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Councilmember Sullivan asked the City Manager to provide an update on negotiations with PCEA. Mr. Fialho said the City is involved in the collective bargaining process; management is working within the parameters established by the Council, and discussions are on- going. At the time staff does have something to report, this can be scheduled for a public review and Council will take action. Councilmember Sullivan noted the operating budget does not address debt. Ms. Wagner said the operating budget addresses the golf course debt, which is the largest debt, and debt on the Operations Services Center, the Senior Center, and water and sewer. She noted it is almost $26 million and is in the Operating Budget and reflected as debt service the City pays annually. The annual debt annually on the golf course is $1.5 million. Mr. Fialho and Ms. Wagner pointed out that debt shows up on page 6 of 6 in transfers in and out, on the balance sheet and also in the audit, which is on the website. The Operating Budget has close to $4.5 million that goes into the retiree medical portion; a portion pays retiree medical and a portion goes into the trust fund to pay more to build up reserves long -term. Mayor Hosterman opened the item for public comment Kay Ayala said a presentation was made at the Bay Area Council's forum regarding City budgets and Pleasanton has a reputation for being one of the most financially stable cities, but no where does it say the City is facing a crisis, and she thinks the budgets from here on out should be zero based. Unfunded liabilities have gone up dramatically which have not been highlighted, she questioned and hoped that one workshop would address pensions, and for a priority to have pensions and benefits under control. Mayor Hosterman closed public comment. Mayor Hosterman asked Mr. Fialho to recap efforts made by the City to address the recession. Mr. Fialho said the City has revised its revenues and expenditures since 2009 consistently. Expenditures have been reduced close to $15 million over the last few years and a lot of credit goes to employees, departments and to the Council in making difficult decisions, and he recognized that services are stretched with 39 less employees. Regarding concessions, the City rolled back retiree medical and established a two -tier system with managers, hopefully with the PCEA, and hoping to approach them with police and fire as contracts become due. He said the City is also conscious of expenditures, work with revenue estimation, employee contributions making up for vacant positions, and balancing the budget so as not to significantly impact service levels. In response to the unfunded liability of the City, Mr. Fialho said the issue is serious up and down the state. The City has stated what its unfunded liabilities are in the CAFR which is on the website, and the way the liabilities are posted are in conformance with the law. Mayor Hosterman said the City Manager shared a report from the Little Hoover Institute on pension reform written by a group of unbiased individuals in the form of an open letter to the State legislature and the Governor to do something. She said the report is good at explaining frequently asked questions having to do with public and private sectors. Councilmember Cook- Kallio cited another good report, The Callister Letter, released on Friday, and noted some information is consistent and some contradictory. She suggested that everybody review all data before offering or taking a position. City Council Minutes Page 6 of 7 March 15, 2011