HomeMy WebLinkAboutResolution No. 7033RESOLUTION NO. 7033
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AZUSA 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 California Public Employees Retirement System
membership, as of June 30, 1980, included 357,157 members who are
employed by local public agencies; and
WHEREAS, the City of Daly City sent a letter to the PERS
Board of Administration in April, 1980, encouraging a change in
investment policies in order to take advantage of short-term investment
opportunities, such as federal treasury bills, which are guaranteed
by the federal government; 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; and
WHEREAS, short-term investment vehicles continue to pay
high interest rates, as they have for the past 30 months, with PERS
failing to capitalize on these investment opportunities; and
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, the rate of inflation, as determined by the state
composite California Consumer Price Index, as computed by the California
State Industrial Relations Board, for the same 12 -month period was 17.57
for all urban wage earners, and 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 "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 stablize current employer contribution rates."
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 opportunities; 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;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Azusa that it hereby expresses its support and concurs in
adoption of the Resolution adopted by the City of Daly City, wherein:
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;
2. While it is recognized that the PERS Board of Administra-
tion 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 performance investment vehicles with
high yield when market conditions so justify, in a concerted effort
to maximize earnings from investments;
3. 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;
4. The effort to maximize interest earnings from the PERS
investment 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.
ADOPTED AND APPROVED this 17th day of August, 1981.
MAYOR
I HEREBY CERTIFY that the foregoing Resolution was duly
adopted by the City Council of the City of Azusa at a regular meeting
thereof held on the 17th day of August, 1981, by the following vote
of Council:
AYES: COUNCILMEN: Decker, Cruz, Moses, Solem
NOES: COUNCILMEN: None
ABSENT: COUNCILMEN: Fry
, � L &' //. ��
CITY CLERK
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