Wednesday, February 09, 2011

No Surprises - A Long And Painful Study Session

Well, that normal "one hour" meeting ended up taking almost three! And, while most council study sessions play to a crowd of, maybe, a half dozen people, this one was attended by at least 85 people at peak attendance - most of whom were employees. The decision to hold the meeting in council chambers instead of the cramped quarters in Conference Room 1A proved to be a good choice.


Following a brief period of public comments, in which budget gadfly Judi Berry told the council that she remained concerned that the City Attorney's office was blowing through an average of $100,000 per month, Mayor Gary Monahan set the tone with his opening remarks. He told us we were "going see some very familiar and some very new financial facts and figures. Some will be very disturbing. As we move forward with our eyes on a fiscally-solvent five year plan we will need to recognize and reverse some of the financial trends we have been dealing with the past few years. It's not a surprise, but "business as usual" will not be sustainable. Having been on this city council twelve of the last fourteen years, I personally bear much responsibility for actions taken over those years. Suffice it to say that some of these actions have directly led to some of our difficulties that we now face...." He went on to compare Costa Mesa to Ronald Reagan's "shining city on the hill" and told the assembled throng that we would all have to pull together.


Tom Hatch, City Manager-in-waiting, announced that he's actually going to have some help following Allan Roeder's retirement in a couple weeks. Terry Matz, former City Manager in Stanton and retired Assistant City Manager from Brea, will be working part time - 15 to 20 hours per week - in the City Manager's office to help with the transition and to get the city over it's financial hump. This, of course, is great news. Hatch is very good, but is going to need a lot of help...

Let me make an editorial comment on the meeting in general before going on to specifics. We heard a lot
of numbers - many of them not new - and a lot of gloom and doom mixed with the occasional attempt at cheer leading. I heard nothing that told me this new council was not intent in a major restructuring of the city using layoffs, outsourcing and complete elimination of departments and services - quite the contrary. For example, in response to a question from Wendy Leece for clarification of his definition of just what "outsourcing" meant in the context of his discussion, Mayor Pro Tem Jim Righeimer said, "I think we have to look at every duty that the city does that can be done from an outside source, not done by a city employee." Monahan subsequently said, "I don't want anyone to take away a goal that we want to outsource the entire city." Since those two very divergent statements were made by the top two elected officials - the two members of the Budget Work Group - within minutes of each other, it's easy to understand just why there is apprehension among many members of the city staff.

A little later Righeimer told the audience that he was already reaching out to department heads, looking for ways to change operations and to improve the way things are done. He encouraged the employees present to let him or any other member of the City Council know if they have ideas about the way things can be improved. That, of course, brings up the issue of potential Brown Act violations. You will recall that City Manager Allan Roeder cautioned the council at their last regular meeting that the formation of sub-committees makes the possibilities of Brown Act violations much more possible. Righeimer's suggestion is a perfect example of how we could be getting into trouble in this process.

At the very end Steve Mensinger told the audience and the council that he had already reached out to members of County government about meeting to discuss a joint powers authority for airborne law enforcement. I find myself wondering if this is the first of many unilateral initiatives he's going to launch himself on in the future? Remember my concern about this council's impatience? There you go...

The discussion about ABLE was enlightening. You can read the staff report at the link I provided in my previous entry, but one tidbit gleaned from the discussion with Commander Tim Starn, who heads up ABLE, was that the "Equipment Replacement Fund" segment of ABLE's budget may be $1 million over what would be necessary to purchase a new helicopter. I found myself wondering if that chunk of cash could be tapped immediately to help balance our current budget and keep us from using Fund Balance. If we had to split that number with Newport Beach it would give us another half-million to work with. It all may be moot since the staff report tells us that Righeimer and Monahan are recommending the dissolution of ABLE. Contractual obligations will require that some partners be given 120 day notice if that happens. That means notices must be sent by the end of the month. Unless something miraculous happens in the next week I fear we are soon to be without the force multiplier that ABLE represents in our law enforcement efforts. Criminals will sleep more soundly...

