PARS-CCLC Pension Rate Stabilization Program (PRSP)
A Comprehensive, Turn-Key Pension Prefunding Solution to Address STRS/PERS Costs
The League, in partnership with PARS (Public Agency Retirement Services), is proud to offer the Pension Rate Stabilization Program (PRSP), an innovative, first-of-its-kind, IRC Section 115 irrevocable trust program designed to help community college districts manage their ongoing pension costs through prefunding. The PRSP allows a district to securely set aside funds, separate and apart from STRS and PERS, in a tax-exempt, IRS-compliant prefunding vehicle to manage long-term contribution rate growth.
- Assets can be accessed at any time to offset contribution rate increases (rate stabilization) or as a rainy-day fund to reimburse pension-related expenses during adverse budgetary or economic conditions
- Allows prudent use of apportionment funds or one-time funds to address a district’s increasing retirement costs
- Protects funds from diversion to other uses
- Districts have local control over assets held in the trust
- Can diversify investments to earn potentially greater returns than from county or state treasury pools
- Can determine the appropriate investment goals and risk tolerance level with specially designed low-cost investment strategies
- May favorably impact a district’s accreditation and credit rating
Key Advantages of PRSP
- Comprehensive, turn-key services that include consulting, recordkeeping, reporting, compliance monitoring, leading trustee/custodian services and fiduciary investment management
- Legally vetted program with exclusive first-of-its-kind IRS Private Letter Ruling
- Full flexibility over investment options including fixed income only, conservative, balanced and growth options, and actively managed and index approaches using Vanguard and U.S. Bank
- Low-cost investment management with fees that decrease as assets grow in each investment strategy with Vanguard
- Signature-ready documents that enable quick, streamlined implementation process
- Hands-on support from dedicated PARS and CCLC service teams
- Most experienced and largest pension prefunding trust administrator in California
Districts Facing Ongoing STRS and PERS Increases
California community college districts face scheduled increases to their STRS and PERS contribution rates through 2023-24 (STRS is projected through 2022-23) due to the underfunding of the pension plans. The Chancellor’s Office has recommended that districts plan ahead for long-term ongoing liabilities by setting funds aside now.
STRS/PERS Contribution Rate Increases
How Rate Increases Affect a District
Annual pension costs increase from $7.0 million to $14.3 million in 8 years.
For over 35 years, PARS has been a leader in custom and turn-key retirement programs for community colleges and other public agencies. PARS pioneered the PRSP concept and obtained a first-of-its-kind Private Letter Ruling from the IRS in 2015. Since then, over 240 public agencies in California have joined PRSP including colleges, school districts, cities, counties and special districts. As a specialist in retirement program design, implementation and ongoing administration, PARS has administered more than 2,000 plans for over 1,000 clients and 500,000 public employees, including 44 community college districts, and currently has $6 billion in assets under administration.
PARS (Public Agency Retirement Services)
- Maureen Toal, ext. 135 | email@example.com
- Eric O’Leary, ext. 124 | firstname.lastname@example.org
- Rachael Sanders, ext. 121 | email@example.com
- Lisa Mealoy, 916-245-5027 | firstname.lastname@example.org