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(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.)
(a) Duty of Care. The Board must discharge its duties with respect to the Trust Fund:
(1) only in the interest of the participants in retiree benefit plans and eligible dependents;
(2) only to provide benefits to participants in retiree benefits plans and to defray reasonable expenses of administering and operating the Trust Fund;
(3) with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(4) by diversifying the investments of the Trust Fund to minimize the risk of large losses, unless it is clearly not prudent to diversity under the circumstances; and
(5) in accordance with the laws, policies, and instruments governing the Trust.
(b) Records. The Board must maintain accurate and detailed accounts of each investment, receipt, disbursement, and other transaction, including any specific record required by law, separate accounting for participating agencies and any additional record it finds necessary. All accounts, books and records are subject to applicable State laws governing maintenance and disclosure of public records.
(c) Annual Accounting. The Trust Fund fiscal year is the same as the County fiscal year. On or before January 1 of each year, the Board must file with the Chief Administrative Officer a written account, listing each investment, receipt, disbursement, and other transaction during the preceding fiscal year or during the period from the close of the last preceding fiscal year to any interim date that the Board selects. The account must include a list of the Trust Fund assets and the current fair market value of each asset at the end of that period. The account must include the separate accounts of the participating agencies. If a current fair market value is not available for or does not apply to a particular investment, the Board must assign a value to that investment. The Board must apply the investment valuation method on a consistent basis. If the Board changes the investment valuation method, the Board must notify the Executive and Council of the change.
(1) be a party to any transaction engaged in by the Board or an investment manager involving the assets of the Trust Fund.
(2) use the gains or profits of the Trust Fund for any purpose except to make investments or payments authorized by the Board;
(3) deal with the assets of the Trust Fund for the member’s own interest or account;
(4) act in any transaction involving the Trust Fund on behalf of a party whose interests are adverse to the interests of the Trust Fund or the interests of participants or beneficiaries of the Trust Fund; or
(5) become an endorser or surety, or in any manner an obligor, for money loaned to or borrowed from the Board. (2008 L.M.C., ch 3, § 1.)
(a) General. The Director of Finance is the custodian of the Trust Fund assets. The Director must give bond with a surety and for a period and in an amount as the Board determines. Each payment from the Trust Fund must be made by the Director, the Director’s designee, or 2 persons designated by the Board acting jointly. The Board must file a copy of its resolution designating the 2 persons, with specimen signatures of those persons, with the Director to confirm their authority to make payments.
(b) Contracts. If the Board approves, the Director of Finance may make written contracts with banks, trust companies, insurance companies or investment companies authorized to do business in any state for the safe custody of investments, banking services, the payment of benefits and expenses, and any other function necessary to manage and safeguard the assets of the Trust Fund.
(c) Procurement. Chapter 11B does not apply to the procurement of goods and services for the Trust Fund by the Director of Finance. (2008 L.M.C., ch 3, § 1.)
(a) General. The County must indemnify each member of the Board who is or may become a party to any legal action, including any administrative or investigative proceeding, because of service as a Board member, subject to the conditions in this Section.
(b) Standards; payments.
(1) The County must indemnify a Board member:
(A) with respect to civil matters, if the member acted in good faith and in a manner that the member reasonably believed to be in the best interest of the Trust Fund; and
(B) with respect to criminal matters, if the member had no reasonable cause to believe that the member’s conduct was unlawful.
(2) If the County indemnifies a Board member under this Section, the County must indemnify the member for any expense when the member incurs the expense, including:
(A) reasonable attorney fees;
(B) judgments;
(C) damages;
(D) fines; and
(E) settlements.
(c) Effect of Terminating any legal action. The termination of any legal action does not, by itself, create a presumption that a Board member did not act in good faith and in a manner reasonably believed to be in the best interest of the Trust Fund. The termination of a criminal proceeding does not, by itself, create a presumption that a Board member had reasonable cause to believe that any conduct was unlawful.
(d) Exceptions. The County must not indemnify a Board member if:
(1) the member is found by a court or other tribunal to be liable for gross negligence or willful and wanton misconduct in the performance of a duty to the Trust Fund; or
(2) liability arises from an action that occurred before the date when all Board members accepted the Trust Fund in writing.
(e) Recovery of Payments. If the County Attorney finds that any indemnification payment was made that was outside the scope of the indemnification allowed under this Section, the County Attorney must take appropriate action on behalf of the County to recover that payment.
(f) Insurance Provided. The County must provide insurance for each Board member against any liability asserted against or incurred by the member with respect to service on the Board. Assets of the Trust Fund must not be used to pay any premium. The County may self-insure, wholly or partly, for this purpose. If the County does not provide adequate insurance coverage or indemnification under this Section, a Board member need not pay any amount attributable to liability incurred by serving on the Board and the County must pay any amount due.
