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Exhibit E Proposal for Regional Pension Reform Alameda County City Managers Association Contra Costa County Public Managers Association February 2, 2010 Introduction After reviewing the work of several other regional California City Management associations on pension reform, the Alameda County City Managers Association and the Contra Costa County Public Managers Association established a joint working group on pension reform to make recommendations to our respective organizations regarding regional public pension reform. The need for such a working group is rooted in the following concerns: 1. The general state of the economy has sparked a public outcry over public pensions that may lead to overreaching and. inappropriate pension reform by statewide initiative. 2. The majority of current public pension programs under the California Public Employee Retirement System (Cal and most other public retirement systems in California are not financially sustainable. 3. It is important for cities in the same geographic region to work toward a uniform set of goals for pension reform so as to avoid an inherent competitive disadvantage in hiring qualified staff. The working group concluded that existing pension programs have worked well to support career local government employees for decades; however, there is a growing recognition that they are not financially sustainable. To that end, the public managers recommend a new tier pension offering that could be implemented by the great majority of cities in Alameda and Contra Costa Counties through the bargaining process. Such pension offerings would not affect existing employees who have vested rights to the current pension programs, but would affect new employees after a date certain and be both sustainable and defensible. As to existing employees, the public managers recommend that public employers require employees through labor negotiations to fund a portion of their pensions through direct payroll contributions. In these difficult economic times, this will create an immediate annual operating savings for public agencies as well as create more parity within the workplace as it relates to future new tier pension offerings. Background For more than 70 years, the State of California and local governments have offered a "defined benefit" retirement plan to employees. This system provides a guaranteed annual pension based upon retirement age, salary, years of service and the appropriate benefit factor multiplier. Most, but not all, municipalities in California participate in the California Public Employees' Retirement System (Ca1PERS). All municipalities in Alameda/Contra Costa County, with the exception of the Cities /Towns of Danville, Lafayette and Orinda and the Counties of Alameda and Contra Costa, are CaIPERS members. 1