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Pegueros proceeded with a PowerPoint presentation that outlined the Civil Grand Jury's <br /> recommendations and the response from management to implement two of the <br /> recommendations. First, the report had recommended that the salary schedule be <br /> expanded. The proposed action by Town management was to increase the current 5 steps <br /> to 9 steps. The new scale would reduce the percentage increase between merit based <br /> salary increases and provide a 2.469% differential between steps. If implemented, this <br /> change would have the effect of slowing growth in employees' salaries. Second,the Civil <br /> Grand Jury report recommended reducing the pension provided to future hires. The <br /> pension benchmark would be raised to 2% at 60 years of age. Management concurred <br /> with the recommendation. <br /> Pegueros reviewed the report's additional recommendations which included employee <br /> contributions to pension and medical benefits. <br /> Pegueros provided an overview of the Town's participation in the CalPERS risk pool and <br /> pension costs. The Town is one of 428 member agencies with a total of 11,827 members. <br /> As a percentage, the Town is 0.0017%. It was noted that given that the Town did not <br /> participate in Social Security, this was the only pension retirement option for staff. <br /> In addition to the discussed recommendations, Pegueros offered that management was <br /> recommending the creation of a $700,000 pension contingency reserve fund over a ten <br /> year period. Management recommended using the $70,000 annual pension expense <br /> savings that had been realized by paying off the CalPERS pension side fund liability in <br /> June 2010. The funds would remain with the Town and would be reported as a designated <br /> fund balance available when deemed necessary by the City Council. <br /> Council Discussion: <br /> Councilmember Summit questioned if the Finance and Investment Committee had <br /> reviewed management's response to the Civil Grand Jury's report. Pegueros offered that <br /> the Committee had reviewed the report. <br /> Councilmember Mordo noted that he did not support the current"steps" formula for merit <br /> salary increases. He supported the option of using a salary range for each position. This <br /> would afford more flexibility for management. In addition, Mordo recommended a full <br /> review of employee compensation and benefits and suggested that a Council <br /> subcommittee be created for the review process and with the possible retention of a <br /> consultant. Council briefly discussed the feasibility of creating a subcommittee's and its <br /> composition. Mordo added that he did not favor the implementation of a two tier pension <br /> plan. <br /> OPENED PUBLIC COMMENT <br /> John Lemes, resident, spoke to the two recommendations under consideration. With <br /> regards to the step increases, Lemes acknowledged that the process was widely pervasive <br /> in very large government institutions. It afforded the employee the opportunity to start at <br /> step 1 with the knowledge that there was room for growth and what the successive merit <br /> salary increases would be. Lemes added that the pension plan for staff (2% at 55) was <br /> "cheap" given there is no social security. He offered that many institutions pay both and <br /> 6 Approved City Council Regular Meeting Minutes <br /> October 21,2010 <br />