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now than at that point in time. Twelve years ago, staffbegan negotiating contracts about two months before they were due to expire. That really does not allow enough time to get through some key issues. Currently, the labor relations process is continuous. There are quarterly employee meetings to discuss issues so that when negotiations actually start, the issues are fairly clear. That also provides an opportunity to extend a contract when it makes sense. This is only the second time a contract has been extended. Ms. Michelotti asked when staff first approached Council regarding contract negotiations. Ms. McKeehan said this was a collateral issue in discussions regarding the police and fire contracts a year and a half ago. She had stated at that time that the miscellaneous, non-sworn, employees would be interested in changes to the retirement formula. The employees approached her in the fall of 2001, when the legislative change was made. Formal discussions began in February 2002 and closed sessions with Council began in March and ended in August 2002. Ms. Michelotti asked if Council had given staffparameters for negotiation with the employees? Ms. McKeehan said there were several discussions before the parameters were set. Normally staff would not ask for parameters at the first meeting with Council but would discuss the pending issues for both sides. There were seven closed sessions to discuss this in 2002. Mayor Pico invited public testimony on this item. Jeff Renholts, 7489 Aster Court, referred to the current rate at .03% versus the 7% normal rate and asked for an explanation. Ms. McKeehan said under the Social Security system an employer pays .0765% of its payroll. The actuarial rate (or normal cost) of PERS for the City's retirement is 7%. The actual cost the City has been charged has been as low as .03% of payroll, which is the city's current rate, because of the actuarial history of the City and PERS. Mr. Renholts referred to the statement that the discount rate would gradually increase to 4.8%. He said that is not a gradual increase; that is a 13,000% increase. Ms. McKeehan indicated those are not the percentage increases, but they are the percentages that PERS will charge the City. It is gradually using the excess assets in the fund over a period of time. PERS reviews the assets and makes calculations every year to set the contribution percentage. Ms. Renholts then said if the 2.7% formula is adopted there would be a 50% increase on what the city is paying. Yet, in the supplemental staffreport it shows the first year it's the difference in what you would have paid out in the 2% at 55 versus the 2.7% at 55. But in the subsequent years you show a significantly less amount as being the differential. He did not understand that. Pleasanton City Council 9 10/01/02 Minutes