Score: +44
(53/23/9)
Santa Clara County Grand Jury
• 2011-2012
Pension and Opeb
Published: March 16, 2012
35 pages
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 18 findings
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
Related Recommendations (1)
R1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages.
F2
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 (4)
R2
Does CalPERS administer your pension fund? If not, please identify and describe the manner in which the pension plan is being administered.
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. 26
F3
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
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.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits.
Related Recommendations (3)
R4
For each identified plan, what percent of an employee’s income is earned toward retirement each year of employment? • For each identified plan, is there an identified maximum salary percent cap that can be earned in retirement?
R4A
The Cities should require all employees to pay the maximum 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.
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios.
Related Recommendations (1)
R5
The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. 27
Related Recommendations (1)
R6
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
The Cities’ defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities.
Related Recommendations (1)
R7
The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented.
F8
How much pension money was paid out in each of the last two fiscal years to retirees? • How many retired employees are currently collecting benefits? • How many active employees are there currently? • How many employees are within five years of being eligible for retirement?
Related Recommendations (1)
R8
How much pension money was paid out in each of the last two fiscal years to retirees? • How many retired employees are currently collecting benefits? • How many active employees are there currently? • How many employees are within five years of being eligible for retirement?
F9
For each plan, please identify and quantify all significant actuarial assumptions used in evaluation of ARC to include: a) Amortization period b) Investment rate of return c) Projected salary increases d) Overall payroll growth e) Inflation factor f) Smoothing duration g) Other, if applicable
Related Recommendations (1)
R9
For each plan, please identify and quantify all significant actuarial assumptions used in evaluation of ARC to include: a) Amortization period b) Investment rate of return c) Projected salary increases d) Overall payroll growth e) Inflation factor f) Smoothing duration g) Other, if applicable
F10
What is the unfunded liability of each identified plan for the fiscal years 2010 and 2011?
Related Recommendations (1)
R10
What is the unfunded liability of each identified plan for the fiscal years 2010 and 2011?
F11
Please indicate the major reasons for the unfunded liability. For each reason provided, indicate the approximate percentage of contribution to total unfunded liability.
Related Recommendations (1)
R11
Please indicate the major reasons for the unfunded liability. For each reason provided, indicate the approximate percentage of contribution to total unfunded liability.
F12
What is the funded ratio of each identified plan for the fiscal years 2010 and 2011?
Related Recommendations (1)
R12
What is the funded ratio of each identified plan for the fiscal years 2010 and 2011?
F13
When was the last time the funds have been funded at the level of 100% or higher?
Related Recommendations (1)
R13
When was the last time the funds have been funded at the level of 100% or higher?
F14
Have pension contributions ever been reduced from calculated ARC payments? • What year was the last time this happened?
Related Recommendations (1)
R14
Have pension contributions ever been reduced from calculated ARC payments? • What year was the last time this happened?
F15
Please summarize any significant changes to pension benefits over the last ten years for each plan. • For each, indicate if this was a pension benefit enhancement or reduction.
Related Recommendations (1)
R15
Please summarize any significant changes to pension benefits over the last ten years for each plan. • For each, indicate if this was a pension benefit enhancement or reduction.
F16
Please provide any evidence that indicates how projected pension costs are expected to change in the next 5 to 10 years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) 30 Appendix B: Grand Jury Survey - continued
Related Recommendations (1)
R16
Please provide any evidence that indicates how projected pension costs are expected to change in the next 5 to 10 years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) 30
F17
Please provide any evidence of the strategies that are in work to reduce the rate of pension escalation. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.)
Related Recommendations (1)
R17
Please provide any evidence of the strategies that are in work to reduce the rate of pension escalation. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.)
F18
For each plan, please provide evidence as to how pension fund past performance is doing relative to assumed performance for the last ten years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) Section 2: OTHER POST EMPLOYMENT BENEFITS
Related Recommendations (1)
R18
For each plan, please provide evidence as to how pension fund past performance is doing relative to assumed performance for the last ten years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) Section 2: OTHER POST EMPLOYMENT BENEFITS
Conclusions 25
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CL1 Page 26Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
-
CL2 Page 26Campbell, 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.
-
CL3 Page 27Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them.
-
CL4 Page 27The Cities are making an overly generous contribution toward the cost of providing Benefits.
-
CL5 Page 27The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios.
-
CL6 Page 28The Cities’ defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities.
-
CL7 Page 27The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. 27
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CL8 Page 30How many defined pension plans do you have? Please identify them by name and answer all subsequent questions for each identified plan name.
-
CL9 Page 30Does CalPERS administer your pension fund? If not, please identify and describe the manner in which the pension plan is being administered.
-
CL10 Page 30Please provide a description of each defined pension plan that you provide to your employees. • At what age is an employee eligible for a pension? • How many years must an employee work to be vested for a pension? • Are employees required to make contributions to their own accounts? If so, what percent of their salary is paid toward their pension? Is there any annual or lifetime employee contribution cap? • Does the plan include cost-of-living allowance increases post retirement?
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CL11 Page 30For each identified plan, what percent of an employee’s income is earned toward retirement each year of employment? • For each identified plan, is there an identified maximum salary percent cap that can be earned in retirement?
-
CL12 Page 30Do plan participants contribute to Social Security?
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CL13 Page 30For each identified plan, describe the formula for determining final compensation used in factoring a retiree’s pension. Include number of months that income is averaged, whether or not overtime is included or excluded from this calculation, and whether or not any other form of employee payments other than base salary are included in the formula (awards, bonuses, travel compensation, etc.).
-
CL14 Page 30How much money was contributed in each of the last two fiscal years toward pensions (not including employee contributions)? • What percent was this of total payroll?
-
CL15 Page 30How much pension money was paid out in each of the last two fiscal years to retirees? • How many retired employees are currently collecting benefits? • How many active employees are there currently? • How many employees are within five years of being eligible for retirement?
-
CL16 Page 30For each plan, please identify and quantify all significant actuarial assumptions used in evaluation of ARC to include: a) Amortization period b) Investment rate of return c) Projected salary increases d) Overall payroll growth e) Inflation factor f) Smoothing duration g) Other, if applicable
-
CL17 Page 30What is the unfunded liability of each identified plan for the fiscal years 2010 and 2011?
-
CL18 Page 30Please indicate the major reasons for the unfunded liability. For each reason provided, indicate the approximate percentage of contribution to total unfunded liability.
-
CL19 Page 30What is the funded ratio of each identified plan for the fiscal years 2010 and 2011?
-
CL20 Page 30When was the last time the funds have been funded at the level of 100% or higher?
-
CL21 Page 30Have pension contributions ever been reduced from calculated ARC payments? • What year was the last time this happened?
-
CL22 Page 30Please summarize any significant changes to pension benefits over the last ten years for each plan. • For each, indicate if this was a pension benefit enhancement or reduction.
-
CL23 Page 30Please provide any evidence that indicates how projected pension costs are expected to change in the next 5 to 10 years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) 30 Appendix B: Grand Jury Survey - continued
-
CL24 Page 31Please provide any evidence of the strategies that are in work to reduce the rate of pension escalation. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.)
