaration of trust of that fund is a part of the Trust Fund.
(e) Written Policies. The Board must establish an investment policy and guidelines appropriate for the Trust Fund, and may review and change the policy and guidelines as necessary. The Board must establish such other written policies to administer and invest funds under this Article and transact the Trust’s business.
(f) Investment Manager.
(1) Except as provided in subsection (d)(1), the Board must appoint one or more investment managers to invest all or part of the RHB trust fund assets consistent with applicable guidelines. If the Board has properly appointed an investment manager, the Board is not liable for any act or omission of the manager and is not otherwise responsible for the investment of funds allocated to the investment manager.
(2) Any investment management contract must provide that when the investment manager is making individual investment selections, the investment manager must make individual investment selections subject to applicable Board policies. In any contract, the Board may limit the investment of a specified portion of the Trust Fund to a certain type of property. In any contract, the Board may delegate to the investment manager any power or discretion conferred on the Board under this Article and may assign to the investment manager custody and control of certain Trust Fund assets. The fees charged by any manager are expenses of the Trust Fund.
(3) The Board must monitor the performance of each investment manager and may terminate any appointment. Monitoring may include any tests or analyses that the Board finds prudent in the circumstances to assure the Trust Fund’s stability and growth.
(g) Available Cash. The Board may keep cash available in an amount it finds prudent to pay benefits and expenses. The Board may keep cash on deposit in one or more banks or trust companies organized under the laws of any state or the United States, but the amount on deposit in any bank or trust company must not exceed 25% of the paid-in capital and surplus of that bank or trust company.
(h) Board Powers. Except as otherwise provided in this Article, the Board may:
(1) buy or subscribe for any investment with any cash, at a premium or discount, and retain the investment;
(2) sell, exchange, convey, transfer, lease for any period, pledge, mortgage, grant options, contract with respect to, or otherwise encumber or dispose, at public or private sale, for cash or credit or both, any part of the Trust Fund;
(3) subject to Section 33-165(h)(2), sue, defend, compromise, arbitrate, compound, and settle any debt, obligation, claim, suit, or legal proceeding involving the Trust Fund, and reduce the rate of interest on, extend or otherwise modify, foreclose upon default, or otherwise enforce any debt, obligation, or claim;
(4) retain a part of the Trust Fund assets uninvested in preparation for distributions;
(5) exercise any option on any investment for conversion into another investment, exercise any right to subscribe for additional investments, and make all necessary payments;
(6) join in, consent to, dissent from, oppose, or deposit in connection with the reorganization, recapitalization, consolidation, sale, merger, foreclosure, or readjustment of the finances of any corporation or property in which the assets of the Trust Fund are invested, or the sale, mortgage, pledge or lease of that property or the property of any such corporation on any terms that the Board finds prudent; exercise any options, make any agreements or subscriptions, pay any expenses, assessments, or subscriptions, and take any other action in connection with these transactions that the Board finds prudent; and accept and hold any investment issued in or as a result of any such proceedings;
(7) vote, in person or by proxy, at any election of any corporation in whose stock the assets of the Trust Fund are invested, and exercise, personally or by any power of attorney, any right appurtenant to any investment held in the Trust Fund, and give general or specific proxies or powers of attorney with or without power of substitution.
(8) sell at a public or private sale, enter into an option to sell, mortgage, lease, partition, or exchange any real property at prices and for terms that the Board finds prudent. The Board may execute and deliver deeds of conveyance and all assignments, transfers, and other legal instruments to pass ownership to a buyer, free and discharged of all liens;
(9) renew or extend any mortgage, on any terms that the Board finds prudent, and increase or reduce the rate of interest on any mortgage or modify the terms of any mortgage or of any guarantee as the Board finds prudent to protect the Trust Fund or preserve the value of the investment; waive any default or enforce any default in a manner that the Board finds prudent; exercise and enforce any right of foreclosure, bid on property in foreclosure, take a deed in lieu of foreclosure with or without paying a consideration, and release the obligation on the bond secured by the mortgage; and exercise and enforce in any legal action any right or remedy regarding any mortgage or guarantee;
(10) form a corporation or partnership under the laws of any jurisdiction, or acquire an interest in or otherwise make use of any corporation or partnership already formed to invest in and hold title to any property;
(11) incur and pay expenses for agents, financial advisors, actuaries, accountants, and legal counsel, if those expenses are incurred solely to perform the Board’s duties under the Trust;
(12) borrow, raise or lend money for the purpose of the Trust Fund, in any amounts and on any terms and conditions as the Board in its discretion finds prudent; for any money borrowed, issue a promissory note and secure the repayment of this note by pledging or mortgaging all or part of the Trust Fund;
(13) hold, buy, transfer, surrender, and exercise all other incidents of ownership of any insurance or annuity contract;
(14) pool all or any of the assets of the trust, from time to time, with assets belonging to any retirement plan trust or other retiree health benefit trust created by the County, including any subtrust thereof, and commingle such assets and make joint or common investments and carry joint accounts on behalf of this trust and such other trust, trusts, or subtrusts, allocating undivided shares or interests in such investments or accounts or in any pooled assets to the two or more trusts or subtrusts in accordance with their respective interests. Any such trusts or subtrusts may be unitized for investment purposes. Consistent with the authority granted in this Article, the Board may also buy or sell any assets or undivided interests in this trust or in any other trust or subtrust with which the assets of this trust may be pooled, to or from this trust or such other trusts or subtrusts at such prices or valuations as the Board may determine in reasonable good faith; and
(15) do any act that the Board finds necessary and exercise the power of this Article to manage the Trust Fund. The Board may exercise all powers to manage the assets that an individual could exercise to manage property owned by that individual.
