Rigonomics:

I got a few calls from my quote in Alan Blank’s Thursday article regarding the new Costa Mesa fire contract the city approved (“New fire contract pushes retirement”).

I said it then, and I will say it again: Any system that allows able-bodied public employees to retire at 50 years of age with 90% of the pension is simply bad policy.

This retirement plan, the de facto standard in California for all public safety personnel, is why this state is going bankrupt.

Costa Mesa has a memorandum of understanding with its fire union that is not much different than what other cities have with their firefighters or police unions.

These agreements are negotiated with the help of the unions’ experts in Sacramento. The cities have very few, if any, experts on negotiations. If negotiating a union contract is war, the cities come unarmed.

Looking at Costa Mesa’s memorandum with the fire union will give you a glimpse of why city councils are impotent to make changes to employee agreements in their respective cities. In a nutshell, previous city councils have taken all their bargaining power away. Due to the agreements made by the previous council, present councils have almost zero control to bring costs down.

To understand the dilemma the Costa Mesa City Council finds itself in, let me explain the existing memorandum the city has with the firefighter union. The agreement has language that makes the agreement an “evergreen contract.” No matter how long the contract is, if both parties do not come to an agreement on a new memorandum, the old one stays in place.

You might say “OK, then the city should not give any pay raises until a new agreement is in place.” That’s when you run into the “Fair Wage” clause.

Previous city councils gave up any opportunity to stop pay increases by agreeing to set the pay based on what other cities pay in total compensation. Under the guise of paying “fair wages,” Costa Mesa has agreed to use the average compensation of Fountain Valley, Huntington Beach, Santa Ana, Newport Beach and the Orange County Fire Authority to calculate pay and benefits. This gives automatic increases, because all the cities have the same clauses in their agreements to make their pay “average.” This puts the salaries in Costa Mesa on an automatic pilot that only goes up.

Consider that in the middle of one of the worst recessions on record, the union firefighters were getting an automatic 4.9% pay increase this year. Last year, according to city documents, the average firefighter received $143,087.78 for salary and benefits without including the $37,286 that was paid into their pension.

Lastly, unlike the other city unions, including the police union, the fire union memorandum has a “minimum staffing” clause that was agreed to by previous city councils. It says that 32 fire personnel will be on duty at any given time. So if the council decided to lay off any personnel to save money, it couldn’t, because they would have to be replaced by giving overtime to another firefighter to keep staffing at 32.

Staffing is the duty of the City Council, not the union. By the agreement to put a minimum staffing clause in the contract, the management of staffing given to the union.

Let’s look at what the council agreed to this week:

Firefighters can now retire at 90% of pay at age 50 instead of 55 for a cost of at least $702,000 a year going forward. The union agreed not to take its automatic increase of 4.9%, which saved the city $661,000 a year. The union also agreed to lower minimum staffing to 28 personnel from 32. That is where the city got its savings; at least for now. Lowering minimum staffing will allow 12 firefighters to leave for early retirement at 90% of pay and the city will save about $1.8 million per year.

Here is the problem with the agreement: Though the city will save money from less staff this year, how long will that last? Less than four days after agreeing to less staff, the firefighters are already saying they will be understaffed. Yet, like the councils before them, they have agreed to something, an early retirement pension benefit, which can never be taken back. Like the councils before them, they have ratcheted up costs that can never be lowered in return for cost savings that can always be increased. That’s simply not a good business model.

JIM RIGHEIMER is a Costa Mesa Planning Commissioner, local business owner and a father of four. He can be reached at jim@rigonomics.com.