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John Bartel presented a brief analysis of the agreement's overall impacts. He noted the compounded impacts of the EPMC adjustment, as the contribution is typically included in pensionable wages when paid by the City. He also noted that the analysis assumes a July 1, 2011 effective date, resulting in slightly decreased actuarial savings for the 2011-12 fiscal year. City Manager Fialho advised that the Council adopted a policy setting forth a PERS Rate Stabilization Fund that allows the City to begin to affect the unfunded liability. While the Tentative agreement only begins to gradually address benefit levels, it allows for the opportunity for the 9% EPMC formerly paid by the City to be put, at least in part, towards that fund to address the negative amortization associated with the PERS rate. This request will be brought to the Council well in advance of the July 1, 2012 approval of the operating budget. Mayor Hosterman opened the item for public comment. Bart Hughes attempted to provide context for the discussion, reviewing contractual and unfunded liability changes since 2003. He referred to Exhibit A, noting that the cumulative savings identified is essentially wiped out by the $17 million liability CaIPERS increase in 2011. He said it is clear that concessions made to date fall short of truly addressing the problem and the longer this continues, the greater the cost will be to the next generation. He posed the following questions: How do the results of the Tentative Agreement compare to the Council's improved objectives? Why were the following not included: Final compensation based on the three highest paid years for all employees; Lengthening of the retirement age for tier two employees; Narrowing of the definition of "base pay"; More aggressive adjustments to medical benefits. What flexibility is built into the contract to address future CaIPERS adjustments? How did the City's 2012 payment on the department's side fund factor into negotiations and to what extent were other labor groups penalized? To what extent will this agreement hinder the concessions in last year's PCEA contract? David Miller said this is about the fiscal situation of the City, not anyone's personal feelings about the Pleasanton Police Department. He said the Tentative Agreement is a significant improvement over what was presented last year. He presented a slide depicting the historical growth in police expenses, which will have doubled since 2000. He appreciated the employees' full contribution of the EPMC, though considered it to be a bit slow in coming, and said that while 3% at 55 seemed to be in line with other jurisdictions, it was not in line with the fiscal reality. He stressed that CaIPERS continues to perform poorly and the City would likely be hit hard again. Karen de Baca Martens said she is so proud to be part of a City whose police officers are willing to above and beyond the rest, agreeing to compensation cuts while the city they work for still has significant budget reserves. She thanked the PPOA for its willingness to ante up and thanked its officers for their leadership. Paul Martens questioned the data integrity of information presented by those who remain dissatisfied with the Tentative Agreement. He asked the Council to trust the integrity of that presented by staff and consultants and to approve the agreement. Dave Batory, PPOA President, said the Tentative Agreement is the culmination of months of hard work and negotiation. This is not the optimal contract for PPOA officers, but it is a decent compromise in these economically unpredictable times. He reviewed the concessions of the contract, noting that the EPMC contribution requires officers to contribute $1,000 towards their pension each month. Despite the fact that Pleasanton's General Fund contains over $20 million in reserves, the officers support this contract because they care about the community and do not wish to see a reduction in services. PPOA officers remain 100% committed to serving the residents of this community. Special City Council Minutes Page 2 of 4 January 31, 2012