Friday, March 4, 2011

Costa Mesa provides a window to Encinitas' future

Costa Mesa has just found a solution for unsustainable pensions: firing 43% of city workers and outsourcing services.

Tuesday's move is part of a dramatic restructuring of a city that faces potentially skyrocketing pension costs in the coming years.

Costa Mesa's own projections show that in the next few years, it will be expected to pay more into the state's public pension fund, CalPERS. It's a situation being replayed up and down the state: When the CalPERS pension fund was flush in the early 2000s, Costa Mesa did not have to pay much to the state to cover its employees' retirement costs. Now that CalPERS investments are hurting, cities have to cover the difference.

That pattern looks to continue for at least the next five years, city officials project.

Laying off hundreds of employees and their accumulating pensions by the fall would help to balance the city's budget in years to come, council members reason.

Encinitas is a young city with few current retirees, and it is still underfunding its pensions and assuming awesome investment returns, so it hasn't felt the impact of its outrageous pension giveaway. The bill will come due for Encinitas in 10 or 20 years as it has in Costa Mesa already.

The current city council and the greedy unions are painting us into a corner. If they won't reform the pensions, the only solution will be to fire city workers and outsource everything.


  1. Costa Mesa Retirement
    Non-safety Staff
    PERS 2.5% @ 55
    Safety Staff
    PERS 3.0% @ 55

    City of Encinitas Retirement
    Non-safety Staff
    PERS 2.7% @ 55
    PERS 3.0% @55

  2. A small group of people have classically entered the public arena and have feathered their own nests by lavish pension benefits and pay scales. Now as the communities across America melt down, the greater public is becoming aware of this inequity. Encinitas has 4 retirees that draw down nearly $500,000/year, and this city only incorporated in 1984! You can clearly see the financial disaster that lay ahead if this is allowed to continue. It is good to see the activists calling for change, as the elected officials won't implement anything that goes against their vested self interests. Lavish pensions should be abolished and the sooner the better.

  3. I wonder what the current retirement obligation is for the city of Encinitas? It has to be in the multi-millions already and climbing!

  4. Annual pension cost for city staff, firemen, lifeguards, and water district staff is around $3.1 million. The four plans are with the California Public Employees Retirement System (CalPERS). The value of the City's assets in the system is $40.5 million, but there is an accrued liability of $55.7 million. So there is an unfunded liability of $15.2 million.

    In other words the plan is only funded at 72.7%. The problem is actually worse because CalPERS assumes a 7.75% rate of return on investment That is not happening right now, and the system has suffered heavy loses.

    There are also post-retirement health care benefits for SDWD and city employees. There is an accrued unfunded liability of $10.3 million. The two plans assume a 10%-11% rate of premium increase and a closed 30-years amortization for the unfunded liability. Again a 7.75% rate of return on investment was used.

    All figures come from Financial Statements of the City of Encinitas.