Attachment 1C,R,°4ND iUR1
December 21, 2016
Laurel I'revetti, "Town Manager
'1 owia of Los Gatos
110 L. Main Street
Los Gatos, California 94022
Serl1 Via C''ni i ,to
[)ear Ms. Pittsveili:
1 •rtrn contacting you on behalf of the 201(-2017 Santa Clara County Civil Ci rand ,fury. its a follow up to a report
generated by the 201 1-2012 Santa Clara Counit's. C'i\°il Grand Jury in July ot'2012, entitled "An Analysis of
Pension and Other Post la rnpiovrnent Benefits.- Attached is Li letter from Greg Larson elated September 13.
2012, in response to the Civil Grand Jury report.
The current Grand Jury' would life to learnt: (1) how. the towns views the various rccomiiiendatiuns, (2) whether
the recotlanaendlsttions \ ere ;ici epled. and (3} inhere is plan for future action. Please he as :specific and
detailed as possible to help the Civil (irand Jury understand the decisions rli.ade by eitc:li jurisdiction.
TheCivil Grand Jury would appreciate a response to this request by January 3 I. 2017, sent to:
Santa Clara County Civil Grand Jury
Superior Court
Attention: T'LuTiiiit Davis, Deputy Manager ofJttry Service:,
1 tJ 1 North First Street
San Jose, California 95113
Thanking you in advance 1 rr your timely response to this request For information.
Deputy Manager, Jury Services
TD:Peter I lertnn. 2i I6w-2017 Civil Cirand Juror
Atttchnaents/f=nclusures: "An Analysis of'Pension and (Hier lost Employment Belie its:"' Response from Greg
l-arsoti elated Sepientber I3, 20 I 2.
ATTACHMENT 1
T
OWN OF LOS GATOS
OFFICE OF 11HE TOWN MANAGER
(40E) 354-6832
FAN: (408) 399-576
September 13, 2012
Superior Court of Santa Clara County
Horarablle Richard R. Loftus, Jr.
Presiding Judge
Santa Clara County Civil Grand Jury
191 North Hirst Street)
San Jose, CA 95113
FILED
SEP952(112
DAVID h. °VilAitASAK
Chief Executive Officer/Cler
Superior CcL rt CI CA Ccun+y, cf SS
Subject: Response to 2011-12 Santa Clara Ccunty Civil Grand Jury Report — Ar Analysis
and Other Post -Employment Benefits
Dear Judge Loftus:
On behalf of the Town of Los Gatos Town Council, I am providing this formal response to
the 2011-2012 Santa Clara County Civil Grand Jury's Report, "An Analysis of Pension and
Other Post -employment Herefits." This response was authorized in a public Town Council
meeting on September 4, 2012.
Should you have ary questions regarding the enclosed document, please feel free to
contact rre at 408-334-6832.
Sincerely,
GREG LARSON
Town Manager
Atltachmert
Tcwn of Los Gatos Response to 2011-2012 Santa Clara County Civil Grand Jury Report,
"Ar Analysis of Pension and Other Past Employment Benefits"
Santa Clara County) Grand Jury Report: An Analysis of Pension and Other Post-Bmploylmentl Benefits
Summary of Town of Los Gatos Response
ALgust 30, 2012
Rage 1
NO71E: The responses provided below were prepared prior to the announcement of the Public
Employee Pension Reform Act of 2013 (PEPRA). Details of the act are not yet known; however it is
anticipated that the items marked with an asterisk 1*) will be implemented or impacted by via the
provisions of the PEPRA.
Rincing 1
Public sector emplcyees are eligible for retirement at least 10 years earlier than is ccmmcn for private sector
emplcyees.
)Jos Gatcs Respcnse: Agree
Reccmmerdaticn 1
The Cities shculd adopt pension plans to extend the retirement age beycnd current retirement plan ages.
Implemented
Not Yet But In Future
Requires Further Analysis
Will Not Be Implemented
Los Gatos has
implemented for
miscellaneous (,non -
sworn) employees and
intends' to engage in
negotiations for sworn
when the current union
agreement expires.*
Rincing 2
Campbell, Gilroy, Los Altos Hills, llos Gatos, Milpitas anc Ralo Altc have acopted seconc tier plans that offer
reduced Benefits,, which help reduce future costs, but further changes are needed tc address tcday's unfundec
liability. Santa Clara County and the cities of Cupertinc, Los Altcs, Mcnte Serenc, Morgan Hill, Mourtain View, San
Jose, Santa Clara, Saratcga and Sunnyvale have not adcpted second tier plans.
