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Lies, Damn Lies, and PowerPoint in Costa Mesa

by: OC Progressive

Sat Mar 26, 2011 at 13:10:55 PM PDT


Costa Mesa is ground zero for the California war against public employees, the bloody tip of the spear.

The Orange County GOP has chosen this middle-class burg as their laboratory and given pink slips to 213 employees, even before making any analysis of whether his planned outsourcing makes any fiscal sense.

Mayor Pro Tem Jim Righeimer has been beating his chest on John and Ken and appearing all over the local news in Southern California.  

Riggy's spiel always includes his description of the pension crisis in Costa Mesa, which he describes like this, "Ten years ago Costa Mesa paid 5 million for public pensions. Now we pay 15 million a year, and CalPERS projects that five years from now we will be paying 25 million. His allies point to this scary, scary graph that was presented at a study session in Costa Mesa in February.

There's only one problem. It's phony as a three dollar bill. Click "There's more" to see an honest graph.

 

OC Progressive :: Lies, Damn Lies, and PowerPoint in Costa Mesa
When I first saw that graph, it just seemed screwy, so I went to the City of Costa Mesa web site to see the back-up documentation. Surprisingly, there was none. I made a visit to Costa Mesa City Hall to see what was in the agenda packet. "Only the Powerpoint", the City Clerk told me.

I persevered with requests under the Public Records Act, talked to current and former Council members in Orange County, got comparative figures from other cities, and remained mystified.

Of course it made sense that pension costs had increased since 2000. Back then, Costa Mesa had superfunded pensions and didn't even have to make the employer's share of the contribution. Lately, pension rates have increased, but Costa Mesa has also cut over a hundred employees, including police and fire.

In October 2010, Costa Mesa employees agreed to pay an additional $3.6 million a year in pension costs that are just now going into effect. That's why the expenditures for 2011-2012 decrease even while there was a marked increase in CalPERS rates used in the City's projections.

I've emailed back and forth with the new $3,000 a week communications director, Bill Lobdell, who promises to get back to me next week.

So finally, I pulled out the October 2010 actuarial valuation reports that I had received from the City of Costa Mesa, and made my own projections and graph. Here's what it looks like over a six year period. The numbers through 2011-2012 come from the City's report. The next two years are my projection.

Image width=500 Hosted by ImageShack.us

Not so scary, eh?

There's one huge difference. The City's projection includes a notation that says, "includes employee reimbursement from current contracts only". I am assuming that the employees of the City of Costa Mesa will continue to pay the same share of the pension contribution that they are paying now.

Really, could anyone believe that Costa Mesa's radical Republican City Council is going to negotiate new contracts that involve picking up a bigger share of the pensions.?

Following are my assumptions. I am challenging the City of Costa Mesa to show theirs.

*2012-2013 projection based on October 2010 CalPERS reports that projects increase in city's share of pension costs using actual 2009-10 investment returns.from

**2013-2014 projection based on October 2010 CalPERS report where CalPERS projects five different rates based on FY 2010-2011 investment returns, which are quite good so far this year.

FY 2013-14 projection is based on blended rate between 3rd scenario with 7.75% return (47th percentile) and 4th scenario with 16% return (75th percentile)for this fiscal year.
(Appendix D-1 of each report.)

Assumption of compensation subject to pension for each pool (estimates) used to calculate increase in City's share of pension costs

For FY 2011-2012 with no changes for 2012-13, 2013-14

Sworn fire 13 million
Sworn police 18 million
Everyone else 20 million

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But it made the New York Times (0.00 / 0)
Just read about it this morning. One thing the Times didn't mention is that previous experiments in privatization with public money have almost uniformly resulted in poorer service at higher costs. These folks are in it to make money. So it really only makes sense. Still, I wait to see if anybody who donated money to the new councilmembers gets a contract out of this purge.

Cities/Counties/States/Federal (0.00 / 0)
Cities/Counties/States/Federal level are not supposed to make a profit, If they did they would be Businesses and not Elected Governments.

[ Parent ]
Context and graphing (0.00 / 0)
When one does comparative graphs, the time frame on both graphs should be the same.

The scary part of the first graph is just as much the 99-10 years where costs tripled, as it is prediction over the next 5 years that costs will a little less than double.

The second graph below not only does not have the previous ten years, but also does not extend as far.


Comparative graphs (0.00 / 0)
An honest graph from the City of Costa Mesa would have extended back further than 10 years, showing that pension expenditures had dropped substantially prior to the super-funding and contribution holiday that came at the end of the internet boom. Unfortunately I don't have those numbers handy.
You are welcome to research them.

As to forecasting out beyond 2013-2014,there's no real basis to do that other than wild-ass guess. The 2014-2015 rates and beyond will be based on investment returns, number of employees, ages and wages of employees that I cannot predict, nor can the City of Costa Mesa's finance assistant, Bobby Young.


OC Progressive is Gus Ayer, former Fountain Valley Council member.  


[ Parent ]
Stop them now, stop them here (0.00 / 0)
Righeimer and his three flunkies in the Gang of Four are liars and thieves who are destroying people's careers and intentionally crushing the life out of the middle class in order to benefit the richest and most powerful.  They must be stopped, or this ugly degeneration of local government will spread to other cities where extremists can win elections to city councils. The next City Council meeting is Tuesday, April 5, at 6 pm, at Costa Mesa City Hall, 77 Fair Drive, Costa Mesa 92626.  How many people who oppose this destruction can show up at this meeting?  The rules require them to give 3 minutes per speaker under public comment, which means 18-20 people can block an entire hour of the meeting, and 120 people can occupy the entire advertised length of the meeting, forcing them to either adjourn as required at midnight, or to publicly vote to extend the meeting.  I'd love to see their business brought to a halt for an extended number of meetings, simply by enough people showing up to tell them NO.

Lies By Little Tyrant GOP Mayors (5.00 / 1)
The same thing is happening right now in Carlsbad, California, a very affluent coastal community in San Diego County. The new mayor, Matt Hall, is not a friend of public sector employees. The Employees' Association and the City are currently in talks regarding the new contract. The City has proposed:

1) The City will be empowered to contract out to private companies any work now performed by city employees.
2) All employees will be re-classified to at-will employees.
3) Work schedules and hours will be determined by the City.
4) Employee contributions to the pension fund will be 8%.
5) These terms are in addition to pay and health care concessions.

This offer(which seems to be non-negotiable) will effectively destroy the association, eliminate seniority and allow the firing of senior employees who may be deemed to be making too much money, for no other reason than that. It will also lead to eventual privatization of many city departments and outsourcing.

The goal of Matt Hall is to outsource all city services.

The city has stated that there is a $2.6 million dollar budget shortfall, but the numbers are skewed. The city has enough money to fund a $70 million dollar aquatic park, while Legoland (in Carlsbad) is building a water park.

The city golf course (by the way, Carlsbad is home to La Costa Golf Resort) costs the city over $1 million dollars a year.

The city has presented a similar graph showing projected pension costs also. It looks amazingly similar to Costa Mesa's graph.

Both the City Manager and City Attorney have salaries and benefits which amount to over $300,000.00 each and both of their departments each has a budget of close to $2 million dollars.

In the interest of disclosure, I do have a family member employed by the City of Carlsbad.


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