One message that kept getting a lot of play at this meeting was the fact that the City is almost out of cash. Righeimer used it as the back beat to several of his messages. Based on information provided by Budget and Research Officer Bobby Young, it was posited that in November - before we receive our Property Tax revenue from the State - we could be down to $5 million in cash reserves. However, as I understood the discussion, that doesn't take into account the emergency reserve of $14.125 million nor the $10.8 million loan to the Redevelopment Agency. I'm not trying to make light of what appears to be a "cash" problem, but there are some folks who will hear that $5 million number and immediately begin to hyperventilate.

Speaking of which, the
discussion of the future of the Costa Mesa Redevelopment Agency was interesting. Since nobody really knows just what old/new Governor Jerry Brown has in mind for redevelopment agencies it's difficult to plan. However, much discussion was given over to the wisdom, or lack thereof, of having the Redevelopment Agency repay the $10.8 million loan to the City by refinancing that amount in today's market. Eric Bever asked a question that's been rattling around in my head, too. He wanted to know just who would be lending money to ANY redevelopment agency in light of the Governor's rumblings about folding them up and re-claiming the cash? I never did near a good answer to that question.


It seems inevitable that the Police Department will soon lose the two officer positions it's been holding open for several months. While that's irritating but understandable, more disconcerting for me is the fact that the new, impatient council seems determined to micro-manage every aspect of city government by taking any flexibility out of the hands of managers. For example, it has long been city practice to leave positions open when they occur until and unless the managers and department heads can justify the need to re-fill them. This provides a very significant level of management flexibility and actually has been an effective budget management tool. It seemed to me, based on the discussion, that Righeimer and Mensinger were eager to have EVERY vacancy immediately dropped from the roles as they occur and thereby force managers and department heads to jump through unnecessary hoops to later fill them.

The discussion of CalPERS numbers - future rates and unfunded liability - was dismal. Young provided graphic information that only seemed to fuel the fire in the bellies of the pension reform cabal on the council. They were not dissuaded by the facts of recent employee participation in the pension contributions, seeing only the bleakest possible downside. In fairness, the numbers are staggering and the charts that showed recent climbs in liabilities that looked like a Space Shuttle launch only emphasized that point. There is no doubt in my mind that Young's presentation is going to form the cornerstone of near-term attacks on employee retirement plans. The easiest way to solve those "problems", of course, is to get rid of the employees who are earning them. I saw nothing in the discussions that gave me hope that negotiations were planned in the near future. I think it will take a major initiative by the employee organizations to get this council to the table.

In her formal presentation of the "Noticing" requirements for layoffs and/or outsourcing she told the crowd and council that in the case of Layoffs and complete elimination of services a 30 day notice is required and conferences with the bargaining units must be held regarding potential reorganization. In the case of outsourcing a 6 months notice is required. See above for my comments on outsourcing.


I close tonight with a heavy heart. While Gary Monahan attempted to be a cheerleader, e
ncouraging everyone to participate in problem-solving, it was clear that "solutions" are already in the works. Several of these issues will appear on a Council agenda soon - some as soon as next Tuesday. This haste is unprecedented and makes me very nervous. It seems to me that this council is like a snowball rolling down hill - it's gaining momentum and seems destined to roll over everything in the way. At the close of the meeting I found not a single employee who felt positively about what they had heard. Instead several commented to me and others around me that they were more concerned than before the meeting. I guess only time will tell...

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Blogger Unknown said...

I'm always amazed when pension numbers are discussed as to the intentional misinformation that is disseminated. Mr. Young's numbers on the "unfunded" liability did not include the fact that the current pension payout is covered 64% by investments and has been higher than 100% in the past, at current levels that means the "unfunded" liability is 2/3rds less than projected and could move up or down. Not one word was said about the fact the the General Employee's pension for new hires has been negotiated to be 2% at 60 which significantly reduces future obligations.

2/09/2011 05:46:00 AM  
Anonymous Wyatt Earp said...

The police department can still save money. Animal Control should be contracted out to the county or shared with Irvine or Newport. I still can't understand why this isn't handled by a private company. Also, CMPD staffs it's front desk with 3 full time civilian employees (full time pay and benefits). Anaheim PD staffs their front desk with police cadets earning $8-$10 per hour. CMPD should do the same. This would eliminate 6 city positions from the pension program. Also, the PD maintains a civilian "Commander" earning at least $200K per year. This position should be eliminated and the responsibility from this position should be shifted to other management personnel. The line staff cops have sucked up more duties due to layoffs, management should do the same.