-
CL25 Page 31For each plan, please provide evidence as to how pension fund past performance is doing relative to assumed performance for the last ten years. (Page referencing within an included URL or separate attachment with appropriate material is an acceptable response.) Section 2: OTHER POST EMPLOYMENT BENEFITS
Agency Responses 18
Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.
▶
City of 2017 Update from the City of Los Altos
March 03, 2017
•
5 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
▶
City of 2017 Update from the City of Palo Alto
January 30, 2017
•
3 pages
• 1 response
•
Score: 0
(+0, 1, 0)
View Details ▾
1 response to findings and recommendations
R7
in principle. The recommendations align with the City's plan for addressing pension obligation impacts. Attachment A is an update to four of the recommendations and it displays the additional steps the City has taken to address the significant unfunded pension liability it faces. 2) "Whether the recommendations were accepted?" As stated above, the City agrees with the recommendations. To further clarify the City's response to Recommendation 7, we agree in principle. As administrator of the Pensi...
Response: Implemented
Scheduled: FY 2017
Score: 0
, we agree in principle. As administrator of the Pension Trust, CalPERS has specific and challenging provisions for exiting their plan. Exit criteria include a rate of return assumption weighted according to the average of the 10-year and 30-year U.S. Treasury yields. As of the June 30, 2015 actuary report (the City's latest), CalPERS used a 3.25% hypothetical rate, which would translate into the City having to immediately deposit $667 million for miscellaneous employees and $388 million for safety employees, a total over $1 billion to exit the plan. In addition, the City would have to then es...
▶
City of 2017 Update from the County of Santa Clara
August 21, 2012
• 15 responses
•
Score: +4
(+4, 2, 0)
View Details ▾
15 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. The respondent agrees with the finding (understanding that the finding is a general statement about the timing of eligibility for retirement or retirement benefits).
Response: Agree
Score: +1
Agree as to Finding 1.
R1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementation. The State of California and CalPERS control the pension plans available from CalPERS for City employees. As such, the City does not control and is not presently able to offer a pension plan with a retirement age eligibility requirement different than what is offered. Th...
Response: Unknown
Score: 0
Agree as to
F2
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. Agree with finding
Response: Agree
Score: +1
Agree as to Finding 2.
R2B
is not applicable to the City of Santa Clara. N/A
Response: Unknown
Score: 0
Not applicable
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. The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementation. The State of California and CalPERS control the pension plans available from CalPE...
Response: Unknown
Score: 0
Agree as to
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them The City agrees with the finding, although the overly optimistic ROI and actuarial assumptions generally were not determined or decided by "the Cities;" rather, they were decided by the pension systems and their related actuarials. <b>Recommendation 3:</b> The Cities should adopt policies that do not permit Benefit enhancements unless suf...
Response: Disagree Partially
Score: 0
Disagree partially with Finding 3.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. The City agrees with the finding as it applies to "the Cities" generally, but disagrees in part as applies to the City of Santa Clara. While many cities pay both the employer share and either the entire employee share or a portion of the employee share of pension, City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions.
Response: Agree
Score: +1
Agree as to Finding 4.
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. The recommendation has been implemented. City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions. (1) How the town [sic] views the various recommendations Answer: Agree with the recommendation "The Cities should require all employees to pay the maximum employee contribution rate of a given plan." All City of Santa Clara employees pay t...
Response: Unknown
Score: 0
Agree as to
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. The recommendation has not yet been implemented as employees already pay the employee share or contribution of their CalPERS pension, and the City is discussing and negotiating a second tier pension for future hires, and is analyzing all options for addressing the costs of pension benefits and making sure they are fiscally sustainab...
Response: Unknown
Score: 0
Agree as to
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. The City agrees with the finding as it applies to "the Cities" generally. (See below as it applies to the City of Santa Clara.)
Response: Disagree Partially
Score: 0
Partially agree as to Finding 5.
R5
The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. The recommendation has been implemented. The City of Santa Clara implemented Governmental Accounting Standards Board (GASB) Statement No. 45 dealing with Other Post-Employment Benefits or OPEB in a timely manner. Since implementation, the City has made the full Annual Required Contribution (ARC) each year and has budgeted sufficient funds in its...
Response: Unknown
Score: 0
Partially agree as to
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded.
Response: Unknown
Score: 0
Not Applicable
R6
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 ratios is less than 100%.
Response: Unknown
Score: 0
Not Applicable
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. The City agrees with the finding that defined contribution plans are less volatile and easier to manage than defined benefit pension plans.
Response: Agree
Score: +1
Agree as to Finding 7.
R7
The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. The City does not currently intend to implement this recommendation because, as a CalPERS member, the City does not control the plans that are offered and/or what changes may be made to pension benefit plans. Currently, CalPERS does not offer a defined contribution plan for new tiers. (1) How the town [sic] views the various recommendations Answer: The City agrees that def...
Response: Unknown
Score: 0
Agree as to
▶
City of 2017 Update from the County of Santa Clara
August 21, 2012
• 2 responses
View Details ▾
2 responses to findings and recommendations
R6
The Los Altos Police Department should remove reference to the unconstitutional California Penal Code Section 148.6 criminal advisory from their complaint form.
Response: Unknown
Score: 0
Not Applicable
R7
The Los Gatos/Monte Sereno Police Department should make their complaint materials available on-line and also freely available in hard copy form in their lobby.
Response: Unknown
Score: 0
Agree as to
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City of Campbell
September 06, 2012
•
4 pages
• 8 responses
•
Score: 0
(+2, 1, -2)
View Details ▾
8 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. Response: The City of Campbell agrees with the finding. <b>Recommendation 1:</b> The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. Response: The City has implemented this recommendation for its Miscellaneous Plan by creating a 2<sup>nd</sup> tier pension plan that encourages working to a later age and reduces the incentiv...
Response: Agree
Score: +1
The City of Campbell agrees with the finding. <b>
F2
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. <b>Response</b>: The City of Campbell agrees with the finding. <b>Recommendation 2C:</...
Response: Agree
Score: +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. <b>Response</b>: The City of Campbell agrees with the finding. <b>Recommendation 2C:</b> All cities' new tier of plans should close the unfunded liability burden they have pushed to futu...
F3
Retroactive benefit enhancements were enacted by cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. Response: The City cannot speak to the basis for determination that other cities may have used in implementing benefit enhancements as each city's fiscal situation is FY 2012 Grand Jury Responses different. The City of Campbell disagrees with the finding as it relates to this City's situation. The determination to enact benefit enhanceme...
Response: Disagree
Score: -1
The City cannot speak to the basis for determination that other cities may have used in implementing benefit enhancements as each city's fiscal situation is
Page 2 different. The City of Campbell disagrees with the finding as it relates to this City's situation. The determination to enact benefit enhancements was based on the best information available at the time the decision was made which included analyses of professional actuaries as well as the most current economic and investment data. This data indicated that the City was super-funded (a term that means actuarial assets far exceeded pr...
