HomeMy WebLinkAboutAgenda Statement 1981/09/22 Item 7COUNCIL AGENDA STATEMENT
Item 7
Meeting Date 9-22-81
ITEM TITLE: Resolution ~~ ~.f,L Supporting an Investigation and Analysis of the
Investment Policies of the California Public
Employees' Retirement System in an Effort to Increase
the Rate of Return
SUBMITTED BY: Director of Finance (4/5ths Vote: Yes No X )
~~...
On August 25, 1981, the City Council voted unanimously to support an inves-
tigation and analysis of the PERS investment policies as requested by the
City of Daly City. It is therefore my
RECOMMENDATION: That Council adopt the attached resolution in support thereof.
BOARD AND COMMISSION RECOMMENDATION: Not Applicable
DISCUSSION:
During the fiscal year ending June 30, 1980, the "Computed Rate of Return"
for the Public Employees' Retirement System was 7.91%. The interest credited
to the member employers and employees retirement earnings was only 6% and
subsequently raised to 6..75% effective July 1, 1980.
During the same period, short-term commercial paper, Treasury Notes and
T-Bills have been yielding interest rates ranging from 12% to 20% over
the past 18 months. We have been informed also that 49% of the PERS
$12.85 billion investment portfolio is placed in bonds, many of which are
long-term investments yielding only 3% to 4%.
Since member cities, such as Chula Vista, are experiencing continuous
employer rate increases following periodic audit of the financial integrity
of the system, it is believed that a better investment philosophy could
help reduce these increases; therefore, we are recommending this resolution
requesting the State Legislature to review the investment practices of the
Public Employees' Retirement System.
FINANCIAL IMPACT:
Not Applicable
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Form A-113 (Rev. 11/79)