202238 / 53.58% Yes votes ...... 175242 / 46.42% No votes

See Also: Index of all Propositions

A determination of fiscal impact due to the change in amortization schedules for new retirement benefits requires a full and complete actuarial report, which time did not permit.

Under existing language in the City Charter, the City's Retirement System is a contributory plan, with the City contributing jointly with the employees. Employees are required to contribute according to the actuarial tables adopted by the Retirement Board for normal retirement allowances. The City is required to contribute annually an amount substantially equal to that required of the employees for normal retirement allowances, as certified by the actuary, but shall not be required to contribute in excess of that amount.

The result of application of the contribution requirements described above is that the City, not the City employees, is legally responsible for making any contributions necessary to rectify a situation where the Unfunded Accrued Actuarial Liability [UAAL] is unacceptably high, such as where the Retirement System is in an underfunded status.

This measure adds language into the City Charter which, commencing July 1, 2008, sets amortization schedules recommended by the Pension Reform Committee for the Retirement Board and the City to use in making the calculations necessary to determine the component of the City's annual contribution associated with paying down the UAAL. Between now and July 1, 2008, the minimum obligations of the City with respect to contributions is provided for both in the City Charter and the terms of a recently approved court settlement agreement settling litigation brought by a group of City retirees.

In addition, this measure adds language into the City Charter that precludes the City and the Retirement Board from entering into any future multi-year contracts or agreements delaying full funding of City obligations to the Retirement System, except for court-approved settlement agreements.

The California Constitution, at article XVI, section 17, provides that certain pension administration responsibilities are vested exclusively with local retirement boards. This provision was included in the California Constitution to ensure that retirement board members would not be artificially constrained by any law or policy that would interfere with the ability of these boards to exercise fiduciary duties in the most prudent manner. It is the City Attorney's opinion that the setting of contribution rates is one of those responsibilities vested exclusively with the Retirement Board. Therefore, at the suggestion of the City Attorney, language has been incorporated into the measure providing the Retirement Board with the ability to deviate from the amortization standards provided for in this measure, but only in a circumstance where adherence to the standard would prevent the Retirement Board from fulfilling its fiduciary duties prescribed in article XVI, section 17 of the California Constitution.