F4
The cities are making an overly generous contribution toward the cost of providing benefits. Response: The City disagrees with this finding. The finding is a generalization which fails to distinguish one city from the other. Additionally, there is no standard for what constitutes a meager contribution from a generous one or even an overly generous one. It also does not take into consideration each City's ability to fund those contributions. For example, some cities pay a portion of the employee'...
Response: Disagree
Score: -1
The City disagrees with this finding. The finding is a generalization which fails to distinguish one city from the other. Additionally, there is no standard for what constitutes a meager contribution from a generous one or even an overly generous one. It also does not take into consideration each City's ability to fund those contributions. For example, some cities pay a portion of the employee's contribution whereas in other cities, such as Campbell, employees pay their full share.
R4A
The cities should require all employees to pay the maximum employee contribution rate of a given plan. Response: The City already requires all employees to pay the maximum employee contribution rate.
Response: Unknown
Score: 0
The City already requires all employees to pay the maximum employee contribution rate.
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. Response: The recommendation requires further analysis as to whether this is the best way to proceed. There are other ways to have employees pick up a greater share of the FY 2012 Grand Jury Responses cost of their retirement benefit, such as negotiated cost sharing of the City's portion of cost. It is best determined through the me...
Response: Requires Analysis
Score: 0
The recommendation requires further analysis as to whether this is the best way to proceed. There are other ways to have employees pick up a greater share of the
Page 3 cost of their retirement benefit, such as negotiated cost sharing of the City's portion of cost. It is best determined through the meet-and-confer process which way will work best for both employees and the City. The City will consider implementing additional employee pickup of cost when bargaining group contracts are up for renewal.
F5
The cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>Response</b>: The City agrees with the finding. <b>Recommendation 5:</b> The cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payment as soon as possible. Response: The City has implemented this recommendation 3 years ago. The City has chosen to implement a 10-year phase in of the ARC that would increase its con...
Response: Unknown
Score: 0
The City has implemented this
F7
The cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the cities. <b>Response</b>: The City agrees with the finding. <b>Recommendation 7:</b> The cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. Response: The recommendation will not be implemented because the City has already implemented 2<sup>nd</sup> tier plans for both its employee gro...
Response: Unknown
Score: 0
The recommendation will not be implemented because the City has already implemented 2<sup>nd</sup> tier plans for both its employee groups. It should be noted that both 2<sup>nd</sup> tier plans represent significant reductions in retirement benefit levels from the tier 1 plans which, over time, will bring down considerably the City's pension costs.
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City of Cupertino
September 04, 2012
•
4 pages
• 3 responses
•
Score: +3
(+3, 0, 0)
View Details ▾
3 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
Response: Agree
Score: +1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
Recommendation 1:
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. City Response 1: The City concurs with this recommendation and is currently in negotiations to provide a 2% at 60 plan for all new employees with an effective date of January 1, 2013.
F2
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.
Response: Agree
Score: +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.
Recommendation 2A
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 impl...
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits.
Response: Agree
Score: +1
The Cities are making an overly generous contribution toward the cost of providing Benefits.
Recommendation 4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. City Response 4A The City concurs with this recommendation and will consider including this in future negotiations.
Recommendation 4B
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. City Response 4B: The City concurs with this recommendation and will consider incl...
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City of Gilroy
August 07, 2012
•
4 pages
View Details ▾
No structured response data extracted yet.
View the PDF for full details.
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City of Milpitas
September 06, 2012
•
3 pages
• 12 responses
•
Score: +5
(+5, 3, 0)
View Details ▾
12 responses to findings and recommendations
F1
– 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.
Response: Agree
Score: +1
The City of Milpitas agrees with Finding 1.
R1
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.
Response: Implemented
Score: 0
Recommendation 1 has been implemented.
F2
- 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.
Response: Agree
Score: +1
The City of Milpitas agrees with Finding 2 that further changes are needed to address today's unfunded ٠ liability.
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: Implemented
Score: 0
Recommendation 2B has been implemented.
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. 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.
Response: Unknown
Score: 0
Recommendation 2C has been partially implemented.
F3
- Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them.
Response: Agree
Score: +1
The City of Milpitas agrees with Finding 3, especially with regards to retroactive benefit enhancements • made in early 2000s.
R4A
- The Cities should require all employees to pay the maximum employee contribution rate of a given plan.
Response: Implemented
Score: 0
Recommendation 4A has been implemented.
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.
Response: Unknown
Score: 0
The City of Milpitas agrees with
F5
- The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. Judge Loftus September 6, 2012
Response: Agree
Score: +1
The City of Milpitas agrees with Finding 5.
R5
- The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
Response: Unknown
Score: 0
The City of Milpitas agrees with
F6
- 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.
Response: Unknown
Score: 0
F7
- 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 pack...
Response: Agree
Score: +1
The City of Milpitas agrees with Finding 7.
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City of Monte Sereno
September 05, 2012
•
5 pages
• 7 responses
•
Score: +3
(+4, 2, -1)
View Details ▾
7 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. City Response The City partially disagrees with the finding. There are positions in the public sector that do not have comparable private sector counterparts. Therefore, making a broad comparison is not accurate.
Response: Disagree Partially
Score: 0
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. City Response The City partially disagrees with the finding. There are positions in the public sector that do not have comparable private sector counterparts. Therefore, making a broad comparison is not accurate.
F2
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. <b>City Response</b> The City agrees with the finding.
Response: Agree
Score: +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. <b>City Response</b> The City agrees with the finding.
Recommendation 2A
Santa Clara County and the cities of Cupertino, Los Altos, Monte Sereno, Morgan Hill, Mountain View, San Jose, ...
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response The City partially disagrees with the finding. Although many cities may have enacted pension benefit enhancements over the last several years, the City of Monte Sereno has not enacted any pension enhancements for the past 13 years.
Response: Disagree Partially
Score: 0
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response The City partially disagrees with the finding. Although many cities may have enacted pension benefit enhancements over the last several years, the City of Monte Sereno has not enacted any pension enhancements for the past 13 years.
F4
The Cities are making overly generous contributions toward the cost of providing Benefits. <b>City Response</b> The City agrees with this finding.
Response: Agree
Score: +1
The Cities are making overly generous contributions toward the cost of providing Benefits. <b>City Response</b> The City agrees with this finding.
Recommendation 4A
The Cities should require employees to pay the maximum employee contribution rate of a given plan. City Response The recommendation has not yet been implemented. The City will consider adopting a two tier pension plan within 12 months.
<b>Recommendation 4B</b> 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>Ci...
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>City Response</b> The City agrees with this finding.
Response: Agree
Score: +1
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>City Response</b> The City agrees with this finding.
R5
The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
Response: Will Not Implement
Score: -1
The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. City Response This recommendation will not be implemented because it is not warranted. The City of Monte Sereno has a very small unfunded liability associated with OPEB. For Monte Sereno the annual OPEB ARC payment is only $58,900. This amount is sustainable for the City to continue with the pay as you go option.
