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Pension fight docks in Newport Beach

The usually restrained city is going through an unusually public fight over public safety retirement.

December 05, 2011|By Mike Reicher and Lauren Williams

Newport Beach's public employee unions and city officials normally keep quiet about contract disputes — a more restrained, "Newport" way of doing business.

Not this time around.

As police, firefighter and lifeguard contracts expire at the end of the month, city officials have asked employees to contribute more to their pension funds, and unions are striking back publicly.

Union officials sought to rally residents with a mailer last week, and city administrators countered with an open letter explaining why they think employees should pay more toward their retirements.

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"While the city is in fairly good fiscal shape today, if the current pension practices don't change, we are concerned that it won't stay in such good shape," City Manager Dave Kiff wrote in a statement to residents.

The city faces the question of who should pay for city employees' retirement, and if city funds would be better spent on infrastructure.

Unlike Costa Mesa and other cities experiencing pension problems, Newport officials find themselves defending their decisions with nearly $90 million in reserves.

"A city does more than just pay its employees," Kiff said Monday. "We have medians to repair and buildings to replace … It's the quality of our infrastructure that drives our prosperity."

"We want to keep doing that while still being competitive in the labor market," he added.

Firefighters and police officers have a retirement plan that allows them to retire at age 50 with a pension that equals 90% of their largest annual salary. They contribute 3.5% of their base pay toward their retirement fund, which is managed by the California Public Employees' Retirement System (CalPERS).

Lifeguards had a similar contract until this past summer, when they faced a massive public outcry about their salaries and pensions, which critics called generous.

Guards agreed to contribute 9% of their total salary to their retirement funds and to a less generous formula for new hires.

City officials have said they would like police and firefighters to make the same concessions.

"The public sector must contract with the economy, just as the private sector has contracted with the economy," said Councilman Rush Hill, an architect and businessman.

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