2/09/2011 07:07:00 AM  
Anonymous Ted said...

My neighbors and I are in agreement. Get rid of ABLE it’s an expense we can’t afford right now.

2/09/2011 07:35:00 AM  
Anonymous Wyatt Earp said...

Ted, I agree with you that we cannot afford it right now. I want to see it go so that the department can survive. For many reasons I do not want the sheriff's department to handle police services for my city. The only hesitation I have for the loss of ABLE is the fact that once it is gone, it will never come back. I agree with Geoff West here that due dilligence must be exercised here, but, in the end I believe it must go.

2/09/2011 08:10:00 AM  
Anonymous Butch said...

We weren't at the meeting but heard that the unfunded pension obligation is actually $130 mil, not $110 mil. Is that correct? What is the plan to get this under control? Who is going to pay for this?

2/09/2011 09:00:00 AM  
Blogger ERIC said...

It is so frustrating hearing these twisted and sometimes made up numbers on pensions. "Unfunded" is a poor and misleading term.
This council is using doom and gloom to push through sweeping changes for political reasons. Where is the talk about how IT WAS THE CITY that took its employees out of its private retirement and put them into PERS. And in doing so THE CITY pocketed over $20 million, and then didn't have to pay a dime into PERS for years because it was overfunded. Where is that talk? Where is that money? Aren't you suppose to SAVE for rainy days... well Council its raining. You can't have it both ways, PROFIT WHEN THINGS ARE GOOD AND THEN OUTSOURCE/LAYOFF AND PROFIT WHEN THING ARE BAD..... unless you are the banks.

And about only having $5 million cash? what a farce. There are so many emergency/ hidden funds throughout the budget. The fact that a forensic audit found nearly $60 million in available moneys just a few years ago seems to have escaped this council and the public.

2/09/2011 09:01:00 AM  
Blogger The Pot Stirrer said...

Butch, that's right - $130.8 million according to Bobby Young's presentation. Who pays? The shortest answer is "we do", with the understanding that PERS investments make up a big chunk of that obligation IF they are profitable. Recently, due to the economy, they have NOT been profitable. More on this later...

2/09/2011 09:04:00 AM  
Blogger ERIC said...

I would also like to add, is anyone mentioning the COUNCIL'S compensation? How its one of the best in the county? If you use the amount of pay they get and actual council meeting hours, they receive nearly $180/ hour, plus FULL MEDICAL, plus RETIREMENT.

I think 95% of the public would like that job.

2/09/2011 09:05:00 AM  
Anonymous OCLonghair said...

Monahan proved my point, in earlier comments, in his opening remarks...

"Do what you want and ask for forgiveness later".

It's now later and Monahan sits as Mayor once again; promising this time he will do the right thing. Remember that Jimmy Boy said, "CM needed a Mayor with experience leading us...". And now we have a man admitting he caused some, if not most, of the problems we are having to deal with.

What's wrong with this picture?

2/09/2011 11:53:00 AM  
Anonymous Anonymous said...

During this recession CM residents have been complaining about the out of towners that work for the city. the council should call their bluff and do just as they suggested, contract it all out. ALL of it. Fire, PD, Comm, HR, Rec, Acct, Engineering, IT, Planning, Maintenance, parks, redevelopment. Pay the contractors as cheaply as you can and save CM residents money. You get what you pay for.

2/09/2011 03:27:00 PM  
Blogger Unknown said...

An unfunded liability is a lot like a mortgage payment. For example, I do not have $500,000 to pay for my condo in Costa Mesa today, but eventually I will have paid in enough to own my house completely in 30 years. So, yes we cannot afford the pension costs if every single employee were to be laid off/ quit today, but after they work for 30 years it will be covered.

2/09/2011 04:15:00 PM  
Anonymous Reality bites said...

Watch this:

Then discuss the affordability of current public employee pay schemes.

2/09/2011 05:16:00 PM  
Anonymous Sissy Casper said...

Wow.. please someone check into how many lawsuits the City of Costa Mesa is involved in right now and how much money it cost the citizens and taxpayers of Costa Mesa. I guarantee it if the City Council proceeds along this course they will be sued for 1. Violations of the Browne Act 2. Disregarding MOU Agreements regarding proper notification for outsourcing. PLEASE do the math.. the City Council is ramming this through soo fast for only one AGENDA- their own. They could care less about the citizens or saving the taxpayers money. Think people.. think..

