Civic Center Office of the Town Manager*

R1

The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. <b>2011-12 Town of Los Gatos response</b>: Los Gatos has implemented for miscellaneous (non-sworn) employees and intends to engage in negotiations for sworn when the current union agreement expires. 2016-17 Town of Los Gatos additional response: The California Public Employees' Pension Reform Act of 2013 (PEPRA), which was enacted after the Civil Grand Jury

R2A

Santa Clara County and the cities of Cupertino, Los Altos, Monte Sereno, Morgan Hill, Mountain View, San Jose, Santa Clara, Saratoga and Sunnyvale should work to implement second tier plans <b>2011-12 Town of Los Gatos response</b>: This recommendation is not applicable to the Town of Los Gatos. 2011-12 Civil Grand Jury

R2B

For Gilroy, Los Gatos, Milpitas and Palo Alto, which have not implemented second tier plans for MISC and Public Safety second tier plans should be implemented for both plans. RESPONSE TO THE SANTA CLARA CIVIL GRAND JURY'S REQUEST DATED DECEMBER 21, 2016 FOR ADDITIONAL INFORMATION REGARDING THE TOWN'S ACTIONS RELATIVE THE GRAND JURY'S 2011-12 PENSION AND OTHER POST-EMPLOYMENT BENEFITS (OPEB) REPORTS JANUARY 10, 2017 2011-12 Town of Los Gatos response: Los Gatos has implemented for miscellaneous (non-sworn) employees and intends to engage in negotiations for sworn when the current union agreement expires. 2016-17 Town of Los Gatos additional response: With the PEPRA effective January 1, 2013, a third tier formula was implemented for miscellaneous employees and a second tier formula for safety employees hired after January 1, 2013. 2011-12 Civil Grand Jury

R2C

All Cities' new tier plans should close the unfunded liability burden they have pushed to future generations. The new tier should include raising the retirement age, increasing employee contributions, and adopting pension plans caps that ensure pensions do not exceed salary at retirement. 2011-12 Town of Los Gatos response: Regarding retirement age, see the response to

R3

The cities should adopt policies that do not permit Benefit enhancements unless sufficient monies are deposited, such as an irrevocable trust, concurrent with enacting then enhancement, to prevent an increase in unfunded liability. <b>2011-12 Town of Los Gatos response:</b> Los Gatos has not implemented this recommendation yet but staff will make this recommendation for Council adoption prior to the end of FY 2012/13. 2016-17 Town of Los Gatos additional response: While the Town has not adopted a specific policy, the Town has implemented this Recommendation by not offering any benefit enhancements since the 2011-12 response. 2011-12 CIVIL GRAND JURY

R4A

The Cities should require all employees to pay the maximum employee contribution rate of a given plan. 2011-12 Town of Los Gatos response: Los Gatos implemented this recommendation. RESPONSE TO THE SANTA CLARA CIVIL GRAND JURY'S REQUEST DATED DECEMBER 21, 2016 FOR ADDITIONAL INFORMATION REGARDING THE TOWN'S ACTIONS RELATIVE THE GRAND JURY'S 2011-12 PENSION AND OTHER POST-EMPLOYMENT BENEFITS (OPEB) REPORTS JANUARY 10, 2017 2016-17 Town of Los Gatos additional response: CalPERS sets the required employee contribution cap according the employee retirement tier. The Town of Los Gatos requires all the employees to pay the entire required contribution for CalPERS. 2011-12 Civil Grand Jury

R4B

The Cities should require employees to pay some portion of the Past Service Cost associated with the unfunded liability, in proportion to the Benefits being offered. <b>2011-12 Town of Los Gatos response:</b> Further analysis is required to understand the impacts. The analysis will be conducted prior to the end of FY 2012/13. 2016-17 Town of Los Gatos additional response: The California Public Employees' Pension Reform Act of 2013 allows for employers like the Town of Los Gatos to negotiate employee contributions during the bargaining process for past service cost associated with the unfunded actuarial accrued liability (UAAL). This is available to the Town as part of its ongoing labor negotiations with all collective bargaining units. Any modified contribution could only be implemented with current, active employees. Employees who have retired from Los Gatos or separated from Los Gatos with eligible service credit would not be subject to any new negotiated contribution rate. This not included in current employee contracts and it may be negotiated in future labor agreements. 2011-12 CIVIL GRAND JURY

R5

The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. <b>2011-12 Town of Los Gatos response:</b> Los Gatos has implemented this recommendation and currently has a long-term plan in place. 2016-17 Town of Los Gatos additional response: The Town's current retiree healthcare unfunded obligation has decreased from $14.5 million (June 30, 2013) to $12.7 million (June 30, 2015). In FY 15/16, the Town payments to its retirees and the pre-funding of the Other Post Employment Benefit (OPEB) trust exceeded the actuarially required contribution levels updated by the Town actuaries in RESPONSE TO THE SANTA CLARA CIVIL GRAND JURY'S REQUEST DATED DECEMBER 21, 2016 FOR ADDITIONAL INFORMATION REGARDING THE TOWN'S ACTIONS RELATIVE THE GRAND JURY'S 2011-12 PENSION AND OTHER POST-EMPLOYMENT BENEFITS (OPEB) REPORTS JANUARY 10, 2017 August 2016. To help reduce costs related to OPEB benefits, the Town successfully negotiated an agreement that employees retiring after February 1, 2016 are reimbursed to a maximum amount of benefit matching "Kaiser North" Employee or Employee plus One, once Medicare eligible age is reached. It is estimated that this cap on reimbursement will achieve approximately $200,000 in savings per year in actuarially required contribution to the OPEB trust account. Assuming current funding levels and similar returns on investment, the Town's OPEB obligation is expected to continue to decrease in future years. 2011-12 CIVIL GRAND JURY

R6

The City of San Jose should eliminate the SRBR program to prevent withdrawal of pension trust money whenever the pension-funded ratio is less than 100%. <b>2011-12 Town of Los Gatos response:</b> This recommendation is not applicable to the Town of Los Gatos. 2011-12 CIVIL GRAND JURY

R7

The Cities should transition from defined benefit (DB) plans to defined contribution (DC) plans as the new tier plans are implemented. <b>2011-12 Town of Los Gatos response:</b> Los Gatos does not have authority to change the CalPERS DB plan to a DC plan. However, should CalPERS implement this recommendation; Los Gatos will conduct further analysis. 2016-17 Town of Los Gatos additional response: The Town of Los Gatos does not have authority to change the CalPERS defined benefit plan to defined contribution plan within the existing contract with CalPERS. To implement this recommendation would require the Town to terminate its existing contract with RESPONSE TO THE SANTA CLARA CIVIL GRAND JURY'S REQUEST DATED DECEMBER 21, 2016 FOR ADDITIONAL INFORMATION REGARDING THE TOWN'S ACTIONS RELATIVE THE GRAND JURY'S 2011-12 PENSION AND OTHER POST-EMPLOYMENT BENEFITS (OPEB) REPORTS JANUARY 10, 2017