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Without factoring in this Tentative Agreement, personnel costs are hovering at about 77% of the operating budget. Mr. Fialho reminded everyone that negotiations are guided by the strategic objectives adopted by the Council and that these efforts are not achieved in the short term, but rather are adhered to in the long term to begin to reverse what all acknowledge as unsustainable enhanced pension benefits. Vice-Mayor Thorne stated that the purpose of tonight is to receive and consider public input and that the Council will hold a special meeting next Tuesday at 6:30 p.m. to make a final decision. Assistant City Manager Yuan-Miu reminded the Council and public that this negotiation process is slightly different from others because LPFD is governed by a Joint Powers Authority comprised of a Board of Directors and the City Councils of both Livermore and Pleasanton. The current Memorandum of Understanding (MOU) with IAFF covers 103 employees of both the fire suppression and prevention bureaus for the period from August 1, 2007 through December 31, 2011. The negotiations process began in January 2012 and, as required by the Meyers-Milias-Brown Act, all parties engaged in the confer process and covered the areas of term, wages, benefits and operational issues. In July 2012, an agreement was reached with IAFF and their members ratified the contract. The next step is to obtain approval by the City Council's of both cities, with tonight's purpose being to introduce the agreement and receive public input. Ms. Yuan-Miu presented the following significant terms and conditions of the Tentative Agreement: • Term - shorter term than is usually approved in order to provide flexibility should the economy or City's financial situation change; • Wages — no across the board cost of living wage adjustment; • EPMC — employee payment increases from 2% to 6% (of the total 9%) upon approval of the agreement and then to the full 9% in less than one year; • Retirement formula — lower tier formula of 3% at 55, based on three years highest earnings; • Retiree medical — reduced to single party coverage for new hires and the City's obligation ends when the employee reaches Medicare eligible age (currently 65) Ms. Yuan-Miu stated that the net impact of savings for Fiscal Years 11-12 through 13-14, less expenses for the LPFD, is $1.3 million. These figures do not include additional savings due to the significant change in pension and retiring medical programs. John Bartel, Chief Actuary, presented the Council and public with several slides. He noted that the calculations were prepared on the presumption that the changes reviewed by Ms. Yuan-Miu would take effect July 1, 2011 and that the full employee contribution of the EPMC would take effect immediately. He said the first year savings would consequently be less than shown and that while he felt the savings were still representative of what the City could expect, they would be deferred. He noted that the bulk of immediate savings has to do with elimination of the EPMC while retiree benefits result in a more gradual accrual over a ten-year period. He presented a slide on other post employment benefits (OPEB), projecting what the City's long-term contribution would be with and without the change to the second tier. He also noted that the OPEB figures are based on a valuation that was prepared several years ago and do nct precisely reflect the most current assumptions. Councilmember McGovern asked if he could update these figures by the next meeting. Mr. Bartel said there was not sufficient time to prepare the requested changes by next week and that he did not expect the magnitude of numbers to be any different from what was presented. City Council Minutes Page 7 of 19 August 21, 2012