CITY COUNCIL: Resolution Urging Governor & State Legisture to Approve CalPERS Pension Reform

City Council
Agenda Item Summary

Name: Consideration of a Resolution urging the Governor and the State Legislature to approve CalPERS pension reform in 2010.

Description: The cost of retirement benefits is estimated to escalate at an alarming rate in the next two years. The future funding of public employee retirement benefits will divert funding away from essential City services and programs. Carmel-by-the-Sea is just one public agency among many statewide that will face this significant financial challenge.

The Monterey Bay Area Managers’ Group has developed “Guiding Principles” (see attached) that was presented to the Monterey County Mayors’ Group. Public agencies statewide also are in different stages of adopting guidelines/principles to deal with pension reform. It is for this reason that public agencies throughout California are participating by adopting resolutions urging pension reform in 2010.

Overall Cost:
City Funds: Undetermined, but significant.
Grant Funds: N/A

Staff Recommendation: Adopt the Resolution.

Important Considerations: The future cost of the CalPERS retirement benefit is not fiscally sustainable as structured today. A reform is needed to protect the abilities of local communities to provide basic public services and programs.

Decision Record: City Council has taken no prior action on this issue.

Reviewed by:

__________________________ _____________________
Rich Guillen, City Administrator Date

CITY COUNCIL
CITY OF CARMEL-BY-THE-SEA
RESOLUTION 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA URGING THE GOVERNOR AND STATE LEGISLATURE TO APPROVE CALPERS PENSION REFORM IN 2010

WHEREAS, CalPERS is responsible for retirement, health, and related financial programs for more than 1.6 million public employees, retirees, and their families for more than 2,500 public agencies; and

WHEREAS, CalPERS’ rules and regulations are restrictive and prevent agencies and their employees from negotiating solutions other than the established retirement formulas; and

WHEREAS, CalPERS requires that any lower retirement formula be applied to new hires only; and

WHEREAS, CalPERS requires that an improved retirement formula must be applied to all past employee service time, which increases agency unfunded liability and the cost of retirement; and

WHEREAS, local governments throughout California are facing severe financial challenges due to the worst economic downturn since the Great Depression; and

WHEREAS, it is the fiscal responsibility of agencies and their employees to address these financial challenges together;

NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Carmel-by-the-Sea that:

SECTION 1. CalPERS reform is necessary to approve new retirement formulas that encourage retirement at a later age.

SECTION 2. CalPERS reform is needed to authorize lower retirement formulas to be negotiated for all employees immediately.

SECTION 3. CalPERS reform is needed to authorize lower retirement formulas to be negotiated for future service time only.

SECTION 4. CalPERS reform is needed to place a cap on the maximum dollar amount that can be paid to any retiree after January 1, 2011.

BE IT FURTHER RESOLVED that local governments and their employees need additional choices and options from CalPERS. Basic pension reform to CalPERS must be a priority in 2010 in order to save jobs and preserve public services.

PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA on this 2nd day of March 2010 by the following roll call vote:

AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:

SIGNED:

________________________
SUE McCLOUD, MAYOR

ATTEST:

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Heidi Burch, City Clerk