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• Undergrounding Project Status Report Councilmember Warshawsky reported that the next meeting of the Undergrounding Committee was scheduled for May 10, 2005. They are developing an outreach program to illustrate the project to residents to initiate interest in a similar project for other neighborhoods. Former City Engineer Dave Ross reported that the preliminary project plans were ready for distribution to the Committee. The project was on schedule. 5.2 Response to City Council Inquires on Salaries, Benefits and Post Retirement Health Insurance Costs (continued 4/7/2005) Mayor O'Malley explained that the initial presentation of this item was made at the April 7, 2005 City Council meeting and was being revisited to permit the full Council to hear the report. Administrative Services Director Sarah Joiner addressed Council. She explained that the report was prepared in response to some of the concerns that were raised during the joint study session of the Finance and Investment Committee and City Council on March 17, 2005. Concerns were raised about a potential fiscal crisis facing the Town due to the cost of employee benefits and the cost of health insurance paid on behalf of retired employees. Joiner had prepared the analyses of salary and benefit costs and operating expenditures before Council and noted that the data showed that benefit costs and retiree benefits were neither out of control or threatening the fiscal health of the Town. Joiner explained that the Town of Los Altos Hills was unique in comparison to other cities. It has a small staff, lack of safety employees, significantly more conservative retirement benefits and a low percentage of retirees who receive post retirement health benefits. Joiner noted that retention has been a significant problem for the Town and offered that it was important for the Town to have a compensation package that was competitive and consistent with industry standards to attract quality employees and retain them. Joiner reviewed the report exhibits with Council. Exhibit I detailed the salaries and benefits and reflected a range from a high of 36.94% of operating expenditures in 1997/1998 to the current 30.98% in 2004/2005. She noted that the Town currently had three retirees with their health premiums costing $4,403 per retiree. Exhibit II reflected the budgeted salaries and benefits for 2004/2005 which had increased by 4.62% and 7.26% respectively, over the prior year. Exhibit III showed that operating expenditures other than salaries and benefits for 2004/2005 had increased by 18.79% over the prior fiscal year. In summary, Joiner reported that the Town had participated in the California Public Employees Retirement System (Ca1PERS) since 1965 and in their health plan since 1975. During the thirty years with the health plan, ninety five (95) Town employees had been enrolled. Nineteen active employees were currently covered. Joiner explained that the • post-retirement health benefit was only available to employees who retire from the Town. 5 City Council Meeting Minutes May 5,2005