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Many agencies are negotiating for employees to pay the member contribution and to agree to a different retirement tier formula for new employees hired in the future. Other topics for discussion include health related benefits (e.g. medical plans) as well as non- health related items (e.g. uniform allowance). Operational Issues: During negotiations, matters related to departmental operations appropriately covered under the scope of representation may be discussed and language may be incorporated in subsequent MOU's. Other Related Mailers: Attached to this staff report is the recently adopted League of California Cities Pension Reform Action Plan. The document was approved by the League's Board of Directors in July of this year. The document is designed to address the League's 2011 Strategic Goal related to pension sustainability by providing information and recommendations to meet the competing challenges of maintaining high-quality public services while also providing reasonable pension reform strategies for local government and the State of California. The document was approved unanimously by the Board, which is comprised of various local elected officials throughout the State of California. Technical support was provided by various pension experts. The document identifies various strategies that can be employed locally and statewide to address sustainable pension reform. It also acknowledges reform initiatives should be taken locally and immediately, as part of the collective bargaining process to move local pension costs in a more sustainable direction. Staff recommends that the City Council discuss this action plan and determine whether it wishes to endorse, with possible local amendments, the document as a roadmap for pension sustainability. Also, if the City Council is interested in measuring progress towards achieving pension sustainability locally, the following 5-year benchmarks could be considered in tandem with the adoption of the League Action Plan: • Eliminate negative amortization inherent in the CaIPERS unfunded liability amortization method; • Reduce the City's overall pension and other post-employment unfunded liabilities by at least 10%, and • Reduce personnel related costs as a percentage of the total operating budget to 70%. Exceptions to this threshold may be provided through specific City Council action to support short-term and/or long-term initiatives, programs and/or activities desired by the community. To assess the progress being made, the aforementioned benchmarks could be incorporated into the City's fiscal policies and measured annually through the City's Comprehensive Annual Financial Report and/or biannually through the City's budget process. Both the adoption of these benchmarks and the League's Action Plan would be consistent with the City Council's recently adopted 2011/2012 work plan to establish fiscal policies that address the reduction of unfunded liabilities. Page 3 of 4