2/09/2011 06:22:00 PM  
Anonymous ConcernedforCM said...

@Reality bites....
The governor of NJ makes sense. However the solution is NOT to just wipe out all the public employees.
Let's say that Righeimer and his little puppets do this ( and I have no doubt they will). There is a cheer "woohoo no pensions to be liable for". They then go out and outsource everything. One would think that this would be a cheaper solution. WRONG! All that money they say they are liable for WILL end up being used up on those they outsource to. Why? Because all the jobs and projects the council is gonna want them to do are going to wrack up a huge bill. It has been investigated before by the city. Quite a few times actually. They are not going to be able to save the city the amount of money they are trying project they will. Numbers and graphs are easy to rig and make look any way one wants them too. Trust me. Costa Mesa is in for a rude awakening. Come the end of Righeimer's term you will be very disappointed and very angry.

2/09/2011 07:45:00 PM  
Blogger Unknown said...

Reality bites:

An article about a city that could not be more socially, economically, and just plain different from Costa Mesa is hardly relevent in the conversation about COsta Mesa's issues. You might as well find an article about Cuba's economy and it will hold just as much importance as yours. Thanks for adding nothing other than attempting to be a fear mongerer.

2/09/2011 08:39:00 PM  
Anonymous Reality bites said...

CM cant afford to pay its employees what it is paying them. The employees have to adjust to economic reality. That is the message of the link and it applies everywhere, including CM. The money isn't there and the crazy pensions are going away, time to deal with it and be part of the solution jim.

2/09/2011 10:28:00 PM  
Anonymous ConcernedforCM said...

And what is the solution exactly? As public employees they dont pay into SS. From what i understand they can't. So what is solution? I keep hearing that pensions are unrealistic and employees need to get over themselves but not once have a heard any suggestions as to what options there are instead.

2/10/2011 01:09:00 AM  
Anonymous Sissy Casper said...

TO: REALITY BITES- OUTSOURCING has been done before in several cities equivalent to Costa Mesa with "disastrous results".. why do think it is not done in any successful city?? OMG- are you daft? Riggy and Mensinger have their own agenda and it is not for the good of the City. This has been in the planning stages for a very long time with these stooges. Do the math, check figures, I do my research and it tells me the city will sink further into a dismal economic failure if this path proceeds. This is a NO-BRAINER.. do the math..

2/10/2011 04:59:00 AM  
Anonymous Think... said...

What is this "force multiplier" that you claim ABLE provides? Do you have data to support this? Where is the hard data that shows a direct connection between helicopters and reduced crime? And where is the data that shows that this is the best use of our money to reduce crime? No data, no support.

2/10/2011 08:02:00 AM  
Blogger Gericault said...

The city council(s) for year and years have ignored recommendations that revenues need to be increased.This from their own finance department. Instead they voted time and time again against TOT increases and business fees being competitive. Against the advice of their own "consultants". Moanahan being the biggest culprit. You can't have this discussion without including the larger contxt of where to cut the fat across the board. Hiring consultants will just be this council spending thousands an hour to pay someone to agree them their position. They say that there are NO Sacred Cows, but then all the want to do is slaughter cattle.
This council would have a lot more credibility with the residents and staff if they were truly looking at cutting costs. Not just playing with numbers , misinforming the public, and trying to forward an political agaenda. The losers here are the customers....US.

2/10/2011 08:05:00 AM  
Anonymous Rob Dimel said...


There is actually quite a bit of data regarding air support as a force multiplier. Most of it is far too lengthy to post here. If you are truly interested in the research data, please feel free to contact me directly at (714) 754-5281 and they can transfer you.

2/10/2011 01:09:00 PM  
Anonymous Reality bites said...

Many CM employees are gone, with their years of experience and service. PD and Fire are willing to let more go to protect their salaries and pensions, they'd keep their jobs with OCSA or OCFA. Look at how many fire captains there are, layoffs hit junior ranks. The pensions can be adjusted, later retirement and full employee payment of employee contribution. All new employees 401(k) or other non-PERS system, like private sector. Talking about what council did in past is waste of time, and ignores reality - deal with current situation and save jobs.

