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