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by Cities. <b>City Response</b> The City agrees with this finding. City of Monte Sereno Responses to Civil Grand Jury Report Dated June 13, 2012 <b>Recommendation</b> 7 The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. City Response The recommendation has not yet been implemented. The ...
Response: Agree
Score: +1
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by Cities. <b>City Response</b> The City agrees with this finding.
<b>Recommendation</b> 7 The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. City Response The recommendation has not yet been implemented. The City will consider limiting the City's contribution toward pension when adopting a two tier pension plan within 12 months. The City contracts with CalPERS to administer the pens...
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City of Mountain View
September 13, 2012
•
5 pages
• 15 responses
•
Score: +7
(+8, 2, -1)
View Details ▾
15 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. City Response: The City of Mountain View agrees with this finding. For many nonpublic safety job classifications, employees may retire at an earlier age than their private-sector counterparts. However, in the case of public safety positions such as Police and Fire, there are no comparable positions in the private sector. Additionally, it is worth noting that retirement benef...
Response: Agree
Score: +1
The City of Mountain View agrees with this finding. For many nonpublic safety job classifications, employees may retire at an earlier age than their private sector counterparts. However, in the case of public safety positions such as - Police and Fire, there are no comparable positions in the private sector. Additionally, it is worth noting that retirement benefits are only one part of employee compensation.
R1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages.
Response: Will Implement
Score: +1
This recommendation will be implemented effective January 1, 2013. Recently approved State pension legislation has established pension formulas for new employees which will extend retirement ages. The City of Mountain View has focused on increased employee pension contributions rather than adopting a second tier of benefits which could include higher retirement ages.
F2
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. City Response: The City of Mountain View agrees with this finding; however, while it i...
Response: Agree
Score: +1
The City of Mountain View agrees with this finding; however, while it is true that the City of Mountain View has not adopted second-tier pension plan, this is not the only mechanism for addressing pension liabilities.
As noted in the Grand Jury report, "Comparing the Sunnyvale pension costs expressed in percent of payroll to Mountain View (same plans) demonstrates that employee contributions toward the cost of pensions is just as effective at keeping the cost under control as curtailing the level of pension benefits being offered. Mountain View actually compares favorably to other cities offe...
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.
Response: Will Implement
Score: +1
, the City of Mountain View has negotiated significantly greater-than-normal employee pension contributions in order to address pension liabilities.
Finding 3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response: The City partially agrees with this finding as ROI and actuarial assumptions have not been realized in recent years. However, the City of Mountain View did work to ensure adequate funding existed for benefit enhancements, negotiating with Mountain View employees ...
R2B
— Does not apply to the City of Mountain View.
Response: Will Implement
Score: +1
This recommendation will be implemented effective January 1, 2013. As noted in the response to
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.
Response: Will Implement
Score: +1
This recommendation will be implemented effective January 1, 2013. As noted in the response to
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response: The City partially agrees with this finding as ROI and actuarial assumptions have not been realized in recent years. However, the City of Mountain View did work to ensure adequate funding existed for benefit enhancements, negotiating with Mountain View employees to contribute toward the cost of enhanced retirement benefits...
Response: Disagree Partially
Score: 0
The City partially agrees with this finding as ROI and actuarial assumptions have not been realized in recent years. However, the City of Mountain View did work to ensure adequate funding existed for benefit enhancements, negotiating with Mountain View employees to contribute toward the cost of enhanced retirement benefits. These additional employee contributions have helped moderate cost increases associated with lower-than-projected investment returns and longer-thanprojected retiree life spans. -2-
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. The City does not anticipate any Benefit enhancements for the
Response: Will Implement
Score: +1
The City does not anticipate any Benefit enhancements for the foreseeable future. If this changes, the City will implement this recommendation.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. The City of Mountain View disagrees with this finding as City City Response: employees pay between 9.5 percent and 15.4 percent of their salary toward pension benefits, a notably higher rate than most other public agencies.
Response: Disagree
Score: -1
The City of Mountain View disagrees with this finding as City employees pay between 9.5 percent and 15.4 percent of their salary toward pension benefits, a notably higher rate than most other public agencies.
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan.
Response: Unknown
Score: 0
The City of Mountain View has implemented this recommendation. City employees pay both the maximum employee contribution rate as well as a portion of the employer contribution rate for pension benefits.
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.
Response: Unknown
Score: 0
The City of Mountain View has implemented this recommendation. As noted previously, the City of Mountain View has adopted a different strategy for addressing costs associated with pension benefits with employees paying part of the employer contribution for pension benefits. The employer contribution is based on both the normal cost of benefits and the Past Service Cost.
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. City Response: The City of Mountain View partially agrees with this finding as the OPEB funded ratio is indeed low for many agencies. However, the City of Mountain View has the highest funded ratio of all agencies in the County; significantly more than the rate of the next highest city as noted on Table 6. Additionally, the City has negotiated with bargaining groups to reduce the co...
Response: Disagree Partially
Score: 0
The City of Mountain View partially agrees with this finding as the OPEB funded ratio is indeed low for many agencies. However, the City of Mountain View has the highest funded ratio of all agencies in the County; significantly more than the rate of the next highest city as noted on Table 6. Additionally, the City has negotiated with bargaining groups to reduce the costs associated with retirees' health benefits by offering an optional defined contribution plan for miscellaneous employees, and by negotiating employee contributions to the City's retirees' health trust. As a result, this funded ...
R5
The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
Response: Unknown
Score: 0
The City of Mountain View has implemented this recommendation and already contributes full ARC payments.
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. The City agrees that defined contribution plan costs are more City Response: predictable.
Response: Agree
Score: +1
The City agrees that defined contribution plan costs are more predictable.
R7
The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented.
Response: Unknown
Score: 0
The City of Mountain View has implemented this recommendation for OPEB, instituting a defined contribution plan option for retirees' health benefits for nonsafety employees. As noted above, the City of Mountain View has focused on working with bargaining groups to increase employee contributions toward pension benefits in order to manage the City's costs associated with these benefits. Additionally, the City of Mountain View, as a member of the. California Public Employees Retirement System (Ca1PERS), can only offer benefits as allowed under Ca1PERS law. Currently, no defined contribution plan...
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City of Palo Alto
September 10, 2012
•
41 pages
• 10 responses
•
Score: +1
(+1, 1, 0)
View Details ▾
10 responses to findings and recommendations
R1
Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. Response: Agree. Palo Alto has already created a second tier for Miscellaneous (non-public safety) employees extending the retirement age for new hires from 55 to 60. In the past year it has also extended the retirement age for new safety employees from 50 to 55. Because the City participates in the CalPERS retirement system, it is limited to the retirement formulas offered by CalPERS. Retirement ...
Response: Will Implement
Scheduled: FY 2010
Score: +1
, the City has already raised the retirement age for new employees in the Miscellaneous and Safety groups. In addition, as discussed in Recommendation 4, nearly all employee groups are now paying (or will be paying in the near future) the full amount of the PERS employee share. For current employees, CalPERS does not offer the option of adopting pension caps within its current formulas. The City has taken steps to minimize increases to final compensation. State law establishes several "optional benefits" that CalPERS offers to employers that may result in increasing an employee's final compens...
