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9. STUDY SESSION(S) A Public Employees' Pension Reform Act of 2013 Study Session (904) Recommendation: Review the information provided. No Council action is recommended. Ms. Leah Lockhart, Human Resources Manager, covered the new regulations related to Public Employees' Pension Reform Act (PEPRA) 2013. She provided background information to the beginnings of the Pension Reform. She addressed the City's unfunded liability, how to keep our employees whole, and meet pension requirements while working with bargaining groups. She provided information about the raise of the retirement age and how the City negotiated a Cost-Sharing Agreement with $2.6 million coming from employees. The State's response in bringing future liabilities down was lowering the retirement formula of new members and but it is not for all new hires. They created a three-tier formula and the final compensation went to a three-year average. Vice Mayor Foust would like a best guess of the number of employees in Redwood City befinreen the first group before 2013 and the second group. Ms. Lockhart did provide some numbers as to the number of employees in Tier 2 and in Tier 3. Dr. Bell added that the City will bring back to Council the information requested. He further said that it was very fortunate to enact the second Tier when they did, because PEPRA prohibited agencies from having a second tier. He thanked Council and the bargaining units for their help. Ms. Lockhart stated that the employees pay 50% of normal cost, and there are limits and caps to pensionable compensation. She also explained the concept of "classic members" and how they can retain the existing retirement formula and that the goal is that all employees pay 50% of the normal cost. She added that this needs to be achieved through the bargaining process. Furthermore, higher contributions may be negotiated. She shared with Council implications for the city administratively in ensuring the different classification of tiers are not missed, labor relations are more complex due to the different tiers, there hasn't been a change of recruitment, and the financial implications is that the short term gains are very small. The City has 12 members that are impacted by PEPRA. A Council Member thanked Ms. Lockhart for her presentation. He asked if the City has been working with the labor groups, especially to understand this. She mentioned that they are currently working with four of their bargaining units. He wants to know if the employees are aware of this, which she confirmed, especially about the issue of 50% of normal cost. Another Council Member thanked Ms. Lockhart for being thorough. She added that this was a complex issue and was disappointed that there were no savings. She is concerned about the multiple bargaining units, but hoped that they will get through this together. One other Council Member appreciated both Ms. Lockhart's and Mr. Ponty's reports. He is glad that these issues are brought to light, although not positive news, he feels that this issue is not just a Council matter, but everyone's issue. CITY COUNCIL February 10, 2014 MEETING MINUTES PAGE 10 MINUTE BOOK NO. 65 Page No. 82