CC RESOLUTION 3099RESOLUTION NO, 3099
• A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
EL SEGUNDO, CALIFORNIA, SUPPORTING AN INVESTIGATION
AND ANALYSIS OF THE INVESTMENT POLICIES OF THE
CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM IN AN
EFFORT TO INCREASE RATE OF RETURN.
WHEREAS, the 1980 Annual Financial Report and Report of Operations,
issued by the Public Employees Retirement System of the State of California
for the fiscal period ended June 30, 1980, has revealed that the "Computed
Rate of Return" on the entire $12.85 billion investment portfolio was 7.91 %; and
WHEREAS, 49% of the PERS $12.85 billion investment portfolio as of
June 30, 1980, is placed in bonds, many of which are long term investments,
some yielding as low as 4 %; and
WHEREAS, only 4,1% of the PERS investment portfolio, as of
June 30, 1980, was placed in short term investments at a time when money market
funds are earning up to 20% for large investments; and
WHEREAS, PERS' actuaries have estimated that a 1% increase in the
PERS' Computed Rate of Return on its investment portfolio would probably offset
a 13% increase in'costs to PERS Retirement System employers in California; and
WHEREAS, Public agency employers >, such as PERS member cities and
counties, are experiencing continuous employer rate increases following
periodic audits of the financial integrity of the PERS system; and
WHEREAS,the "Statement of Investment Objectives and Policy" of the
California Public Employees Retirement System contains a section entitled,
"Investment Objectives ", which states the following:
"1) to increase asset coverage of actuarial
liabilities; 2) to maintain real dollar value
of the assets (provide inflation coverage); and
3) to stabilize current employer contribution
rates," and
WHEREAS, current PERS investment policies appear too rigid and
unable to respond in a timely manner with a flexible and aggressive investment
policy which can capitalize on rapidly changing money market investment oppor-
tunities; and
WHEREAS, nineteen cities of the County of San Mateo, represented by
the Mayor and Deputy City Manager of the city of Daly City and the Management
Analyst of the city of Redwood City, made a formal presentation to the PERS
Board of Administration at its April 22, 1981 meeting in Los Angeles, requesting
a change in PERS investment policies in order to maximize earnings from in-
vestments; and
WHEREAS, as of this date, no action has been taken by the PERS Board
of Administration to indicate that a change in investment policies is imminent;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
EL SEGUNDO, CALIFORNIA, that it hereby expresses its support of the views
expressed by numerous California agencies and employee groups that;
1) The California Public Employees Retirement System (PERS) is
not currently meeting the 2nd and 3rd objectives of its stated,, "Investment
Objectives ", which it has officially adopted as policy guidelines for the
retirement system investment program; and
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2) While it is-recognized that the PERS Board of Administration
has managed.its investment portfolio in a prudent and effective manner in
the past, that .the .League of California Cities take appropriate action to
influence the PERS Board of Administration to change its investment strategy
so that a significantly higher percentage of new revenue could be placed in
;Federal T- Bills, Certificates of Deposit, Bankers Acceptance and other per-
formance investment vehicles with high yield when market conditions so justify,
in a concerted effort to maximize earnings from investments; and
3) The League of California Cities sponsor legislation which will
expand membership of the PERS Board of Administration and the PERS Investment
Committee to ensure representation of public agency employers who are PERS
members; and
4) Support be given by the League of California Cities to the
Investment Practices Sub -- Committee of the Finance, Insurance and Commerce
Committee, Assemblyman Louis J. Papan�s Assembly Committee, which is con-
ducting an investigation of the investment policies of the California Public
Employees Retirement System in an effort to ensure that PERS maximizes its
rate of return from infestments? and
5) Encouragement be given to PERS member cities, member counties,
individual members and public agency employee organizations to write letters
to the PERS Board of Administration and to personally appear before the
Board to demonstrate wide public agency and employee organization support
for a full review of and change, as appropriate, of current investment
policies; and
6') The effort to maximize interest earnings from the PERS invest-
ment portfolio will directly.benefit PERS member cities and individual members
of the California Public Employees Retirement System and, in so doing, will
reduce the need for employer rate increases which would be funded from tax
revenues; and
BE IT FURTHER RESOLVED, that the City Clerk shall certify to the
passage and adoption of this resolution, shall enter the same in the book of
original resolutions of said City; and shall make a minute of the passage and
adoption thereof in the records of the proceedings of the City Clerk of said
City, in the.mnutes:of the meeting at which the same is passed and adopted.
PASSED, APPROVED and ADOPTED this lst day of September, 1981.
ATTEST;
City Clerk
CSEAL)
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Mayor of the City of El Segundo
California
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )
CITY OF EL SEGUNDO
0
SS
I, VALERIE A. BURROWES , City Clerk of the
City of El Segundo, California, DO HEREBY CERTIFY that the
whole number of members of the City Council of the said City is
five; that the foregoing resolution, being Resolution No. 3099 _
was duly passed and adopted by the said City Council, approved
and signed by the Mayor of said City, and attested by the City
Clerk of said City, all at a regular meeting of the said Council
held on the 1st day of September 119 81__
and that the same was so passed and adopted by the following vote:
AYES: Councilmen Armstrong,_ Bue. Johnson,
Siadek and Mayor Van Vranken_
NOES: Councilmen None
ABSENT: Councilmen None
WITNESS MY HAND AND THE OFFICIAL SEAL OF SAID
CITY this 14th day of September 198811
•
(SEA L)
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-� ay� ��)' 4Z4'4��-
City Clerk of the City of El Segundo,
California
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