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paid of the Police Side Fund Loan in 2011 of $7.8 million, which resulted in a $3.5 million savings in interest payments as well as a reduction in the unfunded actuarial liability. Ms. Stern stated that the Audit Committee reviewed the CAFR and related audits on January 22, 2013. The CAFR has been made available for public review at both the library and on the City's website. Staff and the Committee are recommending that the Council formal accept the audit reports. Mayor Thorne opened the item for public comment. David Miller said he has seen considerable improvement since he first voiced concerns over the City's financial statement. While the journey is far from over, he commended the progress made thus far and said he was very pleased to see this level of transparency from the City. He asked what impact the market has had on reducing the unfunded liability and whether the adjustments made are material enough to survive another downturn in the economy. Mayor Thorne closed public comment. Vice Mayor Cook-Kallio noted that she and Councilmember Brown sit on the Audit Committee. She complimented staff and the auditors for preparing such a thorough yet readable report. She requested a breakdown of the unfunded liability as it relates to current and retired employees. While the overall liability is alarming, it is balanced somewhat by the fiscal responsibility of the City in terms of assets. It is also important for the public to see the breakdown and understand that this amount will never be due all at one time. Ms. Wagner said she could not recall but would provide the Council with that information. Councilmember Brown commended Ms. Wagner. She assured the public that the entire Council is very aware of the unfunded liability and will continue to work diligently to meet the City's fiscal benchmarks and goals in this respect. Mayor Thorne said he enjoyed his time on the Audit Committee, which he retired from this year, and extended his compliments to staff. Councilmember Pentin also extended his compliments to staff. In reference to Mr. Miller's question, Mr. Fialho noted that the values in the CAFR are June 30, 2011 values. He explained that most of the pension changes implemented by the Council did not take effect until later in 2011 so the changes reflected here are largely market-driven. Ms. Wagner added that they did see significant improvement in the police group as a result of paying off the side fund and changes in CaIPERS reporting. She explained that numbers prior to 2011 were an estimate of the City's portion of a pool comprised of 275 different cities, whereas CaIPERS is now required to disclose a city's specific obligation within a pool. She estimated there would be additional improvements on an actuarial basis in 2012 as a result paying in an additional $2 million and the changes noted earlier. MOTION: It was m/s by Cook-Kallio/Brown to accept the Comprehensive Annual Financial Report (CAFR) and other related audits for the year ending June 30, 2012. Motion passed by the following vote: Ayes: Councilmembers Brown, Cook-Kallio, Pentin, Mayor Thorne Noes: None Absent: One Vacancy City Council Minutes Page 7 of 9 February 5,2013