AgdaPkt 2014-01-13 Interview, Closed and Regular

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7.2.D. - Page 1 REPORT To the Honorable Mayor and City Council From the City Manager January 13, 2014 SUBJECT Amendments to the Executive Management Summary of Benefits and related resolution to amend the Executive Management Salary Plan RECOMMENDATION 1. By motion, approve amendments to the Executive Management Summary of Benefits to increase the employee contribution to pension costs, reduce the employer -paid member contribution (EPMC), and update language as required by the Public Employee Pension Reform Act; 2. By resolution, approve a three percent (3 %) increase to the Executive Management salary ranges. BACKGROUND Costs related to employee pensions have escalated due in part to the 2008 -2009 recession, which resulted in significant losses for the CaIPERS pension fund. Demographic shifts related to the increasing number of retirements among the "baby boom" generation of workers has also increased the unfunded pension liabilities of local governments throughout the State. As a result of the changing economy and increasing costs, the City of Redwood City has made a number of difficult budget decisions over the past several years, including staffing reductions, programmatic cuts, improved operational efficiencies and structural changes to employee benefits. The City has worked successfully with labor groups to implement benefit reforms in order to maintain a fiscally- sound, equitable, and sustainable compensation program for employees. In 2011, the City implemented a second tier for employee pensions at a reduced formula for new hires. In addition, the City negotiated cost - sharing agreements with most labor groups, including the Executive Management group, in order to increase the employee contributions to pensions and healthcare premiums. In 2012 and 2013, the Council approved changes to the Executive Management Summary of Benefits to increase the employee contribution to the City's share of pension to seven percent (7 %) of salary by January 1, 2014. At the State level, measures have been taken to address increasingly unsustainable pension costs, including the Public Employee Pension Reform Act (PEPRA) signed into law in late 2012. This Act mandates a reduced pension formula for new CaIPERS members, along with other reforms in an effort to ensure the long -term viability of pensions for public employees. Among the provisions required by PEPRA is the elimination of employer -paid member contributions.