Pension obligation estimates differ greatly

Costa Mesa: A City Divided

Costa Mesa's pension forecasts, released in 2011, were based on a worst-case scenario that did not immediately come to pass.

August 25, 2012|By Joseph Serna and Mike Reicher

Second in a series about Costa Mesa's political battle.


Costa Mesa's estimated pension costs could climb by about $3 million over the next five years, according to a recent estimate released by the city.

That figure stands in stark contrast with the $10 million to $12 million pension spike forecast in 2011, when the City Council directed its staff to issue pink slips to the city's employees.


The differing data sets represent best- and worst-case budgeting scenarios based on projections of how retirement funds are likely to perform. The council a year and a half ago went with a pessimistic forecast.

"Government always has to assume worst case," said Mayor Pro Tem Jim Righeimer.

But critics say the council's 4-1 majority, led by Righeimer, purposely presented dimmer-than-necessary estimates to the public to justify its plan to reduce the municipal workforce.

"It's just another example of how they'll manipulate the numbers and say anything and do anything to advance their political agenda," said Jennifer Muir, spokeswoman for the Orange County Employees Assn., which represents some 200 Costa Mesa employees. "They throw out a number to create a crisis and advance their political agenda."

But Righeimer said local government cannot bank on sunny estimates for the California Public Employees' Retirement System (CalPERS), an organization he calls "a pseudo government body that can do whatever they want to do."

In fact, he said, he asked finance officials to choose the rainy-day estimates when they presented a chart on the city's pension liabilities to the City Council.

Most of his colleagues on the council concurred with the decision.

"Hope is not a formula that's accepted in business," said Councilman Steve Mensinger. "The consequence is we keep pushing the losses out 20 years, 30 years, and I'm dead, you're dead, and your kids are asking about it. I don't want to leave my kids with an unfunded liability."


Contrasting data

In February 2011, then-Budget and Research Officer Bobby Young presented to the City Council a chart of projected payments Costa Mesa would need to make to CalPERS to fund employee retirement programs.

Young forecast city costs climbing from about $15 million in 2011 to more than $26 million in 2016. An increase like that, without significant new revenue sources from taxes or fees, could lead to potentially crippling problems for City Hall, council members argued at the time.

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