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Well we now know that Costa Mesa’s pension crisis is phony as a three dollar bill.
Like most cities, Costa Mesa certainly has a long-term pension problem, but Lies, Damn Lies, and Powerpoint in Costa Mesa debunks Jim Righeimer’s outlandish claims that “CalPERS has projected that Costa Mesa’s pension cost will go from 15 million a year to 25 million in the next five years.”
Even by Costa Mesa’s own numbers, their actual pension costs are going down in Fiscal Year 2011-2012 because the employees are picking up 3.6 million dollars more a year in the City’s pension costs.
What happens in the two following years? CalPERs has projected rates for 2011-2012 based on investment returns for 2009-2010, and a range of investment returns for 2013-2014 based on investment returns for 2010-2011.
As the Calitics article shows, Costa Mesa’s pensions won’t rise steeply unless you assume that Righeimer and his team are going to completely fail in negotiating with public employees, and that when current contracts end, the City will start picking up a larger share of pension costs.
Maybe Riggy and his gang realize that they have no skills as negotiators and are assuming that they will be pantsed by the unions when contracts are up. But unless you make that assumption, Costa Mesa doesn’t have a pension crisis, at least not for the three years that we can legitimately project. And as City revenues continue to recover from their drastic plunge during the Great Recession, the modest increases in pensions costs won’t break the budget.
It’s not rocket science, and it would have been obvious that the City’s PowerPoint had some bogus assumptions if there had been any kind of staff report that showed the numbers. But there wasn’t. There was just poor Bobby Young mumbling and stumbling as he tried to defend a projection.
Riggy likes getting on TV with his talking points, and it appears that he’s bullied staff into making projections to support his agenda. Riggy wants to get rid of paramedics, firemen, police officers, and the people who clean up and maintain Costa Mesa. Is it ideology or ambition or a long-standing grievance against the unions that fought him so bitterly during his failed Assembly campaign? Who knows.
But let’s get to another question, one that the City Council of Costa Mesa should have started asking before they started issuing pink slips and spending hundreds of thousands of dollars on over-paid consultants and lawyers.
What happens to Costa Mesa’s $37 million in unfunded pension liability for their miscellaneous employee pool (everyone except sworn police and fire) if Costa Mesa’s outsourcing plans go through?
Do they think it just goes away?
As of June 30, 2009, Costa Mesa their contract for miscellaneous employees included liabilities for 400 active employees, 283 transferred members, 262 terminated members, and 300 retired members and their beneficiaries.
And there’s a pesky legal document we call a “contract”. This isn’t like being upside-down on your home loan and being able to send your keys back to the bank and walk away. And it’s not like an LLC for a development where you can file for bankruptcy. It’s a city, and there is an entire section of law called the Government Code that determines what is legal and what is not when it comes to “contracts”.
Which brings us to the REALLY BIG QUESTION; have Righeimer and his gang even asked what happens to their PERS obligations for each of the 18 departments they will be laying off?
I’ll bet they haven’t.
And I’ll also bet that they don’t know how their PERS obligations will be affected by the number of employees who transfer out to other agencies, and what the PERS payments will be for those employees in the future.
With over 500 cities in California, it’s not like Riggy is the first City Council member who has ever looked at outsourcing jobs performed by public employees. And there’s a reason why most cities move gradually and judiciously with outsourcing, absorbing current employees into other departments or using attrition to reduce head count.
We know that Righeimer has lied about the pension crisis, and that the actual documents from PERS show that he is a liar. Before we believe anything else he says, shouldn’t we demand that the City of Costa Mesa requests information from their PERS actuaries regarding these costs? And the city doesn’t have to waste money on another over-priced consultant to do this as Council Member Mensinger suggested at a recent meeting. You can just have staff send an email to the actuary who is designated to work with the City of Costa Mesa.
When you ask this question, you might find out that outsourcing will create a fiscal crisis for the city, by locking the City into losses that were incurred during the Great Recession, and missing the gains from the recovery. Or you might find out something else.
But it’s the height of folly to rush headlong into a series of expensive actions without bothering to learn anything about your responsibilities under the law.
Mayor Quimby – What are “out years”? Are those the years that come next year or five years or in 10 years or in 25 years.