(g) Defenses. The County may assert the defenses of governmental immunity, and any other available defense, in any legal action arising out of the actions of the Board.
(h) County Attorney.
(1) The County Attorney must determine whether a Board member is eligible for indemnification with respect to any matter and the reasonableness of any fee, expense, or settlement.
(2) Unless the County Attorney approves the settlement, a Board member cannot settle a claim against another Board member using:
(A) County funds;
(B) funds of a Participating agency;
(C) County-funded agency funds;
(D) funds provided by a self-insurance program of the County; or
(E) funds provided under a policy the County has with an insurance company. (2008 L.M.C., ch 3, § 1; 2011 L.M.C., ch. 14, § 1.)
(a) Termination. Except on termination, no part of the Trust Fund may revert to the County or a participating agency or be used for any purpose other than the exclusive benefit of participants of a retiree benefit plan. If all County retiree benefit plans are terminated and all benefit claims and expenses are paid, any remaining assets in the Trust Fund relating to contributions made by the County and participating agencies must revert to the County and the participating agencies. The Trust Fund must terminate in its entirety on the earlier of the termination of all County retiree benefit plans or the depletion of the Trust Fund. Funds may partially revert to the County or participating agencies if one or more retiree benefit plans is terminated. When a County or a County-funded agency retiree benefit plan is terminated, the assets in the Trust Fund attributable to that plan after expenses and benefits have been paid must revert to the County and the participating agencies as provided in the adoption agreement. If the County terminates all of its retiree benefit plans and a County-funded agency continues to maintain at least one retiree benefit plan, the assets attributable to each County-funded agency retiree benefit plan must be transferred to a trust which meets the requirements of Internal Revenue Code Section 115.
(b) Amendments. Any provision of this Article may be amended at any time. No amendment may:
(1) authorize any part of the Trust Fund to be used for any purpose other than the exclusive benefit of participants of retiree benefit plans and eligible dependents; or
(c) Compliance with Applicable Law. The Council may amend the Trust at any time, retroactively if required, if found necessary to conform to any requirement of State law, the Internal Revenue Code or any similar act or any amendments or corresponding regulations or applicable guidance. (2008 L.M.C., ch 3, § 1; 2011 L.M.C., ch. 14, § 1.)
(a) Participating Agencies. An agency permitted to participate in County benefit plans under Section 20-37(b) which chooses to participate in a retiree benefit plan must participate in the Trust Fund. However, a participating agency must be eligible to participate under Internal Revenue Code Section 115. Each participating agency in the Trust Fund must execute an adoption agreement in a form satisfactory to the Chief Administrative Officer and must submit any information the Chief Administrative Officer requires. Except for any obligation to refund assets under subsection (b), legal liability must not accrue to the County by including any participating agency in the Trust Fund. Each participating agency must be fully responsible for its pro rata cost of coverage, including any required annual contribution to the County and its share of administrative expenses.
(b) Termination of Participating Agency. If a participating agency decides to terminate participation in a retiree benefit plan and the Trust Fund, the agency must notify the Chief Administrative Officer in writing. The Chief Administrative Officer and the participating agency must agree on a date to end the agency’s participation. Any tranfer of assets from the Trust Fund resulting from the termination of an agency’s participation must comply with the Internal Revenue Code and the adoption agreement between the County and the participating agency. (2008 L.M.C., ch 3, § 1.)
Any asset held by the Trust Fund is not subject to any creditor of the County or a County-funded agency and is exempt from execution, attachment, prior assignment, or any other judicial relief or order for the benefit of any creditor or third person. (2008 L.M.C., ch 3, § 1; 2011 L.M.C., ch. 14, § 1.)
(a) County Liability. Except for any obligation to refund or transfer assets under subsection (b) or (c), no legal liability for benefits must accrue to the County by including a County- funded agency in the Trust Fund.
(b) Termination of Participation by a County-funded Agency. Any Trust Fund assets must not revert to a County-funded agency. Assets may partially revert to the County if a County-funded agency terminates at least one retiree benefit plan. Only funds attributable to the terminated retiree benefit plan, after benefits and expenses have been paid, may revert to the County.
(c) Transfer of Trust Fund: If the County decides to terminate a County-funded agency’s participation in the Trust Fund, the County must notify the County-funded agency in writing. If the County-funded agency continues to maintain a retiree benefit plan, assets must be transferred to a trust which meets the requirements of Internal Revenue Code Section 115. Any transfer of assets from the Trust Fund resulting from the termination of participation in the Trust Fund must comply with the Internal Revenue Code. (2011 L.M.C., ch. 14, § 1.)
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