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has been paying since 2013. PEPRA's stated goal is for both new member and "Classic Members" to contribute 50% of the normal cost, (the costs associated with the current year's benefits) and it allows agencies, after good faith bargaining and completing the impasse procedures, to impose this provision up to a maximum of 12% in 2018. The tentative agreement reached with PPOA works towards PEPRA's goal in that "Classic Member" contributions will increase by 1% in June 2015 and 0.5% in June 2016 for a total member contribution of 10.5% by the end of the MOU. New member's contribution will remain at 11.5%. Deferred Compensation: All PPOA members hired prior to the most recent MOU are considered "Classic Members" with a 3%@50/single highest year retirement formula. However, to control retirement costs, the most recent PPOA MOU implemented a lower cost 3%@55/average highest three year's formula for current PERS members new to the PPOA. In addition, with the passage of PEPRA effective January 2013, public safety employees new to the CaIPERS system receive a benefit of 2.7% @57 , based on the average of the highest three years' earnings. In view of these adjustments, and in an effort to provide employees with more post retirement saving options, the MOU includes a 0.5% City contribution to PPOA employees' deferred compensation program effective June 2016. Currently, approximately 60% of PPOA members contribute to the deferred compensation program without a City contribution or match. This contribution is not subject to CaIPERS contributions, and does not impact other personnel expenses that are calculated based on salary. Medical Contributions for Active Employees: Currently active employees receive Agency-paid contributions towards medical premiums up to the lowest cost HMO family plan. Although employees are required to pay co-pays and/or deductibles, they do not contribute towards the premiums if the selected plans' premiums are less than the lowest cost HMO family plan. The proposed contract requires employees who currently make no contributions toward their medical premiums to pay $25 per month effective the first pay period following ratification of the MOU. Other Changes: Agreements were also reached in the areas outlined below. Paid Time Off— Under the recently expired MOU, PPOA members were credited with eighty (80) hours of paid time off in January of each calendar year. PPOA members were scheduled to receive a reduced credit of sixty (60) hours of paid time off beginning 2015. This decrease has been postponed until 2017. Page 3 of 4