R2A
Some cities, including Palo Alto, have adopted second tier plans, but further changes are needed. Second tier plans should be implemented for both Miscellaneous and Public Safety. Response: Agree. Since the Grand Jury questionnaire was submitted, Palo Alto has now adopted second tier plans for safety employees as well as miscellaneous.
Response: Unknown
Score: 0
Agree. Since the Grand Jury questionnaire was submitted, Palo Alto has now adopted second tier plans for safety employees as well as miscellaneous.
R2B
Cities which have not already done so should implement second tier plans for Miscellaneous and public safety employees. Response: Agree. As discussed above, Palo Alto has already implemented this recommendation.
Response: Implemented
Score: 0
Agree. As discussed above, Palo Alto has already implemented this recommendation.
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. Response: Agree. However, as discussed above, the City's options are currently limited to the pre-determined formulas and other optional benefits established by CalPERS. The City has taken steps to address is...
Response: Unknown
Score: 0
Agree. However, as discussed above, the City's options are currently limited to the pre-determined formulas and other optional benefits established by CalPERS. The City has taken steps to address issues associated with some of its optional benefits, but also would like
to see CalPERS offer more options for additional cost containment. As discussed in the Response to
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. Response: Agree. This recommendation is addressed by the Labor Guiding Principles adopted by City Council on April 9, 2012 (Exhibit 1). The Principles include #2, which provides that "The City should be able to meet the cost of any compensation commitment from curre...
Response: Unknown
Score: 0
Agree. This recommendation is addressed by the Labor Guiding Principles adopted by City Council on April 9, 2012 (Exhibit 1). The Principles include #2, which provides that "The City should be able to meet the cost of any compensation commitment from current and projected on-going City revenues," and principle #8 which provides that "The City should pursue short term and long term strategies to curtail increasing employee benefit costs. It should move away from providing benefits that place the burden on the City to pay the cost of automatic increases and toward benefit structures that require...
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. Response: Agree. This recommendation has been a key goal of the City in recent negotiations and has now been implemented across all employee groups with the exception of the Fire Chiefs Association (FCA), Police Managers Association (PMA), and the Utility Managers Association. These groups comprise 55 positions out of a total of 1,016 citywide. The City has proposed this contribution level for ...
Response: Unknown
Score: 0
Agree. This recommendation has been a key goal of the City in recent negotiations and has now been implemented across all employee groups with the exception of the Fire Chiefs Association (FCA), Police Managers Association (PMA), and the Utility Managers Association. These groups comprise 55 positions out of a total of 1,016 citywide. The City has proposed this contribution level for FCA and for the Utility Managers Association and expects to bring PMA in line with the other groups in the next round of negotiations.
R4B
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. Response: Agree. The first step in this direction was to bring employees up to paying their entire employee share of pension costs. In future labor contract negotiations, the City may explore with employee groups additional measures to ensure that past service costs are distributed in an equitable and sustainable manner. Moreover, the Ci...
Response: Unknown
Score: 0
Agree. The first step in this direction was to bring employees up to paying their entire employee share of pension costs. In future labor contract negotiations, the City may explore with employee groups additional measures to ensure that past service costs are distributed in an equitable and sustainable manner. Moreover, the City would welcome legislative change that would prohibit retroactive improvements. Unfortunately, PEPRA did not address this issue.
R5
Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. Response: Agreed. Palo Alto approved a policy to make full Retiree Medical Annual Required Contributions (ARC) payments in 2007 (CMR:438:07) when the City established the trust with CalPERS for Retiree Medical benefits.
Response: Unknown
Score: 0
Agreed. Palo Alto approved a policy to make full Retiree Medical Annual Required Contributions (ARC) payments in 2007 (CMR:438:07) when the City established the trust with CalPERS for Retiree Medical benefits.
R6
This recommendation pertains to the City of San Jose and is not applicable to Palo Alto.
Response: Unknown
Scheduled: FY 2010
Score: 0
Agree in principle. The Council has recognized the importance of new and more creative options for post-employment benefits going forward and views defined contribution plans as an important option. The City already offers all employees, in addition to their CalPERS pension, the option of participating in a IRC 457 retirement plan and contributing a portion of their pre-tax earnings for retirement. However, this is another area where CalPERS currently limits the City's ability to make changes. As a CalPERS participant, the City cannot opt out of the defined benefit plans offered by CalPERS wit...
R7
Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. Response: Agree in principle. The Council has recognized the importance of new and more creative options for post-employment benefits going forward and views defined contribution plans as an important option. The City already offers all employees, in addition to their CalPERS pension, the option of participating in a IRC 457 retirement plan and contributing a portion of their ...
Response: Unknown
Scheduled: FY 2010
Score: 0
Agree in principle. The Council has recognized the importance of new and more creative options for post-employment benefits going forward and views defined contribution plans as an important option. The City already offers all employees, in addition to their CalPERS pension, the option of participating in a IRC 457 retirement plan and contributing a portion of their pre-tax earnings for retirement. However, this is another area where CalPERS currently limits the City's ability to make changes. As a CalPERS participant, the City cannot opt out of the defined benefit plans offered by CalPERS wit...
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City of San Jose
August 29, 2012
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City of Santa Clara
September 12, 2012
•
7 pages
• 11 responses
•
Score: +6
(+6, 2, 0)
View Details ▾
11 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. <b>City Response to Finding 1:</b> The respondent agrees with the finding (understanding that the finding is a general statement about the timing of eligibility for retirement or retirement benefits). <b>Recommendation 1:</b> The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. City Response to Recommendation 1: The recommen...
Response: Agree
Score: +1
</b> The respondent agrees with the finding (understanding that the finding is a general statement about the timing of eligibility for retirement or retirement benefits). <b>Recommendation 1:</b>
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. City
F2
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. <b>City Response to Finding 2:</b> The respondent agrees with finding. <b>Recommendati...
Response: Agree
Score: +1
The respondent agrees with finding. <b>Recommendation 2A:</b> 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.
Page 3 City
R2B
is not applicable to the City of Santa Clara. <b>Recommendation 2C:</b> 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. <u>City Response to Recommendation 2C:</u> The recommendation has not yet been implemented, but will be implemented in the future, with ...
Response: Unknown
Score: 0
Recommendation 2B is not applicable to the City of Santa Clara. <b>Recommendation 2C:</b> 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. <u>City
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response to Finding 3: The respondent agrees with the finding, although the overly optimistic ROI and actuarial assumptions generally were not determined or decided by "the Cities;" rather, they were decided by the pension systems and their related actuarials. Honorable Richard J. Loftus, Jr. September 12, 2012 <b>Recommendation 3:<...
Response: Agree
Score: +1
The respondent agrees with the finding, although the overly optimistic ROI and actuarial assumptions generally were not determined or decided by "the Cities;" rather, they were decided by the pension systems and their related actuarials.
