Mayor stresses pay cuts for staff

Costa Mesa paid more than $15 million toward employee pensions in 2008 and about $7 million in overtime pay.

The average firefighter in the city racked up $35,000 in overtime pay in addition to an average salary of more than $85,000.

Perhaps as a result of the compensation, when the Fire Department was trying to fill seven vacancies late last year, more than 400 people applied for the jobs within a few days, according to Fire Chief Mike Morgan.

Mayor Allan Mansoor says the costs of paying employees is crippling the city, which will have to draw more than $11 million from its savings to balance the current fiscal year’s budget because of losses in sales tax revenue, according to the most recent numbers from the finance department.

Compensation, though, for Costa Mesa employees, according to provisions in their contracts, is mandated to be the average of surrounding cities Newport Beach, Huntington Beach, Fountain Valley, Santa Ana, Irvine and county workers.

“We’re going to have to renegotiate contracts or be forced to make difficult decisions such as layoffs and other things that are less appealing,” Mansoor said. “Certainly we want to attract quality employees, and we do, but when one neighboring agency says we’ll pay more and another says we’ll see your raise and raise again, finally someone has to go all in and someone’s going to go bust. You can’t say that’s a reasonable way to do business on a permanent basis because eventually it becomes unsustainable.”

Some say, however, that if pay and benefits are reduced then good employees may be hard to come by.

The reason salaries and benefits are being so closely scrutinized is because they account for 74% of the city’s general fund spending, or almost $90 million a year. At a recent closed-door meeting, the majority of the City Council members decided that it was time to try to renegotiate the contracts it made with city employees in the last couple of years.

But renegotiating those deals with the four associations that represent its employees — police, fire, police management and staff — is not simple.

The associations would have to voluntarily agree to open their contracts back up to possible cuts if anything is to happen before the end of this year. Otherwise, the city has to wait until September or October, when audited financial reports can unequivocally prove that the city has lost enough tax revenue to merit a cut in compensation at which point the city can force negotiations.

City officials say that the signs they are getting from association leaders indicate that they’re willing to play ball, though. Numerous attempts to reach association leaders for comment were unsuccessful.

“I sense that everyone is willing to come to the table and talk about all of these issues,” said Steve Mandoki, the city’s administrative services director, who has talked with association leaders.

The pension numbers are particularly alarming to Councilman Gary Monahan. According to Pilot calculations, the city is putting $41,900 a year in each police officer’s pension, $34,700 in each firefighter’s and $13,500 in each staff member’s.

But those numbers can be misleading, said Finance Director Marc Puckett.

The city has a defined benefit plan, which essentially means that employees are promised a set amount of money every year once they retire at a certain age.

The city contributes to a pool of money so that it can pay its workers what it owes them when they call it quits. But when enough money is in the pool to cover its liabilities, the city doesn’t need to contribute.

In fact, for 13 years — starting in 1989 — Costa Mesa didn’t put a single dime into employee pensions because the investment income on the pension fund was enough to pay current and projected expenses, Puckett said.

Now that the economy has tanked, on the other hand, the city has to pay a lot into the pool to keep it fully funded. On average, the city isn’t spending nearly as much as it is in this extraordinary year, though, Puckett said.

“One of the things that never gets presented fairly is the actual costs of a pension,” Puckett said.

A dozen firefighters logged more than $50,000 in overtime in 2008, which Fire Chief Mike Morgan attributes to a set of unfavorable circumstances that all came together during the year.

When Morgan came on board a year and a half ago the department was understaffed by 13 employees, requiring workers to put in a lot of extra hours to keep the stations fully functioning, Morgan said. But the force is now full.

Also, the city’s firefighters responded to an abnormally high amount of intense wildfires around the state, which accounted for about 25% of its overtime expenditures, and that money was reimbursed by the state and federal governments.

“My anticipation is that overtime will go down [next year] because we’re now fully staffed,” Morgan said.

Councilwoman Katrina Foley opposes cutting salaries and benefits for city employees.

“I do not believe we’re overpaying our staff in any department. If you want to have quality, educated employees you have to compensate them accordingly,” Foley said.

She points to two years ago, when the council — including members who now want to cut salaries and benefits — decided to increase the compensation for police officers and form a recruitment task force because of concerns that some were leaving to other cities for better pay.

The fire chief sees the risk that firefighters might leave to other cities if pay is dropped as a problem, too.

“Retention is important because then firefighters get to know the lay of the land and can more easily navigate during emergencies,” Morgan said.

Although hundreds applied for only a few positions recently, that kind of volume is not unusual in the industry and it’s necessary to find employees that are of the highest caliber, Morgan said.

Foley thinks that finding more creative revenue sources is a better solution to the budget shortfall.

For instance, Costa Mesa could try to get other cities to reimburse it for police and fire equipment damaged when Costa Mesa’s police and fire squads have to help other departments, and agreements with ambulance providers can be reworked so that Costa Mesa gets more money for providing ambulance service, she said.

Staff salaries

 The city spends about 74% ($90 million) of its general fund on salaries and benefits. About two-thirds of that is in the police and fire departments.

 Firefighters earned an average of $35,000 in overtime last year, and police earned an average of $15,000.

 The city spent more than $200,000 on about 60 of its employees last year.

 The average police and firefighter salaries were both about $85,000 last year.

 Costa Mesa’s employees’ total compensations are average compared to surrounding cities Newport Beach, Fountain Valley, Huntington Beach, Santa Ana, Irvine and the county.