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Julie Yuan-Miu, Assistant City Manager, reported on the Pleasanton Police Officer's Association negotiations, said their most recent contract covered a long period of time from June 2001 - May 2008, and both parties are obligated to meet and confer what is called the scope of representation which includes wages hours, and other terms of conditions of employment. On February 19, the first public session was held to introduce the item and receive input from Council as well as the public. Of general concern to many cities is containing the cost of providing health care and, in particular, retiree medical benefits. It is also necessary to balance providing competitive wages for recruitment and retention of police personnel but in a fiscally prudent manner. Overall, the goal is to develop a competitive package within budgetary parameters. The representatives of both parties met between February and June. A successor agreement was developed. The elements of the tentative agreement are: Term of the agreement is three years beginning June 1 2008 through May 31 2011, which is a pretty common period of time. It gives flexibility to both parties because the contract will be reviewed in three years. In terms of the wage adjustment, the tentative agreement calls fora 4% increase for each year, based this on a salary survey of comparable cities. The increases provided by the other cities range from 2.75% to 9.39%. The other item considered is the CPI (Consumer Price Index). The most recent figure is a 4.7% increase and the trend continues to rise. The majority of time was spent discussing reforms to medical benefits. Avery significant reform is the revision of the vesting schedule. Currently, employees receive retiree medical benefits for two parties; the employee and spouse. This revision was made to a single party benefit, the employee only unless the employee completes 20 years of service with the City of Pleasanton. This signals a very significant shift in philosophy and, assuming that, in ten years this affects 50% of City employees, the actual liability is reduced by $2.3 million. Ms. Yuan-Miu said the last key reform is for retired employees, effective July 1 2009, to have the same plan as active employees. The impact of the change in this cost sharing arrangement for medical benefit translates in the reduction of long-term liability. Just for police and fire, the actuarial liability is reduced by close to $900,000 and the annual required contribution is reduced by $122,000. This direction will be continued with the other employees in the City. Vice Mayor Thorne asked how the cities were picked for the salary survey comparison. City Manager Fialho explained the agencies, not including Pleasanton, in the report were agreed to previously by agreement with the labor group and management and are balanced among smaller and larger cities generally in the same vicinity that have comparably sized police departments. In response to questions from Councilmembers regarding adding other city as comparables, City Manager Fialho said the only way to add cities would be with concurrence from the PPOA labor group, although nothing prevents the City from completing a survey. Vice Mayor Thorne noted there were no speaker cards. City Manager Fialho noted Council and staff has tried hard to begin to roll back liability long- term on the retiree medical front, they provided early disclosure and financial statements. The staff report suggests this is the first contract that makes meaningful reductions in that long-term liability. The union recognized this was an issue and worked with staff to find a solution. As City Council Minutes 5 August 19, 2008