Page 5 <b>Recommendation 3:</b> 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. <b>City
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. City Response to Finding 4: The City agrees with the finding as it applies to "the Cities" generally, but disagrees in part as applies to the City of Santa Clara. While many cities pay both the employer share and either the entire employee share or a portion of the employee share of pension, City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pension...
Response: Disagree Partially
Score: 0
The City agrees with the finding as it applies to "the Cities" generally, but disagrees in part as applies to the City of Santa Clara. While many cities pay both the employer share and either the entire employee share or a portion of the employee share of pension, City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions.
Recommendation 4A:
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. <b>City
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. <b>City Response to Recommendation 4A:</b> The recommendation has been implemented. City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions.
Response: Implemented
Score: 0
</b> The recommendation has been implemented. City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions.
Recommendation 4B:
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. City
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.
Response: Will Implement
Score: +1
The recommendation has not yet been implemented, but will be implemented in the future, with a time frame for implementation.
Page 6 Employees already pay the employee share or contribution of their CalPERS pension, and the City is discussing and negotiating a second tier pension for future hires, and is analyzing all options for addressing the costs of pension benefits and making sure they are fiscally sustainable in the future.
Finding 5:
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. City
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. City Response to Finding 5: The respondent agrees with the finding as it applies to "the Cities" generally. (See below as it applies to the City of Santa Clara.) <b>Recommendation 5:</b> The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. City Response to Recommendation 5: The recomm...
Response: Agree
Score: +1
The respondent agrees with the finding as it applies to "the Cities" generally. (See below as it applies to the City of Santa Clara.) <b>Recommendation 5:</b> The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. City
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. City Response to Finding 6:
Response: Unknown
Score: 0
Finding 6 is not applicable to the City of Santa Clara.
Recommendation 6:
The City of San Jose should eliminate the SRBR program or amend the SRBR program to prevent withdrawal of pension trust money whenever the pensionfunded ratios is less than 100%. <b>City
R6
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 ratios is less than 100%. <b>City Response to Recommendation 6:</b>
Response: Unknown
Score: 0
</b> Recommendation 6 is not applicable to the City of Santa Clara.
Page 7
Finding 7:
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>City
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>City Response to Finding 7:</b> The respondent agrees with the finding that defined contribution plans are less volatile and easier to manage than defined benefit pension plans. <b>Recommendation 7:</b> The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. <b>City Respons...
Response: Agree
Score: +1
</b> The respondent agrees with the finding that defined contribution plans are less volatile and easier to manage than defined benefit pension plans. <b>Recommendation 7:</b> The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. <b>City
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City of Saratoga
May 12, 2012
•
6 pages
• 9 responses
•
Score: +1
(+1, 4, 0)
View Details ▾
9 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. <b>City Response:</b> The City of Saratoga agrees that the common standard for public sector defined benefit plans is 2%@55, while full Social Security eligibility begins at age 65. <b>Recommendation 1:</b> The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. <b>City Response:</b> This recommendation has been implemented. Th...
Response: Agree
Score: +1
</b> The City of Saratoga agrees that the common standard for public sector defined benefit plans is 2%@55, while full Social Security eligibility begins at age 65. <b>
F2
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. <b>City Response:</b> The City of Saratoga disagrees partially with this finding becau...
Response: Disagree Partially
Score: 0
</b> The City of Saratoga disagrees partially with this finding because the City now has a two-tier retirement plan for employees hired on or after May 12, 2012 (2% at 60 as the second tier). See Response to
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: Unknown
Score: 0
Not Applicable.
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. <b>City Response:</b> The recommendation has been implemented. The City of Saratoga now has a two-tier retirement plan for employees hired on or after May 12, 2012 (2% at 60 as the second tier). As a result o...
Response: Implemented
Score: 0
</b> The recommendation has been implemented. The City of Saratoga now has a two-tier retirement plan for employees hired on or after May 12, 2012 (2% at 60 as the second tier). As a result of negotiations in 2011, Saratoga retirement costs significantly decreased as a result of all employees agreeing to pay the maximum employee contribution of 7% of wages. Furthermore, as the City of Saratoga did not enhance pension benefits in the last decade, and does not provide Other Post Employment Benefits, the City has not incurred an unfunded liability burden.
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. <b>City Response:</b> Not Applicable because the City of Saratoga did not enact retroactive benefit enhancements to its CalPERS plan, but rather has maintained the 2%@55 plan for its employees hired before May 12, 2012. <b>Recommendation 3</b> The Cities should adopt policies that do not permit Benefit enhancements unless sufficient moni...
Response: Unknown
Score: 0
</b> Not Applicable because the City of Saratoga did not enact retroactive benefit enhancements to its CalPERS plan, but rather has maintained the 2%@55 plan for its employees hired before May 12, 2012. <b>
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. <b>City Response</b>: The City of Saratoga disagrees partially with this finding (as it relates to Saratoga) because the City's bargaining units agreed to economic concessions and partnered with the City of Saratoga to provide more financially sustainable benefits. Employee groups and those employees not represented by an employee group within the City of Saratoga agreed to contribute the 7% employee con...
Response: Disagree Partially
Score: 0
The Cities are making an overly generous contribution toward the cost of providing Benefits. <b>City Response</b>: The City of Saratoga disagrees partially with this finding (as it relates to Saratoga) because the City's bargaining units agreed to economic concessions and partnered with the City of Saratoga to provide more financially sustainable benefits. Employee groups and those employees not represented by an employee group within the City of Saratoga agreed to contribute the 7% employee contribution for CalPERS pension benefits to assist the City of Saratoga in sustaining its ability to p...
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>City Response:</b> Not applicable because the City of Saratoga does not offer OPEB benefits.
Response: Unknown
Score: 0
</b>
Not applicable because the City of Saratoga does not offer OPEB benefits.
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. <b>City Response:</b> Not Applicable. <b>Recommendation 6</b> 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%. <b>City Response:</b> Not Applicable.
Response: Unknown
Score: 0
</b> Not Applicable. <b>
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>City Response:</b> The City disagrees partially with this finding. The City of Saratoga participates in the CALPERS retirement system as do most other California Cities. Adopting a defined contribution plan would mean abandoning the CALPERS system and adopting other more expensive plans, which are less common in the public sector. This may p...
Response: Disagree Partially
Score: 0
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>City Response:</b> The City disagrees partially with this finding. The City of Saratoga participates in the CALPERS retirement system as do most other California Cities. Adopting a defined contribution plan would mean abandoning the CALPERS system and adopting other more expensive plans, which are less common in the public sector. This may put the City at a competitive disadvantage when attempting to recruit experienced staff that have man...
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City of County of Santa Clara
August 27, 2012
•
7 pages
• 11 responses
•
Score: +4
(+4, 2, 0)
View Details ▾
11 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. <b>City Response to Finding 1:</b> The respondent agrees with the finding (understanding that the finding is a general statement about the timing of eligibility for retirement or retirement benefits). <b>Recommendation 1:</b> The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. City Response to Recommendation 1: The recommen...
Response: Agree
Score: +1
Agree as to Finding 1.
F2
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. <b>City Response to Finding 2:</b> The respondent agrees with finding. <b>Recommendati...