2/10/2011 01:18:00 PM  
Anonymous sam said...

"Gericault said...
This council would have a lot more credibility with the residents and staff if they were truly looking at cutting costs."

Could you give a few examples of what costs can be cut from Costa Mesa? Thank you.

2/10/2011 01:34:00 PM  
Anonymous Anonymous said...

He who does not look at past mistakes guarantees making the same mistakes in the future.

The Fire and Police Departments have been offering ways to generate money for the past 15 years.

The Fire Department staff have presented many different types of paramedic services that would be able to bill the citizens insurance company to help pay for the cost of running the program (if there was a hardship they would not be charged). Every city in the county has some type of system that allows them to recoup money to help pay for the programs they offer. We are talking about millions of dollars back into the budget. The council has ignored the suggestions for the past 15 years.

They have also ignored the TOT tax. In the Daily Pilot the other day Newport Beach said they had a windfall from their TOT tax that has helped their City Budget. Our Council would not even consider raising our TOT to the average of all the cities in the County.

All of the wages and benefits the employees have received have been through negotiations. There is always a give and take between both parties. When the City decided to get the employees out of the City retirement and into PERS it was their idea not the employees. It was because they wanted the access money and to get the benefits of not paying for our retirement programs when things were going well in PERS. Now that the cost has gone up they are pointing fingers at the employees and the high cost of our retirements. We were perfectly happy in the City controlled retirement plan.

They have always known what they were offering us and they wouldn't have done it if it wasn't going to benefit them. The employees understood that and have always been willing to help the City during it's tough times.

The employees are part of Costa Mesa and care deeply about it's citizens.

2/10/2011 04:11:00 PM  
Anonymous Sissy Casper said...

The City Attorney Kim Barlow quit the City of Costa Mesa today. Hmmm.. were her ethics to high too work for the City Council.. very interesting..

Riggy and Mensinger- no ethics
Kim Barlow- ethics
= Bad Politics for City of Costa Mesa

2/10/2011 05:33:00 PM  
Anonymous Bill said...

The employee associations have the power to prevent more layoffs and outsourcing, will they? Anyone who was at the council mtg where contracts were voted heard about the lawsuit threats. The whole campaign against Riggy was another give-away of the union intent. Negotiations? Hardly!

2/10/2011 08:34:00 PM  
Blogger The Pot Stirrer said...

Bill, I'm curious.. what do you think the employee associations should do, specifically?

2/10/2011 08:37:00 PM  
Blogger Gericault said...

$20 thousand for the new sign banners the council just voted to stretch across the streets......and that was just off the top of my head......
I would also stop the $200k the city gives to the Sanitation Dept. from our property taxes....why do they do that anyway?
The Sanitation collects their own fees and are flush with cash and we've already absorbed the big rate increases.
How much gets sent to the Water district?
There's a lot more....but I'm not the one with the credibility issues.

2/10/2011 09:05:00 PM  
Anonymous Wyatt Earp said...

Bill, when does it become the employees financing the services of the city? All city employee associations have made concessions over the last 3+ years, most of which was voluntary. This has helped save services for the citizens. At some point it becomes, "We need to cut your salaries and benefits so that we can keep animal control or Eagle, or some other service".

Two examples of where the employees are coming from: from 1989 to 2002, the city paid NOTHING, NADA, ZIP, ZERO towards the cost of the cops retirements. Where did that money go? Why is it the fault of the cops that the city failed to adequately save for this eventuality? Second, the cops made a contract offer to the city on June 1st, 2010 in anticipation of the then current contract expiring on August 31st, 2010. That offer would have saved more money for the city than what the city eventually agreed to. Is this also the fault of the cops? Not at all. In fact, the city flat out ignored the offer until mid-September at which point it was costing the city an extra $125,000 per week. You couple this with the fact the city has consistently ignored pleas from the associations with regard to enhancing revenues to cover the cost of the services the city wants, what else should we expect from the employees. You want a service, you must pay for it.

2/10/2011 10:15:00 PM  
Anonymous sissy casper said...

