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Mayor Pico said the added annual cost is $674,000 a year based on the current payrolls and retirement program. The City currently pays $1,425,000 in a normal retirement costs under the 2% at 55 formula. Going to 2.7% at 55, it will cost an additional $674,000 a year. Mr. O'Callaghan said he wanted to know how much that costs the taxpayers of Pleasanton. He thought there was some "eye wash" with the reference to budgeting 7%, but it is not all used. If that is the case, then refund it to the taxpayers or spend it on some other capital improvements. Mayor Pico said the cumulative cost over a 20-year period of time is $61 million and that increase is about $20 million over and above what the cost for 2% at 55 would have been ($41 million). Statistically, it is very close in terms of the percentages. There were no further speakers. Mayor Pico did not believe the city was "walking offa cliff". This is a long term investment in the employees of the City. The community is extremely financially solvent and has extremely conservative financial accounting practices. The city employees are exceptional and the envy ora number of other communities. They are treated fairly and paid reasonably. In more than one community survey, the community has indicated it was extremely satisfied with the level of service the city is providing. The last poll indicated a 99% favorable rating for city operations. The pollsters who conducted the survey said that is unheard of in their experience. The staff is diligent and capable. There have been many months of analysis and study of this issue and there were many closed sessions to discuss this. Ms Ayala has raised all these questions in those sessions. He felt this public discussion was very healthy and he agreed it was possible to post this information on the website. The contracts are public information once they are negotiated. There is a process for negotiation which is covered by state law. He felt the community was stronger because it has a six-year agreement with firefighters, a seven-year agreement with the police officers and hopefully with the eight-year agreement with the remaining city employees. He has been CFO in private sector companies for years and they all had pension programs for their employees. They also had Social Security for the employees. It is laughable to him to argue about the rates the City is paying into a PERS system, when you compare it to what is happening with the Social Security system. The employer pays 7.5% and the employee pays 7.5% into a system that most cannot access until the age of 62 without significant reduction in benefits. Most get benefits at 65 and in the furore the age will be 67. When one compares the amount of benefit to the amount of contribution and compare all that to PERS, it is ridiculous. One wonders why the federal government cannot be as successful as the PERS system. PERS has done a superb job of managing its assets. It is amazing that we can provide this level of benefit with a total employer cost on an ongoing basis of approximately 10% of compensation. In addition to the Social Security system, a private sector employer would contribute a pension program such as profit-sharing, stock options, 401 (k), IRA with match, etc. The City has a very secure base of revenue. Property tax revenue base keeps rising and even though the state may try to balance its budget with cuts to cities, such as the ERAF program, which took away $3 million, and other cuts of about $30 million over the last few years, the City has still been able to provide an excellent level of service to the citizens. He believed there is a significant element of fairness involved in this. People in the private sector Pleasanton City Council 16 10/01/02 Minutes