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largely because the city mitigated a portion of its unfunded liability with payment of a side fund several years ago. He explained that the new accounting policy will require the city to recognize its full unfunded liability, which is estimated at $172 million for Police, Fire and Miscellaneous employee groups, on its financial statements. He noted that there is a certain logic that a portion of the $61.9 million unfunded liability for Fire Safety belongs to Livermore and will be reallocated, though confirmation of such has not yet been received. He discussed the impacts of PEPRA cost sharing on both'groups, reminding the Council that the mandate that employees pay 50% of the total normal cost of benefits applies only to the new PEPRA employees. Councilmember Cook-Kallio referred to an earlier slide which showed contribution rates that appeared to peak at 49.8% and then decrease. She asked and Mr. Bartel confirmed that this reflects the impact of PEPRA. Mr. Bartel added that the decrease should be significant over time largely as the result of second tier changes, but also those related to PERPA and paying down of the unfunded liability. Councilmember Cook-Kallio asked and Mr. Bartel confirmed that his recommendation would still be not to pay down the entire unfunded liability at this time. She asked him to expand on this recommendation, for the benefit of those who wonder why the city is not more aggressive with its contributions. Mr. Bartel explained that monies to pay,down the unfunded liability would come from either unallocated reserves/surplus or pension obligation bonds. In both instances, it is a question of what level of risk the Council is willing to tolerate relative to the expected rate of return. CaIPERS expected return is 7.5%, but this has proven to be volatile and there is always the risk that the return will be less than the city could have achieved through its own investments or than the rate of interest at which it borrow the funds. While pulling the money from unallocated reserves or using an end of year surplus is less risky, the amount of money available from these sources is very small in relation to the unfunded liability. Councilmember Brown asked and Mr. Bartel confirmed that June 30, 2012, which the assumptions are based on, is the most recent CaIPERS valuation. Mr. Bartel also explained that the 2012 valuation is used to determine the city's 2014-15FY contribution: Councilmember Brown asked and Mr. Bartel confirmed that the projections assume that 50% of new hires in 2013 were classic and 50% were PEPRA. Councilmember Narum asked why PEPRA rates differ between police and fire. Mr. Bartel could not say specifically, but thought it related to a difference in final average earnings or post-retirement survivor allowances. Mayor Thorne noted there were no speakers to address this item. 15. Consider approval of a Request from Pleasanton Garbage for a Refuse and Recycling Rate Adjustment Assistant City Manager Bocian presented the staff report, stating that the item pertains to an exclusive Franchise Agreement with Pleasanton Garbage Service (PGS) running through June 2019. The agreement includes provisions that establish a process for setting refuse and recycling collection rates and language that the firm should receive a fair rate of return. PGS last submitted a rate increase of 12.8% in the 2011-2012 timeframe. In response to that increase, the Council approved a 5% rate adjustment, 4% of which went to PGS and 1% to the city franchise fee, which took effect January 1, 2013. The increase did not address the Alameda County Waste Management Benchmark Information fee for which the city has no direct control or authority. At that City Council Minutes Page 14 of 18 March 18, 2014