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Resolution 1981-16 . . RESOLUTION NO. 81 - 16 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY FOR OPTD1UM INVESTMENT OF PUBLIC EMPLOYEES' RETIREMENT SYSTEM FUNDS. WHEREAS, the most recent Report to the Governor from the Board of Directors of the Public Employees Retirement System dated January 12, 1981, reveals that the "Computed rate of Return" on the entire $12.85 billion investment portfolio was 7.91% for the fiscal year ending June 30, 1980; and WHEREAS, the interest crediting rate which member employers and employees were granted on their accumulated retirement earnings for the year ending June 30, 1980 was only 6%; and WHEREAS, the interest crediting rate was increased by PERS Board of Administration to 6.75% effective July 1, 1980; and WHEREAS, Federal Treasury Notes, Federal I-Bills; and Short term Commercial paper has been yielding interest rates ranging from 12% to 20% over the past 18 months, depending on the amount to be invested; and WHEREAS, 49% of the PERS $12.85 billion investment nortfo- 1io as of June 30, 1980, is placed in bonds, many of which are long-term investments yielding only 3% and 4%; and WHEREAS, only 4.1% of the PERS investment portfolio as of June 30, 1980, is placed in short term investments, at a time when money market funds are earning up to 20% for large investments; and ~VHEREAS, public agency employers such as PRRS member cities and counties are experiencing continuous employer rate increases, following periodic audits of the financial integrity of the PERS system; RESOLUTION NO. 81 - 16 -1- . . WHEREAS, current PERS investment policy appears too rigid, and unable to respond in a timely manner with a flexible and ag- gressive investment policy which can capitalize on rapidly changing money market investment opportunities; NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Gilroy supports the Peninsula Division, League of Calif- ornia Cities, representing 37 cities in San Francisco, San Mateo and Santa Clara Counties, on their following recommendations: 1) That the Board of Administration of PERS be encouraged to explore whether a significantly higher percentage of investments should be placed in short-term investments with higher yield than most typical long-term investments; and 2) That the League of California Cities, Peninsula Divi- sion, take whatever steps are necessary to encourage the PERS Board of Directors, with the cooperation and input of member cities and employee organizations, to fully investigate their investment poli- cies, especially as they relate to the amounts invested in long-term as compared with short-term investments; and 3) That employee organizations such as the Peace Officers Research Association of Californi (PaRAe); California State Fire- fighters Association; (CSFA); American Federation of State, County and Municipal Employees (AFSCME); Service Employees International Union (SEIU); other or8anized labor organizations; and other inter- ested organizations anc committees, be fully informed of the im- portance of this issue, and to seek their support in its review and recommendation; and 4) To support the current efforts of Assemblyman Louis J. Papan in creating a Legislative Committee to investigate the invest- ment policies of the Public Employees Retirement System; and -2- RESOLUTION NO. 81-16 . . 5) To encourage PERS member cities, member counties; indi- vidual members; and public agency employee organizations to attend the April 22, 1981 meeting in Los Angeles of the PERS Board of Ad- ministration, when the PERS investment policy issue will be consi- dered as a separate agenda item; or if unable to attend, to write letters to the Board of Administration to demonstrate support of a full review of current investment policies. 6) That the sole purpose of this resolution is to maximize the interest earnings from the PERS investment portfolio for the benefit of PERS member cities, individual members of the Public Employees Retirement System, and in so doing to reduce the need for employer contribution rate increases which would otherwise have to be funded from tax revenues. PASSED AND ADOPTED this 2nd day of March, 1981, by the fol- lowing vote: NOES: ABSENT: COUNCIL MEMBERS: ALBERT, CUNNINGHAM, HUGHAN, LINK, PATE, TAYLOR and GOODRICH. COUNCIL MEHBERS: None AYES: COUNCIL MEMBERS: None APPROVED: 1(~Yor ATTEST: ~ .~~ ~ 0./ .' .~y 1er. -3- RESOLUTION NO. 81 - 16 . . It I' I, SIIS.~J~NE I::. STEUltll:TZ, City Clerk of the City of Gilroy, 10 hel-eby cet-tJ.fy that the attached Reuolution No. 81-16 i II an lrieirwl re~ollltiol\, duly udoptfJd by the Council of tho City of alrl}Y lit d n~f.ular mceting of :,luid Council held on t:he 2nd tHY 0 t March . 1 ()....!.!.-. uf. which meeting,. quorum \o/l1fi lrCtJcnt. ltJ WIT~IESS \1l1I:.:IU~OI", 1 have hereunto tt~t my ha.nd and affixed the Otficiul Scal of thc City of Gilroy, thia 5th day at March '. it) 81. ~~~. pCity.Clcrk of the City of