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Finance officials: High pension estimates are subjective

City leaders insist they can't rely on a recovering economy or employees' help, but Costa Mesa needs to act immediately.

April 04, 2011|By Joseph Serna,

"If you look at it so simply, OK, it's the high cost of pensions that's causing the problem, then why aren't other cities going through the same problem?" Fong asked. "It is true that pension costs have gone up in recent years because of the recession. It's gone up for everybody … but not every city is being forced to lay off [nearly] 50% of its workforce."

Costa Mesa has seen its contributions for firefighter pensions grow from 24.6% of its payroll in 2008 to a 37.4% next fiscal year and to an estimated 38.7% in 2012-13, according to CalPERS records.

Police rates are projected to climb to 38.2% in 2013-14 from 29.3% in 2008. Miscellaneous costs have increased from 12.5% of its payroll in 2008 to an estimated 22.7% in 2013-14, CalPERS data show.


The city also pays much of the employees' portion, which ranges from 8% to 9% and will increase in the coming budgets.

CalPERS investments have performed better than expected the last two years.

Those gains won't be seen until at least 2014, experts said.

City leaders say they can't gamble on the economy recovering or employees' help, and they have to act now to minimize costs.

Costa Mesa desperately needs to address building and street repairs and other city projects deferred in recent years to plug past budget shortfalls, said Councilman Steve Mensinger.

"We've come to the end of the road; we can't kick the can any longer," he said.

Costa Mesa's some 470 employees are already absorbing the increases coming for 2011-12. All three employee associations — fire, police and miscellaneous — signed contracts in October that contribute some of their paycheck to their pensions, adding up to about $3.6 million.

That total could increase over time, further helping absorb the CalPERS increases, Young said.

Costa Mesa would have to renegotiate with firefighters in the fall to keep them contributing past October. Miscellaneous employees stop contributing in two years, police in about 2013.

"Our track record speaks for itself," said Costa Mesa Police Officer Assn. President Jason Chamness of officers' willingness to pay part of their pension costs. "When the city asked us to take a furlough, we did. When the city asked for concessions … we gave them the concessions they asked for and that we all agreed upon. We'll certainly be prepared to negotiate in good faith in 2013."

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