Of Spending, Not Saving
The SECOND study session of the afternoon yesterday, Tuesday, was also held in Conference Room 1A, but played to a much smaller crowd than the earlier training session. Funny, because this one had some very important issues to be discussed by the 60% of the council present - Mayor Jim Righeimer and councilman Gary Monahan were also absent from this one. Mayor Pro Tem Steve Mensinger chaired this meeting and, although it began at 4:55 p.m. instead of 4:30 as scheduled, he observed that "we're right on time" - and he wasn't kidding. Geez!
In my earlier report on this meeting I provided links to the staff report, HERE, and three attachments to it.
Fiscal Year 2012/2013 Surplus Analysis HERE
Recommended Uses of the FY 2012/13 Surplus HERE
Unfunded Priority List for Capital Improvement Projects HERE
Appendix A, the Fiscal Year Capital Improvement Program Budget HERE.
CALPERS REP. COMING TO TOWN
During Public Comments Jeff Arthur, Chairman of the Pension Oversight Committee, spoke to advise the council and other participants and observers that a representative from CalPERS will be speaking to his group at their meeting on Wednesday, November 20th. These meetings are usually held in Conference Room 1A, too. That meeting begins early - at 2:00 - an hour that almost guarantees a small turnout of those who might otherwise be able to make it. I'll be there.
SPENDING AND SAVING
The purpose of this particular meeting was to discuss the current Capital Improvement Program and also to get a sense of how to manage the $7.1 million budget surplus carried over from the last fiscal year.
PENSION LIABILITY FUNDS
CEO Tom Hatch led off this meeting by mentioning that there is $500,000 in the budget surplus earmarked to pay toward Unfunded Pension Liabilities, plus $50,000 available for Unfunded Medical Liabilities AND similar amounts earmarked in the 2013/2014 approved budget. Wendy Leece wondered why these funds had not been disbursed, since the council approved the budget. Mention was made that the Pension Oversight Committee was to report to the council on this issue. We all remember that the mayor, in one of his little rants from the dais, said he's not going to send one extra dollar to Sacramento, period!
BANKRUPTCY TO BUST THE EMPLOYEE ASSOCIATIONS
As I've said before, if that is true, and IF it is also true that our Unfunded Pension Liability is so large as to cause the city serious financial distress, perhaps that's exactly what Righeimer wants - for the city to be placed in the position to declare bankruptcy so he can bust the associations. And, perhaps that's why he continues to throw money at so-called hard assets instead of providing adequate staffing for public safety and, now, in other areas that are in need of more staff time to provide expected services on a timely basis.
Hatch spoke of the Capital Improvement Budget and mentioned how unusual it is for a meeting of this type to occur at this time of the year. In years past similar presentations were held during the Mid-Year Budget Review in January or February.
STAFFING LEVELS IN THE TANK
Speaking of staffing levels, Hatch told us that the city has gone from 611 employees in the recent past to only 410 on the payroll today. The current authorized staffing level is 450, with 40 approved vacancies. At a recent council meeting he reminded the council that, in order to meet their demands it would be necessary to fill positions in many areas across the board.
CODIFYING CIP AND RESERVES
Hatch told us he would be recommending that, beginning with the next budget cycle, the council earmark 5% of the budget for capital improvements and 1% to begin replenishing our reserves, which he told us were at around $70 million before the economy tanked and we began tapping them to stay in business. Hatch told us that the reserves are now down to around $33 million. Mensinger indicated that number included our "$16 million emergency fund", which I believe is actually $14.125 million, but what's almost $2 million between friends, right?
CMPD STAFFING LEVELS PRECARIOUS
As a sidebar here, although it was not discussed at this meeting, It's my understanding that the Costa Mesa Police Department staffing level of sworn personnel now hovers at 105, well short of the meager authorized level of 125 and far, far from the levels recommended by consultants two years ago. It is also my understanding that, if retirements occur as anticipated and considering the officers currently out due to on-the-job injuries, it is VERY likely that we will soon - maybe as early as January - fewer than 100 officers available for duty. On Veterans Day there were only five (5) officers on patrol for our city of over 110,000 souls.
EMPLOYEE PERFORMANCE SLIPS
In recent months I've seen what appears to be a drop off in response times by some city departments. This certainly is due to the demands made upon them by the council and the public and press, as well. With demands for public records taxing many departments and investigations ongoing, it doesn't surprise me at all if performance slips. You can thank your council majority for creating such a toxic work environment that employees leave and we continue to have problems attracting replacements.
LITIGATION - A "COST OF DOING BUSINESS"
It's going to be a very interesting remainder of this fiscal year. Expect legal fees to continue to spin the meter as the men in charge treat operating this city like they would operate a business - where litigation is just another cost of doing business. It's disgusting! And, did we mention that Jones Day, our nearly $500 per hour lawyers, is the firm navigating the City of Detroit into bankruptcy?