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be at a big disadvantage in trying to hire and retain employees in the City. The retirement programs are expensive, but it is a cost of doing business that the City needs to be paying at this point to be able to remain reasonably competitive with every other city in California. If decisions are to be made, they will need to be made on a more global basis. Ms. Ayala believed that the retirement program has an impact on cities, particularly those cities that are cutting back on essential levels of service that it provides to the community. Ms. McKeehan believed that all of the costs, including the cost of retirement, have an impact. She noted that the City of Fremont went through the process of closing a fire station because it had severe financial problems, caused in part by retirement costs, but also caused in a bigger part by a huge loss of business-to-business transactions and sales tax revenue. Mr. Brozosky referred to the minutes of Council's discussion last year with regard to a second tier retirement system. The minutes reflect a motion he made, which was to accept the budget and to direct staff to work with the legislature to allow the City of Pleasanton to have a second tier in the retirement system. He noted that this motion failed due to a lack of three passing votes. Ms. McKeehan said that the point staff tried to make when this motion was made was that Council could not approve a second tier within the retirement system, unilaterally, with its own employees. Staff would need to negotiate this with its employees. Mr. Brozosky said the motion he made last year was to begin a process of working with State legislators and agencies to investigate allowing a second tier within the retirement system. Ms. McKeehan did not believe that motion was what Council intended to do for several reasons: one, because that is not what Council needed to do, and secondly, Council could not unilaterally make a change to labor contracts with employees without entering into negotiations. Mr. Brozosky was under the impression last year that Council could not bring this matter up to a labor union because legislation did not allow it. Ms. McKeehan said that this was not correct. Ms. Ayala noted that the minutes state that staff replied that the two-tier retirement system that was raised is a situation that Council could not do today under the existing retirement law. Ms. McKeehan said that statement was true because the City would need to negotiate a two-tier retirement system with its employees. She noted that the City Pleasanton City Council 18 06/15/04 Minutes