County joins new investment program

Sept. 30--CUMBERLAND -- Allegany County has joined a new investment fund in hopes of gaining a higher return on funds to be used to pay for providing retiree health insurance benefits. The new trust is being created by the Maryland Association of Counties and will allow investments other than certificates of deposit, which have been earning very low interest rates for years. County commissioners have appointed Jason Bennett, county finance director, as the county's representative on the fund's board of directors.

"They're still building the trust," Bennett said. "The ... trust is established to account for retiree health and life insurance benefits covering existing retirees and also contains an actuarial calculation of future benefits to be paid to existing and future (current employee) retirees," Bennett said.

The trust currently covers 342 active employees and 214 retirees for a total of 556, Bennett said.

"We currently have approximately $2.4 million invested in our OPEB Trust," Bennett said.

Joining the MACo trust requires a change in county investment policies to allow for investments other than CD's, county officials said.

"MACo realized this was an issue for the counties," said Bennett. "This would be an excellent opportunity for Allegany County to realize additional investment income," Bennett wrote in a Sept. 18 staff report. The move will have no financial impact other than a positive one of increased interest income, Bennett said.

"The MACo Trust will establish an investment portfolio for assets other than CDs. There will be an investment manager selected and participating counties will have options regarding their asset allocation," Bennett said.

The idea and intent of current state rules is that there would be money available to pay promised benefits even if the county "ceased to exist or experienced some massive financial hardships," Bennett said.

Commissioners unanimously approved the move at a business meeting last week at county offices on Kelly Road. The money will be spent only for retirement benefits.

"The intent would be not to ever use this trust for operating funds, only funds we have allocated to the OPEB Trust," said Bennett.

The county holds these retirement funds in a separate account as required by state regulations. Commissioners agreed to make the MACo fund an approved investment.

MACo has outlined the benefits to counties by joining the trust to include:

--County governments without their own trust would benefit by bypassing the cost and complexity of creating a local trust and simply creating an account with the MACo OPEB trust.

--County governments with their own trust in place would benefit by joining a larger scale trust, as investment advisory fees are generally "tiered" down based on the portfolio size.

--Counties with supported units (community colleges, libraries, or other similar entities) that don't yet have an investment structure could also participate.

--Municipal governments have expressed interest in the investment vehicle, and under the draft trust agreement, would be able to join.

Matthew Bieniek can be contacted at [email protected].

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