custody or rehabilitation on the county's approach to

R1

The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages.

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.

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.

R2C

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.

R3

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.

R4A

The Cities should reqmre all employees to pay the max1mU!Il employee contribution rate of a given plan.

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. Countv Response: Agree as to Finding 4. However, the recommendation requires further analysis and discussion between County Administration and the Board of Supervisors as such a change would be subject to successful collective bargaining s with each of the County employee organization groups and would require that these groups all agree to such a change. It is uncertain though whether CalPERS would be able to readily calculate what portion oft he past service cost associated with the unfunded liability was derived from the benefit enhancements that were added over the past 1O + years. Furthermore, employees have been making additional employee contributions that were negotiated at the time of the enhancements to pay for these added benefits based on the earlier Ca/PERS actuarial estimates. As noted earlier, any additional employee contributions required must be considered together with other possible benefit changes and negotiable terms; therefore a full discussion of the various options and alternatives needs to occur before direction and priority for bargaining can be provided. It is expected that this discussion will occur within the next six months as negotiations with bargaining groups will begin shortly after the start oft he new calendar year.

R5

The Cities should immediately work toward implementing policy changes and adopting measures at making full OPEB ARC payments as soon as possible.

R6

The City of San Jose should eliminate the SRBR program or amend the SRBR program to prevent withdrawal of pension trnst money whenever the pension-funded ratio is less than I 00%.

R7

The Cities should transition from defined benefit plans to defined contribution plans as the tier plans are implemented.