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Ms. Ayala felt another reason for concern was the uncertainty of the present economic climate. The City of Pleasanton is part of the bigger picture and Council has the responsibility to take a look at a possible second tier of retirement benefits with new hires be placed in a different category. This is something she would like the Council to have an open mind with this idea. When the previous Council voted on approval of the MOUs there was a feeling that the economy would have changed by this time. That has not happened and she felt the economic climate had gotten worse. She does not think that the State can continue on the path it is currently taking. The Pleasanton City Council followed in the footsteps of the State by adopting the 3% at 50 retirement plan and became one of the pieces to the puzzle that contributes to excessive retirement benefits. Receiving 90% of your pay at retirement is excessive. She hoped that Council would keep an open mind in the future as the State addresses their situation. Ms. McKeehan replied that the two-tier system that was raised is a situation that Council cannot do today under the existing retirement law. If Council had an interest in doing something, she suggested working with State legislators to make that a reality. The two-tiered system does not exist today. Any changes regarding employees would have to be addressed through the process already in place. It is through the City labor relations process to discuss all of the options. Ms. Ayala made a motion, seconded by Mr. Brozosky, to accept the operating budget as presented in Staff Report 03:187 and to direct staff, because of the uncerta'mties of the VLF and the sales tax, to begin the process of working with State legislators and agencies to investigate allowing a second tier within the retirement system. Mayor Pico was not supporting the motion because he felt it was not relevant to the City of Pleasanton at this point and does not change the City's financial circumstances. He did not want to send a message to the bargaining units that the Council is trying in any way to undermine the contracts that have already been entered into. Ms. Hosterman said she would not support the motion. She is confident that staff has addressed those issues adequately. Mr. Brozosky said as an elected official he is concerned about the salary increases that municipal employees are getting. He felt these increases are high in comparison to other areas of employment. Ms. McKeehan said she is recommending that Council not proceed with the motion. If Council would like more information in pursuing this concept, it could be presented to Council with more information than is available at this point. The roll call vote was as follows: AYES: NOES: ABSENT: ABSTAIN: Pleasanton City Council Special Meeting Minutes Councilmembers - Ayala and Brozosky Councilmember - Campbell, Hosterman, and Mayor Pico None None 2 06/24/03