M E M O R A N D U M 05- 77

TO: MAYOR HORNADAY AND HOMER CITY COUNCIL

FROM: COUNCILMAN DOUG STARK

DATE: COUNCIL MEETING OF 25 APRIL 2005

SUBJECT: COUNCIL'S POSITION ON PERS REVISIONS - TIER IV

Prior to testifying to the Senate Finance Committee on the 12th on the City's need for the $265,000 the Governor proposed to appropriate to the City for a two-year payment on the PERS shortfall, I discussed with the City Manager what our position should be. We agreed that corrosion-proofing the deep water dock was not only the best use for the money, but was also the most salable politically.

In discussing this with the Committee, Co-Chairman Senator Gary Wilken asked me about the City's position on proposed Tier IV, changing the PERS plan to a defined contribution plan, similar to a 401-K. In participating in Alaska Municipal League conference calls these last

2 1/2 months this subject has come up repeatedly, since the PERS problem is the AML's top priority in this legislative session, and the change to a defined contribution system is a logical step. This is part of a nation-wide switch in retirement systems. And the AML has urged its members to give their views to the Legislature, since the House and Senate appear to be delaying approval of the $39 million (which contains Homer's $265,000) until the member citys/school districts agree to the change.

I told Senator Wilken that we would consider the issue at our meeting on the 25th and we would get back to him. Time is of the essence in Juneau, and I urge this body to approve the accompanying resolution and forward it posthaste to the House and Senate.