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95 retirees). This ratio increases the percentage of the City's unfunded liability that belongs to retirees, which in Pleasanton equates to 65% for the Miscellaneous Plan and 68% for the Police and Fire Safety plans. This essentially means that the City has to pay more into the system annually to offset retiree obligations. e Continuation of Various Rules that Increase Pension Liabilities — Safety Personnel's use of industrial disability retirements (IDR) have increased cities' unfunded pension liabilities because there is no minimum period of employment required to receive an IDR and the minimum pension benefit is equal to 50% of the employee's salary. Thus, neither the employer nor employee have necessarily been adequately contributing to PERS to cover IDR pensions. In addition, the automatic cost of living adjustments of up to 2% for retirees is another cost factor that contributes further to the growth in unfunded liabilities and annual payments to CaIPERS to fund the system. OTHER RELATED MATTERS In 2012, the state legislature enacted the Public Employee Pension Reform Act (PEPRA) to address the escalating pension costs faced by the state and other public jurisdictions that provide pension benefits. PEPRA included the following pension reforms: e Pension payments based on average of three highest paid years eliminating the single highest paid year. e Less generous pension formulas along with extended retirement ages for employees2 hired after January 1, 2013. GO Eliminated pension spiking provisions such as using overtime and vacation pay- outs in the calculation of final pension compensation. e Purchase of air time is prohibited. e Employees must pay their pension contributions. Unfortunately, these reforms did not adequately address the unfunded pension liabilities in the short-term. Rather, the PEPRA reforms will substantively affect unfunded liabilities in 20 to 30 years (long-term) when the PEPRA retirees begin to constitute a larger portion of the CaIPERS retiree population. So while the reform was necessary and important, it did very little to benefit the system in the short-term. As a result, to address the City's growing pension expenses, the City's labor agreements all include provisions for the employees to pick-up the employee's share of pension contributions. In addition, since FY 2011/12 the City has provided a total of $25.4 million towards prefunding the City's pension liabilities through a combination of strategies, including the use of year-end surpluses, paying-off of pension side funds, and leveraging reserves to buy-down the City's unfunded status. 2 New employees hired after 2013 that were not previously in CaIPERS or reciprocal retirement plans. Page 3of6