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Ms. McKeehan did not know. It was her belief that the proposal was dismissed by the Governor elect and the Lieutenant Governor in the recent election. Ms. Ayala believed the public deserved to be informed and understand what the Council was doing. She had a problem with the very basic retirement program, which she believed to be very lucrative and excessive. When the retirement issue was brought to Council, she believed that she had to vote in the affirmative on the matter, and that she did not have a choice. When she questioned the issue, she believed she was informed that she had to do this in order to compete with other agencies. She followed the lead of Governor Davis but now would like to change it. She believed the City cannot make any changes unless the State makes changes. She asked if this was correct? Ms. McKeehan pointed out that in order to structurally change the retirement system, the changes need to be made at the State level. She believed it would be prudent for the State to look at these types of changes if it were to fix its financial situation. An option for Council would be to direct staffto renegotiate benefits with City employees; however, the City could not set up a two-tier retirement system without a change in State law. She would not recommend t~ying to renegotiate the existing contracts given the dynamics of the City's position and where the market is. Ms. Ayala guaranteed that she would work on trying to make the structural changes with regard to benefits at the State level. Mr. Campbell wondered if the increase of the management pool had been considered in the budget presentation heard prior this evening. Ms. Rossi pointed out that the increase had been built into the two-year budget, and it also included the bonuses. Mr. Campbell believed the City had done a good job in terms of being fiscally responsible by taking into consideration compensation for the long-term. In response to an inquiry by Mayor Pico, Ms. McKeehan said the City only pays into the PERS retirement system for existing employees, and does not continue to make any additional premiums to the retirement system for retired employees. The rote the City is currently paying is less than what it paid twenty years ago. She pointed out that the rates are adjusted every year, and are based on the entire actuarial picture, and what type of benefits are being provided, for example, the demographics of the work force, the age of the work force, and the length people are expected to live once they retire. In response to an inquiry by Mayor Pico, Ms. Rossi noted that the average rate that the City pays into the PERS retirement system for miscellaneous employees for the last twenty years was 5.5 percent. Mayor Pico inquired as to whether employees are required to pay for social security benefits. Pleasant City Council 21 10/21/03 Minutes