Please read the below: There is a reason you don't give the power to one entity. (City Council)
Separation of powers is a doctrine that is often believed to rest at the foundation of the U.S. Constitution. It holds that liberty is best preserved if the three functions of government—legislation, law enforcement, and adjudication—are in different hands. The modern idea of separation of powers is to be found in one of the most important eighteenth-century works on political science, the Baron de Montesquieu's The Spirit of the Laws (1748), which states that "There can be no liberty where the legislative and executive powers are united in the same person, or body of magistrates … [or] if the power of judging be not separated from the legislative and executive powers.

2/11/2011 04:39:00 AM  
Anonymous jim fisler said...

Gericault: no city money gets "sent" to the Mesa Consolidated Water District. Also, no property tax money goes to Mesa Water. Mesa Water's revenue comes from the sale of water. Mesa Water has no unfunded pension liablilities either. You get clean (tested 10,000 times per year), pressurized water delivered to your faucets 24/7/365 for 1/3rd cent per gallon.

2/11/2011 08:14:00 AM  
Anonymous Register says said...

Register reports:

Pension obligations are measured as a percentage of base salary, acting as a surcharge. The city now pays an extra 46 percent on each firefighter salary, 43 percent on a police salary, and 27 percent on a city worker's salary.

Five years from now, the city worker's pension charge will be over 35 percent, while police and fire pension costs approach 60 percent of salary.

That is insanity.

2/11/2011 08:52:00 AM  
Anonymous Terrry Shaw said...

i heard aoubt this on the radio a week ago and have attached a link that may be the answer to all our problems or something more to spew and sputter about: consolidating orange county into one city.
here it is:

2/11/2011 12:32:00 PM  
Anonymous sissy casper said...

Read the new agenda for Tuesday's meeting. They want to name the City Manager "The Chief Executive Officer"..... inane.

2/12/2011 08:21:00 AM  
Anonymous Sissy Casper said...

It is amazing the misinformation given the public regarding liabilty numbers. The fact is civil servants, fire and police do not pay into social security; therefore, they do not receive it upon retirement. Private employers have a 401K, higher salaries and stock benefits. In the past years city employees have graciously taken pay cuts, furloughs, and have made many sacrifices in the name of unity. What has the City Council done? Has the City Council asked to dismiss their salaries and do their few hours sans a salary? No. Has the City Council revealed that they get insurance benefits for their entire family? No. Has the City Council revealed that they benefit from a retirement plan? No. Now, has the City Council cancelled or diminished any of their benefits? Again, the poor answer is NO. These elected civil servants want to spend $200,000 on consultants effective immediately. These bozos want to change the vending machine on the first floor to free water and coffee like private offices. Can you imagine.. what's next?? I thought the City has no money .. or is it only for Riggy, Mensinger, and Mons useage?? This is only the beginning of the iceberg.. DO YOU SERIOUSLY WANT ANOTHER BELL.. it wasn't the employees being paid out the gazoo it was CITY COUNCIL..

2/12/2011 05:29:00 PM  
Blogger ERIC said...

Does anyone else wonder why a city, who is "supposed" to be broke and is paying a city manager $207,000+/ yr ( plus a hefty severance), would pay $200,000 to a consultant on the cities future?

For $207k ( plus benefits ) , isn't that what Mr Hatch is supposed to do?

Sure looks like the council is buying some legal deniability for there political endeavors.... I mean financial decisions.

I hope the citizens really take the time to understand what is really going on. Pensions are not the sickness hurting the city. Its the few making rash, political decisions with no regard for the long term future of Costa Mesa.
Just look at the people diving off the sinking ship and the wholes being left in top city positions. ( ie.- No Fire Chief, No Police Chief, No City Attorney, etc )

2/12/2011 06:15:00 PM  
Anonymous Mrs. Anonymous said...

Just curious... I've noticed a couple of posts by "Anonymous." Have you finally dropped that silly restriction?

2/12/2011 06:49:00 PM  
Anonymous judy lindsay said...

Thank you for your coverage of the Costa Mesa Senior Center's fundraiser at Rubys on the l7th. Our cities seniors are often overlooked, our center provides opportunites for physical fitness , social interaction, educational fullfillment and just plain fun. It all has a cost to it and we strive to ask everyone to give us a hand. Even a dollar per person in our city would benefit so many. This is one way to help, Ruby's gives us 20% of the sales. thank you Ruby's.

2/14/2011 06:59:00 PM  

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