CalPERS Study Session Wrap-Up
I attended the Costa Mesa City Council Study Session yesterday afternoon/evening at City Hall. Actuary and CalPERS expert John Bartel had the whole show to himself and managed to guide the council and the 20 or so people in the audience through the morass that is our pension system with much skill - and a slide show presentation that involved 64 slides. You can read the brief staff report HERE and Bartel's PowerPoint presentation HERE.
BEVER MADE IT - RIGHEIMER WAS AWOL
First, I'm pleased to announce that part-time, part-time city councilman Eric Bever actually made it to this meeting. And, more than that, he actually managed one or two semi-intelligent comments and questions, too. Mayor Pro Tem Jim Righeimer was reported to be out of state, so the initiator of all the pension dust-up was absent and unable to participate.
MEETING WAS TELEVISED LIVE AND TAPED
The meeting began at around 4:30 and ended just before 8:00 p.m., so the promised (threatened?) four hour meeting didn't materialize. It was conducted in council chambers televised live and taped, so it will be available for viewing on Channel 24, CMTV - Channel 99 on ATT U-verse and via streaming video - maybe sometime tomorrow. You may wish to watch it to double-check my facts. NOTE: Streaming video is now available for viewing, HERE.
2-TIER SYSTEM IS LONG TERM STRATEGY
Bartel told us that implementing a 2-tier pension system - where new-hires after a certain date receive a severely reduced benefit - won't generate any appreciable immediate savings. He said it's a long-term strategy, and quantified some of the options available. There were too many variables to cover here.
EMPLOYEES MUST PAY THEIR FULL CONTRIBUTION
He said the only real short-term strategy for finding cash is for the employees to pick-up all their contributions to the pensions. From where I sit, that seems very unlikely. The City sent letters to the six employee associations, requesting they re-open their Memorandums of Understanding. It is my understanding that none of the associations are willing to do that because that opens EVERYTHING up for negotiation and this council has already demonstrated its willingness to get rid of the bargaining units. I'm told, however, that some of the associations might be willing to sit down and discuss side letters to the existing MOUs. It's all a matter of trust. We know the City Council majority doesn't trust the employees and it certainly seems like the employees have every reason not to trust the council.
AN IMPASSE SOON....
It seems likely that we will soon be at an impasse, with heels dug in on both sides. I found it interesting that the only bargaining unit officer present was Helen Nenadal of the Costa Mesa City Employees Association. I did not see representatives from the Police or Fire Associations, but they may have been watching on television. Nothing I saw or heard last night would have made any of them very comfortable.
IMPATIENCE ON DISPLAY
Clearly, the most agitated and animated of the council members last night was Steve Mensinger. He asked most of the questions - some, apparently, because he hadn't read the staff report. Others he asked gave me a clear idea of what he's planning - a full-frontal assault on the associations at the next council meeting.
At the end of the evening Bartel left a couple suggestions. First, the council should try to quickly pay off the Fire organization's Side Fund. Second, the employees should pay their entire portion of the pension cost to help reduce the prodigious unfunded liability. When pressed by Mensinger he told us that, of the 40-50 organizations he's working with, only about 4-5 are developing a plan to deal with similar problems.
WHAT ABOUT OUTSOURCED UNITS?
I followed Bartel out of the auditorium following his presentation and asked him what happens if, for example, the Fire organization joins up with the Orange County Fire Authority? What happens to the pension liability? He told me that NOTHING happens to it - we, the city, remain on the hook for it all up to that point. The same is true about any other units that are "outsourced" - our obligation remains.
WE'LL SEE THE DIRECTION WE'RE GOING NEXT WEEK
This issue will appear on the agenda of the next council meeting, on Tuesday, October 18th, at which time the staff will be looking for direction from the council on how to proceed. That's going to be very interesting, since Mensinger has already requested a hiring freeze across the board until a 2-tier pension system is implemented. He may have to wait until 2014, when the last of the contracts expire, for that to happen. I guess we'll see. If we do have a hiring freeze public services and safety will certainly suffer.