Overview of O.C. city employee pensions


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Sac Bee Columnist Dan Walters article in today’s Register is a red flag that we all acknowledge. “Big spending cities facing music.” He cites Vallejo, which filed for bankruptcy protection a few year ago, and has added the city of Stockton, which “borrowed  to build a new baseball park, a new sports arena and a marina, none of which came close to breaking even.” Huell Howser. I will not focus on that redevelopment failure in this report. According to Dan’s report  the city of Stockton “faces a $37 million budget deficit.”

Last year I posted a report detailing compensation of a dozen senior Mission Viejo city staffers. Today, thanks to State Controller John Chiang, as a result of abuses by elected officials in the city of Bell, we now have detailed reporting of Local Government Salaries and Compensation. Thank you Mr. Chiang.

Around this time of year city council members are being asked to review their city budgets for the next one or two year cycles. City managers have a habit of comparing themselves to other cities to justify giving raises to their employees which also includes themselves. What is often overlooked in these deliberations is that there is more to the cost than the basic wages. In my Part 2 of 2 post on May 15th I detailed every one of the benefits that Mission Viejo offers to all of our employees. At this time my focus will be on the ticking time bomb faced by every city in the state. I refer to costly PERS pension obligations According to the Controllers office report 17 of our 34 O.C. cities offer 2%@55 pension programs for their employees. The most conservative city employee pension is found in our neighboring city of Laguna Hills whose employees receive 2%@60.
 Eight cities offer 2.5%@55. They are Buena Park, Costa Mesa, Fountain Valley, Garden Grove, Huntington Beach, Newport Beach, RSM and Westminster.

The big spenders, offering 2.7%@55, are Anaheim, Irvine, La Habra, Los Alamitos, Mission Viejo, Orange, San Juan Capistrano and Santa Ana.

Offering 2%@55 are: Aliso Viejo, Brea, Cypruss, Dana Point, Fullerton, La Habra, Laguna Beach, Laguna Niguel, Laguna Woods, Lake Forest, Placentia, San Clements, Seal Breach, Stanton, Tustin, Villa Park and Yorba Linda.

As you scan this list there is no benchmark to their pension offerings. .i.e.  Check out their date of incorporation, population, contract vs non-contract city, etc.
For every city employee who retires at 55 to 60 with a 25 year lifespan to follow, we must hire their replacement which will also be entitled to some form of pension benefit. Therefore city council members must consider the ongoing cost of funding current, future and retired employees as they consider what level of compensation can be justified in this recession that led to a 280 point drop in the Dow yesterday “erasing more than a quarter of the stock market’s gains for the year.” OC Register.
Looking outside of Orange County I did a random check of a few large cities. San Francisco offers their employees a 2.3%@62 pension benefit. LA offers 2.16%@55 with 30 years of service. Sacramento offers 2%@55 and San Diego provides 2.5%@55.

While you visit the Controllers site take a few minutes to see what every one of your city employees earned including their total 2009 wages subject to Medicare (Box 5 of W-2.
i.e. The Mission Viejo city manager earned $245,699. The report also lists $10,120 in health, dental and vision coverage.
Following  is the link to the controllers report which is my data source of the above information.

http://lgcr.sco.ca.gov/EntityList.aspx?entity=City&load=ByDefault


About Larry Gilbert