(i) Prohibited Transactions. The Board must not engage in any transaction between the Trust and the County or any entity controlled by the County, including a County-funded agency, or a participating agency in which the Board:
(1) lends any part of its income or corpus without receiving adequate security and a reasonable rate of interest;
(2) pays any compensation more than a reasonable allowance for salaries or other compensation or services actually rendered;
(3) makes any service available on a preferential basis;
(4) makes any substantial purchase of securities or other property for more than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust;
(5) sells any substantial part of its securities or other property for less than adequate consideration which, for avoidance of doubt, does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust; or
(6) engages in any transaction which results in a substantial diversion of its income or corpus.
(j) To comply with Section 315 of the County Charter, a firm of certified public accountants, under contract with the Council, must complete an annual independent audit of the Trust Fund. The complete audit must be filed with the Council and each County- funded agency, and copies made available for public inspection.
(k) Delegation of Duties. The Board may delegate its duties to the Executive Director or a similarly situated County employee as it deems appropriate and consistent with its fiduciary duties in a written policy and procedure. If the Board has prudently delegated its duties and monitored the delegation, the trustees must not be liable for an act or omission made by its delegate. (2008 L.M.C., ch 3, § 1; 2009 L.M.C., ch. 31, § 1; 2011 L.M.C., ch. 14, § 1; 2014 L.M.C., ch. 3, § 1; 2017 L.M.C., ch. 14, §1; 2019 L.M.C., ch. 12, §1; 2021 L.M.C., ch. 16, §1.)
(a) Legislative findings.
(1) Emerging investment managers, including businesses owned by women, minorities and disabled individuals, should receive an equal opportunity to provide investment management services to the Consolidated Retiree Health Benefits Trust Board.
(2) The Board has adopted a policy requiring its staff to identify qualified emerging investment managers to participate in an investment manager search, including regular monitoring of investment managers.
(3) Expanding opportunities for emerging investment managers will increase competition.
(b) Definitions.
As used in this Section:
Assets means total client assets managed by an investment manager.
Emerging investment manager means:
(1) an investment manager with assets or product assets below the 75th percentile of their respective peer group; or
(2) a new or developing investment manager.
New or developing investment manager means an investment manager:
(1) raising its first or second private institutional investment fund; or
(2) creating its first institutional product.
Product Assets means client assets managed by an investment manager in a single strategy.
(c) Consistent with the fiduciary duties established in Section 33-163, the Board must make a good faith effort to remove any barriers that limit participation by qualified emerging investment managers to manage funds for the Consolidated Retiree Health Benefits Trust Fund.
(d) The Board must adopt guidelines to identify and evaluate qualified emerging investment managers. The guidelines must include procedures for:
(i) identifying possible firms;
(ii) reviewing, evaluating and interviewing emerging investment managers on an ongoing basis; and
(iii) maintaining research files on emerging investment managers.
(e) The Board must report annually to the Council and the Executive on compliance with this Section on or before September 1 for the prior fiscal year. The report must:
(1) identify each emerging investment manager used during the fiscal year;
(2) list the percentage and dollar value of the assets of the trust fund, by investment sector, managed by each emerging investment manager; and
(3) describe the good faith effort made to include qualified emerging investment managers in the procurement process during the fiscal year. (2012 L.M.C., ch.; 3, § 1.)
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