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years. In taking this tradeoff, he estimated the City would pay approximately double the amount of dollars for only one year's worth of savings. His recommendation to all clients is therefore to request that the full impact of the rate increase be taken immediately. Mr. Bartel reviewed projected contribution rates through FY 2018-19, provided CaIPERS makes no changes to its assumptions or other methods for determining contribution. Councilmember Brown asked if the recent upturn in the economy is indicative of a reasonable or good rate of return on these investments in the near future. Mr. Bartel stressed that he is not an investment advisor but said those he has spoken with note that bond rates remain at an all time low and question whether CaIPERS will be able to achieve even a 7.5% return over the next 10 years. Mr. Bartel noted several typos on slide 27, which represented the City's contribution rate if CaIPERS were not to use an asset smoothing formula. He explained that 10.7 should be 10.3 in both instances, the actuarial value of assets should be 13.7, and the total contribution rate in the right hand column should be 27.9%. He discussed upcoming changes to accounting standards. He anticipated some minor modifications to CaIPERS Miscellaneous Employees Plan, perhaps less minor for safety employees. He explained that the new standard would require the City to report its unfunded liability in its financial statements and would allow changes to the contribution requirement that may have a noticeable impact over the next 5 to 10 years and drive the City in the direction of calculating its contribution based on the market value of assets. He stated that CaIPERS actuaries are expected to present the board with a set of recommendations in the March/April timeframe to change the existing asset smoothing and amortization policy. Mr. Fialho invited the Council to listen to questions and comments from the public regarding this issue before entering into formal negotiations with City labor groups. He reminded them and the public of the three benchmarks adopted by the Council last year for measuring performance relative to pension liability. The first strives to maintain an operational budget with approximately 70% of assets dedicated to payroll. This amount peaked at 80% in 2011 and is currently down to approximately 77% thanks to attrition, reorganization and increased employee contributions. The second reduces the unfunded liability by 10%, for which the City has strategically provided contributions to CaIPERS in excess of the minimum amount required. He acknowledged the difficulty in labor negotiations which can be very emotional and said that the City is working to achieve a plan that is both sustainable and fair. He stressed that the City recognizes the value of its employees and their contributions to help mitigate these impacts over the last several negotiation cycles. Vice-Mayor Cook-Kallio asked if there is a plan to ask CaIPERS not to phase in the rate adjustment. Mr. Fialho said staff expects to come forward with a request soon. Mr. Bartel added that the CaIPERS actuary would need to be notified prior to May 1. Mayor Thorne noted there were no public speakers present to address this item. BREAK Mayor Thorne called a brief recess at 8:36 and reconvened the regular meeting at 8:45 p.m. 15. Public Hearing: P12-1786; City of Pleasanton — Introduction of an ordinance amending various Chapters of Title 18 of the Pleasanton Municipal Code to comply with California Government City Council Minutes Page 5 of 11 February 19, 2013