Pension responsibilities rise as you stated clearly when people retire, are laid off and take an early out….and begin taking their pensions…say at 50 or thereafter. Some things that need to be addressed are budgets which impact capital improvements, infrastructure and general services. When those pressing Pension Payments wind up requiring a Bond Issue to borrow
the money for Police and Fire people retiring…..why is that not an option? Not politically sustainable perhaps? Our question however remains: Which Public Employees promises should be kept, changed or dealt with – without impact to Public Safety or Trash Collection?
Hmm, a poster known as “OC Progressive” claims that the Costa Mesa pension crisis is phony – I’m shocked! Does this bold progressive also dispute that staff costs account for nearly 90% of Costa Mesa’s budget? Or the fact that Costa Mesa has at least 27 retired public employees making more than $100,000 per year in pensions. Or how about the fact that last year, more than half of Costa Mesa’s public employees received over $100,000 in compensation? That’s what I thought. If you believe that Costa Mesa does not have a crisis of employee compensation, I’ve got a nice bridge in New York I can sell you.
Maybe Costa Mesa can be the first Orange County city to dis-incorporate
If local governments (cities etc) can not provide local services, then they should dissolve.
Under economies of scale, when you spread the costs over many people, the cost per person decreases.
That is not happening in California.
This is class warfare! Waged on the rest of us by the rich.
I see all over the nation that politicians are using phony budgetary excuses to foist their agenda on the public to do what they want to do – destroy labor, destroy the middle class. And they got a lotta nerve doing this while other people across the globe are risking their lives for democracy and honest government.
If by “rich” you mean those of in the private sector earning a modest living paying taxes that support bloated public sector pensions, then rich means most of America by your definition.
Well, “bloated” is a relative term, isn’t it? Many public employees, after years of dedicated service, get a modest pension.
Perhaps you should be more concerned that those in the private sector earning a “modest living” should also get a decent pension after years of service, instead of disingenuously calling such people “rich.” You know who the truly and disproportionately rich are, and you’re their lapdog.
The Calitics analysis is a joke. Not using any real actuarial data, the folks at Calitics whose sole purpose seems to attack the current Costa Mesa council does its “own” “analysis” of the Costa Mesa public pension crisis. This is a little like a non engineer measuring Homer and Marge Simpson’s cartoon home and saying that independent analysis shows that the home is unstable.
First, the notices were given to public employees due to the ridiculous public union requirement that six months notice be given of any potential change. The only way to make any realy change is to provide the notices and then reasonably decide which, if any, of the notices to act upon. If the union had been willing to waive the notice requirement, no notices need have been sent.
Second, the rules reqarding public pension caclulation have become so warped that they challenge any rational analysis. Typically a public employee gets a penison representing average of the three highest years of compensation during the employees last five years of employment. What frequently happens is that an employee that has been averaging $65,000 suddenly gets an Masters degree just four years before their retirement pushing their pay to $80,000 – even though the degree will have done little over the course of the employees entire career to help them do their job – the purpose of the degree was to solely pump up their pension. Then, the employee then becomes a “manic worker” working extra shifts and getting lots of overtime driving their “salary” from $80,000 to $110,000. And then they retire. Now, instead of a pension based on the REAL average pay of $65,000 per year, this employee retires with a pension of $110,000 per year – ALMOST DOUBLE WHAT THEY REALLY DESERVE.
However union shill like Mayor Quimby and Calitics want to play the shell game and hide the real numbers, the truth is that public unions are bleeding dry local government in Caliornia.
“Not using any real actuarial data, the folks at Calitics whose sole purpose seems to attack the current Costa Mesa council does its “own” “analysis” of the Costa Mesa public pension crisis”.
The Calitics analysis uses the rates from the June 30,2009 actuarial valuation reports for the City of Costa Mesa and is pretty clear about its assumptions. You can get a copy of the report.
Maybe some of the assumptions are wrong. And maybe the City of Costa Mesa could actually show their work so other people wouldn’t have to recreate it.
Some cities even post it on their website.
Congratulations to Geoff Willis for seeing the similarity between the Costa Mesa City Council and the Simpson’s cartoon household.
But the comparison is really unfair to Homer Simpson. Yes, he is stupid and selfish, but he usually doesn’t intend the harm and chaos that he causes.
Ron Winship asks “What are “out years”? Are those the years that come next year or five years or in 10 years or in 25 years”
CalPERS actuaries have determined rates for Costa Mesa for 2011-12, have a very accurate projection of what the rates are for 2012-2013, and has a range of projections for 2013-2014, which we can interpolate based on what we see happening with CalPERS investments during this fiscal year.