Los Gatcs Response: Agree
Recommendation 2A
Santa Clara County and the cities of Cupertinc, Los Altos, Monte Serenc, Morgan Hill, Mourtain View, San .ose,
Santa Clara, Saratoga and Sunnyvale should wcrk to implement second tier plans.
Irrplementec
Not yet But In Future
Requires Further Analysis
Will Not Be Implemented
Not applicable to Los Gatos
Santa Clara County Grand Jury Report: An Analysis of Pension and other Post -Employment Benefits
Summary of Town of Los Gatos Response
August 30, 2012
Page 2
Recommendation 2BI
Fcr Gilroy, Las Gatos, Milpitas and Piz lc Alta, which Have nct implemented seconc tier plans for NISC and Public
Safety second tier plans should be implemented for both plans.
In. plemertec
Not Yet But In Ruture
Requires Rurther Analysis
Will Not BE Implemented
Los Gatlos Has
implemented for
miscellaneous Inon-
siworn) employees and
intends to engage in
negotiations for sworn
when the current union
agreement expires. *
Recommendation 2C
All Cities' rew tier plays should close the unfunc ed liability burden they have pushed tc future generations. The
rew tier shculd incluce raising the retirement age, increasing employee cortributiors, and adoptirg pension plan
caps that ensure pensiers do rot exceed salary) at retirement.
Imp emerted
Not Yet But In Ruture
Requires Further Analysis
Will Nct Ble Implemented
Re Retirement age, see
Recommendation 1.
Re increasing, employee
contributions, see
Recommendations 4A and
4B. Re Pension caps, Los
Gatos does not have
a uthority to cha nge the
pension caps established
by CaIPIERS. However, Los
Gatos is open to
consideration once
CaIPERS provides the
option.*
Santa Clara County Grand Jury Report: An Analysis of Pension and Other Post -Employment Benefits
Summary of Town of Los Gatos Response
August 310, 2012
Page 3
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.
Los Gatos Response: Agree
Recommendation 3
The Cities shculc acopt 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 ir unfunced
liability.
Implementer
Not Yet But In Fluture
Requires Further Analysis
Will Nct Be Implemented
IJos Gatos Has not
implemented this
recommend alion yet but
staff will malde this
recommendation for
Council adoption prior to
the end of FY2012/13.*
Finding 4
THe Cities are making an overly, generous ccntributicn toward tile cost of providing Berefits.
Los Gatos Response: Agree
Recommencation 4A
The Cities should require all employees to pay the maximum employee contribution rate of a given plan.
Implemertec
Not Yet But In Future
Requires Flurther Analysis
Will Not Be Implemented
Los Gatos has
implemented this
recommendation.
Recommendation 48
The Cities should require employees to pay, some portion cf the Bast Service Ccst associatec with the unfunced
liability, ir proportion to the Benefits being offerec.
Implemented
Not Yet But In Future
Requires Further Analysis
Will Not Be Implemented
Further analysis is
required to understand
the impacts. The analysis
will be conducted prior to
the end of FY 2O 12/ 13 . *
Santa Clara County Grand Jury Report: An Analysis of Pension and Other Postl-Employment Benefits
Summary of flown cf Los Gatos Response
August 30, 2012
Pla ge 4
Findirg 5
The Cities are rot fully funding OPEE bier efits as evidenced by large unfunced liabilities and small furdec ratios.
Les Gatos Rlespcnse: Agree
Recommendatier 5
The Cities should immediately work toward irrplementirg policy changes and adopting measures aimed at making
full OFIBB ARC payments as sioor as possible.
Implemerted
Not Yet But In AL.ture
RecuIres Rurther Aralysis
Will Not Be Implerrentec
Los Gatos has
implemented this
recommendation and
currently has a Tong -term
plan in place.
Findirg 6
The City of San Jcse should eliminate the SRBR program er amend the SRBR program to prevent withdrawal of
pension trust money whenever the pension-furded ratic is less thar 1C0%.
Los Gatcs Response: Not applicable.
Fir ding 71
The Citiesl' defired benefit pension plan costs are volatile. Defined ccrtributicr plan costs are predictable and
therefore mere manageable by the Cities.
Los Gatos Response: Agree
Recommendation 7
THe Cities shculd trarsiticn frcm defired benefit (DB: plans tc defined contributior (DC) plars as the new tier
plars are implementec.
In.plemertec
Not Yet But In Future
Requires Flurther Aralysis
Will Not Be Implerrentec
Los Gatos does not Have
authority to change the
Cal PIERS DB plan 10 a DC
plan. However, should
CaIPIERS implement this
recommendation, Los
Gatos will conduct further
analysis.'"