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Ken Dyda ITEM #6 PENSION REFORM Sept.20,2011 <br />1 I compliment the sub committe for bringing the pension proposal to the council.Based <br />on the data the subcommittee had,the conclusions and recommendations are well <br />founded.However,they did not have the benefit of other inputs from the public. <br />2 Before I get into specifics about the pension plans,I want to disabuse the notion that <br />because we have a $9M general Fund Reserve and a $6M elP reserve that the city is in <br />great shape and should use those funds to create an entitlement for increased wages and <br />benefits.We need to look at preserving the reserves for some emerging liabilities such <br />as: <br />a.$6M is on standby should San Ramon need urgent stop gap measures before federal <br />monies are available which mayor may not come.If the monies come there will be a <br />matching fund requirement of 10 to 20 %.There goes another $2M to $4M dollars. <br />That:s a total of$8m to $lOMgone.ifthe monies don't come in time.If the monies do <br />not materialize at all,there's $19M in addition to the stop gap money that may have <br />been spent. <br />b.This begs the issue of the storm drain fee sunsetting in the near future and the real <br />possibility for major renovation/repair of the sewer system which is reaching the end of <br />its projected life.The T<?T may cover these expenses. <br />c.Let's not forget Port.Bend moving 6 to 9 feet a year.Sooner or later the stop gap <br />band aid approach will end and more cost will be involved.Do we continue to ignore <br />this problem until it becomes a crisis? <br />3 I have talked to a number of retired middle and upper management retirees from the <br />private sector.Their pension runs between 28%and 34%.ofthe final base salary.The <br />qualifying service is 35 yrs even if their service goes beyond that time.The city is <br />showing two programs.One is a 2%and the other is 2.5%.At 2%after 35 years the <br />pension is 70%of the base salary and at 2.5%it grows to 87.5%.That's if spiking is <br />not an added factor or longer service credit is included. <br />4 The plan before you is for the city to continue paying the employer portion and to move <br />the city's 6.5%,which is 81 %of the employees share,back to the employee with a 5%..--:'''':'':'I'''"~_''' <br />raise.This is to soften the impact.This is in addition to the approved 3.5%cola and a <br />merit pool of 5%.That's 13.5%to offset the 6.5%.The other facet is that the 5%raise <br />will create a new baseline for future raises which will compound the effect.We all <br />know how compounding steepens with time.Mayor Pro tem Misetich's proposal is a <br />more sensible approach to soften the impact by reducing the city's payment of the <br />employees share over a period of time.It avoids the compounding of the 5%raise. <br />The employees share being paid by the city should not be looked at as an entitlement <br />but rather a generous tax free benefit while it was in place. <br />5 Lastly the second tier still needs further study.I'm sure with the talent we have,a <br />minor realignment of employee responsibilities can be made to temporarily fill the <br />vacant positions until such time as a more meaningful tier two can be developed for <br />new employees.