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7.B. - Page 1 <br />REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br />September 12, 2011 <br />SUBJECT <br />Final Resolution and Ordinance to amend contract between the Board of Administration <br />of CaIPERS and the City of Redwood City <br />RECOMMENDATION <br />Hold a public hearing and adopt a resolution to approve an amendment to contract <br />between the Board of Administration of the California Public Employees' Retirement <br />System (CaIPERS) and the City Council of Redwood City (ATTACHMENT 1). <br />Hold a public hearing, waive second reading, and adopt the ordinance to approve an <br />amendment to contract between the Board of Administration of the California Public <br />Employees' Retirement System (CaIPERS) and the City Council of Redwood City <br />(ATTACHMENT 2). <br />BACKGROUND <br />As part of a multi -year year approach to secure the City's financial health, the City <br />entered into agreements to reduce the City's budget and minimize long -term pension <br />costs. The labor agreements approved by Council earlier this year included provisions <br />committing the City to amend its contract with CaIPERS to provide for a second tier <br />retirement benefit for new hires. Specifically, these pension formulas reduce the <br />pension formula for Miscellaneous employees from 2.7% at 55 with a single highest <br />year of compensation calculation to a 2% at 60 formula with a three year average of <br />compensation calculation. Current Safety employees receive a 3% at 50 formula based <br />on a single highest year of compensation calculation and under the proposed contract <br />amendment, newly hired employees will receive a 3% at 55 pension formula with a <br />three year average of compensation calculation. <br />On August 22, 2011, through a public hearing, the Council adopted an ordinance and a <br />Resolution of Intention to amend its contract with CaIPERS to provide for these new <br />pension benefit formulas. Holding a public hearing and adopting the attached Final <br />Resolution and the accompanying ordinance are the final steps in effectuating the <br />contract amendment. As presented in the August 22, 2011 staff report, CaIPERS <br />offers a choice of two contribution rate methodologies to effectuate the cost savings <br />over time: the Standard Method or the Temporary Pooling method. Because the <br />