Response: Agree
Score: +1
Agree as to Finding 2.
R2B
is not applicable to the City of Santa Clara. <b>Recommendation 2C:</b> 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. <u>City Response to Recommendation 2C:</u> The recommendation has not yet been implemented, but will be implemented in the future, with ...
Response: Unknown
Score: 0
Not applicable
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response to Finding 3: The respondent agrees with the finding, although the overly optimistic ROI and actuarial assumptions generally were not determined or decided by "the Cities;" rather, they were decided by the pension systems and their related actuarials. Honorable Richard J. Loftus, Jr. September 12, 2012 <b>Recommendation 3:<...
Response: Disagree Partially
Score: 0
Disagree partially with Finding 3.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. City Response to Finding 4: The City agrees with the finding as it applies to "the Cities" generally, but disagrees in part as applies to the City of Santa Clara. While many cities pay both the employer share and either the entire employee share or a portion of the employee share of pension, City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pension...
Response: Agree
Score: +1
Agree as to Finding 4.
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. <b>City Response to Recommendation 4A:</b> The recommendation has been implemented. City of Santa Clara employees rather than the City pay the employee share or contribution of their CalPERS pensions.
Response: Unknown
Score: 0
Agree as to
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.
Response: Unknown
Score: 0
Agree as to
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. City Response to Finding 5: The respondent agrees with the finding as it applies to "the Cities" generally. (See below as it applies to the City of Santa Clara.) <b>Recommendation 5:</b> The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. City Response to Recommendation 5: The recomm...
Response: Disagree Partially
Score: 0
Partially agree as to Finding 5.
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. City Response to Finding 6:
Response: Unknown
Score: 0
Not Applicable
R6
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 ratios is less than 100%. <b>City Response to Recommendation 6:</b>
Response: Unknown
Score: 0
Not Applicable
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. <b>City Response to Finding 7:</b> The respondent agrees with the finding that defined contribution plans are less volatile and easier to manage than defined benefit pension plans. <b>Recommendation 7:</b> The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. <b>City Respons...
Response: Agree
Score: +1
Agree as to Finding 7.
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Town of Los Altos Hills
August 30, 2012
•
6 pages
• 7 responses
•
Score: +4
(+5, 0, -1)
View Details ▾
7 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. <b>Town Response:</b> We agree that the anecdotal evidence seems to support the conclusion of Finding #1. <b>Recommendation 1</b> The cities should adopt pension plans to extend the retirement age beyond current retirement ages. <b>Town Response:</b> The recommendation has been implemented. The Town of Los Altos Hills has created a second tier to its retirement plan which in...
Response: Agree
Score: +1
agree that the anecdotal evidence seems to support the conclusion of Finding #1.
F2
Campbell, 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, have not adopted second tier plans. <b>Town Response:</b> While we have no direct knowledge of what other cities have done, we agree that the T...
Response: Agree
Score: +1
</b> While we have no direct knowledge of what other cities have done, we agree that the Town of Los Altos Hills adopted a second "tier" to its retirement in 2011.
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. <b>Town Response:</b> We disagree with the finding. The Town of Los Altos Hills has not granted retroactive benefit enhancements and has no plans to do so. The Town has insufficient information to comment on other Cities' actions.
Response: Disagree
Score: -1
</b> We disagree with the finding. The Town of Los Altos Hills has not granted retroactive benefit enhancements and has no plans to do so. The Town has insufficient information to comment on other Cities' actions.
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 the unfunded liability. Town Response: The recommendation has not yet been implemented, but the Town intends to adopt such a policy in fiscal year 2012-13.
Response: Unknown
Scheduled: fiscal year 2012-13
Score: 0
The recommendation has not yet been implemented, but the Town intends to adopt such a policy in fiscal year 2012-13.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits. Honorable Richard J. Loftus, Jr. August 30, 2012 <b>Town Response:</b> While the term "overly generous" is extremely subjective, in hindsight it is hard not to agree, especially as the costs of these benefits continue to rapidly increase, that the employer, whatever level of government that may be, cannot continue to absorb most or all the risks and costs of the various retirement benefits. <b>Recommenda...
Response: Agree
Score: +1
</b> While the term "overly generous" is extremely subjective, in hindsight it is hard not to agree, especially as the costs of these benefits continue to rapidly increase, that the employer, whatever level of government that may be, cannot continue to absorb most or all the risks and costs of the various retirement benefits. <b>
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>Town Response</b>: Based on your report as well as some other reports of which we're aware, we agree with this finding's general conclusion. <b>Recommendation 5</b> The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. <b>Town Response</b>: The recommendation has been implemented. As...
Response: Agree
Score: +1
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>Town Response</b>: Based on your report as well as some other reports of which we're aware, we agree with this finding's general conclusion. <b>Recommendation 5</b> The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible. <b>Town Response</b>: The recommendation has been implemented. As noted above, the Town has amended its plan to limit annuitant medical benefits for employees hired ...
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities. Town Response: We agree with Finding 7. <b>Recommendation 7</b> The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. Town Response: The recommendation has not yet been implemented, and we agree that most governments may need to "transition" away from defined benefit plans. ...
Response: Agree
Score: +1
agree with Finding 7.
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Town of Los Gatos
September 13, 2012
•
5 pages
• 13 responses
•
Score: +2
(+6, 0, -4)
View Details ▾
13 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees. City Response The City partially disagrees with the finding. There are positions in the public sector that do not have comparable private sector counterparts. Therefore, making a broad comparison is not accurate.
Response: Agree
Score: +1
Agree
R1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. <b>City Response</b> The recommendation has not yet been implemented. The City will consider adopting a two tier pension plan
Response: Will Not Implement
Score: -1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages. Will Not Be Implemented Not Yet But In Future Requires Further Analysis Implemented Los Gatos has implemented for miscellaneous (nonsworn) employees and intends to engage in negotiations for sworn when the current union agreement expires.*
F2
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. <b>City Response</b> The City agrees with the finding.
Response: Agree
Score: +1
Agree
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.
Response: Will Not Implement
Score: -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. Will Not Be Implemented Requires Further Analysis Not Yet But In Future <b>Implemented</b> Not applicable to Los Gatos.
August 30, 2012 Page 2
Recommendation 2B
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. Will Not Be Implemented Requires Further Analysis Implemented Not Yet ...
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 plan caps that ensure pensions do not exceed salary at retirement. <b>City Response</b> The recommendation has not yet been implemented. The City will consider adopting a two tier pension plan
Response: Will Not Implement
Score: -1
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 plan caps that ensure pensions do not exceed salary at retirement. Will Not Be Implemented Requires Further Analysis Not Yet But In Future Implemented Re Retirement age, see
Recommendation 1.
Re increasing employee contributions, see Recommendations 4A and 4B. Re Pension caps, Los Gatos does not have authority to change the pension caps established by CalPERS. However, Los ...
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response The City partially disagrees with the finding. Although many cities may have enacted pension benefit enhancements over the last several years, the City of Monte Sereno has not enacted any pension enhancements for the past 13 years.
