Score: +5 (5/3/0)
Santa Clara County Grand Jury • 2011-2012 • Agency Response
Response to: City of Milpitas

City of Milpitas Office of Mayor Jose S. Esteves 455 East Calaveras Boulevard, Milpitas, California 95035-5479*

Published: September 06, 2012 3 pages
Ver PDF original

Note: Missing finding numbers detected: F4

Findings and Recommendations 6 findings

F1 Page 1
– Public Sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. <b>Recommendation 1</b> – The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. CITY RESPONSE: The City of Milpitas agrees with Finding 1.
Related Recommendations (1)
R1
Page 1
has been implemented. The City of Milpitas adopted two-tier pension plans for both • miscellaneous employees and public safety employees on October 9, 2011 and March 6, 2012, respectively. The new tier extends the retirement age and reduces the benefit level. All new hires will be brought in under second tier pension plan of either 3% at 55 for public safety employees or 2% at 60 for miscellaneous employees.
F2 Page 1
- Campbell, Gilroy, Los Altos Hills, Los Gatos, Milpitas and Palo Alto have adopted second tier plans that offer reduced Benefits, which help reduce future costs, but further changes are needed to address today's unfunded liability. Santa Clara County and the cities of Cupertino, Los Altos, Monte Sereno, Morgan Hill, Mountain View, San Jose, Santa Clara, Saratoga and Sunnyvale have not adopted second tier plans.
Related Recommendations (3)
R2A
Page 1
– 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.
R2B
Page 1
- 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.
R2C
Page 1
- All Cities' new tier of 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 plan caps that ensure pensions do not exceed salary at retirement. Judge Loftus September 6, 2012 <b>CITY RESPONSE:</b> The City of Milpitas agrees with Finding 2 that further changes are needed to address today's unfunded ٠ liability.
F3 Page 2
- Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them.
Related Recommendations (1)
R3
Page 2
- The Cities should adopt policies that do not permit Benefit enhancements unless sufficient monies are deposited, such as in an irrevocable trust, concurrent with enacting the enhancement, to prevent an increase in unfunded liability.
F5 Page 2
- The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. Judge Loftus September 6, 2012
Related Recommendations (1)
R5
Page 3
- The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
F6 Page 3
- The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that pension trust funds are underfunded.
Related Recommendations (1)
R6
Page 3
- The City of San Jose should eliminate the SRBR program or amend the SRBR program to prevent withdrawal of pension trust money whenever the pension-funded ratio is less than 100%.
F7 Page 3
- The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>Recommendation 7</b> – The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. CITY RESPONSE: The City of Milpitas agrees with Finding 7. The City of Milpitas will not implement Recommendation 7. The City needs further analysis with regards to employees' compensation package and the City's ability to attract quality employees for key positions. Should you have any questions or concerns regarding our response, please feel free to call Thomas C. Williams, Milpitas City Manager, at (408) 586-3050. Sincerely, William . Jose S. Esteves Mayor City of Milpitas City Council c: City Manager Thomas C. Williams
No recommendations for this finding

Agency Responses 1

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.