California Code, Government Code - GOV § 31699.4

(b) The postemployment health benefits fund shall be established and administered to comply with the requirements of Governmental Accounting Standards Board Statements No. 43 and No. 45 (GASB 43 and 45) for assets held by the postemployment health benefits fund to be treated as plan assets, to the extent reasonably practicable.

(c) The assets in the postemployment health benefits fund shall be irrevocably held for the exclusive purposes of providing health benefits to employees of the participating public agencies, and to defray the reasonable expenses of administering the fund.  The postemployment health benefits fund board may require that all assets transferred to it on behalf of a participating public agency be transferred from a trust fund that meets the requirements of GASB 43 and 45 for assets to be treated as plan assets, including that the assets of the trust fund be held for the exclusive purpose of providing health benefits to employees of a local public agency.

(d) The retirement system board shall determine, at its sole discretion, the form of the postemployment health benefits fund, which may be one or more trusts that are established under Section 115 of the Internal Revenue Code   1 or any other form or forms chosen.  The retirement system board may take any and all actions necessary or appropriate to implement the postemployment health benefits fund, including, but not limited to, establishing one or more joint powers authorities, partnerships, common trust funds, or other mechanisms in order to combine or commingle the assets held by the fund for investment purposes.

(e) A public agency, or the trustees of a trust fund that has transferred assets to the postemployment health benefits fund, may, in accordance with rules established by the postemployment health benefits fund board, direct that all or part of the assets allocated to the account of that agency or trust be transferred to another fund that is maintained by the agency that holds those assets solely for the exclusive purpose of providing health benefits to employees of the agency.  Upon termination of the postemployment health benefits fund by the retirement system board, the postemployment health benefits fund board shall retain an amount sufficient to pay reasonable costs and expenses of operating and terminating the postemployment health benefits fund, and thereafter shall transfer any remaining assets allocated to the account of each participating public agency only to another fund maintained by the agency that holds those assets solely for the exclusive purpose of providing health benefits to employees of the agency.  If a participating agency does not maintain a fund for that exclusive purpose, the postemployment health benefits fund board shall transfer the assets allocated to the public agency's account to a trust account maintained by a bank for the exclusive purpose of providing health benefits to employees of the agency.  The bank shall have net assets of at least five hundred million dollars ($500,000,000).  The postemployment health benefits fund board shall be reimbursed from the assets of the postemployment health benefits fund allocated to the public agency for all direct and indirect costs of establishing and transferring fund assets to a bank trust account.