CCMIN082112 - Laserfiche WebLink

Mr. Bartel referred to Councilmember Cook-Kallio's earlier question, which he interpreted to be whether it would be worthwhile to hold back the advanced PERS contribution if the City knew the PERS investment performance to be substandard relative to the City's. He cautioned first and foremost that he is not an investment advisor. He explained that while the City has at times outperformed CaIPERS, CaIPERS has historically earned substantially more than the City has. Actuaries deal in probabilities and the probability is that CaIPERS will continue to outperform the City more years than not. Vice-Mayor Thorne said he is often asked by the public what the City has the ability to control and negotiate with respect to these agreements and what it must wait for the state to do in order to effect change. Mr. Bartel explained that the City participates in the CaIPERS pension plan and as such, can only contract with CaIPERS for the menu of benefit formulas that are defined in the code. The hybrid plan that Mr. Fialho referred to earlier is not yet in the code and therefore not an option at this time. He explained that 401K style plans are referred to as defined contributions where the member or employees assume investment, mortality, and other risk. CaIPERS offers a defined benefit program which is where the plan sponsor (the City) assumes the investment and mortality risk. Vice-Mayor Thorne opened the public hearing. Bart Hughes said he is sad and disappointed to see the same broken public process and the same positive spin on a contract that continues to protect a class of employees to the detriment of everyone else. The assumptions presented are meager in the face of the huge hole the City faces and that they fail to take into account CaIPERS' poor investment returns this year, the change in investment assumptions, and potential impacts of AB 2541. He was offended that such an incomplete report from the actuary could be put in front of the public and, while it presents only a best-case scenario, even that is not enough. He asked for a transparent and proper public debate on these agreements and for the Council to explain to future Pleasanton residents and employees that they will be paying more for less in order to protect a class of employees. He said this protected class received raises all the way through the first part of the financial crisis and had their pensions retroactively increased 67%, for an average annual cost of$235,000 per employee. David Miller thanked staff for the presentation but said he heard nothing about where the City's current unfunded liability stands which in his mind is something that should be discussed at every meeting. He is concerned that the City is in a hole so deep that these modest adjustments will not help and supports Mr. Hughes' request for a public debate. He noted the upcoming election and that this Council is leaving a huge fiscal problem for the next to resolve. He said he would ask the following of all Council candidates: 1) What is the most important issue facing Pleasanton today and in the future? 2) Does the candidate truly believe in and support meaningful pension reform that will provide the City with more tools and the flexibility to address these costs? 3) If elected, will the candidate use their position to be a leader in educating the citizenry and fighting for Pleasanton at the state level? Kay Ayala said she was on the Council when the situation began in the early 2000s, that it happened overnight in government terms, and that it can be fixed the same way. She said the Council was lied to at that time when it was told it would cost the citizens nothing to adopt 3% at age 50. Staff lied to the Council when it was told that they had to accept those changes. She sympathized with Mr. Hughes and Mr. Miller for believing years ago that this Council would be honest and put together an effective long- term plan. She asked whether the Council has established a long-term plan and whether any Council members or candidates have accepted contributions or support from the unions whose salaries and benefits they set. Proper public debate is a thing of the past and it is time for the Council to stand up and reveal to the public where they stand and what was said in Closed Session. Howard Long congratulated staff and the Council on recognizing what Mr. Fialho described as an unsustainable pension. He suggested that medical costs need not be nearly as great as predicted and City Council Minutes Page 8 of 19 August 21, 2012