Response: Agree
Score: +1
Agree
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. <b>City Response</b> The recommendation has not yet been implemented. The City Staff will recommend an update to the City's fiscal policy with a statement that addresses this recommendation during the City's routine budget process.
Response: Unknown
Score: 0
Agree
F4
The Cities are making overly generous contributions toward the cost of providing Benefits. <b>City Response</b> The City agrees with this finding.
Response: Agree
Score: +1
Agree
R4A
The Cities should require employees to pay the maximum employee contribution rate of a given plan.
Response: Will Not Implement
Scheduled: FY 2012/13
Score: -1
The Cities should require all employees to pay the maximum employee contribution rate of a given plan. Will Not Be Implemented Requires Further Analysis Not Yet But In Future Implemented Los Gatos has implemented this recommendation.
Recommendation 4B
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. Will Not Be Implemented Requires Further Analysis Not Yet But In Future Implemented Further analysis is required to understand the impacts. The analysis will be conducted prior to ...
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios. <b>City Response</b> The City agrees with this finding.
Response: Agree
Score: +1
Agree
R5
The Cities should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
Response: Unknown
Score: 0
Not applicable.
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite that fact that the pension trust funds are underfunded. <b>City Response</b> Not applicable.
Response: Unknown
Score: 0
Not applicable.
F7
The Cities' defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by Cities. <b>City Response</b> The City agrees with this finding. City of Monte Sereno Responses to Civil Grand Jury Report Dated June 13, 2012 <b>Recommendation</b> 7 The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented. City Response The recommendation has not yet been implemented. The ...
Response: Agree
Score: +1
Agree
▶
City of Sunnyvale
August 23, 2012
•
5 pages
• 17 responses
•
Score: +4
(+4, 3, 0)
View Details ▾
17 responses to findings and recommendations
F1
Public sector employees are eligible for retirement at least 10 years earlier than is common for private sector employees.
Response: Disagree Partially
Score: 0
The City disagrees partially with the finding. There are positions in the public sector that do not typically have comparable private sector counterparts. Most notably, police and fire services are typically provided by the public sector only, so it is difficult to compare retirement ages for public safety personnel against the private sector. As such, the City of Sunnyvale disagrees with the finding as it relates to our Safety personnel.
R1
The Cities should adopt pension plans to extend the retirement age beyond current retirement plan ages.
Response: Unknown
Score: 0
, and increasing employee contributions is addressed in detail as a part of the
F2
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.
Response: Disagree Partially
Score: 0
The City disagrees partially with the finding. In the time between the City of Sunnyvale completing the survey and the Santa Clara County Civil Grand Jury issuing its report, a second-tier pension plan was implemented for Safety employees, with new Safety employees now on the 3°/0 @ 55 formula.
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.
Response: Implemented
Score: 0
Agree. This recommendation has been implemented for the City's Safety employees and is in negotiation for its Miscellaneous employees, 1
with three of four Miscellaneous bargaining units already in agreement on a second tier. The Memorandum of Understanding (MOU) for the fourth Miscellaneous bargaining unit expired on June 30, 2012, and negotiations on a new MOU are nearing a conclusion. As noted previously, the intended outcome of those negotiations is a second-tier pension plan for Miscellaneous employees.
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: Unknown
Score: 0
Not applicable
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. 26
Response: Unknown
Score: 0
Increasing the retirement age is addressed in the response to
F3
Retroactive Benefit enhancements were enacted by Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them.
Response: Agree
Score: +1
The City agrees with this finding.
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.
Response: Unknown
Scheduled: FY 2012/2013
Score: 0
Agree. The recommendation has not yet been implemented; however, City staff will update Council Fiscal Policy with a statement that addresses this recommendation and will seek Council approval of the update prior to the end of FY 2012/2013.
F4
The Cities are making an overly generous contribution toward the cost of providing Benefits.
Response: Agree
Score: +1
The City agrees with this finding. 2
R4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan.
Response: Unknown
Scheduled: FY 2012/2013
Score: 0
and 4B. The City of Sunnyvale, as a contracting agency of Ca1PERS, does not have the ability to adopt caps on pension plans beyond those set by Ca1PERS, which currently caps Safety plans at 90%. Finding 3: Retroactive benefit enhancements were enacted by the Cities using overly optimistic ROI and actuarial assumptions without adequate funding in place to pay for them. City Response: The City agrees with this finding. Recommendation 3: The Cities should adopt policies that do not permit benefit enhancements unless sufficient monies are deposited, such as in an irrevocable trust, concurrent with...
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.
Response: Unknown
Score: 0
As noted above, the City is currently focused on making progress toward employees making the full employee contribution of the pension expense. Requiring employees to pay some portion of the past service cost associated with the unfunded liability would require negotiation, but is something that the City can consider once it has negotiated full employee contribution of the employee share of the pension expense. With that said, implementation of this recommendation would need to be considered and potentially pursued within the context of all elements of an MOU, and as such, the City cannot defi...
F5
The Cities are not fully funding OPEB benefits as evidenced by large unfunded liabilities and small funded ratios.
Response: Agree
Score: +1
The City agrees with this finding.
R5
The Cities, should immediately work toward implementing policy changes and adopting measures aimed at making full OPEB ARC payments as soon as possible.
Response: Unknown
Scheduled: FY 2010
Score: 0
Agree. The City of Sunnyvale has implemented measures to fully fund its OPEB liability. The City has been making the full Annual Required Contribution (ARC) on our OPEB obligation since FY 2010/ 11. 3
Furthermore, the City Council approved the establishment of an OPEB Trust in 2010, with initial funding of $32.6 million contributed during the first half of 2011. As of June 30, 2012, the OPEB Trust has a balance of $37.8 million. Contributing the ARC each year is incorporated into the City's long-term financial plan, and doing so is expected to result in the OPEB Trust being fully funded by FY...
F6
The City of San Jose permits the transfer of pension trust fund money, when ROI exceeds expectations, to the SRBR, despite the fact that the pension trust funds are underfunded. 27
Response: Unknown
Score: 0
Not applicable
R6
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%.
Response: Unknown
Score: 0
Not applicable
F7
The Cities’ defined benefit pension plan costs are volatile. Defined contribution plan costs are predictable and therefore more manageable by the Cities.
Response: Agree
Score: +1
The City agrees with this finding.
R7
The Cities should transition from defined benefit plans to defined contribution plans as the new tier plans are implemented.
Response: Unknown
Score: 0
As noted previously, the City of Sunnyvale contracts with Ca1PERS to administer the pension benefit for existing employees. Ca1PERS does not currently offer a defined contribution plan, and the City does not have the option of going to a defined contribution plan outside of Ca1PERS for new hires. However, one of the components of the Governor's pension reform plan is a hybrid defined benefit/defined contribution retirement plan. Should this aspect of the Governor's plan be implemented, the City will then have a portion of its retirement benefit shifted from defined benefit to defined contribut...
No Responses Found 1
Government entities assigned to respond to this report. No response documents have been linked in our database.
Santa Clara County Board of Supervisors
Elected County Office