Top Costa Mesa officials have offered to pay an average of about $6,250 extra per year toward their pensions, to the maximum portion allowed by the state pension agency, the city announced Friday.
If the City Council approves next week, seven managers and the police chief will contribute from their paychecks 39 percent of their pension costs — up from the current 31.5 percent paid by all city workers who aren’t police officers or firefighters.
A news release quoted Mayor Gary Monahan describing the decision as “a landmark for Costa Mesa and its residents,” and the city estimated it would save about $50,000 a year.
The latest announcement appears to set the stage for the city to request that its rank-and-file employees also increase their pension contributions.
“Our leadership team felt like we couldn’t be asking employees to make their full pension contribution unless we did it first,” CEO Tom Hatch was quoted as saying in the news release.
Jennifer Muir, a spokeswoman for the county employees union, said that as recently as last February, all of Costa Mesa’s general employees, from lower-level staffers to managers, were paying 38 percent of their pension contributions. The city pays the remaining portion.
Since then, she said, the state pension agency, CalPERS, has raised the overall dollar amount Costa Mesa pays toward pensions, while the percentage that employees contribute out of their paychecks has remained the same.
“The city has appreciated the sacrifices the employees have made over recent years to help balance the budget. This volunteer move was done in that same spirit,” said city spokesman Bill Lobdell. Lobdell said he couldn’t immediately verify Muir’s figures.
Costa Mesa recently asked its firefighters to pay nearly 30 percent of their pension costs, instead of the current 2.15 percent, according to the city.
A deal with non-safety employees, however, is unlikely under the current circumstances. Nearly half the city’s employees have been issued layoff notices, and the municipal employees union has made it clear it won’t negotiate until the pink slips are canceled.
Meanwhile, the City Council majority has given no indication of rescinding the notices.
To justify laying off employees and outsourcing services, city leaders point to what they describe as a financial crisis brought on by pension obligations.
Costa Mesa does have a significant long-term unfunded pension liability. Some council members, however, have been presenting the city’s $221-million “termination unfunded liability” — the city’s estimated cost of withdrawing from the state pension plan — as its actual unfunded liability. CalPERS calls this “misleading.”
The number CalPERS officials say should be cited is the city’s “actuarial unfunded liability,” which is about $126 million. The figure is used to calculate incremental changes in cities’ regular pension contributions.
Councilman Jim Righeimer insists, however, it’s CalPERS’ accounting methods that are misleading and says he trusts the termination figure as the actual unfunded liability.
— NICK GERDA
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