So my definition of “out years” is what happens after June, 2014. I’ve made it clear in previous comments that I believe that the cost of public safety pensions is completely unsustainable, and we need to make a series of changes through legislation and negotiation that will get rid of pension spiking, eliminate overtime from pension calculations, move new employees to a less generous system, and have employees pay a higher share of pension costs, which the employees in Costa Mesa have agreed to do.
If these types of changes are made, and if the American economy doesn’t go completely down the toilet, then it’s likely that we will see a drop in pension rates in the future. Time will tell.
But I can’t see any crisis that justifies the recklessness of the Costa Mesa City Council or their failure to ask the most basic questions about what happens to their contractual obligations if they outsource 18 departments.
The city councils are elected political offices, no experience needed and the only qualifications is the ability to get elected. (and the ones who haven’t been bought off don’t make much money either)
The high paid city managements runs the city, the council votes are based on what the city management tells them. (to do)
If the council votes are wrong, then it would be the bad information they got from the people who get paid very high amounts in wages and benefits.
The Bell scandal will show the world the criminal template being used to rip off the taxpayers.
Expect all city managers and city attorneys, assistance managers and the members of the water and sewer boards to retire and run for the hills it in the next year as the prosecution shows, step by step how it is being done.
OR
A deal will be cut, they will get huge pensions, and jail time will be cut short with pardons.
“OC Progressive” surfaces. This is Gus Ayer, the long-ago former Fountain Valley Councilman who got beat like a rented mule in 2008 — the only incumbent to lose in Orange County that election year. Ayer fancies himself an a financial analyst, rather than the liberal with a far left agenda that he actually is. He’s been targeting the toll roads for years, and may even be right about them, except he’s got no credibility. And if he’s not associated himself with Calitics and the insufferable lying piece of crap Robert Cruikshank, that erases any believability he ever had. Ayer was last heard from at the unread OC Progressive blog almost two months ago, so he must’ve been out searching for his reputation.
Listen to Willis, not washed up libs
Ah – it’s the old “GoLightly!” Named after an industrial-strength laxative. I thought you’d left this blog after me and Gabriel put up the Onion’s “Zombie Reagan” video. I remember about twelve dozen comments of yours – all attacking me, but sadly never containing any substance. Nothing. And still, nothing.
I just talked to Gus Ayer, who writes at Calitics as OC Progressive. He said he would be updating something at Caltics ( his signature?) so it would be clear who he was. The OC Progressive blog went dormant when it lost its writers. Joe Shaw went on to run for City Council in Huntington Beach, and won. Heather Pritchard’s husband Gary was part of the CAPO recall team, and won his election to the School Board. Vern, who they had counted on to be a major contributor, decided to write for OJ.
He laughed, and said that the negative comments must be coming from a very angry guy named Roy Reynolds. Ayer said that people at Orange Juice should check out his (Ayer’s) contributions. Before he (Ayer) was first elected in 2002, and gave up on Republicans in 2006, he was a significant contributor to guys like Chris Norby, Bruce Whitaker, and Dave Sullivan. In Fountain Valley, he voted for term limits, and supported Jim Righeimer’s proposal for a development deal on “Sales Tax parkway”, going against the staff recommendation. He was most frequently aligned with Larry Crandall, a Republican Central committee member against the good old boys, Collins and Carrozo.
He admits that now he is a far-left, lefty-left progressive Democrat. He is surprised that he is still right-handed. Ayer is an Executive Board Member of the California Democratic Party, but he still agrees with Chris Norby and Larry Gilbert. on redevelopment, and seems to support the outsiders in the Democratic Party.
Brooce wittaker kilt and et my dog. i am prity sure. him or senitor thoon.
This article is right on. Lets get the facts straight:
PERS is a separate agency within the state system. Regular State/City employees make a large contribution to 100 percent fund their own pension. State makes a contribution as it has always over the last 60 years into PERS. Once the employee retires he is on PERS dime, the State is out of the picture. The unfunded liability is due to lower stock market returns but as another reader stated PERS returns higher average returns then any retirement system in world. This is a temporary situation as the economy is now turning around and stocks are headed up.
