HomeMy WebLinkAbout10/11/2011 - Study SessionREGULAR AJOURNED MEETING (STUDY SESSION) OF THE
CITY COUNCIL
CITY OF COSTA MESA
October 11, 2011
The City Council of the City of Costa Mesa, California met in a Regular
Adjourned Meeting (Study Session), on Tuesday, October 11, 2011 at 4:30 p.m.
in Council Chambers, 77, Fair Drive, Costa Mesa. The meeting was called to
order by the Mayor.
ROLL CALL:
Council Members Present: Mayor Gary Monahan
Council Member Eric R. Bever
Council Member Wendy Leece
Council Member Steve Mensinger
Council Members Absent: Mayor Pro Tem Jim Righeimer
Officials Present: Chief Executive Officer Thomas R. Hatch
Interim Assistant CEO Peter Naghavi
Finance/IT Director Bobby Young
Interim Public Services Director Ernesto Munoz
City Attorney Thomas Duarte
City Clerk Julie Folcik
I. PUBLIC COMMENT
1. Judi Berry, Costa Mesa, commented on unfunded liabilities and the definitions
used by business and accounting communities (00:00:42).
2. Colin McCarthy, Costa Mesa, thanked the Council for dealing with the budget
and noted the budget problems of the City of Santa Ana (00:02:47).
3. Robin Leffler, Costa Mesa, asked how much it would cost the City to leave
CalPERS and the effect on the City's payment to CalPERS if the payroll is
reduced by layoffs or early retirements (00:03:53).
4. Eleanor Egan, Costa Mesa, expressed concerns regarding CalPERS liability.
(00:05:32).
11. ITEMS FOR DISCUSSION
1. Public Employees Retirement System (CalPERS) Update Presentation
(00:08:20)
Mayor Monahan announced the availability to view this presentation on the City's
website. Chief Executive Officer Thomas R. Hatch provided an introduction on the
presentation by Mr. John E. Bartel, of Bartel Associates, LLC.
Study Session — October 11, 2011 — Page 1
Finance/IT Director Bobby Young gave an overview of the presentation. Mr. Bartel
showed current pension plans with CaIPERS for Police, Fire and Miscellaneous
employee units; and explained the retirement plan fund status, contribution rate
schedules, and projections. A summary of employee group demographic information
was also provided to show active and retired employee counts and costs.
Mr. Bartel suggested the City concentrate on paying down the Fire Safety Side Fund
due to the certainty of costs minus the volatility of other pension funds.
Mr. Bartel explained the pension contribution rate projections provided which do not
reflect the five percent currently paid by employees. Mr. Bartel gave examples of cost
saving formulas for Tier Two employees hired at a two percent at sixty pension
benefit assuming a payroll growth over ten years, and stated that a second tier of
pension benefits is considered a long-term goal for cost savings. He suggested the
City set up an affordable and reasonable time frame of not less than 20 years to pay
off the unfunded pension liability.
Council Members asked questions on the totality of the unfunded liability, PERS-able
wages, mortality rates, PERS investments, the effects of a lower payroll on the City's
pension obligation and increasing the City's payment to CalPERS to lower the
unfunded pension liability.
CEO Hatch, Finance/IT Director Bobby Young and Mr. Bartel responded to questions
from the Council indicating that if the City were to continue paying its normal
retirement costs, it would not pay down the unfunded liability quickly. Mortality rates
were determined to be a minor item overall. CaIPERS investments are pooled and
assets are allocated. During super -funded times, CaIPERS reduces the contribution
rates and cities build up reserves. Scenarios on split retirement plans were
discussed.
The Harvey Rose Audit was discussed and a response to the audit would be provided
at the October 18, 2011 Council meeting.
No action was taken on this item.
II. Employee of the Month
The City Council will review applications for Employee of the Month. If a selection is
made, a presentation will be made at a future City Council meeting.
111. COUNCIL MEMBERS REPORTS, COMMENTS, AND SUGGESTIONS
No Council comments were received.
IV. ADJOURNMENT
The Mayor declared the City Council meeting adjourned at 8:10 p.m. The next Regular
Meeting will be held Tuesday, October 18, 2011.
Study Session — October 11, 2011 — Page 2
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ATTEST:
Mesa
City Clerk forth City of Costa Mesa
Study Session — October 11, 2011 — Page 3