PERS has to project into the future so the unfunded liability would be if every State employee worked 30 years and collected a full pension, there may be a problem. It’s like buying a new house and you put 10 percent down, you can still make the payments easily but your bank account would have to funded to be able to pay the house off in full. Only 11 percent of State employees make it to 30 years but PERS still has to fund as all of them make a 30 year career, that were the unfunded liability comes from, it’s not really there. I have this from a reliable source that if the State Employees did not put one dime in PERS it could pay out full benefits for current retirees and future retirees for the next 20 years without borrowing a penny.
Also once you have a contract such as a pension the State cannot take it away. If they go to court on this they will lose and it will cost the taxpayer millions. Again, this is a direct attack on the middle class in the state and Costa Mesa’s Mayor should be removed from office!
O.K. folks – here is the deal. Several things are driving this public pension hyseria nationally, as well as locally. They include
(1) trying to cripple a key funding source for the Democratic Party – union money,
(2). trying to steer the management of public pension funds to Wall Street firms that can make huge bucks from fees of all kinds charged to the trillions in public pension funds and in turn contribute to office holder re-election campaigns
(3) a strong belief that private sector business practices ae applicable to the public sector and will result in both efficiency and political friends and contributors making money
(4) pension envy resulting from the death spiral of defined benefit retirement plans in the private sector over the last 20 or so years coupled with the broad impacts of the current recession, and
(5) philosophical bias against anything government and anything tax-supported.
People and groups subscribing to one or more of these agendas will use the most extreme assumptions possible to produce inflated estimates of future pension costs and then cry that the sky is falling and what has been promised is unsustainable and that the only answer is to steer pension monies to Wall Street, move toward privatization and its accompanying cronyism, and punish the public sector (mostly unionized) workforce.
This is what is happening in many places, from Wisconsin to Costa Mesa. As the saying goes, follow the money – especially if you can redirect it to friends and political contributors while punishing those who support your political opponents. As a philosophy and strategy none of this appears to be illegal, it is just another chapter in the old adage “to the victor goes the spoils.” (by the way, that is why the nation has a civil service system, but that is another story for another day) .
@been around awhile
In the attacks against public pensions, I would add another very strong incentive for attacks specifically against CalPERS.
CalPERS is a huge pension fund that has been very active in fighting corporate greed and bloated compensation packages, because the egregious pillaging of corporate assets by executives reduces the return for California’s employees.
The banksters don’t like CalPERS.
Mayor – good point.When pension funds throw their weight around like CalPERS has with corporate governance, they create enemies who would like, besides getting their hands on all that pension money, to take down the growing power of that organization. I will most certainly add that one to my list.
I would hope no one believes the rhetoric from the Righeimer administration. This same turkey wants to spend millions on resurfacing perfectly good roads with money we don’t have. He just recently turned down $1.3M that could have gone to the general fund in a magnificent display of incompetence. And that’s just for starters.
Costa Mesa needs someone good with money and common sense, not ideological sound bites. Recall Righeimer before it’s too late.
Why in the world is a municipality with streets to pave, parks to maintain, and people to protect in the pension business in the first place? Why should pension costs be paid by the residents? Even this year, pension costs are almost 20% of Costa Mesa’s budget – that is ridiculous. City employees, like everyone else in the United States, should get social security and have a 401(k) or other IRA.
CMCitizen, you might be on to something. Maybe we can pay city employees less AND give them worse benefits. Who wants to attract good employees anyway?
Let’s not stop there, if things are outsourced, Righeimer’s friends can really make sure they work a low wage and with 0 benefits. Think of something like sidewalk maintenance and repair. The contractor who runs that racket can hire illegals. They rarely complain. Who are they going to complain to? The government that’s going to send them back? Nope. Plus, the contractor will know there are hundreds of other economic refugees that will take there place in less than a day. We’ll get wages down to $10 an hour and no benefits in no time.
Better yet, outsource all the desk jobs to India. Lots of corporations are doing that with their accounting departments these days. It will be a neo-con paradise with wild west corruption!
Lastly, let’s go for 0 taxes. Cause, you know how awesome anarchy is. Everyone can walk around with a gun and fire extinguisher if we get rid of public safety all together.
What? You made that slippery a slope cuz she suggested social security like everyone else? Does that mean all those that get social security are second rate workers? I know its been an aeon since you’ve been here but come back…Id like to hear more.